The Insolvency (England and Wales) Rules 2016

CHAPTER 5 E+W Consideration of the proposal by the company members and creditors

[Note: a document required by the Act or these Rules must also contain the standard contents set out in Part 1.]

Consideration of proposal: common requirements (section 3) E+W

2.25.—(1) The nominee must invite the members of the company to consider a proposal by summoning a meeting of the company as required by section 3.

(2) The nominee must invite the creditors to consider the proposal by way of a decision procedure.

[F1 (2A) The nominee must examine whether there is jurisdiction to open the proceedings and must specify in the nominee’s comments on the proposal required by paragraphs (3)(d)(iii) and (5)(a)(iii) whether the proceedings will be [F2 COMI proceedings, establishment proceedings or proceedings to which the EU Regulation as it has effect in the law of the United Kingdom does not apply] with the reasons for so stating].

(3) In the case of the members, the nominee must deliver to every person whom the nominee believes to be a member a notice which must—

(a) identify the proceedings;

(b) state the venue for the meeting;

(c) state the effect of the following—

(i) rule 2.35 about members' voting rights,

(ii) rule 2.36 about the requisite majority of members for passing resolutions, and

(iii) rule 15.35 about rights of appeal; and

(d) be accompanied by—

(i) a copy of the proposal,

(ii) a copy of the statement of affairs, or if the nominee thinks fit a summary including a list of creditors with the amounts of their debts,

(iii) the nominee's comments on the proposal, unless the nominee is the administrator or liquidator [F3 in which case the comments required are limited to stating whether the proceedings will be main, secondary, territorial or non-EU proceedings with the reasons for so stating], and

(iv) details of each resolution to be voted on.

(4) In the case of the creditors, the nominee must deliver to each creditor a notice in respect of the decision procedure which complies with rule 15.8 so far as is relevant.

(5) The notice must also—

(a) be accompanied by—

(i) a copy of the proposal,

(ii) a copy of the statement of affairs, or if the nominee thinks fit a summary including a list of creditors with the amounts of their debts, and

(iii) the nominee's comments on the proposal, unless the nominee is the administrator or liquidator; and

(b) state how a creditor may propose a modification to the proposal, and how the nominee will deal with such a proposal for a modification.

(6) The notice may also state that the results of the consideration of the proposal will be made available for viewing and downloading on a website and that no other notice will be delivered to the creditors or members (as the case may be).

(7) Where the results of the consideration of the proposal are to be made available for viewing and downloading on a website the nominee must comply with the requirements for use of a website to deliver a document set out in rule 1.49(2)(a) to (c), (3) and (4) with any necessary adaptations and rule 1.49(5)(a) applies to determine the time of delivery of the document.

Textual Amendments

F1 Rule 2.25(2A) inserted (26.6.2017) by The Insolvency Amendment (EU 2015/848) Regulations 2017 (S.I. 2017/702), reg. 1, Sch. para. 36(2) (with reg. 3)

F2 Words in rule 2.25(2A) substituted (31.12.2020) by The Insolvency (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/146), reg. 1(3), Sch. para. 52 (with regs. 4, 5); 2020 c. 1, Sch. 5 para. 1(1)

F3 Words in rule 2.25(3)(d)(iii) inserted (26.6.2017) by The Insolvency Amendment (EU 2015/848) Regulations 2017 (S.I. 2017/702), reg. 1, Sch. para. 36(3) (with reg. 3)

Members' consideration at a meeting E+W

2.26.—(1) Where the nominee invites the members to consider the proposal at a meeting the notice to members under rule 2.25(3) must also—

(a) specify the purpose of and venue for the meeting; and

(b) be accompanied by a blank proxy.

(2) The nominee must have regard to the convenience of those invited to attend when fixing the venue for a meeting (including the resumption of an adjourned meeting).

[F4 (3) The date of the meeting (except where the nominee is the administrator or liquidator of the company) must not be more than 28 days from the date on which the nominee’s report is filed with the court under rule 2.9.]

Textual Amendments

F4 Rule 2.26(3) substituted (1.10.2021) by The Insolvency (England and Wales) (No.2) (Amendment) Rules 2021 (S.I. 2021/1028), rules 1, 16 (with rules 4, 5)

Creditors' consideration by a decision procedure E+W

[F5 2.27.   Where the nominee is inviting the creditors to consider the proposal by a decision procedure, the decision date must be not less than 14 days from the date of delivery of the notice and not more than 28 days from the date the nominee’s report is filed with the court under rule 2.9.]

Textual Amendments

F5 Rule 2.27 substituted (1.10.2021) by The Insolvency (England and Wales) (No.2) (Amendment) Rules 2021 (S.I. 2021/1028), rules 1, 17 (with rules 4, 5)

Timing of decisions on proposal E+W

2.28.—(1) The decision date for the creditors' decision procedure may be on the same day as, or on a different day to, the meeting of the company.

(2) But the creditors' decision on the proposal must be made before the members' decision.

(3) The members' decision must be made not later than five business days after the creditors' decision.

(4) For the purpose of this rule, the timing of the members' decision is either the date and time of the meeting of the company or, where the nominee invites members to consider the proposal by correspondence, the deadline for receipt of members' votes.

Creditors' approval of modified proposal E+W

F6 2.29.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F6 Rule 2.29 omitted (1.10.2021) by virtue of The Insolvency (England and Wales) (No.2) (Amendment) Rules 2021 (S.I. 2021/1028), rule 1, Sch. 2 para. 3 Table (with rules 4, 5)

Notice of members' meeting and attendance of officers E+W

2.30.—(1) A notice under rule [F7 2.25(3)] summoning a meeting of the company must be delivered at least 14 days before the day fixed for the meeting to all the members and to—

(a) every officer or former officer of the company whose presence the nominee thinks is required; and

(b) all other directors of the company.

(2) Every officer or former officer who receives such a notice stating that the nominee thinks that person's attendance is required is required to attend the meeting.

Textual Amendments

F7 Word in rule 2.30(1) substituted (8.12.2017) by The Insolvency (England and Wales) and Insolvency (Scotland) (Miscellaneous and Consequential Amendments) Rules 2017 (S.I. 2017/1115), rules 1(1), 3

Requisition of physical meeting by creditors E+W

2.31.—(1) This rule applies where the creditors requisition a physical meeting to consider a proposal (with or without modifications) in accordance with section 246ZE M1 and rule 15.6.

(2) The meeting must take place within 14 days of the date on which the prescribed proportion of creditors have required the meeting to take place.

[F8 (3) A notice summoning a meeting of the creditors must be delivered to the creditors at least seven days before the day fixed for the meeting.]

Textual Amendments

F8 Rule 2.31(3) substituted (6.4.2017) by The Insolvency (England and Wales) (Amendment) Rules 2017 (S.I. 2017/366), rules 1, 7

Marginal Citations

M1 Paragraph 246ZE is inserted by section 122 of the Small Business, Enterprise and Employment Act 2015 (c.26).

Non-receipt of notice by members E+W

2.32.  Where in accordance with the Act or these Rules the members are invited to consider a proposal, the consideration is presumed to have duly taken place even if not everyone to whom the notice is to be delivered receives it.

Proposal for alternative supervisor E+W

2.33.—(1) If in response to a notice inviting—

(a) members to consider the proposal by correspondence; or

(b) creditors to consider the proposal other than at a meeting,

a member or creditor proposes that a person other than the nominee be appointed as supervisor, that person's consent to act and confirmation of being qualified to act as an insolvency practitioner in relation to the company must be delivered to the nominee by the deadline in the notice of the decision by correspondence or by the decision date (as the case may be).

(2) If, at either a meeting of the company or the creditors to consider the proposal, a resolution is moved for the appointment of a person other than the nominee to be supervisor, the person moving the resolution must produce to the chair at or before the meeting—

(a) confirmation that the person proposed as supervisor is qualified to act as an insolvency practitioner in relation to the company; and

(b) that person's written consent to act (unless that person is present at the meeting and there signifies consent to act).

Chair at meetings E+W

2.34.  The chair of a meeting under this Part must be the nominee or an appointed person.

Members' voting rights E+W

2.35.—(1) A member is entitled to vote according to the rights attaching to the member's shares in accordance with the articles of the company.

(2) A member's shares include any other interest that person may have as a member of the company.

(3) The value of a member for the purposes of voting is determined by reference to the number of votes conferred on that member by the company's articles.

Requisite majorities of members E+W

2.36.—(1) A resolution is passed by members by correspondence or at a meeting of the company when a majority (in value) of those voting have voted in favour of it.

(2) This is subject to any express provision to the contrary in the articles.

(3) A resolution is not passed by correspondence unless at least one member has voted in favour of it.

Notice of order made under section 4A(6) F9 ... E+W

2.37.—(1) This rule applies where the court makes an order under section 4A(6) F9 ....

(2) The member who applied for the order must deliver a sealed copy of it to—

(a) the proposer; and

(b) the supervisor (if there is one different to the proposer).

(3) If the directors are the proposer a single copy may be delivered to the company at its registered office.

(4) The supervisor, or the proposer where there is no supervisor, must as soon as reasonably practicable deliver a notice that the order has been made to every person who had received a notice to vote on the matter or who is affected by the order.

(5) The member who applied for the order must, within five business days of the order, deliver a copy to the registrar of companies.

Textual Amendments

F9 Words in rule 2.37 omitted (1.10.2021) by virtue of The Insolvency (England and Wales) (No.2) (Amendment) Rules 2021 (S.I. 2021/1028), rule 1, Sch. 2 para. 3 Table (with rules 4, 5)

Report of consideration of proposal under section 4(6) and (6A) F10 ... E+W

2.38.—(1) A report [F11 or reports as the case may be] must be prepared of the consideration of a proposal under section 4(6) and (6A) M2 F12 ... by the convener or, in the case of a meeting, the chair.

(2) The report must—

(a) state whether the proposal was approved or rejected and whether by the creditors alone or by both the creditors and members and, in either case, whether any approval was with any modifications;

(b) list the creditors and members who voted or attended or who were represented at the meeting or decision procedure (as applicable) used to consider the proposal, setting out (with their respective values) how they voted on each resolution [F13 or whether they abstained];

(c) identify which of those creditors were considered to be connected with the company;

(d) if the proposal was approved, state with reasons whether the proceedings are [F14 COMI proceedings, establishment proceedings or proceedings to which the EU Regulation as it has effect in the law of the United Kingdom does not apply]; and

(e) include such further information as the nominee or the chair thinks it appropriate to make known to the court.

(3) A copy of the report must be filed with the court, within four business days of F15 ... the date of the company meeting.

(4) The court must endorse the copy of the report with the date of filing.

(5) The chair (in the case of a company meeting) or otherwise the convener must give notice of the result of the consideration of the proposal to everyone who was invited to consider the proposal or to whom notice of a decision procedure or meeting was delivered as soon as reasonably practicable after a copy of the report is filed with the court.

(6) Where the decision approving the CVA has effect under section 4A F16 ... with or without modifications, the supervisor must as soon as reasonably practicable deliver a copy of the convener's report or, in the case of a meeting, the chair's report to the registrar of companies.

Textual Amendments

F10 Words in rule 2.38 heading omitted (1.10.2021) by virtue of The Insolvency (England and Wales) (No.2) (Amendment) Rules 2021 (S.I. 2021/1028), rule 1, Sch. 2 para. 3 Table (with rules 4, 5)

F11 Words in rule 2.38(1) inserted (6.4.2017) by The Insolvency (England and Wales) (Amendment) Rules 2017 (S.I. 2017/366), rules 1, 8(1)

F12 Words in rule 2.38(1) omitted (1.10.2021) by virtue of The Insolvency (England and Wales) (No.2) (Amendment) Rules 2021 (S.I. 2021/1028), rule 1, Sch. 2 para. 3 Table (with rules 4, 5)

F13 Words in rule 2.38(2)(b) inserted (6.4.2017) by The Insolvency (England and Wales) (Amendment) Rules 2017 (S.I. 2017/366), rules 1, 8(2)

F14 Words in rule 2.38(2)(d) substituted (31.12.2020) by The Insolvency (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/146), reg. 1(3), Sch. para. 53 (with regs. 4, 5); 2020 c. 1, Sch. 5 para. 1(1)

F15 Words in rule 2.38(3) omitted (6.4.2017) by virtue of The Insolvency (England and Wales) (Amendment) Rules 2017 (S.I. 2017/366), rules 1, 8(3)

F16 Words in rule 2.38(6) omitted (1.10.2021) by virtue of The Insolvency (England and Wales) (No.2) (Amendment) Rules 2021 (S.I. 2021/1028), rule 1, Sch. 2 para. 3 Table (with rules 4, 5)

Marginal Citations

M2 Section 4(6) is amended by paragraph 4(4) of Schedule 9 to the Small Business, Enterprise and Employment Act 2015 and section 6(A) is inserted by paragraph 4(7) of that Schedule.