The Insolvent Partnerships Order 1994

Article 6

SCHEDULE 2 MODIFIED PROVISIONS OF PART II OF THE ACT (ADMINISTRATION ORDERS) AS APPLIED BY ARTICLE 6

1.  Sections 8 to 15 of, and Schedule 1 to, the Act are set out as modified in this Schedule.

Section 8: Power of court to make order

2.  Section 8 is modified so as to read as follows:—

“8.— (1) Subject to this section, if the court—

(a) is satisfied that a partnership is unable to pay its debts (within the meaning given to that expression by section 222, 223 or 224 of this Act), and

(b) considers that the making of an order under this section would be likely to achieve one or more of the purposes mentioned below,

the court may make an administration order in relation to the partnership.

(2) An administration order is an order directing that, during the period for which the order is in force, the affairs and business of the partnership and the partnership property shall be managed by a person (“the administrator”) appointed for the purpose by the court.

(3) The purposes for whose achievement an administration order may be made are—

(a) the survival of the whole or any part of the undertaking of the partnership as a going concern;

(b) the approval of a voluntary arrangement under Part I; and

(c) a more advantageous realisation of the partnership property than would be effected on a winding up;

and the order shall specify the purpose or purposes for which it is made.

(4) An administration order shall not be made in relation to a partnership after an order has been made for it to be wound up by the court as an unregistered company, nor after an order has been made in relation to it by virtue of article 11 of the Insolvent Partnerships Order 1994, nor where it is—

(a) an insurance company within the meaning of the Insurance Companies Act 1982(1), or

(b) an authorised institution or former authorised institution within the meaning of the Banking Act 1987(2).”.

Section 9: Application for order

3.  Section 9 is modified so as to read as follows:—

“9.— (1) An application to the court for an administration order shall be by petition in Form 1 in Schedule 9 to the Insolvent Partnerships Order 1994 presented either by the members of the insolvent partnership in their capacity as such, or by a creditor or creditors (including any contingent or prospective creditor or creditors), or by all or any of those parties, together or separately.

(2) Where a petition is presented to the court—

(a) notice of the petition shall be given forthwith to any person who has appointed, or is or may be entitled to appoint, an agricultural receiver of the partnership, and to such other persons as may be prescribed, and

(b) the petition shall not be withdrawn except with the leave of the court.

(3) Where the court is satisfied that there is an agricultural receiver of the partnership, the court shall dismiss the petition unless it is also satisfied either—

(a) that the person by whom or on whose behalf the receiver was appointed has consented to the making of the order, or

(b) that, if an administration order were made, any security by virtue of which the receiver was appointed would—

(i) be liable to be released or discharged under sections 238 to 240 in Part VI (transactions at an undervalue and preferences),

(ii) be avoided under section 245 in that Part (avoidance of floating charges), or

(iii) be challengeable under section 242 (gratuitous alienations) or 243 (unfair preferences) in that Part, or under any rule of law in Scotland.

(4) Subject to subsection (3), on hearing a petition the court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order that it thinks fit.

(5) Without prejudice to the generality of subsection (4), an interim order under that subsection may restrict the exercise of any powers of the officers of the partnership (whether by reference to the consent of the court or of a person qualified to act as an insolvency practitioner in relation to the partnership, or otherwise).”.

Section 10: Effect of application

4.  Section 10 is modified so as to read as follows:—

“10.— (1) During the period beginning with the presentation of a petition for an administration order and ending with the making of such an order or the dismissal of the petition—

(a) no order may be made for the winding up of the insolvent partnership, nor may any order be made by virtue of article 11 of the Insolvent Partnerships Order 1994 or under section 35 of the Partnership Act 1890(3) in respect of the partnership;

(b) no steps may be taken to enforce any security over the partnership property, or to repossess goods in the possession, under any hire-purchase agreement, of one or more of the officers of the partnership in their capacity as such, except with the leave of the court and subject to such terms as the court may impose; and

(c) no other proceedings and no execution or other legal process may be commenced or continued, and no distress may be levied, against the partnership or the partnership property except with the leave of the court and subject to such terms as aforesaid.

(2) Nothing in subsection (1) requires the leave of the court—

(a) for the presentation of a petition for the winding up of the partnership,

(b) for the presentation of a petition by virtue of article 11 of the Insolvent Partnerships Order 1994 in respect of the partnership,

(c) for the appointment of an agricultural receiver of the partnership, or

(d) for the carrying out by such a receiver (whenever appointed) of any of his functions.

(3) Where—

(a) a petition for an administration order is presented at a time when there is an agricultural receiver of the partnership, and

(b) the person by or on whose behalf the receiver was appointed has not consented to the making of the order,

the period mentioned in subsection (1) is deemed not to begin unless and until that person so consents.

(4) References in this section and the next to hire-purchase agreements include conditional sale agreements, chattel leasing agreements and retention of title agreements.

(5) In the application of this section and the next to Scotland, references to execution being commenced or continued include references to diligence being carried out or continued, and references to distress being levied shall be omitted.”.

Section 11: Effect of order

5.  Section 11 is modified so as to read as follows:—

“11.— (1) On the making of an administration order, any petition for the winding up of the insolvent partnership and any petition for an order to be made by virtue of article 11 of the Insolvent Partnerships Order 1994 shall be dismissed.

(2) Where an administration order has been made, any agricultural receiver of the partnership and any receiver of the partnership property shall vacate office on being required to do so by the administrator.

(3) During the period for which an administration order is in force—

(a) no order may be made for the winding up of the partnership;

(b) no order may be made by virtue of article 11 of the Insolvent Partnerships Order 1994 in respect of the partnership;

(c) no order may be made under section 35 of the Partnership Act 1890 in respect of the partnership;

(d) no agricultural receiver of the partnership may be appointed except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose;

(e) no other steps may be taken to enforce any security over the partnership property, or to repossess goods in the possession, under any hire-purchase agreement, of one or more of the officers of the partnership in their capacity as such, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose; and

(f) no other proceedings and no execution or other legal process may be commenced or continued, and no distress may be levied, against the partnership or the partnership property except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as aforesaid.

(4) Where at any time an agricultural receiver or a receiver of part of the partnership property has vacated office under subsection (2)—

(a) his remuneration and any expenses properly incurred by him, and

(b) any indemnity to which he is entitled out of the partnership property,

shall be charged on and (subject to subsection (3) above) paid out of any partnership property which was in his custody or under his control at that time in priority to any security held by the person by or on whose behalf he was appointed.”.

Section 12: Notification of order

6.  Section 12 is modified so as to read as follows:—

“12.— (1) Every invoice, order for goods or business letter which, at a time when an administration order is in force in relation to an insolvent partnership, is issued by or on behalf of the partnership or the administrator, being a document on or in which the name under which the partnership carries on business appears, shall also contain the administrator’s name and a statement that the affairs and business of the partnership and the partnership property are being managed by the administrator.

(2) If default is made in complying with this section, any of the following persons who without reasonable excuse authorises or permits the default, namely, the administrator and any officer of the partnership, is liable to a fine.”.

Section 13: Appointment of administrator

7.  Section 13 is modified so as to read as follows:—

“13.— (1) The administrator of a partnership shall be appointed either by the administration order or by an order under the next subsection.

(2) If a vacancy occurs by death, resignation or otherwise in the office of the administrator, the court may by order fill the vacancy.

(3) An application for an order under subsection (2) may be made—

(a) by any continuing administrator of the partnership; or

(b) where there is no such administrator, by a creditors' committee established under section 26 below; or

(c) where there is no such administrator and no such committee, by the members of the partnership or by any creditor or creditors of the partnership.”.

Section 14: General powers

8.  Section 14 is modified so as to read as follows:—

“14.— (1) The administrator of an insolvent partnership—

(a) may do all such things as may be necessary for the management of the affairs and business of the partnership and of the partnership property, and

(b) without prejudice to the generality of paragraph (a), has the powers specified in Schedule 1 to this Act;

and in the application of that Schedule to the administrator of a partnership the words “he” and “him” refer to the administrator.

(2) The administrator also has power—

(a) to prevent any person from taking part in the management of the partnership business and to appoint any person to be a manager of that business, and

(b) to call any meeting of the members or creditors of the partnership.

(3) The administrator may apply to the court for directions in relation to any particular matter arising in connection with the carrying out of his functions.

(4) Any power exercisable by the officers of the partnership, whether under the Partnership Act 1890, the partnership agreement or otherwise, which could be exercised in such a way as to interfere with the exercise by the administrator of his powers is not exercisable except with the consent of the administrator, which may be given either generally or in relation to particular cases.

(5) Subject to subsection (6) below, in exercising his powers the administrator is deemed to act as the agent of the members of the partnership in their capacity as such.

(6) An officer of the partnership shall not, unless he otherwise consents, be personally liable for the debts and obligations of the partnership incurred during the period when the administration order is in force.

(7) A person dealing with the administrator in good faith and for value is not concerned to inquire whether the administrator is acting within his powers.”.

Section 15: Power to deal with charged property, etc.

9.  Section 15 is modified so as to read as follows:—

“15.— (1) The administrator of a partnership may dispose of or otherwise exercise his powers in relation to any partnership property which is subject to a security to which this subsection applies as if the property were not subject to the security.

(2) Where, on an application by the administrator, the court is satisfied that the disposal (with or without other assets) of—

(a) any partnership property subject to a security to which this subsection applies, or

(b) any goods in the possession of one or more officers of the partnership in their capacity as such under a hire-purchase agreement,

would be likely to promote the purpose or one or more of the purposes specified in the administration order, the court may by order authorise the administrator to dispose of the property as if it were not subject to the security or to dispose of the goods as if all rights of the owner under the hire-purchase agreement were vested in the members of the partnership.

(3) Subsection (1) applies to any security which, as created, was a floating charge unless an agricultural receiver has been appointed under that security; and subsection (2) applies to any other security.

(4) Where property is disposed of under subsection (1), the holder of the security has the same priority in respect of any partnership property directly or indirectly representing the property disposed of as he would have had in respect of the property subject to the security.

(5) It shall be a condition of an order under subsection (2) that—

(a) the net proceeds of the disposal, and

(b) where those proceeds are less than such amount as may be determined by the court to be the net amount which would be realised on a sale of the property or goods in the open market by a willing vendor, such sums as may be required to make good the deficiency,

shall be applied towards discharging the sums secured by the security or payable under the hire-purchase agreement.

(6) Where a condition imposed in pursuance of subsection (5) relates to two or more securities, that condition requires the net proceeds of the disposal and, where paragraph (b) of that subsection applies, the sums mentioned in that paragraph to be applied towards discharging the sums secured by those securities in the order of their priorities.

(7) References in this section to hire-purchase agreements include conditional sale agreements, chattel leasing agreements and retention of title agreements.”.

10.  Schedule 1 is modified so as to read as follows:—

Section 14

“SCHEDULE 1 POWERS OF ADMINISTRATOR

1.   Power to take possession of, collect and get in the partnership property and, for that purpose, to take such proceedings as may seem to him expedient.

2.   Power to sell or otherwise dispose of the partnership property by public auction or private auction or private contract or, in Scotland, to sell, feu, hire out or otherwise dispose of the partnership property by public roup or private bargain.

3.   Power to raise or borrow money and grant security therefor over the partnership property.

4.   Power to appoint a solicitor or accountant or other professionally qualified person to assist him in the performance of his functions.

5.   Power to bring or defend any action or other legal proceedings in the name and on behalf of any member of the partnership in his capacity as such or of the partnership.

6.   Power to refer to arbitration any question affecting the partnership.

7.   Power to effect and maintain insurances in respect of the partnership business and property.

8.   Power to do all acts and execute, in the name and on behalf of the partnership or of any member of the partnership in his capacity as such, any deed, receipt or other document.

9.   Power to draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of any member of the partnership in his capacity as such or of the partnership.

10.   Power to appoint any agent to do any business which he is unable to do himself or which can more conveniently be done by an agent and power to employ and dismiss employees.

11.   Power to do all such things (including the carrying out of works) as may be necessary for the realisation of the partnership property.

12.   Power to make any payment which is necessary or incidental to the performance of his functions.

13.   Power to carry on the business of the partnership.

14.   Power to establish subsidiary undertakings of the partnership.

15.   Power to transfer to subsidiary undertakings of the partnership the whole or any part of the business of the partnership or of the partnership property.

16.   Power to grant or accept a surrender of a lease or tenancy of any of the partnership property, and to take a lease or tenancy of any property required or convenient for the business of the partnership.

17.   Power to make any arrangement or compromise on behalf of the partnership or of its members in their capacity as such.

18.   Power to rank and claim in the bankruptcy, insolvency, sequestration or liquidation of any person indebted to the partnership and to receive dividends, and to accede to trust deeds for the creditors of any such person.

19.   Power to present or defend a petition for the winding up of the partnership under the Insolvent Partnerships Order 1994.

20.   Power to do all other things incidental to the exercise of the foregoing powers.”.

(1)

1982 c. 50.

(2)

1987 c. 22.

(3)

1890 c. 39.