PART IINTRODUCTORY

Title and commencement1.

(1)

This Order may be cited as the Insolvency (Northern Ireland) Order 1989.

(2)

This Order shall come into operation on such day or days as the Head of the Department may by order appointF1.

(3)

An order under paragraph (2) may contain such transitional and supplementary provisions as appear to the Head of the Department to be necessary or expedient.

Annotations:
Amendments (Textual)

F1partly exercised, SRs 1990/177; 1991/294, 300, 411; 2002/126

General interpretation2.

(1)

The Interpretation Act (Northern Ireland) 1954F2 shall apply to Article 1 and the following provisions of this Order as it applies to a Measure of the Northern Ireland Assembly.

(2) F3

In this Order—

  • F4“the Bankruptcy Acts” means the Bankruptcy Acts (Northern Ireland) 1857 to 1980;

  • F5“body corporate” includes a body incorporated outside Northern Ireland, but does not include—

    1. (a)

      a corporation sole, or

    2. (b)

      a partnership that, whether or not a legal person, is not regarded as a body corporate under the law by which it is governed;

  • “business” includes a trade or profession;

  • F6“the Companies Acts” means the Companies Acts (as defined in section 2 of the Companies Act 2006) as they have effect in Northern Ireland;

  • F7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • “conditional sale agreement” and“hire‐purchase agreement” have the same meanings as in the Consumer Credit Act 1974F8;

  • F4“corporate member” means an insolvent member which is a company;

  • “the Department” means the Department of Economic Development;

  • F9“the EU Regulation” means Regulation (EU) 2015/848 of the European Parliament and of the Council F10as it forms part of domestic law on and after exit day;

  • F11“EEA State” means a state that is a Contracting Party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993;

  • F12“employees' share scheme” means a scheme for encouraging or facilitating the holding of shares in or debentures of a company by or for the benefit of—

    1. (a)

      the bona fide employees or former employees of—

      1. (i)

        the company,

      2. (ii)

        any subsidiary of the company, or

      3. (iii)

        the company's holding company or any subsidiary of the company's holding company, or

    2. (b)

      the spouses, civil partners, surviving spouses, surviving civil partners, or minor children or step-children of such employees or former employees;

  • F13...

  • F4“individual member” means an insolvent member who is an individual;

  • “insolvent member” means a member of an insolvent partnership, against whom an insolvency petition is being or has been presented;

  • “insolvency order” means—

    1. (a)

      in the case of an insolvent partnership or a corporate member, a winding-up order; and

    2. (b)

      in the case of an individual member, a bankruptcy order;

  • “insolvency petition” means—

    1. (a)

      in the case of a petition presented against a corporate member, a petition for its winding up by the High Court; and

    2. (b)

      in the case of a petition presented against an individual member, a petition to the Court for a bankruptcy order to be made against the individual,

    where the petition is presented in conjunction with a petition for the winding up of the partnership by the Court as an unregistered company under the Order;

  • “liability” means (subject to paragraph (4)) a liability to pay money or money's worth, including any liability under a statutory provision, any liability for breach of trust, any liability in contract, tort or bailment and any liability arising out of an obligation to make restitution;

  • F13...

  • “modifications” includes additions, alterations and omissions;

  • F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • “the official receiver” means, in relation to any bankruptcyF15, winding up F16, individual voluntary arrangement, debt relief order or application for such an order, any officer of the Department who by virtue of Article 355 or 357 is authorised to act as the official receiver in relation to that bankruptcyF15, winding up F16, individual voluntary arrangement, debt relief order or application for such an order;

  • “prescribed”

    1. (a)

      in Articles 48(3), 95(1)F17... and in Part XII, means prescribed by regulations; and

    2. (b)

      except as provided in sub‐paragraph (a)F18 in Article 150A(9) and in paragraph 3 of Schedule 4, means prescribed by rules;

  • “property” includes money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property;

  • “records” includes computer records and other non‐documentary records;

  • “regulations” means regulations made by the Department subject (except in F19Part 1A, Article 148A(6), F20Article 197C and Article 359(5) F21... F22and paragraph 61A of Schedule B1) to negative resolution;

  • F4“responsible insolvency practitioner” means—

    1. (a)

      in winding up, the liquidator; and

    2. (b)

      in bankruptcy, the trustee,

    and in either case includes the official receiver when so acting.

  • “rules”, except in Article 350, means rules made under Article 359;

  • “statutory provision” has the meaning assigned to it by section 1(f) of the Interpretation Act (Northern Ireland) 1954F23;

  • “transaction” includes a gift, agreement or arrangement, and references to entering into a transaction shall be construed accordingly.

F24(2A)

The following expressions have the same meaning in this Order as in the Companies Acts—

“articles”, in relation to a company (see section 18 of the Companies Act 2006);

“debenture” (see section 738 of that Act);

“holding company” (see sections 1159 and 1160 of, and Schedule 6 to, that Act);

“the Joint Stock Companies Acts” (see section 1171 of that Act);

“overseas company” (see section 1044 of that Act);

“paid up” (see section 583 of that Act);

“private company” and “public company” (see section 4 of that Act);

“share” (see section 540 of that Act);

“subsidiary” (see sections 1159 and 1160 of, and Schedule 6 to, that Act).

F25(3)

In determining for the purposes of any provision of this Order whether any liability in tort is a bankruptcy debt, the bankrupt is deemed to become subject to that liability by reason of an obligation incurred at the time when the cause of action accrued.

(3A)

In determining for the purposes of any provision in this Order whether any liability in tort is a debt provable in the winding up of a company or where a company is in administration, that liability is provable if either—

(a)

the cause of action has accrued—

(i)

in the case of a winding up which was not immediately preceded by an administration, at the date on which the company went into liquidation;

(ii)

in the case of a winding up which was immediately preceded by an administration, at the date on which the company entered administration;

(iii)

in the case of an administration which was not immediately preceded by a winding up, at the date on which the company entered administration;

(iv)

in the case of an administration which was immediately preceded by a winding up, at the date on which the company went into liquidation; or

(b)

all the elements necessary to establish the cause of action exist at that date except for actionable damage.

(4)

For the purposes of references in any provision of this Order to a debt or liability, it is immaterial whether the debt or liability is present or future, whether it is certain or contingent or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed criteria or as a matter of opinion; and references in any such provision to owing a debt are to be read accordingly.

(5)

In this Order (except Article 355(1)) references to the official receiver include an officer of the Department appointed under Article 357(1) as deputy official receiver.

(6)

For the purposes of any provision in this Order whereby an officer of a company who is in default shall be guilty of an offence,“officer who is in default” means an officer of the company who knowingly and wilfully authorises or permits the default, refusal or contravention mentioned in the provision.

Proceedings under EU Regulation: modified definition of propertyF262A.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“Act as insolvency practitioner”3.

(1)

A person acts as an insolvency practitioner in relation to a company by acting—

(a)

as its liquidator, provisional liquidator, administrator F27, administrative receiver or monitor, or

F28(b)

where a voluntary arrangement in relation to the company is proposed or approved under Part II, as nominee or supervisor.

(2) F29

A person acts as an insolvency practitioner in relation to an individual by acting—

(a)

as his trustee in bankruptcy or interim receiver of his property; or

F30(b)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F28(c)

where a voluntary arrangement in relation to the individual is proposed or approved under Part VIII, as nominee or supervisor;

(d)

in the case of a deceased individual to the administration of whose estate this Article applies by virtue of an order under Article 365 (application of provisions of this Order to insolvent estates of deceased persons), as administrator of that estate.

F31(3) F29

A person acts as an insolvency practitioner in relation to an insolvent partnership by acting—

(a)

as its liquidator, provisional liquidator or administrator, or

(b)

as trustee of the partnership under Article 11 of the Insolvent Partnerships Order (Northern Ireland) 1995, or

F32(c)

where a voluntary arrangement in relation to the insolvent partnership is proposed or approved under Part II, as nominee or supervisor.

F28(3A)

In relation to a voluntary arrangement proposed under Part II or VIII, a person acts as nominee if he performs any of the functions conferred on nominees under the Part in question.

(4) F29

In this Article—

“administrative receiver” has the meaning given by Article 5(1);

F33“company” means—

(a)

a company registered under the Companies Act 2006 in Northern Ireland, or

(b)

a company that may be wound up under Part 6 of this Order (unregistered companies).

F34“monitor” has the same meaning as in Part 1A (moratorium).

(5)

Nothing in this Article applies to anything done by the official receiver.

F35(6)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“Associate”4.

(1)

For the purposes of this Order any question whether a person is an associate of another person is to be determined in accordance with the following provisions of this Article (any provision that a person is an associate of another person being taken to mean that they are associates of each other).

F36(2)

A person is an associate of an individual if that person is—

(a)

the individual's husband or wife or civil partner,

(b)

a relative of—

(i)

the individual, or

(ii)

the individual's husband or wife or civil partner, or

(c)

the husband or wife or civil partner of a relative of—

(i)

the individual, or

(ii)

the individual's husband or wife or civil partner.

(3)

A person is an associate of any person with whom he is in partnership, and of the husband or wifeF36 or civil partner or a relative of any individual with whom he is in partnership; and a Scottish firm is an associate of any person who is a member of the firm.

F37(4)

A person is an associate of any person whom he employs or by whom he is employed.

(5)

A person in his capacity as trustee of a trust other than—

(a)

a trust arising under Parts VIII to X F38... of this Order, Parts VIII to IX of the Insolvency Act 1986F39 or the Bankruptcy (Scotland) Act F402016, or

(b)

a pension scheme or an employees' share scheme F41. . . ,

is an associate of another person if the beneficiaries of the trust include, or the terms of the trust confer a power that may beexercised for the benefit of, that other person or an associate of that other person.

(6)

A company is an associate of another company—

(a)

if the same person has control of both, or a person has control of one and persons who are his associates, or he and persons who are his associates, have control of the other, or

(b)

if a group of 2 or more persons has control of eachcompany, and the groups either consist of the same personsor could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person of whom he is an associate.

(7)

A company is an associate of another person if that person has control of it or if that person and persons who are his associates together have control of it.

(8)

For the purposes of this Article a person is a relative of an individual if he is that individual's brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant, treating—

(a)

any relationship of the half blood as a relationship of the whole blood and the stepchild or adopted child of any person as his child, and

(b)

an illegitimate child as the legitimate child of his mother and reputed father;

and references in this Article to a husband and wife include a former husband or wife and reputed husband or wifeF36 and references to a civil partner include a former civil partnerF42 and a reputed civil partner.

(9)

For the purposes of this Article any director of other officer of a company is to be treated as employed by that company.

(10)

For the purposes of this Article a person is to be taken as having control of a company if—

(a)

the directors of the company or of another company which has control of it (or any of them) are accustomed to act in accordance with his directions or instructions, or

(b)

he is entitled to exercise, or control the exercise of, one‐third or more of the voting power at any general meeting of the company or of another company which has control of it;

and where 2 or more persons together satisfy either of the conditions mentioned in sub‐paragraph (a) or (b), they are to be taken as having control of the company.

(11) F37

In this Article“company” includes any body corporate (whether incorporated in Northern Ireland or elsewhere); and references to directors and other officers of a company and to voting power at any general meeting of a company have effect with any necessary modifications.

Interpretation for F43Parts 1A to 7

Interpretation5.

(1) F44

In F45Parts 1A to 7—

  • F46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • F46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • “administrative receiver” means—

    1. (a)

      a receiver or manager of the whole (or substantially the whole) of a company's property appointed by or on behalf of the holders of any debentures of the company secured by a charge which, as created, was a floating charge, or by such a charge and one or more other securities; or

    2. (b)

      a person who would be such a receiver or manager but for the appointment of some other person as the receiver of part of the company's property;

  • F47“agent” does not include a person's counsel acting as such;

  • F48“books and papers” and “books or papers” includes accounts, deeds, writing and documents;

  • “business day” means any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday in Northern Ireland under the Banking and Financial Dealings Act 1971F49;

  • “chattel leasing agreement” means an agreement for the bailment of goods which is capable of subsisting for more than 3 months;

  • “debt”, in relation to the winding up of a company F50or where a company is in administration, means (subject to F51Article 2(3A) ) any of the following—

    1. (a)

      any debt or liability to which the company is subject at the F52relevant date;

    2. (b)

      any debt or liability to which the company may become subject after F53the relevant date by reason of any obligation incurred before that date; and

    3. (c)

      any interest on a debt proved in the liquidation F54or in the administration which bears interest, except in so far as it is payable in respect of any period after the F55relevant date;

  • “director” includes any person occupying the position of director, by whatever name called;

  • F56“document” includes summons, notice, order and other legal process, and registers;

  • “floating charge” means a charge which, as created, was a floating charge;

  • F57...

  • F58“officer”, in relation to a body corporate, includes a director, manager or secretary;

  • “the official rate”, in relation to interest, means the rate payable under Article 160(4);

  • F59“the registrar” means the registrar of companies for Northern Ireland;

  • “a resolution for voluntary winding up” means a resolution passed under F60either of the sub-paragraphs of Article 70(1);

  • “retention of title agreement” means an agreement for the sale of goods to a company being an agreement—

    1. (a)

      which does not constitute a charge on the goods, but

    2. (b)

      under which, if the seller is not paid and the company is wound up, the seller will have priority over all other creditors of the company as respects the goods or any property representing the goods;

  • “secured creditor”, in relation to a company, means a creditor of the company who holds in respect of his debt a security over property of the company, and“unsecured creditor” is to be read accordingly;

  • “security” means any mortgage, charge, lien or other security;

  • “shadow director”, in relation to a company, means a person in accordance with whose directions or instructions the directors of the company are accustomed to act F61, but so that a person is not deemed a shadow director by reason only that the directors act—

    1. (a)

      on advice given by that person in a professional capacity;

    2. (b)

      in accordance with instructions, a direction, guidance or advice given by that person in the exercise of a function conferred by or under a statutory provision;

    3. (c)

      in accordance with guidance or advice given by that person in that person's capacity as a Minister of the Crown (within the meaning of the Ministers of the Crown Act 1975);

  • “supervisor” means a person acting as defined in Article 20(2);

  • “voluntary arrangement” means an arrangement as defined in Article 14(1).

F62(1A)

For the purposes of the definition of “debt” in paragraph (1), “the relevant date” means—

(a)

in the case of a winding up which was not immediately preceded by an administration, the date on which the company went into liquidation;

(b)

in the case of a winding up which was immediately preceded by an administration, the date on which the company entered administration;

(c)

in the case of an administration which was not immediately preceded by a winding up, the date on which the company entered administration;

(d)

in the case of an administration which was immediately preceded by a winding up, the date on which the company went into liquidation.

(2)

F63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“Insolvency” and“go into liquidation”6.

(1)

In F64Parts 1A to 7, “insolvency”, in relation to a company, includes F65the coming into force of a moratorium for the company under Part 1A, the approval of a voluntary arrangement under Part II,F66or the appointment of an administrator or administrative receiver.

(2) F67

For the purposes of any provision in F64Parts 1A to 7, a company goes into liquidation if it passes a resolution for voluntary winding up or an order for its winding up is made by the High Court at a time when it has not already gone into liquidation by passing such a resolution.

F68(3)

The reference to a resolution for voluntary winding up in paragraph (2) includes a reference to a resolution which is deemed to occur by virtue of—

(a)

paragraph 84(5)(b) of Schedule B1, F69...

F69(b)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“Connected with a company”F707.

For the purposes of any provision in F71Parts 1A to 7, a person is connected with a company if—

(a)

he is a director or shadow director of the company or an associate of such a director or shadow director, or

(b)

he is an associate of the company.

“Member of a company”8. F72

For the purposes of any provision in F73Parts 1A to 7, a person who is not a member of a company but to whom shares in the company have been transferred, or transmitted by operation of law, is to be regarded as a member of the company, and references to a member or members are to be read accordingly.

F74Parts 7A to 10

Interpretation9. F75

(1)

In F76Parts 7A to 10—

  • “bankrupt” means an individual who has been adjudged bankrupt and, in relation to a bankruptcy order, it means the individual adjudged bankrupt by that order;

  • “bankruptcy debt”, in relation to a bankrupt, means (subject to Article 2(3)) any of the following—

    1. (a)

      any debt or liability to which he is subject at the commencement of the bankruptcy,

    2. (b)

      any debt or liability to which he may become subject after the commencement of the bankruptcy (including after his discharge from bankruptcy) by reason of any obligation incurred before the commencement of the bankruptcy, and

    3. (c)

      any interest provable as mentioned in Article 295(2);

    and“debt” shall be construed accordingly;

  • “bankruptcy order” means an order adjudging an individual bankrupt;

  • “bankruptcy petition” means a petition to the High Court for a bankruptcy order;

  • “creditor”

    1. (a)

      in relation to a bankrupt, means a person to whom any of the bankruptcy debts is owed, and

    2. (b)

      in relation to an individual to whom a bankruptcy petition relates, means a person who would be a creditor in the bankruptcy if a bankruptcy order were made on that petition;

  • F77...

  • “creditor's petition” means a bankruptcy petition under Article 238(1)(a);

  • “the debtor”

    1. (za)

      F78in relation to a debt relief order or an application for such an order, has the same meaning as in Part 7A,

    2. (a)

      in relation to a proposal for the purposes of Part VIII, means the individual making or intending to make that proposal, and

    3. (b)

      in relation to a bankruptcy petition, means the individual to whom the petition relates;

  • “debtor's petition” means a bankruptcy petition presented by the debtor himself under Article 238(1)(b);

  • F79“debt relief order” means an order made by the official receiver under Part 7A;

  • F77...

  • “dwelling house” includes any building or part of a building which is occupied as a dwelling and any yard, garden, garage or outhouse belonging to the dwelling house and occupied with it;

  • “family” in relation to a bankrupt, means the persons (if any) who are living with him and are dependent on him;

  • F80“insolvency administration” means the administration in bankruptcy of the insolvent estate of a deceased person;

  • “insolvency administration order” means an order for the administration in bankruptcy of the insolvent estate of a deceased debtor (being an individual at the date of his death);

  • “insolvency administration petition” means a petition for an insolvency administration order;

  • “interim order” means an order under Article 226;

  • F80“the Judgments Enforcement Order” means the Judgments Enforcement (Northern Ireland) Order 1981;

  • “the Land Registration Act” means the Land Registration Act (Northern Ireland) 1970;

  • F77...

  • F77...

  • F80“the Registration of Deeds Act” means the Registration of Deeds Act (Northern Ireland) 1970; and

    “the Rules” means the Insolvency Rules (Northern Ireland) 1999;

  • “the trustee” in relation to a bankruptcy and the bankrupt, means the trustee of the bankrupt's estate;

  • “voluntary arrangement” means an arrangement as defined in Article 227(1).

(2)

References in F81Parts 7A to 10 to a person's affairs include his business, if any.

F82(3)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F83(5)

Liability under the Child Support (Northern Ireland) Order 1991 to pay child support maintenance to any person is not a debt or liability for the purposes of Part 8.

“Security”, etc.10. F84

(1)

Subject to paragraphs (2) and (3) and any provision of the rules requiring a creditor to give up his security for the purposes of proving a debt, a debt is secured for the purposes of F85Parts 7A to 10 to the extent that the person to whom the debt is owed holds any security for the debt (whether a mortgage, charge, lien or other security) over any property of the person by whom the debt is owed.

(2)

Where a statement such as is mentioned in Article 243(1)(a) has been made by a secured creditor for the purposes of any bankruptcy petition and a bankruptcy order is subsequently made on that petition, the creditor is deemed for the purposes of Parts VIII to X to have given up the security specified in the statement.

(3)

In paragraph (1) the reference to a security does not include a lien on books, papers or other records, except to the extent that they consist of documents which give a title to property and are held as such.

“Bankrupt's estate”11. F86

(1)

Subject to the following provisions of this Article, a bankrupt's estate for the purposes of any of Parts VIII to X comprises—

(a)

all property belonging to or vested in the bankrupt at the commencement of the bankruptcy, and

(b)

any property which by virtue of any of the provisions of Part IX of this Order or Article 88(3) or 90(3) of the Judgments Enforcement (Northern Ireland) Order 1981F87 (effect of bankruptcy or winding up on enforcement of judgments and proceeds of such enforcement) is comprised in that estate or is treated as falling within sub‐paragraph (a).

(2)

Subject to Article 281 (certain excluded property reclaimable by trustee), paragraph (1) does not apply to—

(a)

such tools, books, vehicles and other items of equipment as are necessary to the bankrupt for use personally by him in his employment, business or vocation;

(b)

such clothing, bedding, furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family.

(3)

Paragraph (1) does not apply to property held by the bankrupt on trust for any other person.

(4)

References in any of Parts VIII to X to property, in relation to a bankrupt, include references to any power exercisable by him over or in respect of property except in so far as the power is exercisable over or in respect of property not for the time being comprised in the bankrupt's estate and—

(a)

is so exercisable at a time after either the official receiver has had his release in respect of that estate under Article 272(2) or a meeting summoned by the trustee of that estate under Article 304 has been held, or

(b)

cannot be so exercised for the benefit of the bankrupt;

and a power exercisable over or in respect of property is deemed for the purposes of any of Parts VIII to X to vest in the person entitled to exercise it at the time of the transaction or event by virtue of which it is exercisable by that person (whether or not it becomes so exercisable at that time).

(5)

For the purposes of any such provision in Parts VIII to X, property comprised in a bankrupt's estate is so comprised subject to the rights of any person other than the bankrupt (whether as a secured creditor of the bankrupt or otherwise) in relation thereto, but disregarding—

(a)

any rights in relation to which a statement such as is required by Article 243(1)(a) was made in the petition on which the bankrupt was adjudged bankrupt, and

(b)

any rights which have been otherwise given up in accordance with the rules.

F88(5A)

This Article has effect subject to Article 256A.

(6)

This Article has effect subject to the provisions of any statutory provision not contained in this Order under which any property is to be excluded from a bankrupt's estate.

Interpretation for this Order F89. . .

“Receiver or manager”12.

In this Order F90. . . —

(a)

any reference to a receiver or manager of the property of a company, or to a receiver of it, includes a receiver or manager, or (as the case may be) a receiver of part only of that property and a receiver only of the income arising from the property or from part of it; and

(b)

any reference to the appointment of a receiver or manager under powers contained in an instrument includes an appointment made under powers which, by virtue of any statutory provision are implied in and have effect as if contained in an instrument.

“Contributory”13.

(1) F91

In this Order F92. . . “contributory” means every person liable to contribute to the assets of a company in the event of its being wound up, and for the purposes of all proceedings for determining, and all proceedings prior to the final determination of, the persons who are to be deemed contributories, includes any person alleged to be a contributory.

(2) F91

The reference in paragraph (1) to persons liable to contribute to the assets does not include a person so liable by virtue of a declaration by the High Court under Article 177 (imputed responsibility for company's fraudulent trading) or Article 178 (wrongful trading).

(3) F91

A reference in a company's articles to a contributory does not (unless the context requires) include a person who is a contributory only by virtue of Article 63 (liability of past directors and shareholders).

(4)

F93. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F94Parts 1A to 7COMPANY INSOLVENCY; COMPANIES WINDING UP

F95PART 1AMoratorium

CHAPTER 1Introductory

Overview13A.

(1)

This Part contains provision that enables an eligible company, in certain circumstances, to obtain a moratorium, giving it various protections from creditors set out in this Part.

(2)

In this Chapter Article 13AA introduces Schedule ZA1 (which defines what is meant by an “eligible” company).

(3)

Chapter 2 sets out how an eligible company may obtain a moratorium.

(4)

Chapter 3 sets out for how long a moratorium has effect.

(5)

Chapter 4 sets out the effects of a moratorium on the company and its creditors.

(6)

Chapter 5 contains provision about the monitor.

(7)

Chapter 6 contains provision about challenges.

(8)

Chapter 7 contains provision about certain offences.

(9)

Chapter 8 contains miscellaneous and general provision, including—

(a)

special provision for certain kinds of company;

(b)

definitions for the purposes of this Part;

(c)

provision about regulations under this Part.

Eligible companies13AA.

Schedule ZA1 contains provision for determining whether a company is an eligible company for the purposes of this Part.

CHAPTER 2Obtaining a moratorium

Obtaining a moratorium by filing documents at High Court13B.

(1)

This Article applies to an eligible company that—

(a)

is not subject to an outstanding winding-up petition, and

(b)

is not an overseas company.

(2)

The directors of the company may obtain a moratorium for the company by filing the relevant documents with the High Court (for the relevant documents, see Article 13BC).

(3)

For the purposes of this Chapter a company is “subject to an outstanding winding-up petition” if—

(a)

a petition for the winding up of the company has been presented, and

(b)

the petition has not been withdrawn or determined.

Obtaining a moratorium for company subject to winding-up petition13BA.

(1)

This Article applies to an eligible company that is subject to an outstanding winding-up petition.

(2)

The directors of the company may apply to the High Court for a moratorium for the company.

(3)

The application must be accompanied by the relevant documents (for the relevant documents, see Article 13BC).

(4)

On hearing the application the Court may—

(a)

make an order that the company should be subject to a moratorium, or

(b)

make any other order which the Court thinks appropriate.

(5)

The Court may make an order under paragraph (4)(a) only if it is satisfied that a moratorium for the company would achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being subject to a moratorium).

Obtaining a moratorium for other overseas companies13BB.

(1)

This Article applies to an eligible company that—

(a)

is not subject to an outstanding winding-up petition, and

(b)

is an overseas company.

(2)

The directors of the company may apply to the High Court for a moratorium for the company.

(3)

The application must be accompanied by the relevant documents (for the relevant documents, see Article 13BC).

(4)

On hearing the application the Court may—

(a)

make an order that the company should be subject to a moratorium, or

(b)

make any other order which the Court thinks appropriate.

The relevant documents13BC.

(1)

For the purposes of this Chapter, “the relevant documents” are—

(a)

a notice that the directors wish to obtain a moratorium,

(b)

a statement from a qualified person (“the proposed monitor”) that the person—

(i)

is a qualified person, and

(ii)

consents to act as the monitor in relation to the proposed moratorium,

(c)

a statement from the proposed monitor that the company is an eligible company,

(d)

a statement from the directors that, in their view, the company is, or is likely to become, unable to pay its debts, and

(e)

a statement from the proposed monitor that, in the proposed monitor’s view, it is likely that a moratorium for the company would result in the rescue of the company as a going concern.

(2)

Where it is proposed that more than one person should act as the monitor in relation to the proposed moratorium—

(a)

each of them must make a statement under paragraph (1)(b), (c) and (e), and

(b)

the statement under paragraph (1)(b) must specify—

(i)

which functions (if any) are to be exercised by the persons acting jointly, and

(ii)

which functions (if any) are to be exercised by any or all of the persons.

(3)

The rules may make provision about the date on which a statement comprised in the relevant documents must be made.

(4)

Regulations may amend this Article for the purposes of adding to the list of documents in paragraph (1).

(5)

Regulations may not be made under paragraph (4) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

Beginning of moratorium and appointment of monitor13BD.

(1)

A moratorium for a company comes into force at the time at which—

(a)

in the case of a company to which Article 13B applies, the relevant documents are filed with the High Court under paragraph (2) of that Article;

(b)

in the case of a company to which Article 13BA applies, an order is made under Article 13BA(4)(a);

(c)

in the case of a company to which Article 13BB applies, an order is made under Article 13BB(4)(a).

(2)

On the coming into force of a moratorium, the person or persons who made the statement mentioned in Article 13BC(1)(b) become the monitor in relation to the moratorium.

Obligations to notify where moratorium comes into force13BE.

(1)

As soon as reasonably practicable after a moratorium for a company comes into force, the directors must notify the monitor of that fact.

(2)

As soon as reasonably practicable after receiving a notice under paragraph (1), the monitor must notify the following that a moratorium for the company has come into force—

(a)

the registrar,

(b)

every creditor of the company of whose claim the monitor is aware,

(c)

in a case where the company is or has been an employer in respect of an occupational pension scheme that is not a money purchase scheme, the Pensions Regulator, and

(d)

in a case where the company is an employer in respect of such a pension scheme that is an eligible scheme within the meaning given by Article 110 of the Pensions (Northern Ireland) Order 2005, the Board of the Pension Protection Fund.

(3)

A notice under paragraph (2) must specify—

(a)

when the moratorium came into force, and

(b)

when, subject to any alteration under or by virtue of any of the provisions mentioned in Article 13C(3) or (4), the moratorium will come to an end.

(4)

If the directors fail to comply with paragraph (1), any director who did not have a reasonable excuse for the failure commits an offence.

(5)

If the monitor without reasonable excuse fails to comply with paragraph (2), the monitor commits an offence.

CHAPTER 3Length of moratorium

Initial period

End of the moratorium13C.

(1)

A moratorium ends at the end of the initial period unless it is extended, or comes to an end sooner, under or by virtue of a provision mentioned in paragraph (3) or (4).

(2)

In this Chapter “the initial period”, in relation to a moratorium, means the period of 20 business days beginning with the business day after the day on which the moratorium comes into force.

(3)

For provision under or by virtue of which a moratorium is or may be extended, see—

  • Article 13CA (extension by directors without creditor consent);

  • Article 13CB (extension by directors with creditor consent);

  • Article 13CD (extension by High Court on application of directors);

  • Article 13CE (extension while proposal for CVA pending);

  • Article 13CF (extension by High Court in course of other proceedings).

(4)

For provision under or by virtue of which the moratorium is or may be terminated, see—

  • Article 13CG (termination on entry into insolvency procedure etc);

  • Article 13ED (termination by monitor);

  • Article 13F or 13FB (termination by High Court).

(5)

A moratorium may not be extended under a provision mentioned in paragraph (3) once it has come to an end.

(6)

Where the application of two or more of the provisions mentioned in paragraphs (3) and (4) would produce a different length of moratorium, the provision that applies last is to prevail (irrespective of whether that results in a shorter or longer moratorium).

Extension of moratorium

Extension by directors without creditor consent13CA.

(1)

During the initial period, but after the first 15 business days of that period, the directors may extend the moratorium by filing with the High Court—

(a)

a notice that the directors wish to extend the moratorium,

(b)

a statement from the directors that all of the following that have fallen due have been paid or otherwise discharged—

(i)

moratorium debts, and

(ii)

pre-moratorium debts for which the company does not have a payment holiday during the moratorium (see Article 13D),

(c)

a statement from the directors that, in their view, the company is, or is likely to become, unable to pay its pre-moratorium debts, and

(d)

a statement from the monitor that, in the monitor’s view, it is likely that the moratorium will result in the rescue of the company as a going concern.

(2)

The rules may make provision about the date on which a statement mentioned in paragraph (1) must be made.

(3)

On the filing with the Court of the documents mentioned in paragraph (1), the moratorium is extended so that it ends at the end of the period—

(a)

beginning immediately after the initial period ends, and

(b)

ending with the 20th business day after the initial period ends.

Extension by directors with creditor consent13CB.

(1)

At any time after the first 15 business days of the initial period the directors may, if they have obtained creditor consent, extend the moratorium by filing with the High Court—

(a)

a notice that the directors wish to extend the moratorium,

(b)

a statement from the directors that all of the following that have fallen due have been paid or otherwise discharged—

(i)

moratorium debts, and

(ii)

pre-moratorium debts for which the company does not have a payment holiday during the moratorium (see Article 13D),

(c)

a statement from the directors that, in their view, the company is, or is likely to become, unable to pay its pre-moratorium debts,

(d)

a statement from the monitor that, in the monitor’s view, it is likely that the moratorium will result in the rescue of the company as a going concern, and

(e)

a statement from the directors that creditor consent has been obtained, and of the revised end date for which that consent was obtained.

(2)

The rules may make provision about the date on which a statement mentioned in paragraph (1) must be made.

(3)

On the filing with the Court of the documents mentioned in paragraph (1), the moratorium is extended so that it ends with the revised end date mentioned in the statement under paragraph (1)(e).

(4)

A moratorium may be extended under this Article more than once.

Creditor consent for the purposes of Article 13CB13CC.

(1)

References in Article 13CB to creditor consent are to the consent of pre-moratorium creditors to a revised end date for the moratorium.

(2)

The decision as to consent is to be made at a meeting of pre-moratorium creditors.

(3)

A meeting under paragraph (2)—

(a)

is to be held at such time, date and place as the directors think fit, and

(b)

is to be conducted in accordance with the rules.

(4)

The revised end date must be a date before the end of the period of one year beginning with the first day of the initial period.

(5)

In this Article “pre-moratorium creditor” means a creditor in respect of a pre-moratorium debt—

(a)

for which the company has a payment holiday during the moratorium (see Article 13D), and

(b)

which has not been paid or otherwise discharged.

(6)

In determining for the purposes of paragraph (5) what counts as a pre-moratorium debt for which the company has a payment holiday during the moratorium, Articles 13D(3) and 13HD(1)(b) apply as if the references to the moratorium were to the moratorium as proposed to be extended.

(7)

Regulations may amend this Article for the purposes of changing the definition of “pre-moratorium creditor”.

(8)

Regulations may not be made under paragraph (7) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

Extension by High Court on application of directors13CD.

(1)

At any time after the first 15 business days of the initial period, the directors may apply to the High Court for an order that the moratorium be extended.

(2)

The application must be accompanied by—

(a)

a statement from the directors that all of the following that have fallen due have been paid or otherwise discharged—

(i)

moratorium debts, and

(ii)

pre-moratorium debts for which the company does not have a payment holiday during the moratorium (see Article 13D),

(b)

a statement from the directors that, in their view, the company is, or is likely to become, unable to pay its pre-moratorium debts,

(c)

a statement from the directors as to whether pre-moratorium creditors (as defined by Article 13CC(5) and (6)) have been consulted about the application and if not why not, and

(d)

a statement from the monitor that, in the monitor’s view, it is likely that the moratorium will result in the rescue of the company as a going concern.

(3)

The rules may make provision about the date on which a statement mentioned in paragraph (2) must be made.

(4)

On hearing the application the Court may—

(a)

make an order that the moratorium be extended to such date as is specified in the order, or

(b)

make any other order which the Court thinks appropriate.

(5)

In deciding whether to make an order under paragraph (4)(a) the Court must, in particular, consider the following—

(a)

the interests of pre-moratorium creditors, as defined by Article 13CC(5) and (6), and

(b)

the likelihood that the extension of the moratorium will result in the rescue of the company as a going concern.

(6)

Paragraph (7) applies where—

(a)

an application under this Article is made, and

(b)

apart from that paragraph, the moratorium would end at a time before the application has been disposed of.

(7)

The moratorium—

(a)

does not end at the time mentioned in paragraph (6)(b), and

(b)

instead, ends—

(i)

in a case in which the Court makes an order under paragraph (4)(a), in accordance with the order;

(ii)

otherwise, when the application is withdrawn or disposed of.

(8)

A moratorium may be extended under this Article more than once.

Extension while proposal for CVA pending13CE.

(1)

Paragraph (2) applies where—

(a)

at any time, the directors make a proposal under Part 2 (company voluntary arrangements), and

(b)

apart from that paragraph, the moratorium would end at a time before the proposal is disposed of.

(2)

The moratorium—

(a)

does not end at the time mentioned in paragraph (1)(b), and

(b)

instead, ends when the proposal is disposed of.

(3)

For the purposes of this Article a proposal under Part 2 is “disposed of” when any of the following takes place—

(a)

the company and its creditors both decide under Article 17 not to approve the voluntary arrangement contained in the proposal;

(b)

the decisions taken by the company and its creditors under Article 17 differ, and—

(i)

the period for making an application under Article 17A(3) expires and either no application has been made within that period or any application made within that period has been withdrawn, or

(ii)

an application is made under Article 17A(3) and that application is disposed of, or it is withdrawn after the expiry of the period for making an application under Article 17A(3);

(c)

the voluntary arrangement contained in the proposal takes effect under Article 18;

(d)

the proposal is withdrawn.

Extension by High Court in the course of other proceedings13CF.

(1)

Paragraph (2) applies where—

(a)

an application is made under section 896 or 901C(1) of the Companies Act 2006 (arrangements and reconstructions: court order for holding of meeting) in respect of a company, and

(b)

during proceedings before the High Court in connection with the application, a moratorium for the company is in force.

(2)

The High Court may make an order that the moratorium be extended to such date as is specified in the order.

Early termination on certain grounds

Company enters into insolvency procedure etc13CG.

(1)

A moratorium comes to an end at any time at which the company—

(a)

enters into a compromise or arrangement (see paragraph (2)), or

(b)

enters into a relevant insolvency procedure (see paragraph (3)).

(2)

For the purposes of this Article a company enters into a compromise or arrangement if an order under section 899 or 901F of the Companies Act 2006 (court sanction for compromise or arrangement) comes into effect in relation to the company.

(3)

For the purposes of this Article a company enters into a relevant insolvency procedure if—

(a)

a voluntary arrangement takes effect under Article 18 in relation to the company,

(b)

the company enters administration (within the meaning of Schedule B1 (see paragraph 2(2)(b) of that Schedule)),

(c)

paragraph 45 of Schedule B1 (administration: interim moratorium) begins to apply in relation to the company, or

(d)

the company goes into liquidation (see Article 6).

Obligations to notify change in end of moratorium

Obligations to notify change in end of moratorium13CH.

(1)

The table imposes obligations on the directors of a company to notify the monitor where a moratorium for the company is extended or comes to an end.

Where a moratorium is extended or comes to an end under or by virtue of the following provision

the directors must

1

Article 13CA

Notify the monitor of the extension.

2

Article 13CB

Notify the monitor of the extension and of the revised end date.

3

Article 13CD(4)

Notify the monitor of the extension and provide the monitor with the court order under Article 13CD(4).

4

Article 13CD(7)(a)

Notify the monitor of the extension.

5

Article 13CD(7)(b)(ii)

Notify the monitor that the moratorium has come to an end and of the date that it ended.

6

Article 13CE(2)(a)

Notify the monitor of the extension.

7

Article 13CE(2)(b)

Notify the monitor that the moratorium has come to an end and of the date that it ended.

8

Article 13CF

Notify the monitor of the extension and provide the monitor with any court order under Article 13CF.

9

Article 13CG

Notify the monitor that the moratorium has come to an end.

10

Article 13F

Notify the monitor that the moratorium has come to an end and provide the monitor with the court order under Article 13F.

11

Article 13FB

Notify the monitor that the moratorium has come to an end and provide the monitor with the court order under Article 13FB.

(2)

After receiving a notice under paragraph (1), other than a notice under entry 4 or 6 of the table, the monitor must notify the relevant persons of when the moratorium ended or, subject to any alteration under or by virtue of any of the provisions mentioned in Article 13C(3) or (4), the moratorium will come to an end.

(3)

After receiving a notice under entry 4 or 6 of the table, the monitor must notify the relevant persons.

(4)

If a moratorium comes to an end under Article 13ED (termination by monitor), the monitor must notify the company and the relevant persons of when the moratorium ended.

(5)

The rules may—

(a)

make further provision about the timing of a notice required to be given under this Article;

(b)

require a notice to be accompanied by other documents.

(6)

If the directors fail to comply with paragraph (1), any director who did not have a reasonable excuse for the failure commits an offence.

(7)

If the monitor without reasonable excuse fails to comply with any of paragraphs (2) to (4), the monitor commits an offence.

(8)

In this Article “the relevant persons” means—

(a)

the registrar,

(b)

every creditor of the company of whose claim the monitor is aware,

(c)

in a case where the company is or has been an employer in respect of an occupational pension scheme that is not a money purchase scheme, the Pensions Regulator, and

(d)

in a case where the company is an employer in respect of such a pension scheme that is an eligible scheme within the meaning given by Article 110 of the Pensions (Northern Ireland) Order 2005, the Board of the Pension Protection Fund.

CHAPTER 4Effects of moratorium

Introductory

Overview and construction of references to payment holidays13D.

(1)

This Chapter makes provision about the main effects of a moratorium for a company.

(2)

The provision made by this Chapter includes restrictions on the enforcement or payment of the debts that are defined by paragraph (3) as pre-moratorium debts for which a company has a payment holiday during a moratorium.

(3)

In this Part a reference to pre-moratorium debts for which a company has a payment holiday during a moratorium is to its pre-moratorium debts that have fallen due before the moratorium, or that fall due during the moratorium, except in so far as they consist of amounts payable in respect of—

(a)

the monitor’s remuneration or expenses,

(b)

goods or services supplied during the moratorium,

(c)

rent in respect of a period during the moratorium,

(d)

wages or salary arising under a contract of employment,

(e)

redundancy payments, or

(f)

debts or other liabilities arising under a contract or other instrument involving financial services.

(4)

The rules may make provision as to what is, or is not, to count as the supply of goods or services for the purposes of paragraph (3)(b).

(5)

Regulations may amend this Article for the purposes of changing the list in paragraph (3).

(6)

Regulations may not be made under paragraph (5) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

(7)

In this Article—

“contract or other instrument involving financial services” has the meaning given by Schedule ZA2;

“monitor’s remuneration or expenses” does not include remuneration in respect of anything done by a proposed monitor before the moratorium begins;

“redundancy payment” means—

(a)

a redundancy payment under Part 11 of the Employment Rights Act 1996 or Part 12 of the Employment Rights (Northern Ireland) Order 1996, or

(b)

a payment made to a person who agrees to the termination of their employment in circumstances where they would have been entitled to a redundancy payment under that Part if dismissed;

“wages or salary” includes—

(a)

a sum payable in respect of a period of holiday (for which purpose the sum is to be treated as relating to the period by reference to which the entitlement to holiday accrued),

(b)

a sum payable in respect of a period of absence through illness or other good cause,

(c)

a sum payable in lieu of holiday, and

(d)

a contribution to an occupational pension scheme.

Publicity about moratorium

Publicity about moratorium13DA.

(1)

During a moratorium, the company must, in any premises—

(a)

where business of the company is carried on, and

(b)

to which customers of the company or suppliers of goods or services to the company have access,

display, in a prominent position so that it may easily be read by such customers or suppliers, a notice containing the required information.

(2)

During a moratorium, any websites of the company must state the required information.

(3)

During a moratorium, every business document issued by or on behalf of the company must state the required information.

(4)

For the purposes of paragraphs (1), (2) and (3), “the required information” is—

(a)

that a moratorium is in force in relation to the company, and

(b)

the name of the monitor.

(5)

If paragraph (1), (2) or (3) is contravened—

(a)

the company commits an offence, and

(b)

any officer of the company who without reasonable excuse authorised or permitted the contravention commits an offence.

(6)

In this Article “business document” means—

(a)

an invoice,

(b)

an order for goods or services,

(c)

a business letter, and

(d)

an order form,

whether in hard copy, electronic or any other form.

Effect on creditors etc

Restrictions on insolvency proceedings etc13DB.

(1)

During a moratorium—

(a)

no petition may be presented for the winding up of the company, except by the directors,

(b)

no resolution may be passed for the voluntary winding up of the company under Article 70(1)(a),

(c)

a resolution for the voluntary winding up of the company under Article 70(1)(b) may be passed only if the resolution is recommended by the directors,

(d)

no order may be made for the winding up of the company, except on a petition by the directors,

(e)

no administration application may be made in respect of the company, except by the directors,

(f)

no notice of intention to appoint an administrator of the company under paragraph 15 or 23(1) of Schedule B1 may be filed with the High Court,

(g)

no administrator of the company may be appointed under paragraph 15 or 23(1) of Schedule B1, and

(h)

no administrative receiver of the company may be appointed.

(2)

Paragraph (1)(a) does not apply to an excepted petition; and paragraph (1)(d) does not apply to an order on an excepted petition.

(3)

For these purposes, “excepted petition” means a petition under—

(a)

Article 104A, 104B or 104C, or

(b)

section 367 of the Financial Services and Markets Act 2000 on the ground mentioned in subsection (3)(b) of that section.

Restrictions on enforcement and legal proceedings13DC.

(1)

During a moratorium—

(a)

a landlord or other person to whom rent is payable may not exercise a right of forfeiture by peaceable re-entry in relation to premises let to the company, except with the permission of the High Court,

(b)

no steps may be taken to enforce any security over the company’s property except—

(i)

steps to enforce a collateral security charge (within the meaning of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979)),

(ii)

steps to enforce security created or otherwise arising under a financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226)), or

(iii)

steps taken with the permission of the High Court,

(c)

no steps may be taken to repossess goods in the company’s possession under any hire-purchase agreement, except with the permission of the High Court, and

(d)

no legal process (including legal proceedings, enforcement and distress) may be instituted, carried out or continued against the company or its property except—

(i)

employment tribunal proceedings or any legal process arising out of such proceedings,

(ii)

proceedings, not within paragraph (i), involving a claim between an employer and a worker, or

(iii)

a legal process instituted, carried out or continued with the permission of the High Court.

(2)

An application may not be made for permission under paragraph (1) for the purposes of enforcing a pre-moratorium debt for which the company has a payment holiday during the moratorium.

(3)

An application may not be made for permission under paragraph (1)(b), (c) or (d) with a view to obtaining—

(a)

the crystallisation of a floating charge, or

(b)

the imposition, by virtue of provision in an instrument creating a floating charge, of any restriction on the disposal of any property of the company.

(4)

Permission of the High Court under paragraph (1) may be given subject to conditions.

(5)

Paragraph (1)(b)(iii) is subject to Article 13DE(1).

(6)

In this Article—

“agency worker” has the meaning given by Article 15(2) of the Employment Relations (Northern Ireland) Order 1999;

“employer”—

(a)

in relation to an agency worker, has the meaning given by Article 15(2) of the Employment Relations (Northern Ireland) Order 1999;

(b)

otherwise, has the meaning given by Article 3(4) of the Employment Rights (Northern Ireland) Order 1996;

“worker” means an individual who is—

(a)

a worker within the meaning of Article 3(3) of the Employment Rights (Northern Ireland) Order 1996, or

(b)

an agency worker.

Floating charges13DD.

(1)

This Article applies where there is an uncrystallised floating charge on the property of a company for which a moratorium is in force.

(2)

During the moratorium, the holder of the floating charge may not give any notice which would have the effect of—

(a)

causing the floating charge to crystallise, or

(b)

causing the imposition, by virtue of provision in the instrument creating the charge, of any restriction on the disposal of property of the company.

(3)

No other event occurring during the moratorium is to have the effect mentioned in paragraph (2)(a) or (b).

(4)

Paragraph (5) applies where—

(a)

the holder of a floating charge (“the chargee”) is prevented by paragraph (2) from giving a notice mentioned there during the moratorium, and

(b)

under the terms of the floating charge, the time for giving such a notice ends during the moratorium or before the chargee is given notice of the end of the moratorium under Article 13CH.

(5)

The chargee may give notice later than is required under the terms of the floating charge, but only if the chargee does so as soon as is practicable after—

(a)

the end of the moratorium, or

(b)

if later, the day on which the chargee is notified of the end of the moratorium.

(6)

Where—

(a)

paragraph (3) prevents an event which occurs during the moratorium from having the effect mentioned there, and

(b)

the holder of the floating charge gives notice of the event to the company as soon as is practicable after—

(i)

the end of the moratorium, or

(ii)

if later, the day on which the chargee is notified of the end of the moratorium,

the event is to be treated as if it had occurred when the notice was given.

(7)

This Article does not apply in relation to a floating charge that is—

(a)

a collateral security (as defined by Article 13DI);

(b)

a market charge (as defined by Article 13DI);

(c)

a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));

(d)

a system-charge (as defined by Article 13DI).

Enforcement of security granted during moratorium13DE.

(1)

Security granted by a company during a moratorium in relation to the company may be enforced only if the monitor consented to the grant of security under Article 13DH.

(2)

See also Article 13DC(1)(b), which restricts enforcement during a moratorium.

Notification of insolvency proceedings

Duty of directors to notify monitor of insolvency proceedings etc13DF.

(1)

The directors of a company must notify the monitor before taking any of the following steps during a moratorium—

(a)

presenting a petition for the winding up of the company;

(b)

making an administration application in respect of the company;

(c)

appointing an administrator under paragraph 23(2) of Schedule B1.

(2)

The directors of a company must notify the monitor if, during a moratorium for the company, they recommend that the company passes a resolution for voluntary winding up under Article 70(1)(b).

(3)

The rules may make provision about the timing of a notice required to be given under paragraph (1) or (2).

(4)

If the directors fail to comply with paragraph (1) or (2), any director who did not have a reasonable excuse for the failure commits an offence.

Restrictions on transactions

Restrictions on obtaining credit13DG.

(1)

During a moratorium, the company may not obtain credit to the extent of £500 or more from a person unless the person has been informed that a moratorium is in force in relation to the company.

(2)

The reference to the company obtaining credit includes—

(a)

the company entering into a conditional sale agreement in accordance with which goods are to be sold to the company,

(b)

the company entering into any other form of hire-purchase agreement under which goods are to be bailed to the company, and

(c)

the company being paid in advance (whether in money or otherwise) for the supply of goods or services.

(3)

If a company contravenes paragraph (1)—

(a)

the company commits an offence, and

(b)

any officer of the company who without reasonable excuse authorised or permitted the obtaining of the credit commits an offence.

Restrictions on grant of security etc13DH.

(1)

During a moratorium, the company may grant security over its property only if the monitor consents.

(2)

The monitor may give consent under paragraph (1) only if the monitor thinks that the grant of security will support the rescue of the company as a going concern.

(3)

In deciding whether to give consent under paragraph (1), the monitor is entitled to rely on information provided by the company unless the monitor has reason to doubt its accuracy.

(4)

If the company grants security over its property during the moratorium otherwise than as authorised by paragraph (1)—

(a)

the company commits an offence, and

(b)

any officer of the company who without reasonable excuse authorised or permitted the grant of the security commits an offence.

(5)

For the consequences of a company granting security over its property in contravention of paragraph (1), see also Article 13DE.

(6)

The monitor may not give consent under this Article if the granting of security is an offence under Article 13DI.

Prohibition on entering into market contracts etc13DI.

(1)

If a company enters into a transaction to which this Article applies during a moratorium for the company—

(a)

the company commits an offence, and

(b)

any officer of the company who without reasonable excuse authorised or permitted the company to enter into the transaction commits an offence.

(2)

A company enters into a transaction to which this Article applies if it—

(a)

enters into a market contract,

(b)

enters into a financial collateral arrangement,

(c)

gives a transfer order,

(d)

grants a market charge or a system-charge, or

(e)

provides any collateral security.

(3)

Where during the moratorium a company enters into a transaction to which this Article applies, nothing done by or in pursuance of the transaction is to be treated as done in contravention of any of Articles 13DA, 13DC, 13DG, 13DH and 13DJ to 13DN.

(4)

In this Article—

“collateral security” has the same meaning as in the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979);

“financial collateral arrangement” has the same meaning as in the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226);

“market charge” has the same meaning as in Part 5 of the Companies (No. 2) (Northern Ireland) Order 1990;

“market contract” has the same meaning as in Part 5 of the Companies (No. 2) (Northern Ireland) Order 1990;

“system-charge” has the meaning given by the Financial Markets and Insolvency Regulations (Northern Ireland) 1996 (S.R. 1996/252);

“transfer order” has the same meaning as in the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979).

Restrictions on payments and disposal of property

Restrictions on payment of certain pre-moratorium debts13DJ.

(1)

During a moratorium, the company may make one or more relevant payments to a person that (in total) exceed the specified maximum amount only if—

(a)

the monitor consents,

(b)

the payment is in pursuance of a court order, or

(c)

the payment is required by Article 13DM(3) or 13DN(3).

(2)

In paragraph (1)—

“relevant payments” means payments in respect of pre-moratorium debts for which the company has a payment holiday during the moratorium (see Article 13D);

“specified maximum amount” means an amount equal to the greater of—

(a)

£5000, and

(b)

1% of the value of the debts and other liabilities owed by the company to its unsecured creditors when the moratorium began, to the extent that the amount of such debts and liabilities can be ascertained at that time.

(3)

The monitor may give consent under paragraph (1)(a) only if the monitor thinks that it will support the rescue of the company as a going concern.

(4)

In deciding whether to give consent under paragraph (1)(a), the monitor is entitled to rely on information provided by the company unless the monitor has reason to doubt its accuracy.

(5)

If the company makes a payment to which paragraph (1) applies otherwise than as authorised by that paragraph—

(a)

the company commits an offence, and

(b)

any officer of the company who without reasonable excuse authorised or permitted the payment commits an offence.

Restrictions on disposal of property13DK.

(1)

During a moratorium, the company may dispose of its property only if authorised by paragraph (2) or (5).

(2)

In the case of property that is not subject to a security interest, the company may dispose of the property if—

(a)

the disposal is made in the ordinary way of the company’s business,

(b)

the monitor consents, or

(c)

the disposal is in pursuance of a court order.

(3)

The monitor may give consent under paragraph (2)(b) only if the monitor thinks that it will support the rescue of the company as a going concern.

(4)

In deciding whether to give consent under paragraph (2)(b), the monitor is entitled to rely on information provided by the company unless the monitor has reason to doubt its accuracy.

(5)

In the case of property that is subject to a security interest, the company may dispose of the property if the disposal is in accordance with—

(a)

Article 13DM(1), or

(b)

the terms of the security.

(6)

If the company disposes of its property during the moratorium otherwise than as authorised by this Article—

(a)

the company commits an offence, and

(b)

any officer of the company who without reasonable excuse authorised or permitted the disposal commits an offence.

Restrictions on disposal of hire-purchase property13DL.

(1)

During a moratorium, the company may dispose of any goods in the possession of the company under a hire-purchase agreement only if the disposal is in accordance with —

(a)

Article 13DN(1), or

(b)

the terms of the agreement.

(2)

If the company disposes of goods in the possession of the company under a hire-purchase agreement otherwise than as authorised by paragraph (1)—

(a)

the company commits an offence, and

(b)

any officer of the company who without reasonable excuse authorised or permitted the disposal commits an offence.

Disposals of property free from charges etc

Disposal of charged property free from charge13DM.

(1)

During a moratorium, the company may, with the permission of the High Court, dispose of property which is subject to a security interest as if it were not subject to the security interest.

(2)

The Court may give permission under paragraph (1) only if the Court thinks that it will support the rescue of the company as a going concern.

(3)

Where the Court gives permission under paragraph (1) other than in relation to a floating charge, the company must apply the following towards discharging the sums secured—

(a)

the net proceeds of disposal of the property, and

(b)

any money required to be added to the net proceeds so as to produce the amount determined by the Court as the net amount which would be realised on a sale of the property in the open market by a willing vendor.

(4)

Where the permission relates to two or more security interests, the condition in paragraph (3) requires the application of money in the order of the priorities of the security interests.

(5)

Where property subject to a floating charge is disposed of under paragraph (1), the holder of the floating charge has the same priority in respect of acquired property as they had in respect of the property disposed of.

(6)

In paragraph (5) “acquired property” means property of the company which directly or indirectly represents the property disposed of.

(7)

Where the Court makes an order giving permission under paragraph (1), the directors must, within the period of 14 days beginning with the date of the order, send a copy of it to the registrar.

(8)

If the directors fail to comply with paragraph (7), any director who did not have a reasonable excuse for the failure commits an offence.

(9)

If a company fails to comply with paragraph (3)—

(a)

the company commits an offence, and

(b)

any officer of the company who without reasonable excuse authorised or permitted the failure commits an offence.

(10)

Paragraph (1) does not apply in relation to any property which is subject to a financial collateral arrangement, a market charge, a system-charge or a collateral security (as defined by Article 13DI).

Disposal of hire-purchase property13DN.

(1)

During a moratorium, the company may, with the permission of the High Court, dispose of goods which are in the possession of the company under a hire-purchase agreement as if all of the rights of the owner under the agreement were vested in the company.

(2)

The Court may give permission under paragraph (1) only if the Court thinks that it will support the rescue of the company as a going concern.

(3)

Where the Court gives permission under paragraph (1), the company must apply the following towards discharging the sums payable under the hire-purchase agreement—

(a)

the net proceeds of disposal of the goods, and

(b)

any additional money required to be added to the net proceeds so as to produce the amount determined by the Court as the net amount which would be realised on a sale of the goods in the open market by a willing vendor.

(4)

If a company fails to comply with paragraph (3)—

(a)

the company commits an offence, and

(b)

any officer of the company who without reasonable excuse authorised or permitted the failure commits an offence.

(5)

Where the Court makes an order giving permission under paragraph (1), the directors must, within the period of 14 days beginning with the date of the order, send a copy of it to the registrar.

(6)

If the directors fail to comply with paragraph (5), any director who did not have a reasonable excuse for the failure commits an offence.

Effect of contravention of certain provisions of Chapter

Contravention of certain requirements imposed under this Chapter13DO.

The fact that a company contravenes Article 13DA or any of Articles 13DG to 13DN does not—

(a)

make any transaction void or unenforceable, or

(b)

affect the validity of any other thing.

CHAPTER 5The monitor

Status of monitor13E.

The monitor in relation to a moratorium is an officer of the High Court.

Monitoring13EA.

(1)

During a moratorium, the monitor must monitor the company’s affairs for the purpose of forming a view as to whether it remains likely that the moratorium will result in the rescue of the company as a going concern.

(2)

In forming the view mentioned in paragraph (1), the monitor is entitled to rely on information provided by the company, unless the monitor has reason to doubt its accuracy.

Provision of information to monitor13EB.

(1)

The monitor may require the directors of the company to provide any information required by the monitor for the purpose of carrying out the monitor’s functions.

(2)

The directors must comply with a requirement to provide information as soon as practicable.

(3)

For the potential consequences of failing to comply with a requirement to provide information, see Article 13ED.

Application by monitor for directions13EC.

The monitor in relation to a moratorium may apply to the High Court for directions about the carrying out of the monitor’s functions.

Termination of moratorium by monitor13ED.

(1)

The monitor must bring a moratorium to an end by filing a notice with the High Court if—

(a)

the monitor thinks that the moratorium is no longer likely to result in the rescue of the company as a going concern,

(b)

the monitor thinks that the objective of rescuing the company as a going concern has been achieved,

(c)

the monitor thinks that, by reason of a failure by the directors to comply with a requirement under Article 13EB, the monitor is unable properly to carry out the monitor’s functions, or

(d)

the monitor thinks that the company is unable to pay any of the following that have fallen due—

(i)

moratorium debts;

(ii)

pre-moratorium debts for which the company does not have a payment holiday during the moratorium (see Article 13D).

(2)

The rules may provide for debts that are to be disregarded for the purposes of paragraph (1)(d).

(3)

On the filing with the Court of a notice under paragraph (1), the moratorium comes to an end.

(4)

The rules may make provision about the timing of a notice required to be given under paragraph (1).

(5)

Regulations may amend this Article for the purposes of changing the circumstances in which the monitor must bring a moratorium to an end under paragraph (1).

(6)

Regulations may not be made under paragraph (5) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

(7)

See also Article 13CH (obligations to notify change in end of moratorium).

Replacement of monitor or appointment of additional monitor13EE.

(1)

The High Court may make an order authorising the appointment of a qualified person to act as the monitor in relation to a moratorium instead of, or in addition to, a person who already acts as the monitor.

(2)

The High Court may make an order providing that a person ceases to act as the monitor in relation to a moratorium.

(3)

An order under paragraph (1) or (2) may be made on only an application by the directors or the monitor.

(4)

The Court may make an order authorising the appointment of a monitor under paragraph (1) only if the person has provided the Court with a statement that the person—

(a)

is a qualified person, and

(b)

consents to act as the monitor in relation to the moratorium.

(5)

Where it is proposed that more than one person should act as the monitor in relation to the moratorium, the statement under paragraph (4) must specify—

(a)

which functions (if any) are to be exercised by the persons acting jointly, and

(b)

which functions (if any) are to be exercised by any or all of the persons.

(6)

The rules may make provision about the date on which the statement under paragraph (4) must be made.

(7)

Where the Court makes an order under paragraph (1) or (2) the person begins to act as the monitor, or ceases to act as the monitor, in relation to the moratorium at the time specified in, or determined in accordance with, the order (“the relevant time”).

(8)

As soon as reasonably practicable after the relevant time, the monitor must notify the following of the effect of the order—

(a)

the registrar,

(b)

every creditor of the company of whose claim the monitor is aware,

(c)

in a case where the company is or has been an employer in respect of an occupational pension scheme that is not a money purchase scheme, the Pensions Regulator, and

(d)

in a case where the company is an employer in respect of such a pension scheme that is an eligible scheme within the meaning given by Article 110 of the Pensions (Northern Ireland) Order 2005, the Board of the Pension Protection Fund.

(9)

If the monitor without reasonable excuse fails to comply with paragraph (8), the monitor commits an offence.

Application of Part where two or more persons act as monitor13EF.

(1)

Where two or more persons act jointly as the monitor—

(a)

a reference in this Order to the monitor is a reference to those persons acting jointly;

(b)

where an offence of omission is committed by the monitor, each of the persons appointed to act jointly—

(i)

commits the offence, and

(ii)

may be proceeded against and punished individually.

(2)

Where persons act jointly in respect of only some of the functions of the monitor, paragraph (1) applies only in relation to those functions.

(3)

Where two or more persons act concurrently as the monitor a reference in this Order to the monitor is a reference to any of the persons appointed (or any combination of them).

Presumption of validity13EG.

An act of the monitor is valid in spite of a defect in the monitor’s appointment or qualification.

CHAPTER 6Challenges

Challenge to monitor’s actions13F.

(1)

Any of the persons specified below may apply to the High Court on the ground that an act, omission or decision of the monitor during a moratorium has unfairly harmed the interests of the applicant.

(2)

The persons who may apply are—

(a)

a creditor, director or member of the company, or

(b)

any other person affected by the moratorium.

(3)

An application under paragraph (1) may be made during the moratorium or after it has ended.

(4)

On an application under paragraph (1) the Court may—

(a)

confirm, reverse or modify any act or decision of the monitor,

(b)

give the monitor directions, or

(c)

make such other order as it thinks fit (but may not, under this sub-paragraph, order the monitor to pay any compensation).

(5)

Where an application under paragraph (1) relates to a failure by the monitor to bring the moratorium to an end under Article 13ED(1), an order under paragraph (4) may, in particular, bring the moratorium to an end and make such consequential provision as the Court thinks fit.

(6)

Where an application under paragraph (1) relates to the monitor bringing a moratorium to an end under Article 13ED(1), an order under paragraph (4) may, in particular, provide that the moratorium is not to be taken into account for the purposes of paragraph 2(1)(b) of Schedule ZA1 (company not eligible for moratorium if moratorium in force within previous 12 months).

(7)

In making an order under paragraph (4) the Court must have regard to the need to safeguard the interests of persons who have dealt with the company in good faith and for value.

(8)

See also Article 13CH (obligations to notify change in end of moratorium).

Challenges to monitor remuneration in insolvency proceedings13FA.

(1)

The rules may confer on an administrator or liquidator of a company the right to apply to the High Court on the ground that remuneration charged by the monitor in relation to a prior moratorium for the company was excessive.

(2)

Rules under paragraph (1) may (among other things) make provision as to—

(a)

time limits;

(b)

disposals available to the Court;

(c)

the treatment of costs of the application in the administration or winding up.

Challenge to directors’ actions13FB.

(1)

A creditor or member of a company may apply to the High Court for an order under this Article on the ground that—

(a)

during a moratorium, the company’s affairs, business and property are being or have been managed by the directors in a manner which has unfairly harmed the interests of its creditors or members generally or of some part of its creditors or members (including at least the applicant), or

(b)

any actual or proposed act or omission of the directors during a moratorium causes or would cause such harm.

(2)

An application under paragraph (1) may be made during the moratorium or after it has ended.

(3)

On an application under paragraph (1) the Court may make such order as it thinks fit.

(4)

An order under paragraph (3) may in particular—

(a)

regulate the management by the directors of the company’s affairs, business and property during the remainder of the moratorium,

(b)

require the directors to refrain from doing or continuing an act complained of by the applicant or to do an act which the applicant has complained they have omitted to do,

(c)

require the summoning of a meeting of the company’s creditors for the purpose of considering such matters as the Court may direct, or

(d)

bring the moratorium to an end and make such consequential provision as the Court thinks fit.

(5)

In making an order under paragraph (3) the Court must have regard to the need to safeguard the interests of persons who have dealt with the company in good faith and for value.

(6)

See also Article 13CH (obligations to notify change in end of moratorium).

Challenge brought by Board of the Pension Protection Fund13FC.

(1)

This Article applies where—

(a)

a moratorium—

(i)

is in force in relation to a company that is an employer in respect of an eligible scheme, or

(ii)

is or has been in force in relation to a company that has been an employer in respect of an eligible scheme at any time during the moratorium, and

(b)

the trustees or managers of the scheme are a creditor of the company.

(2)

The Board of the Pension Protection Fund may make any application under Article 13F(1) or 13FB(1) that could be made by the trustees or managers as a creditor.

(3)

For the purposes of such an application, any reference in Article 13F(1) or 13FB(1) to the interests of the applicant is to be read as a reference to the interests of the trustees or managers as a creditor.

(4)

In this Article “eligible scheme” has the meaning given by Article 110 of the Pensions (Northern Ireland) Order 2005.

CHAPTER 7Offences: general

Offence of fraud etc during or in anticipation of moratorium13G.

(1)

An officer of a company commits an offence if, during a moratorium for the company or at any time within the period of 12 months ending with the day on which a moratorium for the company comes into force, the officer—

(a)

does any of the things mentioned in paragraph (2), or

(b)

was privy to the doing by others of any of the things mentioned in paragraph (2)(c), (d) and (e).

(2)

Those things are—

(a)

concealing any part of the company’s property to the value of £500 or more, or concealing any debt due to or from the company,

(b)

fraudulently removing any part of the company’s property to the value of £500 or more,

(c)

concealing, destroying, mutilating or falsifying any document affecting or relating to the company’s property or affairs,

(d)

making any false entry in any document affecting or relating to the company’s property or affairs,

(e)

fraudulently parting with, altering or making any omission in any document affecting or relating to the company’s property or affairs, or

(f)

pawning, pledging or disposing of any property of the company which has been obtained on credit and has not been paid for (unless the pawning, pledging or disposal was in the ordinary way of the company’s business).

(3)

It is a defence—

(a)

for a person charged with an offence under paragraph (1) in respect of any of the things mentioned in paragraph (2)(a) or (f) to prove that the person had no intent to defraud, and

(b)

for a person charged with an offence under paragraph (1) in respect of any of the things mentioned in paragraph (2)(c) or (d) to prove that the person had no intent to conceal the state of affairs of the company or to defeat the law.

(4)

Where a person pawns, pledges or disposes of any property of a company in circumstances which amount to an offence under paragraph (1), every person who takes in pawn or pledge, or otherwise receives, the property commits an offence if the person knows it to be pawned, pledged or disposed of in circumstances which—

(a)

amount to an offence under paragraph (1), or

(b)

would, if a moratorium were obtained for the company within the period of 12 months beginning with the day on which the pawning, pledging or disposal took place, amount to an offence under paragraph (1).

(5)

In this Article, “officer” includes a shadow director.

Offence of false representation etc to obtain a moratorium13GA.

(1)

An officer of a company commits an offence if, for the purpose of obtaining a moratorium for the company or an extension of a moratorium for the company, the officer—

(a)

makes any false representation, or

(b)

fraudulently does, or omits to do, anything.

(2)

Paragraph (1) applies even if no moratorium or extension is obtained.

(3)

In this Article, “officer” includes a shadow director.

Prosecution of delinquent officers of company13GB.

(1)

This Article applies where a moratorium has been obtained for a company.

(2)

If it appears to the monitor that any past or present officer of the company has committed an offence in connection with the moratorium, the monitor must forthwith—

(a)

report the matter to the Department, and

(b)

provide the Department with such information and give it such access to and facilities for inspecting and taking copies of documents (being information or documents in the possession or under the control of the monitor and relating to the matter in question) as it requires.

(3)

Where a matter is reported to the Department under paragraph (2), the Department may, for the purpose of investigating the matter and such other matters relating to the affairs of the company as appear to the Department to require investigation, exercise any of the powers which are exercisable by inspectors appointed under section 431 or 432 of the Companies Act 1985.

(4)

For the purpose of such an investigation any obligation imposed on a person by any provision of the Companies Acts to produce documents or give information to, or otherwise to assist, inspectors so appointed is to be regarded as an obligation similarly to assist the Department in its investigation.

(5)

Where a question is put to a person in exercise of the powers conferred by paragraph (3), the person’s answer may be used in evidence against them.

(6)

However, in criminal proceedings in which the person is charged with an offence other than a false statement offence—

(a)

no evidence relating to the answer may be adduced, and

(b)

no question relating to it may be asked,

by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of the person.

(7)

In paragraph (6) “false statement offence” means an offence under Article 7 or 10 of the Perjury (Northern Ireland) Order 1979 (S.I. 1979/1714 (N.I. 19)) (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath).

(8)

Where the Director of Public Prosecutions for Northern Ireland institutes criminal proceedings following any report under paragraph (2), the monitor, and every officer and agent of the company past and present (other than the defendant), must give the Director all assistance in connection with the prosecution which they are reasonably able to give.

(9)

For this purpose “agent” includes any banker or solicitor of the company and any person employed by the company as auditor, whether that person is or is not an officer of the company.

(10)

The High Court may, on the application of the Director of Public Prosecutions for Northern Ireland, direct a person who has failed to comply with paragraph (8) to comply with it.

CHAPTER 8Miscellaneous and general

Special rules for certain kinds of company etc

Regulated companies: modifications to this Part13H.

(1)

For the purposes of Articles 13B and 13BA as they apply in relation to a regulated company, Article 13BC(1) has effect as if the documents listed there included a reference to the written consent of the appropriate regulator to the appointment of the proposed monitor.

(2)

The remaining provisions of this Article apply in relation to a moratorium for a regulated company.

(3)

Any notice under Article 13BE(2), 13CH(2) to (4) or 13EE(8) must also be sent by the monitor to the appropriate regulator.

(4)

The directors must give the appropriate regulator notice of any meeting of the company’s creditors that is to be held for the purposes of Article 13CC(2) or 13FB(4)(c).

(5)

If the directors fail to comply with paragraph (4), any director who did not have a reasonable excuse for the failure commits an offence.

(6)

The appropriate regulator, or a person appointed by the appropriate regulator, may in the way provided for by the rules, participate (but not vote) in any meeting of the company’s creditors that is held for the purposes of this Part.

(7)

The appropriate regulator is entitled to be heard on any application to the High Court for permission under Article 13DM(1) or 13DN(1) (disposal of charged property, etc.).

(8)

The High Court may make an order under Article 13EE(1) only if the appropriate regulator has given its written consent to the appointment of the proposed monitor.

(9)

The persons who may apply to the High Court under Article 13EE(3), 13F(1) or 13FB(1) include the appropriate regulator.

(10)

If a person other than a regulator applies to the High Court under Article 13EE(3), 13F(1) or 13FB(1) the appropriate regulator is entitled to be heard on the application.

(11)

If either regulator makes an application to the High Court under Article 13EE(3), 13F(1) or 13FB(1) in relation to a PRA-regulated company, the other regulator is entitled to be heard on the application.

(12)

This Article does not affect any right that the appropriate regulator has (apart from this Article) as a creditor of a regulated company.

(13)

In this Article—

“the appropriate regulator” means—

(a)

where the regulated company is a PRA-regulated company, each of the Financial Conduct Authority and the Prudential Regulation Authority, and

(b)

where the regulated company is not a PRA-regulated company, the Financial Conduct Authority;

“PRA-authorised person” has the meaning given by section 2B(5) of the Financial Services and Markets Act 2000;

“PRA-regulated company” means a regulated company which—

(a)

is, or has been, a PRA-authorised person,

(b)

is, or has been, an appointed representative within the meaning given by section 39 of the Financial Services and Markets Act 2000, whose principal (or one of whose principals) is, or was, a PRA-authorised person, or

(c)

is carrying on, or has carried on, a PRA-regulated activity (within the meaning of section 22A of that Act) in contravention of the general prohibition;

“regulated activity” has the meaning given by section 22 of the Financial Services and Markets Act 2000, taken with Schedule 2 to that Act and any order under that section;

“regulated company” means a company which—

(a)

is, or has been, an authorised person within the meaning given by section 31 of the Financial Services and Markets Act 2000,

(b)

is, or has been, an appointed representative within the meaning given by section 39 of that Act, or

(c)

is carrying on, or has carried on, a regulated activity in contravention of the general prohibition within the meaning given by section 19 of that Act;

“regulator” means the Financial Conduct Authority or the Prudential Regulation Authority.

(14)

Regulations may amend this Article for the purposes of changing the definition of “regulated company” in paragraph (13).

(15)

Regulations may not be made under paragraph (14) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

Power to modify this Part etc in relation to certain companies13HA.

(1)

Regulations may—

(a)

modify this Part as it applies in relation to a company for which there is a special administration regime, or

(b)

make provision in connection with the interaction between this Part and any other insolvency procedure in relation to such a company.

(2)

The power in paragraph (1) may, in particular, be used to amend, repeal, revoke or otherwise modify any statutory provision.

(3)

In this Article—

“ordinary administration” means the insolvency procedure provided for by Schedule B1;

“special administration regime” means provision made by any statutory provision for an insolvency procedure that—

(a)

is similar or corresponds to ordinary administration, and

(b)

provides for the administrator to have one or more special objectives instead of or in addition to the objectives of ordinary administration.

(4)

Regulations may not be made under paragraph (1) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

Power to make provision in connection with pension schemes13HB.

(1)

A Northern Ireland department may by regulations provide that, in a case where—

(a)

a moratorium—

(i)

is in force in relation to a company that is an employer in respect of an eligible scheme, or

(ii)

is or has been in force in relation to a company that has been an employer in respect of an eligible scheme at any time during the moratorium, and

(b)

the trustees or managers of the scheme are a creditor of the company,

the Board of the Pension Protection Fund may exercise any of the following rights.

(2)

The rights are those which are exercisable by the trustees or managers as a creditor of the company under or by virtue of—

(a)

Article 13CC, or

(b)

a court order under Article 13FB(4)(c).

(3)

Regulations under paragraph (1) may provide that the Board may exercise any such rights—

(a)

to the exclusion of the trustees or managers of the scheme, or

(b)

in addition to the exercise of those rights by the trustees or managers of the scheme.

(4)

Regulations under paragraph (1)—

(a)

may specify conditions that must be met before the Board may exercise any such rights;

(b)

may provide for any such rights to be exercisable by the Board for a specified period;

(c)

may make provision in connection with any such rights ceasing to be so exercisable at the end of such a period.

(5)

Regulations may not be made under paragraph (1) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

(6)

In this Article “eligible scheme” has the meaning given by Article 110 of the Pensions (Northern Ireland) Order 2005.

Floating charges

Void provisions in floating charge documents13HC.

(1)

A provision in an instrument creating a floating charge is void if it provides for the obtaining of a moratorium, or anything done with a view to obtaining a moratorium, to be—

(a)

an event causing the floating charge to crystallise,

(b)

an event causing restrictions which would not otherwise apply to be imposed on the disposal of property by the company, or

(c)

a ground for the appointment of a receiver.

(2)

The reference in paragraph (1) to anything done with a view to obtaining a moratorium includes any preliminary decision or investigation.

(3)

In paragraph (1) “receiver” includes a manager and a person who is appointed both receiver and manager.

(4)

Paragraph (1) does not apply to a provision in an instrument creating a floating charge that is—

(a)

a collateral security (as defined by Article 13DI);

(b)

a market charge (as defined by Article 13DI);

(c)

a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));

(d)

a system-charge (as defined by Article 13DI).

Interpretation of this Part

Meaning of “pre-moratorium debt” and “moratorium debt”13HD.

(1)

In this Part “pre-moratorium debt”, in relation to a company for which a moratorium is or has been in force, means—

(a)

any debt or other liability to which the company becomes subject before the moratorium comes into force, or

(b)

any debt or other liability to which the company has become or may become subject during the moratorium by reason of any obligation incurred before the moratorium comes into force,

but this is subject to paragraph (3).

(2)

In this Part “moratorium debt”, in relation to a company for which a moratorium is or has been in force, means—

(a)

any debt or other liability to which the company becomes subject during the moratorium, other than by reason of an obligation incurred before the moratorium came into force, or

(b)

any debt or other liability to which the company has become or may become subject after the end of the moratorium by reason of an obligation incurred during the moratorium,

but this is subject to paragraph (3).

(3)

For the purposes of this Part—

(a)

a liability in tort is a “pre-moratorium debt” if either—

(i)

the cause of action has accrued before the moratorium comes into force, or

(ii)

all the elements necessary to establish the cause of action exist before the moratorium comes into force except for actionable damage;

(b)

a liability in tort is a “moratorium debt” if it does not fall within sub-paragraph (a) and either—

(i)

the cause of action has accrued during the moratorium, or

(ii)

all the elements necessary to establish the cause of action exist before the moratorium comes to an end except for actionable damage.

(4)

Regulations may amend this Article for the purposes of changing the definition of “pre-moratorium debt” and “moratorium debt” in this Part.

(5)

Regulations may not be made under paragraph (4) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

Interpretation of this Part: general13HE.

(1)

In this Part—

“company” means—

(a)

a company registered under the Companies Act 2006 in Northern Ireland, or

(b)

an unregistered company that may be wound up under Part 6 of this Order;

“eligible”, in relation to a company, has the meaning given by Schedule ZA1;

“employer”, in relation to a pension scheme—

(a)

in Articles 13BE(2)(c), 13CH(8)(c) and 13EE(8)(c), means an employer within the meaning of Article 2(2) of the Pensions (Northern Ireland) Order 2005;

(b)

elsewhere in this Part, has the same meaning that it has for the purposes of Part 3 of the Pensions (Northern Ireland) Order 2005 (see Article 2(2) and (5) of that Order);

“hire-purchase agreement” includes a conditional sale agreement, a chattel leasing agreement and a retention of title agreement;

“money purchase scheme” has the meaning given by section 176(1) of the Pension Schemes (Northern Ireland) Act 1993;

“the monitor”, in relation to a moratorium, means the person who has the functions of the monitor in relation to the moratorium (see also Article 13EF for cases where two or more persons act as the monitor);

“moratorium” means a moratorium under this Part;

“moratorium debt” has the meaning given by Article 13HD;

“occupational pension scheme” has the meaning given by section 1 of the Pension Schemes (Northern Ireland) Act 1993;

“pension scheme” has the meaning given by section 1 of the Pension Schemes (Northern Ireland) Act 1993;

“pre-moratorium debt” has the meaning given by Article 13HD;

“qualified person” means a person qualified to act as an insolvency practitioner;

“unable to pay its debts”—

(a)

in relation to a registered company, has the same meaning as in Part 5 (see Article 103);

(b)

in relation to an unregistered company, has the same meaning as in Part 6 (see Articles 186 to 188).

(2)

Regulations may amend this Article for the purposes of changing the definition of “qualified person” in paragraph (1).

(3)

Regulations may not be made under paragraph (2) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

Regulations

Regulations13HF.

Regulations made in the exercise of any power conferred by this Part may make consequential, supplementary, incidental or transitional provision or savings.

PART IICOMPANY VOLUNTARY ARRANGEMENTS

The proposal

Those who may propose an arrangement14.

(1) F96

The directors of a companyF97(other than one which is in administration or being wound up) may make a proposal under this Part to the company and to its creditors for a composition in satisfaction of its debts or a scheme of arrangement of its affairs (referred to, in either case, as a“voluntary arrangement”).

(2)

A proposal under this Part is one which provides for some person (“the nominee”) to act in relation to the voluntary arrangement either as trustee or otherwise for the purpose of supervising its implementation; and the nominee must be a person who is qualified to act as an insolvency practitioner F98F99... in relation to the voluntary arrangement.

(3) F96

Such a proposal may also be made—

F100(a)

where the company is in administration, by the administrator,

(b)

where the company is being wound up, by the liquidator.

F101(4)

In this Part “company” means—

F102(a)

a company registered under the Companies Act 2006 in Northern Ireland;

(b)

a company incorporated in an EEA State F103...; or

(c)

a company not incorporated in an EEA State but having its centre of main interests F104either in a member State other than Denmark F105or in the United Kingdom.

(5)

In paragraph (4) in relation to a company, “centre of main interests” has the F106same meaning as in Article 3 of the EU Regulation.

(6)

If a company incorporated outside Northern Ireland has a principal place of business in England and Wales or Scotland (or both in England and Wales and in Scotland), no proposal under this Part shall be made in relation to it unless it also has a principal place of business in Northern Ireland.

MoratoriumF10714A.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Procedure where nominee is not the liquidator or administrator15.

(1) F108

This Article applies where the nominee under Article 14 is not the liquidator or administrator of the company F109....

(2)

The nominee shall, within 28 days (or such longer period as the High Court may allow) after he is given notice of the proposal for a voluntary arrangement, submit a report to the Court stating—

(a)

F110whether, in his opinion, the proposed voluntary arrangement has a reasonable prospect of being approved and implemented,

F110(aa)

F108whether, in his opinion, meetings of the company and of its creditors should be summoned to consider the proposal, and

(b) F108

if in his opinion such meetings should be summoned, the date on which, and time and place at which, he proposes the meetings should be held.

(3) F108

For the purposes of enabling the nominee to prepare his report, the person intending to make the proposal shall submit to the nominee—

(a)

a document setting out the terms of the proposed voluntary arrangement, and

(b)

a statement of the company's affairs containing—

(i)

such particulars of its creditors and of its debts and other liabilities and of its assets as may be prescribed, and

(ii)

such other information as may be prescribed.

F111(4)

The High Court may—

(a) F108

on an application made by the person intending to make the proposal, in a case where the nominee has failed to submit the report required by this Article or has died, or

(b) F108

on an application made by that person or the nominee, in a case where it is impracticable or inappropriate for the nominee to continue to act as such,

direct that the nominee be replaced as such by another person qualified to act as an insolvency practitionerF112... in relation to the voluntary arrangement.

Summoning of meetings16.

(1) F113

Where the nominee under Article 14 is not the liquidator or administrator, and it has been reported to the High Court that such meetings as are mentioned in Article 15(2) should be summoned, the person making the report shall (unless the Court otherwise directs) summon those meetings for the time, date and place proposed in the report.

(2) F113

Where the nominee is the liquidator or administrator, he shall summon meetings of the company and of its creditors to consider the proposal for such a time, date and place as he thinks fit.

(3)

The persons to be summoned to a creditors' meeting under this Article are every creditor of the company of whose claim and address the person summoning the meeting is aware.

Annotations:
Amendments (Textual)

F113mod. by SR 2004/307

Consideration and implementation of proposal

Decisions of meetings17.

(1) F114

The meetings summoned under Article 16 shall decide whether to approve the proposed voluntary arrangement (with or without modifications).

(2)

The modifications may include one conferring the functions proposed to be conferred on the nominee on another person qualified to act as an insolvency practitioner F115F116... in relation to the voluntary arrangement; but shall not include any modification by virtue of which the proposal ceases to be a proposal such as is mentioned in Article 14.

(3)

A meeting so summoned shall not approve any proposal or modification which affects the right of a secured creditor of the company to enforce his security, except with the concurrence of the creditor concerned.

(4)

A meeting so summoned shall not, except with the concurrence of the F117... creditor concerned, approve any proposal or modification under which—

(a)

any preferential debt of the company is to be paid otherwise than in priority to such of its debts as are not preferential debts, F118...

F119(aa)

any ordinary preferential debt of the company is to be paid otherwise than in priority to any secondary preferential debts that it may have,

(b)

a preferential creditor of the company is to be paid an amount in respect of F120an ordinary preferential debt that bears to that debt a smaller proportion than is borne to F121another ordinary preferential debt by the amount that is to be paid in respect of that other debt, F122F123...

(c)

a preferential creditor of the company is to be paid an amount in respect of a secondary preferential debt that bears to that debt a smaller proportion than is borne to another secondary preferential debt by the amount that is to be paid in respect of that other debt, F124or

(d)

in the case of a company which is a relevant financial institution (see Article 347A), any non-preferential debt is to be paid otherwise than in accordance with the rules in Article 150ZZA(2) or (3).

F125(4A)

Where the nominee's report under Article 15(2) is submitted to the Court before the end of the period of 12 weeks beginning with the day after the end of any moratorium for the company under Part 1A, a meeting so summoned may not approve any proposal or modification under which the following are to be paid otherwise than in full—

(a)

moratorium debts (within the meaning given by Article 148A);

(b)

priority pre-moratorium debts (within the meaning given by Article 148A);

but this is subject to paragraph (4B).

(4B)

Paragraph (4A) does not prevent the approval of such a proposal or modification with the concurrence of the creditor concerned.

(5) F114

Subject to paragraphs (3) F126to (4B), each of the meetings shall be conducted in accordance with the rules.

F114(6) F114

After the conclusion of either meeting in accordance with the rules, the chairman of the meeting shall report the result of the meeting to the High Court, and, immediately after reporting to the Court, shall give notice of the result of the meeting to such persons as may be prescribed.

(7)

In this Article “preferential debts” F127, “ordinary preferential debt” and “secondary preferential debt” each has the meaning given by Article 346; and “preferential creditor” is to be construed accordingly.

F128Approval of arrangement17A.

(1)

This Article applies to a decision, under Article 17, with respect to the approval of a proposed voluntary arrangement.

(2) F129

The decision has effect if, in accordance with the rules—

(a)

it has been taken by both meetings summoned under Article 16, or

(b)

(subject to any order made under paragraph F130(6)) it has been taken by the creditors' meeting summoned under that Article.

(3) F129

If the decision taken by the creditors' meeting differs from that taken by the company meeting, a member of the company may apply to the High Court.

(4) F129

An application under paragraph (3) shall not be made after the end of the period of 28 days beginning with—

(a)

the day on which the decision was taken by the creditors' meeting, or

(b)

where the decision of the company meeting was taken on a later day, that day.

(5) F129

Where a member of a regulated company, F131as defined by Article 13H(13), applies to the High Court under paragraph (3), the F132Financial Conduct Authority and, where the regulated company is a F133PRA-regulated company F134as defined by Article 13H(13), the Prudential Regulation Authority is entitled to be heard on the application.

(6) F129

On an application under paragraph (3), the High Court may—

(a)

order the decision of the company meeting to have effect instead of the decision of the creditors' meeting, or

(b)

make such other order as it thinks fit.

Effect of approval18.

F135(1)

This Article applies where a decision approving a voluntary arrangement has effect under Article 17A.

(2)

TheF136. . . voluntary arrangement—

(a)

takes effect as if made by the company at the creditors' meeting, and

F135(b)

binds every person who in accordance with the rules—

(i)

was entitled to vote at that meeting (whether or not he was present or represented at it), or

(ii)

would have been so entitled if he had had notice of it,

F135as if he were a party to the voluntary arrangement.

F135(2A)

If—

(a)

when the arrangement ceases to have effect any amount payable under the arrangement to a person bound by virtue of paragraph (2)(b)(ii) has not been paid, and

(b)

the arrangement did not come to an end prematurely,

the company shall at that time become liable to pay to that person the amount payable under the arrangement.

(3)

Subject to F137paragraphs (3A) and (4), if the company is being wound up orF138is in administration, the High Court may do one or both of the following, namely—

(a)

by order stay all proceedings in the winding up orF139provide for the appointment of the administrator to cease to have effect;

(b)

give such directions with respect to the conduct of the winding up or the administration as it thinks appropriate for facilitating the implementation of theF136. . . voluntary arrangement.

F140(3A)

Where immediately before the voluntary arrangement took effect a moratorium for the company was in force under Part 1A and a petition for the winding up of the company, other than an excepted petition within the meaning of Article 13DB, was presented before the beginning of the moratorium, the High Court must dismiss the petition.

(4)

The High Court shall not make an order under paragraph (3)(a) F141or dismiss a petition under paragraph (3A)—

(a) F142

at any time before the expiration of 28 days from the day on which each of the reports required by Article 17(6) has been made to the Court, or

(b)

at any time when an application under Article 19 or an appeal in respect of such an application is pending, or at any time in the period within which such an appeal may be brought.

Challenge of decisions19.

(1)

Subject to this Article, an application to the High Court may be made, by any of the persons specified in paragraph (2), on one or both of the following grounds, namely—

(a)

that a voluntary arrangementF143 which has effect under Article 17A unfairly prejudices the interests of a creditor, member or contributory of the company;

(b) F144

that there has been some material irregularity at or in relation to either of the meetings.

(2)

The persons who may apply under this Article are—

(a) F144

a person entitled, in accordance with the rules, to vote at either of the meetings;

F145(aa)

a person who would have been entitled, in accordance with the rules, to vote at the creditors' meeting if he had had notice of it;

F144(b) F144

the nominee or any person who has replaced him under Article 15(4) or 17(2); and

(c) F144

if the company is being wound up orF146is in administration, the liquidator or administrator.

(3)

An application under this Article shall not be made

F145(a)

F144after the expiration of 28 days from the day on which each of the reports required by Article 17(6) has been made to the High CourtF145 or

F145(b)

in the case of a person who was not given notice of the creditors' meeting, after the end of the period of 28 days beginning with the day on which he became aware that the meeting had taken place,

F145but (subject to that) an application made by a person within paragraph (2)(aa) on the ground that the voluntary arrangement prejudices his interests may be made after the arrangement has ceased to have effect, unless it came to an end prematurely.

.

(4) F144

Where on such an application the High Court is satisfied as to either of the grounds mentioned in paragraph (1), it may do one or both of the following, namely—

(a)

revoke or suspendF143 any decision approving the voluntary arrangement which has effect under Article 17A or, in a case falling within paragraph (1)(b), anyF143 decision taken by the meeting in question which has effect under that Article;

(b)

give a direction to any person for the summoning of further meetings to consider any revised proposal the person who made the original proposal may make or, in a case falling within paragraph (1)(b), a further company or (as the case may be) creditors' meeting to reconsider the original proposal.

(5) F144

Where at any time after giving a direction under paragraph (4)(b) for the summoning of meetings to consider a revised proposal the High Court is satisfied that the person who made the original proposal does not intend to submit a revised proposal, the Court shall revoke the direction and revoke or suspend anyF143 decision approving the voluntary arrangement which has effect under Article 17A.

(6)

In a case where the High Court, on an application under this Article with respect to any meeting—

(a)

gives a direction under paragraph (4)(b), or

(b)

revokes or suspends an approval under paragraph (4)(a) or (5),

the Court may give such supplemental directions as it thinks fit and, in particular, directions with respect to things doneF143 under the voluntary arrangement since it took effect.

(7)

Except in pursuance of the preceding provisions of this Article,F143 a decision taken at a meeting summoned under Article 16 is not invalidated by any irregularity at or in relation to the meeting.

F147False representations, etc.19A.

(1) F148

If, for the purpose of obtaining the approval of the members or creditors of a company to a proposal for a voluntary arrangement, a person who is an officer of the company—

(a)

makes any false representation, or

(b)

fraudulently does, or omits to do, anything,

he shall be guilty of an offence.

(2)

Paragraph (1) applies even if the proposal is not approved.

(3)

For purposes of this Article "officer" includes a shadow director.

Implementation of proposal20.

(1)

This Article applies where a voluntary arrangementF149 has effect under Article 17A.

(2)

The person who is for the time being carrying out in relation to the voluntary arrangement the functions conferred—

F149(a) F150

on the nominee by virtue of the approval given at one or both of the meetings summoned under Article 16

(b)

by virtue of Article 15(4) or 17(2) on a person other than the nominee,

shall be known as the supervisor of the voluntary arrangement.

(3)

If any of the company's creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the High Court; and on the application the Court may—

(a)

confirm, reverse or modify any act or decision of the supervisor,

(b)

give him directions, or

(c)

make such other order as it thinks fit.

(4)

The supervisor—

(a)

may apply to the High Court for directions in relation to any particular matter arising under the voluntary arrangement, and

(b)

is included among the persons who may apply to the High Court for the winding up of the company or for an administration order to be made in relation to it.

(5)

The High Court may, whenever—

(a)

it is expedient to appoint a person to carry out the functions of the supervisor, and

(b)

it is inexpedient, difficult or impracticable for an appointment to be made without the assistance of the Court,

make an order appointing a person who is qualified to act as an insolvency practitioner F151F149... in relation to the voluntary arrangement, either in substitution for the existing supervisor or to fill a vacancy.

(6)

The power conferred by paragraph (5) is exercisable so as to increase the number of persons exercising the functions of supervisor or, where there is more than one person exercising those functions, so as to replace one or more of those persons.

F152Prosecution of delinquent officers of company20A.

F153(1)

This Article applies where the approval of a voluntary arrangement in relation to a company has taken effect under Article 17A.

(2)

F154If it appears to the supervisor that any past or present officer of the company has committed an offence in connection with the voluntary arrangement, the supervisor must forthwith—

(a)

report the matter to the Department, and

(b)

provide the Department with such information and give the Department such access to and facilities for inspecting and taking copies of documents (being information or documents in the possession or under the control of the F155... supervisor and relating to the matter in question) as the Department requires.

(3)

Where a report is made to the Department under paragraph (2), the Department may, for the purpose of investigating the matter reported to it and such other matters relating to the affairs of the company as appear to it to require investigation, exercise any of the powers which are exercisable by inspectors appointed under F156section 431 or 432 of the Companies Act 1985 to investigate a company's affairs.

(4)

For the purpose of such an investigation any obligation imposed on a person by any provision of F157the Companies Acts to produce documents or give information to, or otherwise to assist, inspectors so appointed is to be regarded as an obligation similarly to assist the Department in its investigation.

(5)

An answer given by a person to a question put to him in exercise of the powers conferred by paragraph (3) may be used in evidence against him.

(6)

However, in criminal proceedings in which that person is charged with an offence to which this paragraph applies—

(a)

no evidence relating to the answer may be adduced, and

(b)

no question relating to it may be asked,

by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.

(7)

Paragraph (6) applies to any offence other than an offence under Article 7 or 10 of the Perjury (Northern Ireland) Order 1979 (NI 19) (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath).

(8)

Where the Director of Public Prosecutions for Northern Ireland institutes criminal proceedings following any report under paragraph (2), the F158... supervisor, and every officer and agent of the company past and present (other than the defendant), shall give the Director all assistance in connection with the prosecution which he is reasonably able to give.

For this purpose "agent" includes any banker or solicitor of the company and any person employed by the company as auditor, whether that person is or is not an officer of the company.

(9)

The High Court may, on the application of the Director of Public Prosecutions for Northern Ireland, direct any person referred to in paragraph (8) to comply with that paragraph if he has failed to do so.

Arrangements coming to an end prematurely20B.

For the purposes of this Part, a voluntary arrangement the approval of which has taken effect under Article 17A F159... comes to an end prematurely if, when it ceases to have effect, it has not been fully implemented in respect of all persons bound by the arrangement by virtue of Article 18(2)(b)(i) F160....

F161 PART III ADMINISTRATION

Administration21.

Schedule B1 (which makes provision about the administration of companies) shall have effect.

F162F163F164PART IIIADMINISTRATION ORDERS

Making, etc., of administration order

Application for order22.

(1) F165

An application to the High Court for an administration order shall be by petition presented either by the company or the directors, or by a creditor or creditors (including any contingent or prospective creditor or creditors),F166 or by the chief clerk in exercise of the power conferred by section 35(4A) of the Criminal Justice Act (Northern Ireland) 1945 (enforcement of fines imposed on companies) or a clerk of petty sessions in exercise of the power conferred by Article 92A of the Magistrates' Courts (Northern Ireland) Order 1981 (enforcement of fines imposed on companies) or by all or any of those parties, together or separately.

(2)

Where a petition is presented to the High 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 administrative receiver of the company, 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 High Court is satisfied that there is an administrative receiver of the company, 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—

F167(i)

be liable to be released or discharged under Articles 202 to 204 (transactions at an undervalue and preferences), or

(ii)

be avoided under Article 207 (avoidance of floating charges).

(4)

Subject to paragraph (3), on hearing a petition the High 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 paragraph (4), an interim order under that paragraph may restrict the exercise of any powers of the directors or of the company (whether by reference to the consent of the High Court or of a person qualified to act as an insolvency practitioner in relation to the company, or otherwise).

Effect of application23.

(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) F168

no resolution may be passed or order made for the winding up of the company;

F169(aa)

no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the leave of the High Court and subject to such terms as the Court may impose

(b)

no steps may be taken to enforce any security over the company's property, or to repossess goods in the company's possession under any hire‐purchase agreement, except with the leave of the High Court and subject to such terms as the Court may impose;

(c)

no other proceedings and no legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the leave of the Court and subject to such terms as aforesaid.

(2)

Nothing in paragraph (1) requires the leave of the High Court—

(a)

for the presentation of a petition for the winding up of the company,

(b) F170

for the appointment of an administrative receiver of the company, or

(c) F170

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

(3) F171

Where—

(a)

a petition for an administration order is presented at a time when there is an administrative receiver of the company, 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 paragraph (1) is deemed not to begin unless and until that person so consents.

(4)

References in this Article and Article 24 to hire‐purchase agreements include conditional sale agreements, chattel leasing agreements and retention of title agreements.

Effect of order24.

(1)

On the making of an administration order—

(a)

any petition for the winding up of the company shall be dismissed, and

(b) F172

any administrative receiver of the company shall vacate office.

(2)

Where an administration order has been made, any receiver of part of the company's 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) F173

no resolution may be passed or order made for the winding up of the company;

(b) F174

no administrative receiver of the company may be appointed;

F175(ba)

no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the consent of the administrator or the leave of the High Court and subject (where the Court gives leave) to such terms as the Court may impose;

(c)

no other steps may be taken to enforce any security over the company's property, or to repossess goods in the company's possession under any hire‐purchase agreement, except with the consent of the administrator or the leave of the High Court and subject (where the Court gives leave) to such terms as the Court may impose; and

(d)

no other proceedings and no legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the consent of theadministrator or the leave of the High Court and subject (where the Court gives leave) to such terms as aforesaid.

(4)

F172Where at any time an administrative receiver of the company has vacated office under paragraph (1)(b), or a receiver of part of the company's property has vacated office under paragraph (2)—

(a)

his remuneration and any expenses properly incurred by him, and

(b)

any indemnity to which he is entitled out of the assets of the company,

shall be charged on and (subject to paragraph (3)) paid out of any property of the company 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.

(5) F176

Neither an administrative receiver who vacates office under paragraph (1)(b) nor a receiver who vacates office under paragraph (2) is required on or after so vacating office to take any steps for the purpose of complying with any duty imposed on him by Article 50 (duty to pay preferential creditors).

Notification of order25.

(1)

Every invoice, order for goods or business letter which, at a time when an administration order is in force in relation to a company, is issued by or on behalf of the company or the administrator, being a document on or in which the company's name appears, shall also contain the administrator's name and a statement that the affairs, business and property of the company are being managed by the administrator.

(2)

If default is made in complying with this Article, the company and any of the following persons who without reasonable excuse authorises or permits the default, namely, the administrator and any officer of the company, shall be guilty of an offence.

Administrators

Appointment of administrator26.

(1)

The administrator of a company shall be appointed either by the administration order or by an order under paragraph (2).

(2)

If a vacancy occurs by death, resignation or otherwise in the office of the administrator, the High Court may by order fill the vacancy.

(3)

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

(a)

by any continuing administrator of the company; or

(b)

where there is no such administrator, by a creditors' committee established under Article 38; or

(c) F177

where there is no such administrator and no such committee, by the company or the directors or by any creditor or creditors of the company.

Annotations:
Amendments (Textual)

F177mod. by SR 2004/307

General powers27.

(1)

The administrator of a company—

(a)

may do all such things as may be necessary for the management of the affairs, business and property of the company, and

(b)

without prejudice to the generality of sub‐paragraph (a), has the powers specified in Schedule 1;

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

(2) F178

The administrator also has power—

(a) F178

to remove any director of the company and to appoint any person to be a director of it, whether to fill a vacancy or otherwise, and

(b)

to call any meeting of the members or creditors of the company.

(3)

The administrator may apply to the High Court for directions in relation to any particular matter arising in connection with the carrying out of his functions.

(4)

Any power conferred on the company or its officers, whether by this Order or the Companies Order or by the memorandum or articles of association, 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)

In exercising his powers the administrator is deemed to act as the company's agent.

(6)

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.

Annotations:
Amendments (Textual)

F178mod. by SR 2004/307

Power to deal with charged property, etc.28.

(1) F179

The administrator of a company may dispose of or otherwise exercise his powers in relation to any property of the company which is subject to a security to which this paragraph applies as if the property were not subject to the security.

(2)

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

(a)

any property of the company subject to a security to which this paragraph applies, or

(b)

any goods in the possession of the company 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 company.

(3) F180

Paragraph (1) applies to any security which, as created, was a floating charge; and paragraph (2) applies to any other security.

(4)

Where property is disposed of under paragraph (1), the holder of the security has the same priority in respect of any property of thecompany 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 paragraph (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 High 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 paragraph (5) relates to 2 or more securities, that condition requires the net proceeds of the disposal and, where sub‐paragraph (b) of that paragraph applies, the sums mentioned in that sub‐paragraph to be applied towards discharging the sums secured by those securities in the order of their priorities.

(7)

An office copy of an order under paragraph (2) shall, within 14 days from the making of the order, be sent by the administrator to the registrar.

(8)

If the administrator without reasonable excuse contravenes paragraph (7), he shall be guilty of an offence and for continued contravention, he shall be guilty of a continuing offence.

(9)

References in this Article to hire‐purchase agreements include conditional sale agreements, chattel leasing agreements and retention of title agreements.

General duties29.

(1)

The administrator of a company shall, on his appointment, take into his custody or under his control all the property to which the company is or appears to be entitled.

(2)

The administrator shall manage the affairs, business and property of the company—

(a)

at any time before proposals have been approved (with or without modifications) under Article 36, in accordance with any directions given by the High Court, and

(b)

at any time after proposals have been so approved, in accordance with those proposals as revised, whether by him or a predecessor of his.

(3)

The administrator shall summon a meeting of the company's creditors if—

(a)

he is requested, in accordance with the rules, to do so by one‐tenth, in value, of the company's creditors, or

(b)

he is directed to do so by the High Court.

Discharge or variation of administration order30.

(1)

The administrator of a company may at any time apply to the High Court for the administration order to be discharged, or to be varied so as to specify an additional purpose.

(2)

The administrator shall make an application under this Article if—

(a)

it appears to him that the purpose or each of the purposes specified in the order either has been achieved or is incapable of achievement, or

(b)

he is required to do so by a meeting of the company's creditors summoned for the purpose in accordance with the rules.

(3)

On the hearing of an application under this Article, the High Court may by order discharge or vary the administration order and make such consequential provision as it thinks fit, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order it thinks fit.

(4)

Where the administration order is discharged or varied the administrator shall, within 14 days from the making of the order effecting the discharge or variation, send an office copy of that order to the registrar.

(5)

If the administrator without reasonable excuse contravenes paragraph (4), he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Vacation of office31.

(1)

The administrator of a company may at any time be removed from office by order of the High Court and may, in the prescribed circumstances, resign his office by giving notice of his resignation to the Court.

(2)

The administrator shall vacate office if—

(a)

he ceases to be qualified to act as an insolvency practitioner in relation to the company, or

(b)

the administration order is discharged.

(3)

Where at any time a person ceases to be administrator,F181 the following paragraphs apply.

(4) F182

His remuneration and any expenses properly incurred by him shall be charged on and paid out of any property of the company which is in his custody or under his control at that time in priority to any security to which Article 28(1) then applies.

(5)

Any sums payable in respect of debts or liabilities incurred, while he was administrator, under contracts entered intoF183. . . by him or a predecessor of his in the carrying out of his or the predecessor's functions shall be charged on and paid out of any such property as is mentioned in paragraph (4) in priority to any charge arising under that paragraph;F183. . .

F184(6)

Any sums payable in respect of liabilities incurred, while he was administrator, under contracts of employment adopted by him or a predecessor of his in the carrying out of his or the predecessor's functions shall, to the extent that the liabilities are qualifying liabilities, be charged on and paid out of any such property as is mentioned in paragraph (4) and enjoy the same priority as any sums to which paragraph (5) applies; and for the purpose of this paragraph the administrator is not to be taken to have adopted a contract of employment by reason of anything done or omitted to be done within 14 days from his appointment.

(7)

For the purposes of paragraph (6), a liability under a contract of employment is a qualifying liability if—

(a)

it is a liability to pay a sum by way of wages or salary or contribution to an occupational pension scheme, and

(b)

it is in respect of services rendered wholly or partly after the adoption of the contract.

(8)

There shall be disregarded for the purposes of paragraph (6) so much of any qualifying liability as represents payment in respect of services rendered before the adoption of the contract.

(9)

For the purposes of paragraphs (7) and (8)—

(a)

wages or salary payable in respect of a period of holiday or absence from work through sickness or other good cause are deemed to be wages or (as the case may be) salary in respect of services rendered in that period, and

(b)

a sum payable in lieu of holiday is deemed to be wages or (as the case may be) salary in respect of services rendered in the period by reference to which the holiday entitlement arose.

(10)

In paragraph (9)(a), the reference to wages or salary payable in respect of a period of holiday includes any sums which, if they had been paid, would have been treated for the purposes of the statutory provisions relating to social security as earnings in respect of that period.

Release of administrator32.

(1)

A person who has ceased to be the administrator of a company has his release with effect from the following time, that is to say—

(a)

in the case of a person who has died, the time at which notice is given to the High Court in accordance with the rules that he has ceased to hold office;

(b)

in any other case, such time as the High Court may determine.

(2)

Where a person has his release under this Article, he is, with effect from the time specified in paragraph (1), discharged from all liability both in respect of acts or omissions of his in the administration and otherwise in relation to his conduct as administrator.

(3)

However, nothing in this Article prevents the exercise, in relation to a person who has had his release under this Article, of the High Court's powers under Article 176 (summary remedy against deliquent directors, liquidators, etc.).

Ascertainment and investigation of company's affairs

Information to be given by administrator33.

(1)

Where an administration order has been made, the administrator shall—

(a)

forthwith send to the company and publish in the prescribed manner a notice of the order, and

(b)

within 28 days from the making of the order, unless the High Court otherwise directs, send such a notice to all creditors of the company (so far as he is aware of their addresses).

(2)

Where an administration order has been made, the administrator shall also, within 14 days from the making of the order, send an office copy of the order to the registrar and to such other persons as may be prescribed.

(3)

If the administrator without reasonable excuse contravenes this Article, he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Statement of affairs to be submitted to administrator34.

(1)

Where an administration order has been made, the administrator shall forthwith require some or all of the persons mentioned in paragraph (3) to make out and submit to him a statement in the prescribed form as to the affairs of the company.

(2)

The statement shall be verified by affidavit by the persons required to submit it and shall show—

(a)

particulars of the company's assets, debts and liabilities;

(b)

the names and addresses of its creditors;

(c)

the securities held by them respectively;

(d)

the dates when the securities were respectively given; and

(e)

such further or other information as may be prescribed.

(3)

The persons referred to in paragraph (1) are—

(a)

those who are or have been officers of the company;

(b)

those who have taken part in the company's formation at any time within one year before the date of the administration order;

(c)

those who are in the company's employment or have been in its employment within that year, and are in the administrator's opinion capable of giving the information required;

(d)

those who are or have been within that year officers of or in the employment of a company which is, or within that year was, an officer of the company;

and in this paragraph “employment” includes employment under a contract for services.

(4)

Where any persons are required under this Article to submit a statement of affairs to the administrator, they shall do so (subject to paragraph (5)) before the expiration of 21 days from the day after that on which the prescribed notice of the requirement is given to them by the administrator.

(5)

The administrator, if he thinks fit, may—

(a)

at any time release a person from an obligation imposed on him under paragraph (1) or (2), or

(b)

either when giving notice under paragraph (4) or subsequently, extend the period so mentioned;

and where the administrator has refused to exercise a power conferred by this paragraph, the High Court, if it thinks fit, may exercise it.

(6)

If a person without reasonable excuse contravenes any obligation imposed under this Article, he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Administrator's proposals

Statement of proposals35.

(1)

Where an administration order has been made, the administrator shall, within 3 months (or such longer period as the High Court may allow) after the making of the order—

(a)

send to the registrar and (so far as he is aware of their addresses) to all creditors a statement of his proposals for achieving the purpose or purposes specified in the order, and

(b)

lay a copy of the statement before a meeting of the company's creditors summoned for the purpose on not less than 14 days' notice.

(2)

The administrator shall also, within 3 months (or such longer period as the High Court may allow) from the making of the order, either—

(a)

send a copy of the statement (so far as he is aware of their addresses) to all members of the company, or

(b)

publish in the prescribed manner a notice stating an address to which members of the company should write for copies of the statement to be sent to them free of charge.

(3)

If the administrator without reasonable excuse contravenes this Article, he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Consideration of proposals by creditors' meeting36.

(1)

A meeting of creditors summoned under Article 35 shall decide whether to approve the administrator's proposals.

(2)

The meeting may approve the proposals with modifications, but shall not do so unless the administrator consents to each modification.

(3)

Subject to paragraph (2), the meeting shall be conducted in accordance with the rules.

(4)

After the conclusion of the meeting in accordance with the rules, the administrator shall report the result of the meeting to the High Court and shall give notice of that result to the registrar and to such persons as may be prescribed.

(5)

If a report is given to the High Court under paragraph (4) that the meeting has declined to approve the administrator's proposals (with or without modifications), the Court may by order discharge the administration order and make such consequential provision as it thinks fit, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order that it thinks fit.

(6)

Where the administration order is discharged, the administrator shall, within 14 days from the making of the order effecting the discharge, send an office copy of that order to the registrar.

(7)

If the administrator without reasonable excuse contravenes paragraph (6), he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Approval of substantial revisions37.

(1)

This Article applies where—

(a)

proposals have been approved (with or without modifications) under Article 36, and

(b)

the administrator proposes to make revisions of those proposals which appear to him substantial.

(2)

The administrator shall—

(a)

send to all creditors of the company (so far as he is aware of their addresses) a statement in the prescribed form of his proposed revisions, and

(b)

lay a copy of the statement before a meeting of the company's creditors summoned for the purpose on not less than 14 days' notice;

and he shall not make the proposed revisions unless they are approved by the meeting.

(3)

The administrator shall also either—

(a)

send a copy of the statement (so far as he is aware of their addresses) to all members of the company, or

(b)

publish in the prescribed manner a notice stating an address to which members of the company should write for copies of the statement to be sent to them free of charge.

(4)

The meeting of creditors may approve the proposed revisions with modifications, but shall not do so unless the administrator consents to each modification.

(5)

Subject to paragraphs (2) and (4), the meeting shall be conducted in accordance with the rules.

(6)

After the conclusion of the meeting in accordance with the rules, the administrator shall give notice of the result of the meeting to the registrar and to such persons as may be prescribed.

Miscellaneous

Creditors' committee38.

(1)

Where a meeting of creditors summoned under Article 35 has approved the administrator's proposals (with or without modifications), the meeting may, if it thinks fit, establish a committee ( “the creditors' committee”) to exercise the functions conferred on it by or under this Order.

(2)

If such a committee is established, the committee may, on giving not less than 7 days' notice, require the administrator to attend before it at any reasonable time and furnish it with such information relating to the carrying out of his functions as it may reasonably require.

Protection of interests of creditors and members39.

(1)

At any time when an administration order is in force, a creditor or member of the company may apply to the High Court for an order under this Article on the ground—

(a)

that the company's affairs, business and property are being or have been managed by the administrator in a manner which is unfairly prejudicial to the interests of its creditors or members generally, or of some part of its creditors or members (including at least himself), or

(b)

that any actual or proposed act or omission of the administrator is or would be so prejudicial.

(2)

On an application for an order under this Article the High Court may, subject to paragraphs (3) and (4), make such order as it thinks fit for giving relief in respect of the matters complained of, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order that it thinks fit.

(3)

An order under this Article shall not prejudice or prevent—

(a)

the implementation of a voluntary arrangement approved underF185 Part II, or any compromise or arrangement sanctioned under Article 418 of the Companies Order; or

(b)

where the application for the order was made more than 28 days from the approval of any proposals or revised proposals under Article 36 or 37, the implementation of those proposals or revised proposals.

(4)

Subject to paragraph (3), an order under this Article may in particular—

(a)

regulate the future management by the administrator of the company's affairs, business and property;

(b)

require the administrator to refrain from doing or continuing an act complained of by the petitioner, or to do an act which the petitioner has complained he has omitted to do;

(c)

require the summoning of a meeting of creditors or members for the purpose of considering such matters as the High Court may direct;

(d)

discharge the administration order and make such consequential provision as the Court thinks fit.

(5)

Nothing in Article 28 is to be taken as prejudicing applications to the High Court under this Article.

(6)

Where the administration order is discharged, the administrator shall, within 14 days from the making of the order effecting the discharge, send an office copy of that order to the registrar; and if without reasonable excuse he contravenes this paragraph, he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

PART IVRECEIVERSHIPRECEIVERS AND MANAGERS

General Provisions

F186Meaning of “company”39A.

In this Part “company” means a company registered under the Companies Act 2006 in Northern Ireland.

Disqualification of body corporate from acting as receiver40.

A body corporate is not qualified for appointment as receiver of the property of a company, and any body corporate which acts as such a receiver shall be guilty of an offence.

F187Disqualification of bankrupt41.

(1)

A person shall be guilty of an offence if he acts as receiver or manager of the property of a company on behalf of debenture holders while—

(a)

he is an undischarged bankrupt, or

(b)

a bankruptcy restrictions order is in force in respect of him.

(2)

This Article does not apply to a receiver or manager acting under an appointment made by the High Court.

Power of High Court to appoint official receiver42.

Where application is made to the High Court to appoint a receiver on behalf of the debenture holders or other creditors of a company which is being wound up by the Court, the official receiver may be so appointed.

Receivers and managers appointed out of court

Time from which appointment is effective43.

(1)

The appointment of a person as a receiver or manager of a company's property under powers contained in an instrument—

(a)

is of no effect unless it is accepted by that person before the end of the business day next following that on which the instrument of appointment is received by him or on his behalf, and

(b)

subject to this, is deemed to be made at the time at which the instrument of appointment is so received.

(2)

This Article applies to the appointment of 2 or more persons as joint receivers or managers of a company's property under powers contained in an instrument, subject to such modifications as may be prescribed.

Liability for invalid appointment44.

Where the appointment of a person as the receiver or manager of a company's property under powers contained in an instrument is discovered to be invalid (whether by virtue of the invalidity of the instrument or otherwise), the High Court may order the person by whom or on whose behalf the appointment was made to indemnify the person appointed against any liability which arises solely by reason of the invalidity of the appointment.

Application to High Court for directions45.

(1)

A receiver or manager of the property of a company appointed under powers contained in an instrument or the persons by whom or on whose behalf a receiver or manager has been so appointed, may apply to the High Court for directions in relation to any particular matter arising in connection with the performance of the functions of the receiver or manager.

(2)

On such an application, the High Court may give such directions, or may make such order declaring the rights of persons before the Court or otherwise, as it thinks just.

Power of High Court to fix remuneration46.

(1)

The High Court may, on an application made by the liquidator of a company, by order fix the amount to be paid by way of remuneration to a person who, under powers contained in an instrument, has been appointed receiver or manager of the company's property.

(2)

The High Court's power under paragraph (1), where no previous order has been made with respect thereto under that paragraph—

(a)

extends to fixing the remuneration for any period before the making of the order or the application for it,

(b)

is exercisable notwithstanding that the receiver or manager has died or ceased to act before the making of the order or the application, and

(c)

subject to paragraph (3), where the receiver or manager has been paid or has retained for his remuneration for any period before the making of the order any amount in excess of that so fixed for that period, extends to requiring him or his personal representatives to account for the excess or such part of it as may be specified in the order.

(3)

The power conferred by sub‐paragraph (2)(c) shall not be exercised as respects any period before the making of the application for the order under this Article, unless in the opinion of the High Court there are special circumstances making it proper for the power to be exercised.

(4)

The High Court may on an application made either by the liquidator or by the receiver or manager, vary or amend an order made under paragraph (1).

Liability for contracts, etc.47.

(1)

A receiver or manager appointed under powers contained in an instrument (other than an administrative receiver) is, to the same extent as if he had been appointed by order of the High Court—

(a)

personally liable on any contract entered into by him in the performance of his functions (except in so far as the contract otherwise provides) and on any contract of employment adopted by him in the performance of those functions, and

(b)

entitled in respect of that liability to indemnity out of the assets.

(2)

For the purposes of paragraph (1)(a), the receiver or manager is not to be taken to have adopted a contract of employment by reason of anything done or omitted to be done within 14 days from his appointment.

(3)

Paragraph (1) does not limit any right to indemnity which the receiver or manager would have apart from it, nor limit his liability on contracts entered into without authority, nor confer any right to indemnity in respect of that liability.

(4)

Where at any time a receiver or manager so appointed vacates office—

(a)

his remuneration and any expenses properly incurred by him, and

(b)

any indemnity to which he is entitled out of the assets of the company,

shall be charged on and paid out of any property of the company which is in his custody or under his control at that time in priority to any charge or other security held by the person by or on whose behalf he was appointed.

Receivership accounts to be delivered to registrar48.

(1)

Except in the case of an administrative receiver, every receiver or manager of a company's property who has been appointed under powers contained in an instrument shall deliver to the registrar for registration the requisite accounts of his receipts and payments.

(2)

The accounts shall be delivered within one month (or such longer period as the registrar may allow) after the expiration of 12 months from the date of his appointment and of every subsequent period of 6 months, and also within one month after he ceases to act as receiver or manager.

(3)

The requisite accounts shall be an abstract in the prescribed form showing—

(a)

receipts and payments during the relevant period of 12 or 6 months, or

(b)

where the receiver or manager ceases to act, receipts and payments during the period from the end of the period of 12 or 6 months to which the last preceding abstract related (or, if no preceding abstract has been delivered under this Article, from the date of his appointment) up to the date of his so ceasing, and the aggregate amount of receipts and payments during all preceding periods since his appointment.

(4)

A receiver or manager who contravenes this Article shall be guilty of an offence and, for continued contravention, shall be guilty of a continuing offence.

Provisions applicable to every receivership

Notification that receiver or manager appointed49.

(1)

When a receiver or manager of the property of a company has been appointed, every invoice, order for goods or business letter issued by or on behalf of the company or the receiver or manager or the liquidator of the company, being a document on or in which the company's name appears, shall contain a statement that a receiver or manager has been appointed.

(2)

If this Article is contravened, the company and any of the following persons, who knowingly and wilfully authorises or permits the default, namely, any officer of the company, any liquidator of the company and any receiver or manager, shall be guilty of an offence.

Payment of debts out of assets subject to floating charge50. F188

(1)

This Article applies, in the case of a company, where a receiver is appointed on behalf of the holders of any debentures of the company secured by a charge which, as created, was a floating charge.

(2)

If the company is not at the time in course of being wound up, its preferential debts (within the meaning of Article 346) shall be paid out of the assets coming to the hands of the receiver in priority to any claims for principal or interest in respect of the debentures.

(3)

Payments made under this Article shall be recouped, as far as may be, out of the assets of the company available for payment of general creditors.

Enforcement of duty to make returns51.

(1)

If a receiver or manager of a company's property—

(a)

having made default in filing, delivering or making any return, account or other document, or in giving any notice, which a receiver or manager is by law required to file, deliver, make or give, fails to make good the default within 14 days from the service on him of a notice requiring him to do so, or

(b)

having been appointed under powers contained in an instrument, has, after being required at any time by the liquidator of the company to do so, failed to render proper accounts of his receipts and payments and to vouch them and pay over to the liquidator the amount properly payable to him,

the High Court may, on an application made for the purpose, make an order directing the receiver or manager (as the case may be) to make good the default within such time as may be specified in the order.

(2)

In the case of the default mentioned in paragraph (1)(a), application to the High Court may be made by any member or creditor of the company or by the registrar; and in the case of the default mentioned in paragraph (1)(b), the application shall be made by the liquidator.

(3)

An order of the High Court under paragraph (1), may provide that all costs of and incidental to an application under that paragraph shall be borne by the receiver or manager, as the case may be.

(4)

Nothing in this Article prejudices the operation of any statutory provision imposing penalties on receivers in respect of any such default as is mentioned in paragraph (1).

Administrative receivers: general

General powers52. F189

(1)

The powers conferred on the administrative receiver of a company by the debentures by virtue of which he was appointed are deemed to include (except in so far as they are inconsistent with any of the provisions of those debentures) the powers specified in Schedule 1.

(2)

In the application of Schedule 1 to the administrative receiver of a company—

(a)

the words“he” and“him” refer to the administrative receiver, and

(b)

references to the property of the company are to the property of which he is or, but for the appointment of some other person as the receiver of part of the company's property, would be the receiver or manager.

(3)

A person dealing with the administrative receiver in good faith and for value is not concerned to inquire whether the receiver is acting within his powers.

Power to dispose of charged property, etc.53. F190

(1)

Where, on an application by the administrative receiver, the High Court is satisfied that the disposal (with or without other assets) of any relevant property which is subject to a security would be likely to promote a more advantageous realisation of the company's assets than would otherwise be effected, the Court may by order authorise the administrative receiver to dispose of the property as if it were not subject to the security.

(2)

Paragraph (1) does not apply in the case of any security held by the person by or on whose behalf the administrative receiver was appointed, or of any security to which a security so held has priority.

(3)

It shall be a condition of an order under this Article that—

(a)

the net proceeds of the disposal, and

(b)

where those proceeds are less than such amount as may be determined by the High Court to be the net amount which would be realised on a sale of the property 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.

(4)

Where a condition imposed in pursuance of paragraph (3) relates to 2 or more securities, that condition shall require the net proceeds of the disposal and, where sub‐paragraph (b) of that paragraph applies, the sums mentioned in that sub‐paragraph to be applied towards discharging the sums secured by those securities in the order of their priorities.

(5)

An office copy of an order under this Article shall, within 14 days of the making of the order, be sent by the administrative receiver to the registrar.

(6)

If the administrative receiver without reasonable excuse contravenes paragraph (5), he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

(7)

In this Article“relevant property”, in relation to the administrative receiver, means the property of which he is or, but for the appointment of some other person as the receiver of part of the company's property, would be the receiver or manager.

Agency and liability for contracts54. F191

(1)

The administrative receiver of a company—

(a)

is deemed to be the company's agent, unless and until the company goes into liquidation;

(b)

is personally liable on any contract entered into by him in the carrying out of his functions (except in so far as the contract otherwise provides) andF192, to the extent of any qualifying liability, on any contract of employment adopted by him in the carrying out of those functions; and

(c)

is entitled in respect of that liability to an indemnity out of the assets of the company.

(2)

For the purposes of paragraph (1)(b) the administrative receiver is not to be taken to have adopted a contract of employment by reason of anything done or omitted to be done within 14 days from his appointment.

F193(2A)

For the purposes of paragraph (1)(b), a liability under a contract of employment is a qualifying liability if—

(a)

it is a liability to pay a sum by way of wages or salary or contribution to an occupational pension scheme,

(b)

it is incurred while the administrative receiver is in office, and

(c)

it is in respect of services rendered wholly or partly after the adoption of the contract.

(2B)

Where a sum payable in respect of a liability which is a qualifying liability for the purposes of paragraph (1)(b) is payable in respect of services rendered partly before and partly after the adoption of the contract, liability under paragraph (1)(b) shall only extend to so much of the sum as is payable in respect of services rendered after the adoption of the contract.

(2C)

For the purposes of paragraphs (2A) and (2B)—

(a)

wages or salary payable in respect of a period of holiday or absence from work through sickness or other good cause are deemed to be wages or (as the case may be) salary in respect of services rendered in that period, and

(b)

a sum payable in lieu of holiday is deemed to be wages or (as the case may be) salary in respect of services rendered in the period by reference to which the holiday entitlement arose.

F194(2D)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)

This Article does not limit any right to indemnity which the administrative receiver would have apart from it, nor limit his liability on contracts entered into or adopted without authority, nor confer any right to indemnity in respect of that liability.

Vacation of office55. F195

(1)

An administrative receiver of a company may at any time be removed from office by order of the High Court (but not otherwise) and may resign his office by giving notice of his resignation in the prescribed manner to such persons as may be prescribed.

(2)

An administrative receiver shall vacate office if he ceases to be qualified to act as an insolvency practitioner in relation to the company.

(3)

Where at any time an administrative receiver vacates office—

(a)

his remuneration and any expenses properly incurred by him, and

(b)

any indemnity to which he is entitled out of the assets of the company,

shall be charged on and paid out of any property of the company which is 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.

(4)

Where an administrative receiver vacates office otherwise than by death, he shall, within 14 days from his vacation of office, send a notice to that effect to the registrar.

(5)

If an administrative receiver without reasonable excuse contravenes paragraph (4), he shall be guilty of an offenceF196 and, for continued contravention, he shall be guilty of a continuing offence.

Administrative receivers: ascertainment and investigation of company's affairs

Information to be given by administrative receiver56. F197

(1)

Where an administrative receiver is appointed, he shall—

(a)

forthwith send to the company and publish in the prescribed manner a notice of his appointment, and

(b)

within 28 days from his appointment, unless the High Court otherwise directs, send such a notice to all the creditors of the company (so far as he is aware of their addresses).

(2)

This Article and Article 57 do not apply in relation to the appointment of an administrative receiver to act—

(a)

with an existing administrative receiver, or

(b)

in place of an administrative receiver dying or ceasing to act,

except that, where they apply to an administrative receiver who dies or ceases to act before they have been fully complied with, the references in this Article and Article 57 to the administrative receiver include (subject to paragraph (3)) his successor and any continuing administrative receiver.

(3)

If the company is being wound up, this Article and Article 57 apply notwithstanding that the administrative receiver and the liquidator are the same person, but with any necessary modifications arising from that fact.

(4)

If the administrative receiver without reasonable excuse contravenes this Article, he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Statement of affairs to be submitted57. F198

(1)

Where an administrative receiver is appointed, he shall forthwith require some or all of the persons mentioned in paragraph (3) to make out and submit to him a statement in the prescribed form as to the affairs of the company.

(2)

A statement submitted under this Article shall be verified by affidavit by the persons required to submit it and shall show—

(a)

particulars of the company's assets, debts and liabilities;

(b)

the names and addresses of its creditors;

(c)

the securities held by them respectively;

(d)

the dates when the securities were respectively given; and

(e)

such further or other information as may be prescribed.

(3)

The persons referred to in paragraph (1) are—

(a)

those who are or have been officers of the company;

(b)

those who have taken part in the company's formation at any time within one year before the date of the appointment of the administrative receiver;

(c)

those who are in the company's employment, or have been in its employment within that year, and are in the administrative receiver's opinion capable of giving the information required;

(d)

those who are or have been within that year officers of or in the employment of a company which is, or within that year was, an officer of the company;

and in this paragraph“employment” includes employment under a contract for services.

(4)

Where any persons are required under this Article to submit a statement of affairs to the administrative receiver, they shall do so (subject to paragraph (5)) before the expiration of 21 days from the day on which the prescribed notice of the requirement is given to them by the administrative receiver.

(5)

The administrative receiver, if he thinks fit, may—

(a)

at any time release a person from an obligation imposed on him under paragraph (1) or (2), or

(b)

either when giving notice under paragraph (4) or subsequently, extend the period so mentioned;

and where the administrative receiver has refused to exercise a power conferred by this paragraph, the High Court, if it thinks fit, may exercise it.

(6)

If a person without reasonable excuse contravenes any obligation imposed under this Article, he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Report by administrative receiver58. F199

(1)

Where an administrative receiver is appointed, he shall, within 3 months (or such longer period as the High Court may allow) from his appointment, send to the registrar, to any trustees for secured creditors of the company and (so far as he is aware of their addresses) to all such creditors a report as to the following matters, namely—

(a)

the events leading up to his appointment, so far as he is aware of them;

(b)

the disposal or proposed disposal by him of any property of the company and the carrying on or proposed carrying on by him of any business of the company;

(c)

the amounts of principal and interest payable to the debenture holders by whom or on whose behalf he was appointed and the amounts payable to preferential creditors; and

(d)

the amount (if any) likely to be available for the payment of other creditors.

(2)

The administrative receiver shall also, within 3 months (or such longer period as the High Court may allow) from his appointment, either—

(a)

send a copy of the report (so far as he is aware of their addresses) to all unsecured creditors of the company; or

(b)

publish in the prescribed manner a notice stating an address to which unsecured creditors of the company should write for copies of the report to be sent to them free of charge,

and (in either case), unless the Court otherwise directs, lay a copy of the report before a meeting of the company's unsecured creditors summoned for the purpose on not less than 14 days' notice.

(3)

The High Court shall not give a direction under paragraph (2) unless—

(a)

the report states the intention of the administrative receiver to apply for the direction, and

(b)

a copy of the report is sent to the persons mentioned in sub‐paragraph (a) of that paragraph, or a notice is published as mentioned in sub‐paragraph (b) of that paragraph, not less than 14 days before the hearing of the application.

(4)

Where the company has gone or goes into liquidation, the administrative receiver—

(a)

shall, within 7 days from his compliance with paragraph (1) or, if later, the nomination or appointment of the liquidator, send a copy of the report to the liquidator, and

(b)

where he does so within the time limited for compliance with paragraph (2), is not required to comply with that paragraph.

(5)

A report under this Article shall include a summary of the statement of affairs made out and submitted to the administrative receiver under Article 57 and of his comments (if any) upon it.

(6)

Nothing in this Article is to be taken as requiring any such report to include any information the disclosure of which would seriously prejudice the carrying out by the administrative receiver of his functions.

(7)

Article 56(2) applies for the purposes of this Article also.

(8)

If the administrative receiver without reasonable excuse contravenes this Article, he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Committee of creditors59. F200

(1)

Where a meeting of creditors is summoned under Article 58, the meeting may, if it thinks fit, establish a committee (“the creditors' committee”) to exercise the functions conferred on it by or under this Order.

(2)

If such a committee is established, the committee may, on giving not less than 7 days' notice, require the administrative receiver to attend before it at any reasonable time and furnish it with such information relating to the carrying out by him of his functions as it may reasonably require.

F201Prohibition of appointment of administrative receiver

Floating charge holder not to appoint administrative receiver59A.

(1)

The holder of a qualifying floating charge in respect of a company's property may not appoint an administrative receiver of the company.

(2)

In paragraph (1) “holder of a qualifying floating charge in respect of a company's property” has the same meaning as in paragraph 15 of Schedule B1.

(3)

This Article applies—

(a)

to a floating charge created on or after a date appointed by the Department by order, and

(b)

in spite of any provision of an agreement or instrument which purports to empower a person to appoint an administrative receiver (by whatever name).

(4)

An order under paragraph (3)(a) may—

(a)

make provision which applies generally or only for a specified purpose;

(b)

make different provision for different purposes;

(c)

make transitional provision.

(5)

This Article is subject to the exceptions specified in Articles 59B to 59I.

First exception: capital market59B.

(1)

Article 59A does not prevent the appointment of an administrative receiver in pursuance of an agreement which is or forms part of a capital market arrangement if—

(a)

a party incurs or, when the agreement was entered into was expected to incur, a debt of at least £50 million under the arrangement, and

(b)

the arrangement involves the issue of a capital market investment.

(2)

In paragraph (1)—

“capital market arrangement” means an arrangement of a kind described in paragraph 1 of Schedule 1A, and

“capital market investment” means an investment of a kind described in paragraph 2 or 3 of that Schedule.

Second exception: public-private partnership59C.

(1)

Article 59A does not prevent the appointment of an administrative receiver of a project company of a project which—

(a)

is a public-private partnership project, and

(b)

includes step-in rights.

(2)

In this Article “public-private partnership project” means a project—

(a)

the resources for which are provided partly by one or more public bodies and partly by one or more private persons, or

(b)

which is designed wholly or mainly for the purpose of assisting a public body to discharge a function.

(3)

In this Article—

“step-in rights” has the meaning given by paragraph 6 of Schedule 1A, and

“project company” has the meaning given by paragraph 7 of that Schedule.

Third exception: utilities59D.

(1)

Article 59A does not prevent the appointment of an administrative receiver of a project company of a project which—

(a)

is a utility project, and

(b)

includes step-in rights.

(2)

In this Article—

(a)

“utility project” means a project designed wholly or mainly for the purpose of a regulated business,

(b)

“regulated business” means a business of a kind listed in paragraph 10 of Schedule 1A,

(c)

“step-in rights” has the meaning given by paragraph 6 of that Schedule, and

(d)

“project company” has the meaning given by paragraph 7 of that Schedule.

Fourth exception: urban regeneration projects59E.

(1)

Article 59A does not prevent the appointment of an administrative receiver of a project company of a project which—

(a)

is designed wholly or mainly to develop land which at the commencement of the project is wholly or partly in a designated disadvantaged area in Northern Ireland, and

(b)

includes step-in rights.

(2)

In paragraph (1) “develop” means to carry out—

(a)

building operations,

(b)

any operation for the removal of substances or waste from land and the levelling of the surface of the land, or

(c)

engineering operations in connection with the activities mentioned in sub-paragraph (a) or (b).

(3)

In this Article—

“building” includes any structure or erection, and any part of a building as so defined, but does not include plant and machinery comprised in a building,

“building operations” includes—

(a)

demolition of buildings,

(b)

filling in of trenches,

(c)

rebuilding,

(d)

structural alterations of, or additions to, buildings and

(e)

other operations normally undertaken by a person carrying on business as a builder,

“designated disadvantaged area” means an area designated as a disadvantaged area under section 92 of the Finance Act 2001 (c. 9),

“engineering operations” includes the formation and laying out of means of access to highways,

“project company” has the meaning given by paragraph 7 of Schedule 1A,

“step-in rights” has the meaning given by paragraph 6 of that Schedule,

“substance” means any natural or artificial substance whether in solid or liquid form or in the form of a gas or vapour, and

“waste” includes any waste materials, spoil, refuse or other matter deposited on land.

Fifth exception: project finance59F.

(1)

Article 59A does not prevent the appointment of an administrative receiver of a project company of a project which—

(a)

is a financed project, and

(b)

includes step-in rights.

(2)

In this Article—

(a)

a project is “financed” if under an agreement relating to the project a project company incurs, or when the agreement is entered into is expected to incur, a debt of at least £50 million for the purposes of carrying out the project,

(b)

“project company” has the meaning given by paragraph 7 of Schedule 1A, and

(c)

“step-in rights” has the meaning given by paragraph 6 of that Schedule.

Sixth exception: financial market59G.

Article 59A does not prevent the appointment of an administrative receiver of a company by virtue of—

(a)

a market charge within the meaning of Article 95 of the Companies (No. 2) (Northern Ireland) Order 1990 (NI 10),

(b)

a system-charge within the meaning of the Financial Markets and Insolvency Regulations (Northern Ireland) 1996 (SR 1996 No. 252).

Seventh exception: registered housing association59H.

Article 59A does not prevent the appointment of an administrative receiver of a housing association which is registered as such under Chapter II of Part II of the Housing (Northern Ireland) Order 1992 (NI 15).

Eighth exception: licence companies59I.

Article 59A does not prevent the appointment of an administrative receiver of a licence company within the meaning of section 26 of the Transport Act 2000 (c. 38).

Articles 59A to 59I: supplementary59J.

(1)

Schedule 1A (which supplements Articles 59A to 59I) shall have effect.

(2)

The Department may by order—

(a)

insert into this Order provision creating an additional exception to Article 59A(1);

(b)

provide for a provision of this Order which creates an exception to Article 59A(1) to cease to have effect;

(c)

amend Article 59A in consequence of provision made under sub-paragraph (a) or (b);

(d)

amend any of Articles 59B to 59I;

(e)

amend Schedule 1A.

(3)

An order under paragraph (2) may make—

(a)

provision which applies generally or only for a specified purpose;

(b)

different provision for different purposes;

(c)

consequential or supplementary provision;

(d)

transitional provision.

(4)

An order under paragraph (2)—

(a)

in the case of an order under paragraph (2)(e), shall be subject to negative resolution,

(b)

in the case of an order under paragraph (2)(d) varying the sum specified in Article 59B(1)(a) or 59F(2)(a) (whether or not the order also makes consequential or transitional provision), shall be subject to negative resolution, and

(c)

in the case of any other order under paragraph (2)(a) to (d), shall be subject to affirmative resolution.

PART VWINDING UP OF COMPANIES REGISTERED UNDER F202the Companies Act 2006

CHAPTER IPRELIMINARY

F203Introductory

F204Scheme of this Part60.

(1)

This Part applies to the winding up of a company registered under the Companies Act 2006 in Northern Ireland.

(2)

The winding up may be either—

(a)

voluntary (see Chapters 2 to 5), or

(b)

by the High Court (see Chapter 6).

(3)

This Chapter and Chapters 7 to 10 relate to winding up generally, except where otherwise stated.

Contributories

Liability as contributories of present and past membersF20561.

(1)

When a company is wound up, every present and past member is liable to contribute to its assets to any amount sufficient for payment of its debts and liabilities, and the expenses of the winding up, and for the adjustment of the rights of the contributories among themselves.

(2)

This is subject as follows—

(a)

a past member is not liable to contribute if he has ceased to be a member for one year or more before the commencement of the winding up;

(b)

a past member is not liable to contribute in respect of any debt or liability of the company contracted after he ceased to be a member;

(c)

a past member is not liable to contribute, unless it appears to the High Court that the existing members are unable to satisfy the contributions required to be made by them F206. . . ;

(d)

in the case of a company limited by shares, no contribution is required from any member exceeding the amount (if any) unpaid on the shares in respect of which he is liable as a present or past member;

(e)

nothing in F207the Companies Acts or this Order invalidates any provision contained in a policy of insurance or other contract whereby the liability of individual members on the policy or contract is restricted, or whereby the funds of the company are alone made liable in respect of the policy or contract;

(f)

a sum due to any member of the company (in his character of a member) by way of dividends, profits or otherwise is not deemed to be a debt of the company, payable to that member in a case of competition between himself and any other creditor not a member of the company, but any such sum may be taken into account for the purpose of the final adjustment of the rights of the contributories among themselves.

(3)

In the case of a company limited by guarantee, no contribution is required from any member exceeding the amount undertaken to be contributed by him to the company's assets in the event of its being wound up; but if it is a company with a share capital, every member of it is liable (in addition to the amount so undertaken to be contributed to the assets), to contribute to the extent of any sums unpaid on shares held by him.

Directors with unlimited liability62.

F208. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liability of past directors and shareholders63. F209

(1)

This Article applies where a company is being wound up and—

(a)

it has under F210Chapter 5 of Part 18 of the Companies Act 2006 (acquisition by limited company of its own shares: redemption or purchase by private company out of capital) made a payment out of capital in respect of the redemption or purchase of any of its own shares (the payment being referred to in this Article as “the relevant payment”), and

(b)

the aggregate amount of the company's assets and the amounts paid by way of contribution to its assets (apart from this Article) is not sufficient for payment of its debts and liabilities, and the expenses of the winding up.

(2)

If the winding up commenced within one year from the date on which the relevant payment was made, then—

(a)

the person from whom the shares were redeemed or purchased, and

(b)

the directors who signed the F211statement made in accordance with F212section 714(1) to (3) of the Companies Act 2006 for the purposes of the redemption or purchase (except a director who shows that he had reasonable grounds for forming the opinion set out in the F211statement),

are, so as to enable that insufficiency to be met, liable to contribute to the following extent to the company's assets.

(3)

A person from whom any of the shares were redeemed or purchased is liable to contribute an amount not exceeding so much of the relevant payment as was made by the company in respect of his shares; and the directors are jointly and severally liable with that person to contribute that amount.

(4)

A person who has contributed any amount to the assets in pursuance of this Article may apply to the High Court for an order directing any other person jointly and severally liable in respect of that amount to pay him such amount as the Court thinks just and equitable.

(5)

F213Article 61 does not apply in relation to liability accruing by virtue of this Article.

(6)

F214. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limited company formerly unlimited64. F215

(1)

This Article applies in the case of a company being wound up which was at some former time registered as unlimited but hasF216 re-registered as a limited company.

(2)

Notwithstanding Article 61(2)(a), a past member of the company who was a member of it at the time of re‐registration, if the winding up commences within 3 years from the day on which the company was re‐registered, is liable to contribute to the assets of the company in respect of debts and liabilities contracted before that time.

(3)

Subject to Article 61(2)(a) and to paragraph (2), but notwithstanding Article 61(2)(c), if no persons who were members of the company at that time are existing members of it, a person who at that time was a present or past member is liable to contribute as mentioned in paragraph (2) notwithstanding that the existing members have satisfied the contributions required to be made by them F217. . . .

(4)

Notwithstanding Article 61(2)(d) and (3), there is no limit on the amount which a person who, at that time, was a past or present member of the company is liable to contribute as mentioned in paragraph (2).

Unlimited company formerly limited65. F218

(1)

This Article applies in the case of a company being wound up which was at some former time registered as limited but has been re‐registered as unlimitedF219. . . .

(2)

A person who, at the time when the application for the company to be re‐registered was lodged, was a past member of the company and did not after that again become a member of it is not liable to contribute to the assets of the company more than he would have been liable to contribute had the company not been re‐registered.

Nature of contributory's liability66.

The liability of a contributory creates a debt accruing due from him at the time when his liability commenced, but payable at the times when calls are made for enforcing the liability.

Contributories in case of death of a member67.

(1)

If a contributory dies either before or after he has been placed on the list of contributories, his personal representatives are liable in a due course of administration to contribute to the assets of the company in discharge of his liability and are contributories accordingly.

(2)

If the personal representatives make default in paying any money ordered to be paid by them, proceedings may be taken for administering the estate of the deceased contributory and for compelling payment out of it of the money due.

Effect of contributory's bankruptcy68.

(1)

This Article applies if a contributory becomes bankrupt, either before or after he has been placed on the list of contributories.

(2)

His trustee in bankruptcy represents him for all purposes of the winding up, and is a contributory accordingly.

(3)

The trustee may be called on to admit to proof against the bankrupt's estate, or otherwise allow to be paid out of the bankrupt's assets in due course of law, any money due from the bankrupt in respect of his liability to contribute to the company's assets.

(4)

There may be proved against the bankrupt's estate the estimated value of his liability to future calls as well as calls already made.

F220Companies registered but not formed under the Companies Act 200669. F221

(1)

This Article applies in the event of a company being wound up whichF222 is registered but not formed under the Companies Act 2006.

(2)

Every person is a contributory, in respect of the company's debts and liabilities contracted before registration, who is liable—

(a)

to pay, or contribute to the payment of, any debt or liability so contracted, or

(b)

to pay, or contribute to the payment of, any sum for the adjustment of the rights of the members among themselves in respect of any such debt or liability, or

(c)

to pay, or contribute to the amount of, the expenses of winding up the company, so far as relates to such debts or liabilities.

(3)

Every contributory is liable to contribute to the assets of the company, in the course of the winding up, all sums due from him in respect of any such liability as is mentioned in paragraph (2).

(4)

In the event of the death, bankruptcy or insolvency of any contributory, provisions of this Order, with respect to the personal representatives of deceased contributories and to the trustees of bankrupt or insolvent contributories respectively, apply.

CHAPTER IIVOLUNTARY WINDING UP (INTRODUCTORY AND GENERAL)

Resolutions for, and commencement of, voluntary winding up

Circumstances in which company may be wound up voluntarily70.

(1) F223

A company may be wound up voluntarily—

(a)

when the period (if any) fixed for the duration of the company by its articles expires, or the event (if any) occurs, on the occurrence of which its articles provide that the company is to be dissolved, and the company in general meeting has passed a resolution requiring it to be wound up voluntarily;

(b)

if the company resolves by special resolution that it be wound up voluntarily;

(c)

F224. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F225(1A)

Before a company passes a resolution for voluntary winding up it must give written notice of the resolution to the holder of any qualifying floating charge to which Article 59A applies.

(1B)

Where notice is given under paragraph (1A) a resolution for voluntary winding up may be passed only—

(a)

after the end of the period of 5 business days beginning with the day on which the notice was given, or

(b)

if the person to whom the notice was given has consented in writing to the passing of the resolution.

F226F227(2)

Chapter 3 of Part 3 of the Companies Act 2006 (resolutions affecting a company's constitution) applies to a resolution under sub-paragraph (a) of paragraph (1) as well as a special resolution under sub-paragraph (b).

Notice of resolution to wind up voluntarily71.

(1) F228

When a company has passed a resolution for voluntary winding up, it shall, within 14 days from the passing of the resolution, give notice of the resolution by advertisement in the Belfast Gazette.

(2)

If default is made in complying with this Article, the company and every officer of it who is in default shall be guilty of an offence and, for continued contravention, shall be guilty of a continuing offence.

(3)

For the purposes of paragraph (2) the liquidator is deemed an officer of the company.

Annotations:
Amendments (Textual)

F228mod. by SR 2004/307

Commencement of voluntary winding up72. F229

A voluntary winding up is deemed to commence at the time of the passing of the resolution for voluntary winding up.

Annotations:
Amendments (Textual)

F229mod. by SR 2004/307

Consequences of resolution to wind up

Effect on business and status of company73.

(1)

In the case of a voluntary winding up, the company shall from the commencement of the winding up cease to carry on its business, except so far as may be required for its beneficial winding up.

(2) F230

However, the corporate state and corporate powers of the company, notwithstanding anything to the contrary in its articles, continue until the company is dissolved.

Annotations:
Amendments (Textual)

F230mod. by SR 2004/307

Avoidance of share transfers, etc., after winding‐up resolutionF23174.

Any transfer of shares, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the company's members, made after the commencement of a voluntary winding up is void.

Declaration of solvency

Statutory declaration of solvency75. F232

(1)

Where it is proposed to wind up a company voluntarily, the directors (or, in the case of a company having more than 2 directors, the majority of them) may at a directors' meeting make a statutory declaration to the effect that they have made a full inquiry into the company's affairs and that, having done so, they have formed the opinion that the company will be able to pay its debts in full, together with interest at the official rate (as defined in Article 5(1)), within such period, not exceeding 12 months from the commencement of the winding up, as may be specified in the declaration.

(2)

Such a declaration by the directors has no effect for the purposes of this Order unless—

(a) F232

it is made within the 5 weeks immediately preceding the date of the passing of the resolution for winding up, or on that date but before the passing of the resolution, and

(b)

it embodies a statement of the company's assets and liabilities as at the latest practicable date before the making of the declaration.

(3) F232

The declaration shall be delivered to the registrar before the expiration of 15 days from the date on which the resolution for winding up is passed.

(4)

A director making a declaration under this Article without having reasonable grounds for the opinion that the company will be able to pay its debts in full, together with interest at the official rate, within the period specified shall be guilty of an offence.

(5) F232

If the company is wound up in pursuance of a resolution passed within 5 weeks from the making of the declaration, and its debts (together with interest at the official rate) are not paid or provided for in full within the period specified, it is to be presumed (unless the contrary is shown) that the director did not have reasonable grounds for his opinion.

(6)

If a declaration required by paragraph (3) to be delivered to the registrar is not so delivered within the time specified by that paragraph, the company and every officer of it who is in default shall be guilty of an offence and, for continued contravention, shall be guilty of a continuing offence.

Annotations:
Amendments (Textual)

F232mod. by SR 2004/307

Distinction between “members'” and “creditors'” voluntary winding up76. F233

A winding up in the case of which a directors' statutory declaration in accordance with Article 75 has been made is a “members' voluntary winding up”; and a winding up in the case of which such a declaration has not been made is a “creditors' voluntary winding up”.

Annotations:
Amendments (Textual)

F233mod. by SR 2004/307

CHAPTER IIIMEMBERS' VOLUNTARY WINDING UP

Appointment of liquidator77.

(1) F234

In a members' voluntary winding up, the company in general meeting shall appoint one or more liquidators for the purpose of winding up the company's affairs and distributing its assets.

(2) F234

On the appointment of a liquidator all the powers of the directors cease, except so far as the company in general meeting or the liquidator sanctions their continuance.F234

Annotations:
Amendments (Textual)

F234mod. by SR 2004/307

Power to fill vacancy in office of liquidator78.

(1) F235

If a vacancy occurs by death, resignation or otherwise in the office of liquidator appointed by the company, the company in general meeting may, subject to any arrangement with its creditors, fill the vacancy.

(2) F235

For that purpose a general meeting may be convened by any contributory or, if there were more liquidators than one, by the continuing liquidators.

(3) F235

The meeting shall be held in the manner provided by this Order or by the company's articles, or in such manner as may, on application by any contributory or by the continuing liquidators, be determined by the High Court.F235

Annotations:
Amendments (Textual)

F235mod. by SR 2004/307

General company meeting at each year's end79.

(1) F236

Subject to Articles 82 and 88, in the event of the winding up continuing for more than one year, the liquidator shall summon a general meeting of the company at the end of the first year from the commencement of the winding up, and of each succeeding year, or at the first convenient date within 3 months from the end of the year or such longer period as the Department may allow.

(2)

The liquidator shall lay before the meeting an account of his acts and dealings, and of the conduct of the winding up, during the preceding year.

(3)

If the liquidator contravenes this Article, he shall be guilty of an offence.F236

Annotations:
Amendments (Textual)

F236mod. by SR 2004/307

Final meeting prior to dissolution80.

(1) F237

As soon as the company's affairs are fully wound up, the liquidator shall make up an account of the winding up, showing how it has been conducted and the company's property has been disposed of, and thereupon shall call a general meeting of the company for the purpose of laying before it the account, and giving an explanation of it.

(2)

The meeting shall be called by advertisement in the Belfast Gazette, specifying its time, place and object and published at least one month before the meeting.

(3)

Within one week from the meeting, the liquidator shall send to the registrar a copy of the account, and shall make a return to him of the holding of the meeting and of its date.

F238(3A)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F238(3B)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)

If the copy is not sent or the return is not made in accordance with paragraph (3), the liquidator shall be guilty of an offence and, for continued contravention, shall be guilty of a continuing offence.

(5)

If a quorum is not present at the meeting, the liquidator shall, in lieu of the return mentioned in paragraph (3), make a return that the meeting was duly summoned and that no quorum was present;and upon such a return being made, the provisions of paragraph (3) as to the making of the return are deemed complied with.

F237(6) F237

If the liquidator fails to call a general meeting of the company as required by paragraph (1), he shall be guilty of an offence.

Effect of company's insolvency81.

(1) F239

This Article applies where the liquidator is of the opinion that the company will be unable to pay its debts in full (together with interest at the official rate) within the period stated in the directors' declaration under Article 75.

(2)

The liquidator shall—

(a)

summon a meeting of creditors not later than 28 days from the day on which he formed that opinion;

(b)

not less than 7 days before the day on which the creditors' meeting is to be held—

(i)

send notices of that meeting to the creditors by post; and

(ii)

cause notice of that meeting to be advertised once in the Belfast Gazette and once at least in 2 newspapers circulating in each district in which the company's principal place of business in the United Kingdom was situated during the relevant period; and

(c)

during the period before the day on which the creditors' meeting is to be held, furnish creditors free of charge with such information concerning the affairs of the company as they may reasonably require;

and the notice of the creditors' meeting shall state the duty imposed by sub‐paragraph (c).

(3)

The liquidator shall also—

(a)

make out a statement in the prescribed form as to the affairs of the company;

(b)

lay that statement before the creditors' meeting; and

(c)

attend and preside at that meeting.

(4)

The statement as to the affairs of the company shall be verified by affidavit by the liquidator and shall show—

(a)

particulars of the company's assets, debts and liabilities;

(b)

the names and addresses of the company's creditors;

(c)

the securities held by them respectively;

(d)

the dates when the securities were respectively given; and

(e)

such further or other information as may be prescribed.

(5)

Where the company had no place of business in the United Kingdom during the relevant period, the reference in paragraph (2)(b)(ii) to the company's principal place of business in the United Kingdom is replaced by a reference to its registered office.

(6) F239

In this Article “the relevant period” means the period of 6 months immediately preceding the day on which were sent the notices summoning the company meeting at which it was resolved that the company be wound up voluntarily.

(7)

If the liquidator without reasonable excuse contravenes this Article, he shall be guilty of an offence.

Annotations:
Amendments (Textual)

F239mod. by SR 2004/307

Conversion to creditors' voluntary winding up82.

As from the day on which the creditors' meeting is held under Article 81, this Order has effect as if—

(a) F240

the directors' declaration under Article 75 had not been made; and

(b) F240

the creditors' meeting and the company meeting at which it was resolved that the company be wound up voluntarily were the meetings mentioned in Article 84;

and accordingly the winding up becomes a creditors' voluntary winding up.

Annotations:
Amendments (Textual)

F240mod. by SR 2004/307

CHAPTER IVCREDITORS' VOLUNTARY WINDING UP

Application of this Chapter83.

(1)

Subject to paragraph (2), this Chapter applies in relation to a creditors' voluntary winding up.

(2)

Articles 84 and 85 do not apply where, under Article 82, a members' voluntary winding up has become a creditors' voluntary winding up.

Meeting of creditors84.

(1)

The company shall—

(a) F241

cause a meeting of its creditors to be summoned not later than 14 days from the day on which there is to be held the company meeting at which the resolution for voluntary winding up is to be proposed;

(b)

not less than 7 days before the day on which the creditors' meeting is to be held—

(i)

cause the notices of that meeting to be sent by post; and

(ii)

cause notice of that meeting to be advertised once in the Belfast Gazette and once at least in 2 newspapers circulating in each district in which the company's principal place of business in the United Kingdom was situated during the relevant period.

(2)

The notice of the creditors' meeting shall state either—

(a)

the name and address of a person qualified to act as an insolvency practitioner in relation to the company who, during the period before the day on which that meeting is to be held, will furnish creditors free of charge with such information concerning the company's affairs as they may reasonably require; or

(b)

a place in each district mentioned in paragraph (1)(b)(ii) where, on the 2 business days falling next before the day on which that meeting is to be held, a list of the names and addresses of the company's creditors will be available for inspection free of charge.

(3)

Where the company had no place of business in the United Kingdom during the relevant period, the reference in paragraph (1)(b)(ii) to the company's principal place of business in the United Kingdom is replaced by a reference to its registered office.

(4) F241

In this Article “the relevant period” means the period of 6 months immediately preceding the day on which were sent thenotices summoning the company meeting at which it was resolved that the company be wound up voluntarily.

(5)

If the company without reasonable excuse contravenes paragraph (1) or (2), it shall be guilty of an offence.

Annotations:
Amendments (Textual)

F241mod. by SR 2004/307

Directors to lay statement of affairs before creditors85.

(1) F242

The directors of the company shall—

(a)

make out a statement in the prescribed form as to the affairs of the company;

(b)

cause that statement to be laid before the creditors' meeting under Article 84; and

(c)

appoint one of their number to preside at that meeting;

and it is the duty of the director so appointed to attend the meeting and preside over it.

(2) F242

The statement as to the affairs of the company shall be verified by affidavit by some or all of the directors and shall show—

(a)

particulars of the company's assets, debts and liabilities;

(b)

the names and addresses of the company's creditors;

(c)

the securities held by them respectively;

(d)

the dates when the securities were respectively given; and

(e)

such further or other information as may be prescribed.

(3) F242

If—

(a)

the directors without reasonable excuse contravene paragraph (1) or (2); or

(b)

any director without reasonable excuse contravenes paragraph (1), so far as requiring him to attend and preside at the creditors' meeting,

the directors or (as the case may be) the director shall be guilty of an offence.

Annotations:
Amendments (Textual)

F242mod. by SR 2004/307

Appointment of liquidator86.

(1) F243

The creditors and the company at their respective meetings mentioned in Article 84 may nominate a person to be liquidator for the purpose of winding up the company's affairs and distributing its assets.

(2)

The liquidator shall be the person nominated by the creditors or, where no person has been so nominated, the person (if any) nominated by the company.

(3) F243

In the case of different persons being nominated, any director, member or creditor of the company may, within 7 days from the date on which the nomination was made by the creditors, apply to the High Court for an order either—

(a)

directing that the person nominated as liquidator by the company shall be liquidator instead of or jointly with the person nominated by the creditors, or

(b)

appointing some other person to be liquidator instead of the person nominated by the creditors.F244

Appointment of liquidation committee87.

(1)

The creditors at the meeting to be held under Article 84 or at any subsequent meeting may, if they think fit, appoint a committee ( “the liquidation committee”) of not more than 5 persons to exercise the functions conferred on it by or under this Order.

(2) F245

If such a committee is appointed, the company may, either at the meeting at which the resolution for voluntary winding up is passed or at any time subsequently in general meeting, appoint such number of persons as they think fit to act as members of the committee, not exceeding 5.

(3)

However, the creditors may, if they think fit, resolve that all or any of the persons so appointed by the company ought not to be members of the liquidation committee; and if the creditors so resolve—

(a)

the persons mentioned in the resolution are not then, unless the High Court otherwise directs, qualified to act as members of the committee; and

(b)

on any application to the Court under this provision the Court may, if it thinks fit, appoint other persons to act as such members in place of the persons mentioned in the resolution.

Annotations:
Amendments (Textual)

F245mod. by SR 2004/307

Creditors' meeting where winding up converted under Article 8288.

Where, in the case of a winding up which was, under Article 82, converted to a creditors' voluntary winding up, a creditors' meeting is held in accordance with Article 81, any appointment made or committee established by that meeting is deemed to have been made or established by a meeting held in accordance with Article 84.

Cesser of directors' powers89.

On the appointment of a liquidator, all the powers of the directors cease, except so far as the liquidation committee (or, if there is no such committee, the creditors) sanction their continuance.

Vacancy in office of liquidator90.

If a vacancy occurs, by death, resignation or otherwise, in the office of a liquidator (other than a liquidator appointed by, or by the direction of, the High Court), the creditors may fill the vacancy.

Meetings of company and creditors at each year's end91.

(1) F246

If the winding up continues for more than one year, the liquidator shall summon a general meeting of the company and a meeting of the creditors at the end of the first year from the commencement of the winding up, and of each succeeding year, or at the first convenient date within 3 months from the end of the year or such longer period as the Department may allow.

(2)

The liquidator shall lay before each of the meetings an account of his acts and dealings and of the conduct of the winding up during the preceding year.

(3)

If the liquidator contravenes this Article, he shall be guilty of an offence.

(4)

Where under Article 82 a members' voluntary winding up has become a creditors' voluntary winding up, and the creditors' meeting under Article 81 is held 3 months or less before the end of the first year from the commencement of the winding up, the liquidator is not required by this Article to summon a meeting of creditors at the end of that year.F246

Annotations:
Amendments (Textual)

F246mod. by SR 2004/307

Final meeting prior to dissolution92.

(1) F247

As soon as the company's affairs are fully wound up, the liquidator shall make up an account of the winding up, showing how it has been conducted and the company's property has been disposed of, and thereupon shall call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meetings and giving an explanation of it.

(2)

Each such meeting shall be called by advertisement in the Belfast Gazette specifying the time, place and object of the meeting, and published at least one month before it.

(3)

Within one week from the date of the meetings (or, if they are not held on the same date, from the date of the later one) the liquidator shall send to the registrar a copy of the account, and shall make a return to him of the holding of the meetings and of their dates.

(4)

If the copy is not sent or the return is not made in accordance with paragraph (3), the liquidator shall be guilty of an offence and, for continued contravention, shall be guilty of a continuing offence.

(5)

However, if a quorum is not present at either such meeting, the liquidator shall, in lieu of the return required by paragraph (3), make a return that the meeting was duly summoned and that no quorum was present; and upon such return being made the provisons of that paragraph as to the making of the return are, in respect of that meeting, deemed complied with.

F247(6) F247

If the liquidator fails to call a general meeting of the company or a meeting of the creditors as required by this Article, he shall be guilty of an offence.

Annotations:
Amendments (Textual)

F247mod. by SR 2004/307

CHAPTER VPROVISIONS APPLYING TO BOTH KINDS OF VOLUNTARY WINDING UP

Distribution of company's property93.

Subject to the provisions of this Order as to preferential payments, the company's property in a voluntary winding up shall on the winding up be applied in satisfaction of the company's liabilities pari passu and, subject to that application, shall (unless the company's articles otherwise provide) be distributed among the members according to their rights and interests in the company.

Appointment or removal of liquidator by the High Court94.

(1)

If from any cause whatever there is no liquidator acting, the High Court may appoint a liquidator.

(2)

The High Court may, on cause shown, remove a liquidator and appoint another.

Notice by liquidator of his appointment95.

(1)

The liquidator shall, within 14 days from his appointment, publish in the Belfast Gazette and deliver to the registrar for registration a notice of his appointment in the form prescribed.

(2)

If the liquidator contravenes this Article, he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Acceptance of shares, etc., as consideration for sale of company's property96. F248

(1)

This Article applies, in the case of a company proposed to be, or being, wound up voluntarily, where the whole or part of the company's business or property is proposed to be transferred or sold

F249(a)

to another company ( “the transferee company”), whether or not the latter isF250a company registered under the Companies Act 2006F249, or

F249(b)

to a limited liability partnership (the transferee limited liability partnership).

(2)

With the requisite sanction, the liquidator of the company being, or proposed to be, wound up ( “the transferor company”) may receive, in compensation or part compensation for the transfer orF249 sale—

F249(a)

in the case of the transferee company, shares, policies or other like interests in the transferee company for distribution among the members of the transferor company, or

(b)

in the case of the transferee limited liability partnership, membership in the transferee limited liability partnership for distribution among the members of the transferor company.

(3)

The sanction requisite under paragraph (2) is—

(a)

in the case of a members' voluntary winding up, that of a special resolution of the company, conferring either a general authority on the liquidator or an authority in respect of any particular arrangement, and

(b)

in the case of a creditors' voluntary winding up, that of either the High Court or the liquidation committee.

(4)

Alternatively to paragraph (2), the liquidator may (with that sanction) enter into any other arrangement whereby the members of the transferorF249 company may—

F249(a)

in the case of the transferee company, in lieu of receiving cash, shares, policies or other like interests (or in addition thereto) participate in the profits of, or receive any other benefit from, the transferee company, or

(b)

in the case of the transferee limited liability partnership, in lieu of receiving cash or membership (or in addition thereto), participate in some other way in the profits of, or receive any other benefit from, the transferee limited liability partnership.

(5)

A sale or arrangement in pursuance of this Article is binding on members of the transferor company.

(6)

A special resolution is not invalid for the purposes of this Article by reason that it is passed before or concurrently with a resolution for voluntary winding up or for appointing liquidators; but, if an order is made within a year for winding up the company by the High Court, the special resolution is not valid unless sanctioned by the Court.

Dissent from arrangement under Article 9697.

(1) F251

This Article applies in the case of a voluntary winding up where, for the purposes of Article 96(2) or (4), there has been passed a special resolution of the transferor company providing the sanction requisite for the liquidator under that Article.

(2) F251

If a member of the transferor company who did not vote in favour of the special resolution expresses his dissent from it in writing, addressed to the liquidator and left at the company's registered office within 7 days from the passing of the resolution, he may require the liquidator either to abstain from carrying the resoltuion into effect or to purchase his interest at a price to be determined by agreement or by arbitration under this Article.

(3) F251

If the liquidator elects to purchase the member's interest, the purchase money must be paid before the company is dissolved and be raised by the liquidator in such manner as may be determined by special resolution.

(4) F251

For the purposes of an arbitration under this Article, the provisions of the Companies Clauses Consolidation Act 1845F252 with respect to the settlement of disputes by arbitration are incorporated with this Order, and—

(a)

in the construction of those provisions this Order is deemed the special Act and “the company” means the transferor company, and

(b)

any appointment by the incorporated provisions directed to be made under the hand of the secretary or any 2 of the directors may be made in writing by the liquidator (or, if there is more than one liquidator, then any 2 or more of them).

Reference of questions to the High Court98.

(1)

The liquidator or any contributory or creditor may apply to the High Court to determine any question arising in the winding up of a company, or to exercise, as respects the enforcing of calls or any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court.

(2)

The High Court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit, or many make such other order on the application as it thinks just.

(3)

F253A copy of an order made by virtue of this Article staying the proceedings in the winding up shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the registrar for registration.

No liquidator appointed or nominated by company99.

(1)

This Article applies where, in the case of a voluntary winding up, no liquidator has been appointed or nominated by the company.

(2)

The powers of the directors shall not be exercised, except with the sanction of the High Court or (in the case of a creditors' voluntary winding up) so far as may be necessary to secure compliance with Article 84 (creditors' meeting) and Article 85 (statement of affairs), during the period before the appointment or nomination of a liquidator of the company.

(3)

Paragraph (2) does not apply in relation to the powers of the directors—

(a)

to dispose of perishable goods and other goods the value of which is likely to diminish if they are not immediately disposed of, and

(b)

to do all such other things as may be necessary for the protection of the company's assets.

(4)

If the directors of the company without reasonable excuse contravene this Article, they shall be guilty of an offence.

Expenses of voluntary winding up100.

F254After the payment of any liabilities to which Article 148A applies, all expenses properly incurred in the winding up, including the remuneration of the liquidator, are payable out of the company's assets in priority to all other claims.

Saving for certain rights101.

The voluntary winding up of a company does not bar the right of any creditor or contributory to have it wound up by the High Court; but in the case of an application by a contributory the Court must be satisfied that the rights of the contributories will be prejudiced by a voluntary winding up.

CHAPTER VIWINDING UP BY THE HIGH COURT

Grounds and effect of winding‐up petition

Circumstances in which company may be wound up by the High Court102. F255

A company may be wound up by the High Court if—

(a)

the company has by special resolution resolved that the company be wound up by the Court,

(b)

being a public company which was registered as such on its original incorporation, the company has not been issued with F256a trading certificate under section 761 of the Companies Act 2006 (requirement as to minimum share capital) and more than a year has expired since it was so registered,

(c)

it is an old public company, within the meaning of F257Schedule 3 to the Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009,

(d)

the company does not commence its business within one year from its incorporation or suspends its business for a year,

(e)

F258. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f)

the company is unable to pay its debts,

F259(fa)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(g)

the Court is of the opinion that it is just and equitable that the company should be wound up.

Definition of inability to pay debts; the statutory demand103.

(1)

A company is deemed unable to pay its debts—

F260(a)

if a creditor (by assignment or otherwise) to whom the company is indebted in a sum exceeding £750 then due has served on the company, by leaving it at the company's registered office, F261a written demand (known as “the statutory demand”) in the prescribed form requiring the company to pay the sum due and the company has for 3 weeks thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor, or

(b)

if, in Northern Ireland, a certificate of unenforceability has been granted in respect of a judgment against the company under Article 19 of the Judgments Enforcement (Northern Ireland) Order 1981F262, or

(c)

if, in England and Wales, execution or other process issued on a judgment, decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part, or

(d)

if, in Scotland, the induciae of a charge for payment on an extract decree, or an extract registered bond, or an extract registered protest, have expired without payment being made, or

(e)

if it is otherwise proved to the satisfaction of the High Court that the company is unable to pay its debts as they fall due.

(2)

A company is also deemed unable to pay its debts if it is proved to the satisfaction of the High Court that the value of the company's assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.

(3)

The money sum for the time being specified in paragraph (1)(a) is subject to increase or reduction by order under Article 362(1)(a).

Application for winding up104.

(1)

Subject to the provisions of this Article, an application to the High Court for the winding up of a company shall be by petition presented either by the company, or the directors, or by any creditor or creditors (including any contingent or prospective creditor or creditors), contributory or contributories F263..., F264or by the chief clerk in exercise of the power conferred by section 35(4A) of the Criminal Justice Act (Northern Ireland) 1945 (enforcement of fines imposed on companies) or a clerk of petty sessions in exercise of the power conferred by Article 92A of the Magistrates' Courts (Northern Ireland) Order 1981 (enforcement of fines imposed on companies) or by all of any of those parties, together or separately.

(2) F265

Except as mentioned in paragraph (3), a contributory is not entitled to present a winding‐up petition unless either—

(a)

the number of members is reduced below 2, or

(b)

the shares in respect of which he is a contributory, or some of them, either were originally allotted to him, or have been held by him, and registered in his name, for at least 6 months during the 18 months before the commencement of the winding up, or have devolved on him through the death of a former holder.

(3) F265

A person who is liable under Article 63 to contribute to a company's assets in the event of its being wound up may petition on either of the grounds set out in Article 102(f) and (g), and paragraph (2) does not then apply; but unless the person is a contributory otherwise than under Article 63, he may not in his character as contributory petition on any other ground.

(4)

F266. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F267(4AA)

A winding up petition may be presented by the F268Financial Conduct Authority in a case falling within Article 104C(1) or (2).

F269(4A)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)

A winding‐up petition may be presented by the Department—

(a) F265

if the ground of the petition is that in Article 102(b) or (c), or

F270(b)

in a case falling within Article 104AF271 or 104B.

F272(5A)

A winding-up petition may be presented by the Regulator of Community Interest Companies in a case falling within section 50 of the Companies (Audit, Investigations and Community Enterprise) Act 2004.

(6)

Where a company is being wound up voluntarily, a winding‐up petition may be presented by the official receiver as well as by any other person authorised in that behalf under the other provisions of this Article; but the High Court shall not make a winding‐up order on the petition unless it is satisfied that the voluntary winding up cannot be continued with due regard to the interests of the creditors or contributories.

F273Petition for winding up on grounds of public interest104A.

(1)

Where it appears to the Department from—

(a)

any report made or information obtained underF274 Part 14 of the Companies Act 1985 (company investigations, &c.),

Sub-para.(b) rep. by 1993 c.36

F275(c) F276

any report made by inspectors under—

(i)

section 167, 168, 169 or 284 of the Financial Services and Markets Act 2000, or

(ii)

where the company is an open-ended investment company (within the meaning of that Act), regulations made as a result of section 262(2)(k) of that Act;

(cc) F276

any information or documents obtained under section 165, 171, 172, 173 or 175 of that Act;

(d)

any information obtained under section 2 of the Criminal Justice Act 1987 or section 52 of the Criminal Justice (Scotland) Act 1987 (fraud investigations), or

(e)

any information obtained under section 83 of the Companies Act 1989 (powers exercisable for purpose of assisting overseas regulatory authorities),

that it is expedient in the public interest that a company should be wound up, it may present a petition for it to be wound up if the court thinks it just and equitable for it to be so.

(2)

This Article does not apply if the company is already being wound up by the court.

F277Petition for winding up of SE104B.

(1)

Where—

(a)

an SE whose registered office is in Northern Ireland is not in compliance with Article 7 of Council Regulation (EC) No 2157/2001 on the Statute for a European Company (the “EC Regulation”) (location of head office and registered office), and

(b)

it appears to the Department that the SE should be wound up,

the Department may present a petition for it to be wound up if the court thinks it is just and equitable for it to be so.

(2)

This Article does not apply if the SE is already being wound up by the court.

(3)

In this Article “SE” has the same meaning as in the EC Regulation.

Annotations:
Amendments (Textual)

F277SR 2004/417

F278Petition for winding up of SCE104C

(1)

Where, in the case of an SCE whose registered office is in Northern Ireland—

(a)

there has been such a breach as is mentioned in Article 73(1) of Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative (SCE) (the “European Cooperative Society Regulation”) (winding up by the court or other competent authority), and

(b)

it appears to the F279Financial Conduct Authority that the SCE should be wound up,

the F280Authority may present a petition for the SCE to be wound up if the court thinks it is just and equitable for it to be so.

(2)

Where, in the case of an SCE whose registered office is in Northern Ireland—

(a)

the SCE is not in compliance with Article 6 of the European Cooperative Society Regulation (location of head office and registered office), and

(b)

it appears to the F281Financial Conduct Authority that the SCE should be wound up,

the F282Authority may present a petition for the SCE to be wound up if the court thinks it is just and equitable for it to be so.

(3)

This Article does not apply if the SCE is already being wound up by the court.

(4)

In this Article “SCE” has the same meaning as in the European Cooperative Society Regulation.

Powers of High Court on hearing of petition105.

(1)

On hearing a winding‐up petition the High Court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make an interim order, or any other order that it thinks fit; but the Court shall not refuse to make a winding‐up order on the ground only that the company's assets have been mortgaged to an amount equal to or in excess of those assets, or that the company has no assets.

(2)

If the petition is presented by members of the company as contributories on the ground that it is just and equitable that the company should be wound up, the High Court, if it is of the opinion—

(a)

that the petitioners are entitled to relief either by winding up the company or by some other means, and

(b)

that in the absence of any other remedy it would be just and equitable that the company should be wound up,

shall make a winding‐up order; but this does not apply if the Court is also of the opinion both that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy.

Power to stay or restrain proceedings against company106.

(1)

At any time after the presentation of a winding‐up petition, and before a winding‐up order has been made, the company, or any creditor or contributory, may—

(a)

where any action or proceeding against the company is pending in the High Court or Court of Appeal, apply to the Court in which the action or proceeding is pending for a stay of proceedings therein, and

(b)

where any other action or proceeding is pending against the company, apply to the High Court to restrain further proceedings in the action or proceeding;

and the Court to which application is so made may (as the case may be) stay or restrain the proceedings accordingly on such terms as it thinks fit.

(2) F283

In the case ofF284 a company registered but not formed under the Companies Act 2006, where the application to stay or restrain is by a creditor, this Article extends to actions and proceedings against any contributory of the company.

F285(3)

Paragraph (1) applies in relation to any action being taken in respect of the company under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement by deduction from accounts) as it applies in relation to any action or proceeding mentioned in sub-paragraph (b) of that paragraph.

Avoidance of property dispositions, etc.107. F286

F287(1)

In a winding up by the High Court, any disposition of the company's property, and any transfer of shares, or alteration in the status of the company's members, made after the commencement of the winding up is, unless the Court otherwise orders, void.

F288(2)

This Article has no effect in respect of anything done by an administrator of a company while a winding-up petition is suspended under paragraph 41 of Schedule B1.

F289(3)

This Article has no effect in respect of anything done during a moratorium under Part 1A, or during a period mentioned in Article 18(4)(a) following the end of a moratorium, where the winding-up order was made on a petition presented before the moratorium begins, unless the petition was presented under section 367 of the Financial Services and Markets Act 2000 on the ground mentioned in section 367(3)(b) of that Act.

Avoidance of sequestration or distress108.

F290(1)

Where a company is being wound up by the High Court, any sequestration or distress put in force against the estate or effects of the company after the commencement of the winding up is void.

F291(2)

In paragraph (1) the reference to “sequestration or distress” includes a hold notice or a deduction notice under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement by deduction from accounts) and, if paragraph (1) has effect in relation to a deduction notice, it also has effect in relation to the hold notice to which it relates (whenever the hold notice was given).

Commencement of winding up

Commencement of winding up by the High Court109.

(1) F292

If, before the presentation of a petition for the winding up of a company by the High Court, a resolution has been passed by the company for voluntary winding up, the winding up of the company is deemed to have commenced at the time of the passing of the resolution; and unless the Court, on proof of fraud or mistake, directs otherwise, all proceedings taken in the voluntary winding up are deemed to have been validly taken.

F293(1A)

Where the Court makes a winding-up order by virtue of paragraph 14(1)(e) of Schedule B1, the winding up is deemed to commence on the making of the order.

(2)

In any other case, the winding up of a company by the High Court is deemed to commence at the time of the presentation of the petition for winding up.

Consequences of winding‐up order110.

(1)

On the making of a winding‐up order, F294a copy of the order must forthwith be forwarded by the company (or otherwise as may be prescribed) to the registrar for registration.

(2)

When a winding‐up order has been made or a provisionalliquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the High Court and subject to such terms as the Court may impose.

(3) F295

When an order has been made for winding up a company F296registered but not formed under the Companies Act 2006, no action or proceeding shall be commenced or proceeded with against the company or its property or any contributory of the company, in respect of any debt of the company, except by leave of the High Court, and subject to such terms as the Court may impose.

F297(3A)

In paragraphs (2) and (3), the reference to an action or proceeding includes action in respect of the company under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement by deduction from accounts).

(4)

An order for winding up a company operates in favour of all the creditors and of all contributories of the company as if made on the joint petition of a creditor and of a contributory.

Investigation procedures

Company's statement of affairs111.

(1)

Where the High Court has made a winding‐up order or appointed a provisional liquidator, the official receiver may require some or all of the persons mentioned in paragraph (3) to make out and submit to him a statement in the prescribed form as to the affairs of the company.

(2)

The statement shall be verified by affidavit by the persons required to submit it and shall show—

(a)

particulars of the company's assets, debts and liabilities;

(b)

the names and addresses of the company's creditors;

(c)

the securities held by them respectively;

(d)

the dates when the securities were respectively given; and

(e)

such further or other information as may be prescribed or as the official receiver may require.

(3)

The persons referred to in paragraph (1) are—

(a)

those who are or have been officers of the company;

(b)

those who have taken part in the formation of the company at any time within one year before the relevant date;

(c)

those who are in the company's employment, or have been in its employment within that year, and are in the official receiver's opinion capable of giving the information required;

(d)

those who are or have been within that year officers of, or in the employment of, a company which is, or within that year was, an officer of the company.

(4)

Where any persons are required under this Article to submit a statement of affairs to the official receiver, they shall do so (subject to paragraph (5)) before the expiration of 21 days from the day on which the prescribed notice of the requirement is given to them by the official receiver.

(5)

The official receiver, if he thinks fit, may—

(a)

at any time release a person from an obligation imposed on him under paragraph (1) or (2); or

(b)

either when giving the notice mentioned in paragraph (4) or subsequently, extend the period so mentioned;

and where the official receiver has refused to exercise a power conferred by this paragraph, the High Court, if it thinks fit, may exercise it.

(6)

In this Article—

“employment” includes employment under a contract for services; and

“the relevant date” means—

(a)

in a case where a provisional liquidator is appointed, the date of his appointment; and

(b)

in a case where no such appointment is made, the date of the winding‐up order.

(7)

If a person without reasonable excuse contravenes any obligation imposed under this Article, he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Investigation by official receiver112.

(1)

Where a winding‐up order is made by the High Court, it is the duty of the official receiver to investigate—

(a)

if the company has failed, the causes of the failure; and

(b)

generally, the promotion, formation, business, dealings and affairs of the company,

and to make such report (if any) to the Court as he thinks fit.

(2)

The report is, in any proceedings, prima facie evidence of the facts stated in it.

Public examination of officers113.

(1)

Where a company is being wound up by the High Court, the official receiver may at any time before the dissolution of the company apply to the Court for the public examination of any person who—

(a)

is or has been an officer of the company; or

(b)

has acted as liquidator or administrator of the company or as receiver or manager; or

(c)

not being a person falling within sub‐paragraph (a) or (b), is or has been concerned, or has taken part, in the promotion, formation or management of the company.

(2)

Unless the High Court otherwise orders, the official receiver shall make an application under paragraph (1) if he is requested in accordance with the rules to do so by—

(a)

one‐half, in value, of the company's creditors; or

(b)

three‐quarters, in value, of the company's contributories.

(3)

On an application under paragraph (1), the High Court shall direct that a public examination of the person to whom the application relates shall be held on a day appointed by the Court; and that person shall attend on that day and be publicly examined as to the promotion, formation or management of the company or as to the conduct of its business and affairs, or his conduct or dealings in relation to the company.

(4)

The following may take part in the public examination of a person under this Article and may question that person concerning the matters mentioned in paragraph (3), namely—

(a)

the official receiver;

(b)

the liquidator of the company;

(c)

any person who has been appointed as special manager of the company's property or business;

(d)

any creditor of the company who has tendered a proof;

(e)

any contributory of the company.

Enforcement of Article 113114.

(1)

If a person without reasonable excuse fails at any time to attend his public examination under Article 113, he is guilty of a contempt of court and liable to be punished accordingly.

(2)

In a case where a person without reasonable excuse fails at any time to attend his examination under Article 113 or there are reasonable grounds for believing that a person has absconded, or is about to abscond, with a view to avoiding or delaying his examination under that Article, the High Court may cause a warrant to be issued to a constable—

(a)

for the arrest of that person; and

(b)

for the seizure of any books, papers, records, money or goods in that person's possession.

(3)

In such a case the High Court may authorise the person arrested under the warrant to be kept in custody, and anything seized under such a warrant to be held, in accordance with the rules, until such time as the Court may order.

Appointment of liquidator

Appointment and powers of provisional liquidator115.

(1)

Subject to the provisons of this Article, the High Court may, at any time after the presentation of a winding‐up petition, appoint a liquidator provisionally.

(2)

The appointment of a provisional liquidator may be made at any time before the making of a winding‐up order; and either the official receiver or any other fit person may be appointed.

(3)

The provisional liquidator shall carry out such functions as the High Court may confer on him.

(4)

When a liquidator is provisionally appointed by the High Court, his powers may be limited by the order appointing him.

Functions of official receiver in relation to office of liquidator116.

(1)

The following provisions of this Article have effect, subject to Article 119, on a winding‐up order being made by the High Court.

(2)

The official receiver, by virtue of his office, becomes the liquidator of the company and continues in office until another person becomes liquidator under the provisions of this Part.

(3)

The official receiver is, by virtue of his office, the liquidator during any vacancy.

(4)

At any time when he is the liquidator of the company, the official receiver may summon separate meetings of the company's creditors and contributories for the purpose of choosing a person to be liquidator of the company in place of the official receiver.

(5)

It is the duty of the official receiver—

(a)

as soon as practicable within the period of 12 weeks from the day on which the winding‐up order was made, to decide whether to exercise his power under paragraph (4) to summon meetings, and

(b)

if in pursuance of sub‐paragraph (a) he decides not to exercise that power, to give notice of his decision, before the end of that period, to the High Court and to the company's creditors and contributories, and

(c)

(whether or not he has decided to exercise that power) to exercise his power to summon meetings under paragraph (4) if he is at any time requested, in accordance with the rules, to do so by one‐quarter, in value, of the company's creditors;

and accordingly, where the duty imposed by sub‐paragraph (c) arises before the official receiver has performed a duty imposed by sub‐paragraph (a) or (b), he is not required to perform the latter duty.

(6)

A notice given under paragraph (5)(b) to the company's creditors shall contain an explanation of the creditors' power under paragraph (5)(c) to require the official receiver to summon meetings of the company's creditors and contributories.

Appointment by Department117.

(1)

In a winding up by the High Court the official receiver may, at any time when he is liquidator of the company, apply to the Department for the appointment of a person as liquidator in his place.

(2)

If meetings are held in pursuance of a decision under Article 116(5)(a), but no person is chosen to be liquidator as a result of those meetings, it is the duty of the official receiver to decide whether to refer the need for an appointment to the Department.

(3)

On an application under paragraph (1), or a reference made in pursuance of a decision under paragraph (2), the Department shall either make an appointment or decline to make one.

(4)

Where a liquidator has been appointed by the Department under paragraph (3), the liquidator shall give notice of his appointment to the company's creditors or, if the High Court so allows, shall advertise his appointment in accordance with the directions of theCourt.

(5)

In that notice or advertisement the liquidator shall—

(a)

state whether he proposes to summon a general meeting of the company's creditors under Article 120 for the purpose of determining (together with any meeting of contributories) whether a liquidation committee should be established under that Article, and

(b)

if he does not propose to summon such a meeting, set out the power of the company's creditors under that Article to require him to summon one.

Choice of liquidator at meetings of creditors and contributories118.

(1)

This Article applies where a company is being wound up by the High Court and separate meetings of the company's creditors and contributories are summoned for the purpose of choosing a person to be liquidator of the company.

(2)

The creditors and the contributories at their respective meetings may nominate a person to be liquidator.

(3)

The liquidator shall be the person nominated by the creditors or, where no person has been so nominated, the person (if any) nominated by the contributories.

(4)

In the case of different persons being nominated, any contributory or creditor may, within 7 days from the date on which the nomination was made by the creditors, apply to the High Court for an order either—

(a)

appointing the person nominated as liquidator by the contributories to be a liquidator instead of, or jointly with, the person nominated by the creditors; or

(b)

appointing some other person to be liquidator instead of the person nominated by the creditors.

Appointment by the High Court following administration or voluntary arrangement119.

F298(1)

Where a winding-up order is made immediately upon the appointment of an administrator ceasing to have effect, the High Court may appoint as liquidator of the company the person whose appointment as administrator has ceased to have effect.

(2)

Where a winding‐up order is made at a time when there is a supervisor of a voluntary arrangement approved in relation to the company under Part II, the High Court may appoint as liquidator of the company the person who is the supervisor at the time when the winding‐up order is made.

(3)

Where the High Court makes an appointment under this Article, the official receiver does not become the liquidator as otherwise provided by Article 116(2), and he has no duty under Article 116(5)(a) or (b) in respect of the summoning of creditors' or contributories' meetings.

Liquidation committees

Liquidation committee120.

(1)

Where a winding‐up order has been made and separate meetings of creditors and contributories have been summoned for the purpose of choosing a person to be liquidator, those meetings may establish a committee ( “the liquidation committee”) to exercise the functions conferred on it by or under this Order.

(2)

The liquidator (not being the official receiver) may at any time, if he thinks fit, summon separate general meetings of the company's creditors and contributories for the purpose of determining whether such a committee should be established and, if it is so determined, of establishing it.

The liquidator (not being the official receiver) shall summon such a meeting if he is requested, in accordance with the rules, to do so by one‐tenth, in value, of the company's creditors.

(3)

Where meetings are summoned under this Article, or for the purpose of choosing a person to be liquidator, and either the meeting of creditors or the meeting of contributories decides that a liquidation committee should be established, but the other meeting does not so decide or decides that a committee should not be established, the committee shall be established in accordance with the rules, unless the High Court otherwise orders.

(4)

The liquidation committee is not to be able or required to carry out its functions at any time when the official receiver is liquidator; but at any such time its functions are vested in the Department except to the extent that the rules otherwise provide.

(5)

Where there is for the time being no liquidation committee, and the liquidator is a person other than the official receiver, the functions of such a committee are vested in the Department except to the extent that the rules otherwise provide.

The liquidator's functions

General functions in winding up by the High Court121.

(1)

The functions of the liquidator of a company which is being wound up by the High Court are to secure that the assets of the company are got in, realised and distributed to the company's creditors and, if there is a surplus, to the persons entitled to it.

(2)

It is the duty of the liquidator of a company which is being wound up by the High Court, if he is not the official receiver—

(a)

to furnish the official receiver with such information,

(b)

to produce to the official receiver, and permit inspection by the official receiver of, such books, papers and other records, and

(c)

to give the official receiver such other assistance,

as the official receiver may reasonably require for the purposes of carrying out his functions in relation to the winding up.

Custody of company's property122.

When a winding‐up order has been made, or where a provisional liquidator has been appointed, the liquidator or the provisional liquidator (as the case may be) shall take into his custody or under his control all the property to which the company is or appears to be entitled.

Vesting of company property in liquidator123.

(1)

When a company is being wound up by the High Court, the Court may on the application of the liquidator by order direct that all or any part of the property belonging to the company or heldby trustees on its behalf shall vest in the liquidator by his official name; and thereupon the property to which the order relates vests accordingly.

(2)

The liquidator may, after giving such indemnity (if any) as the High Court may direct, bring or defend in his official name any action or other legal proceeding which relates to that property or which it is necessary to bring or defend for the purpose of effectually winding up the company and recovering its property.

Duty to summon final meeting124.

(1)

Subject to paragraph (2), if it appears to the liquidator of a company which is being wound up by the High Court that the winding up of the company is for practical purposes complete and the liquidator is not the official receiver, the liquidator shall summon a final general meeting of the company's creditors which—

(a)

shall receive the liquidator's report of the winding up, and

(b)

shall determine whether the liquidator should have his release under Article 148.

(2)

The liquidator may, if he thinks fit, give the notice summoning the final general meeting at the same time as giving notice of any finaldistribution of the company's property but, if summoned for an earlier date, that meeting shall be adjourned (and, if necessary, further adjourned) until a date on which the liquidator is able to report to the meeting that the winding up of the company is for practical purposes complete.

(3)

In the carrying out of his functions in the winding up it is the duty of the liquidator to retain sufficient sums from the company's property to cover the expenses of summoning and holding the meeting required by this Article.

F299(4)

The liquidator shall during the relevant period send to the High court and the registrar—

(a)

a copy of the report, and

(b)

a statement of whether any of the company’s creditors objected to the liquidator’s release.

(5)

The relevant period is the period of 7 days beginning with the day after the last day of the period prescribed by the rules as the period within which the creditors may object to the liquidator’s release.

F300(6)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F300(7)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Official receiver’s duty to send statement to registrar about other proceedings—F301124A.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General powers of High Court

Power to stay winding up125.

(1)

The High Court may at any time after an order for winding up, on the application either of the liquidator or the official receiver or any creditor or contributory, and on proof to the satisfaction of the Court that all proceedings in the winding up ought to be stayed, make an order staying the proceedings, either altogether or for a limited time, on such terms and conditions as the Court thinks fit.

(2)

The High Court may, before making an order, require the official receiver to furnish to it a report with respect to any facts or matters which are in his opinion relevant to the application.

(3)

F302A copy of every order made under this Article shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the registrar for registration.

Settlement of list of contributories and application of assets126.

(1) F303

As soon as may be after making a winding‐up order, the High Court shall settle a list of contributories, with power to rectify the register of members in all cases where rectification is required F304. . . , and shall cause the company's assets to be collected, and applied in discharge of its liabilities.

(2)

If it appears to the High Court that it will not be necessary to make calls on or adjust the rights of contributories, the Court may dispense with the settlement of a list of contributories.

(3)

In settling the list, the High Court shall distinguish between persons who are contributories in their own right and persons who are contributories as being representatives of or liable for the debts of others.

Debts due from contributory to company127.

(1) F305

The High Court may, at any time after making a winding‐up order, make an order on any contributory for the time being on the list of contributories to pay, in the manner directed by the order, any money due from him (or from the estate of the person whom he represents) to the company, exclusive of any money payable by him or the estate by virtue of any call F306. . . .

(2) F305

The High Court in making such an order may—

(a)

in the case of an unlimited company, allow to the contributory by way of set‐off any money due to him or the estate which he represents from the company on any independent dealing or contract with the company, but not any money due to him as a member of the company in respect of any dividend or profit, and

(b)

in the case of a limited company, make to any director whose liability is unlimited or to his estate the like allowance.

(3) F305

In the case of any company, whether limited or unlimited, when all the creditors are paid in full (together with interest at the official rate), any money due on any account whatever to a contributory from the company may be allowed to him by way of set‐off against any subsequent call.

Power to make calls128.

(1)

The High Court may, at any time after making a winding‐up order, and either before or after it has ascertained the sufficiency of the company's assets, make calls on all or any of the contributories for the time being settled on the list of the contributories to the extent of their liability, for payment of any money which the Court considers necessary to satisfy the company's debts and liabilities, and the expenses of winding up, and for the adjustment of the rights of the contributories among themselves, and make an order for payment of any calls so made.

(2)

In making a call the High Court may take into consideration the probability that some of the contributories may partly or wholly fail to pay it.

Payment into bank of money due to company129.

(1)

The High Court may order any contributory, purchaser or other person from whom money is due to the company to pay the amount due into such bank as the Court may appoint for the purpose to the account of the liquidator instead of to the liquidator, and such an order may be enforced in the same manner as if it had directed payment to the liquidator.

(2)

All money and securities paid or delivered into any such bank as is mentioned in paragraph (1) in the event of a winding up by the High Court are subject in all respects to the orders of the Court.

Order on contributory to be conclusive evidence130.

(1)

An order made by the High Court on a contributory is conclusive evidence that the money (if any) thereby appearing to be due or ordered to be paid is due, but subject to any right of appeal.

(2)

All other pertinent matters stated in the order are to be taken as truly stated as against all persons and in all proceedings.

Power to exclude creditors not proving in time131.

The High Court may fix a time or times within which creditors are to prove their debts or claims or to be excluded from the benefit of any distribution made before those debts are proved.

Adjustment of rights of contributories132.

The High Court shall adjust the rights of the contributories among themselves and distribute any surplus among the persons entitled to it.

Inspection of books by creditors, etc.133.

(1)

The High Court may, at any time after making a winding‐up order, make such order for inspection of the company's books and papers by creditors and contributories as the Court thinks just; and any books and papers in the company's possession may be inspected by creditors and contributories accordingly, but not further or otherwise.

(2)

Nothing in this Article excludes or restricts any statutory rights of—

(a)

a Northern Ireland department; or

(b)

a department of the Government of the United Kingdom; or

(c)

a person acting under the authority of either such department.

Payment of expenses of winding up134.

The High Court may, in the event of the assets being insufficient to satisfy the liabilities, make an order as to the payment out of the assets of the expenses incurred in the winding up in such order of priority as the Court thinks just.

Power to arrest absconding contributory135.

The High Court, at any time either before or after making a winding‐up order, on proof of probable cause for believing that a contributory is about to quit the United Kingdom or otherwise to abscond or to remove or conceal any of his property for the purpose of evading payment of calls, may cause the contributory to be arrested and his books and papers and movable personal property to be seized and him and them to be kept safely until such time as the Court may order.

Powers of High Court to be cumulative136.

Powers conferred F307on the High Court by this Order are in addition to, and not in restriction of, any existing powers of instituting proceedings against any contributory or debtor of the company, or the estate of any contributory or debtor, for the recovery of any call or other sum.

Delegation of powers to liquidator137.

(1)

Provision may be made by rules for enabling or requiring all or any of the powers and duties conferred and imposed on the High Court F308. . . in respect of the following matters—

(a)

the holding and conducting of meetings to ascertain the wishes of creditors and contributories,

(b) F309

the settling of lists of contributories and the rectifying of the register of members where required, and the collection and application of the assets,

(c)

the payment, delivery, conveyance, surrender or transfer of money, property, books or papers to the liquidator,

(d)

the making of calls,

(e)

the fixing of a time within which debts and claims must be proved,

to be exercised or performed by the liquidator as an officer of the Court, and subject to the Court's control.

(2) F309

But the liquidator shall not, without the special leave of the High Court, rectify the register of members, and shall not make any call without either that special leave or the sanction of the liquidation committee.

CHAPTER VIILIQUIDATORS

Preliminary

Style and title of liquidators138.

The liquidator of a company shall be described—

(a)

where a person other than the official receiver is liquidator, by the style of “the liquidator” of the particular company, or

(b)

where the official receiver is liquidator, by the style of “the official receiver and liquidator” of the particular company;

and in neither case shall he be described by an individual name.

Corrupt inducement affecting appointment139.

A person who gives, or agrees or offers to give, to any member or creditor of a company any valuable consideration with a view to securing his own appointment or nomination, or to securing or preventing the appointment or nomination of some person other than himself, as the company's liquidator shall be guilty of an offence.

Liquidator's powers and duties

Voluntary winding up140.

(1)

This Article has effect where a company is being wound up voluntarily, but subject to Article 141 in the case of a creditors' voluntary winding up.

(2)

The liquidator may—

(a) F310

in the case of a members' voluntary winding up, with the sanction of an F311special resolution of the company, and

(b)

in the case of a creditor's voluntary winding up, with the sanction of the High Court or the liquidation committee (or, if there is no such committee, a meeting of the company's creditors),

exercise any of the powers specified in Part I of Schedule 2 (payment of debts, compromise of claims, etc.).

(3)

The liquidator may, without sanction, exercise either of the powers specified in Part II of Schedule 2 (institution and defence of proceedings; carrying on the business of the company) and any of the general powers specified in Part III of Schedule 2.

(4)

The liquidator may—

(a)

exercise the High Court's power of settling a list of contributories (which list is prima facie evidence of the liability of the persons named in it to be contributories),

(b)

exercise the Court's power of making calls,

(c) F310

summon general meetings of the company for the purpose of obtaining its sanction by F312special resolution or for any other purpose he may think fit.

F310(5)

The liquidator shall pay the company's debts and adjust the rights of the contributories among themselves.

(6)

Where the liquidator in exercise of the powers conferred on him by this Order disposes of any property of the company to a person who is connected with the company (within the meaning given by Article 7), he shall, if there is for the time being a liquidation committee, give notice to the committee of that exercise of his powers.

Creditors' voluntary winding up141.

(1)

This Article applies where, in the case of a creditors' voluntary winding up, a liquidator has been nominated by the company.

(2)

The powers conferred on the liquidator by Article 140 shall not be exercised, except with the sanction of the High Court, during the period before the holding of the creditors' meeting under Article 84.

(3)

Paragraph (2) does not apply in relation to the power of the liquidator—

(a)

to take into his custody or under his control all the property to which the company is or appears to be entitled;

(b)

to dispose of perishable goods and other goods the value of which is likely to diminish if they are not immediately disposed of; and

(c)

to do all such other things as may be necessary for the protection of the company's assets.

(4)

The liquidator shall attend the creditors' meeting held under Article 84 and shall report to the meeting on any exercise by him of his powers (whether or not under this Article or under Article 98 or 140).

(5)

If default is made—

(a)

by the company in complying with paragraph (1) or (2) of Article 84, or

(b) F313

by the directors in complying with paragraph (1) or (2) of Article 85,

the liquidator shall, within 7 days from the relevant day, apply to the High Court for directions as to the manner in which that default is to be remedied.

(6)

“The relevant day” means the day on which the liquidator was nominated by the company or the day on which he first became aware of the default, whichever is the later.

(7)

If the liquidator without reasonable excuse contravenes this Article, he shall be guilty of an offence.

Annotations:
Amendments (Textual)

F313mod. by SR 2004/307

Winding up by the High Court142.

(1)

Where a company is being wound up by the High Court, the liquidator may—

(a)

with the sanction of the Court or the liquidation committee, exercise any of the powers specified in Parts I and II of Schedule 2 (payment of debts; compromise of claims, etc.; institution and defence of proceedings; carrying on of the business of the company), and

(b)

with or without that sanction, exercise any of the general powers specified in Part III of Schedule 2.

(2)

Where the liquidator (not being the official receiver), in exercise of the powers conferred on him by this Order—

(a)

disposes of any property of the company to a person who is connected with the company (within the meaning given by Article 7), or

(b)

employs a solicitor to assist him in the carrying out of his functions,

he shall, if there is for the time being a liquidation committee, give notice to the committee of that exercise of his powers.

(3)

The exercise by the liquidator in a winding up by the High Court of the powers conferred by this Article is subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers.

Supplementary powers143.

(1)

This Article applies in the case of a company which is being wound up by the High Court.

(2)

The liquidator may summon general meetings of the creditors or contributories for the purpose of ascertaining their wishes; and it is his duty to summon meetings at such times as the creditors or contributories by resolution (either at the meeting appointing the liquidator or otherwise) may direct, or whenever requested in writing to do so by one‐tenth in value of the creditors or contributories (as the case may be).

(3)

The liquidator may apply to the High Court (in the prescribed manner) for directions in relation to any particular matter arising in the winding up.

(4)

Subject to the provisions of this Order, the liquidator shall use his own discretion in the management of the assets and their distribution among the creditors.

(5)

If any person is aggrieved by any act or decision of the liquidator, that person may apply to the High Court; and the Court may confirm, reverse or modify the act or decision complained of, and make such order as it thinks just.

F314(5A)

Where at any time after a winding‐up petition has been presented to the High Court against any person (including an insolvent partnership or other body which may be wound up under Part VI of the Order as an unregistered company), whether by virtue of the provisions of the Insolvent Partnerships Order (Northern Ireland) 1995 or not, the attention of the Court is drawn to the fact that the person in question is a member of an insolvent partnership, the Court may make an order as to the future conduct of the insolvency proceedings and any such order may apply any provisions of that Order with any necessary modifications.

(5B)

Any order or directions under paragraph (5A) may be made or given on the application of the official receiver, any responsible insolvency practitioner, the trustee of the partnership or any other interested person and may include provisions as to the administration of the joint estate of the partnership, and in particular how it and the separate estate of any member are to be administered.

(5C)

Where the High Court makes an orderF315 under section 367(3)(a) of the Financial Services and Markets Act 2000 for the winding up of an insolvent partnership, the Court may make an order as to the future conduct of the winding‐up proceedings, and any such order may apply any provisions of the Insolvent Partnerships Order (Northern Ireland) 1995 with any necessary modifications.

Annotations:
Amendments (Textual)

F314SR 1995/225

F315SI 2002/1555

Enforcement of liquidator's duty to make returns, etc.144.

(1)

If a liquidator who has made any default—

(a)

in filing, delivering or making any return, account or other document, or

(b)

in giving any notice which he is by law required to file, deliver, make or give,

fails to make good the default within 14 days from the service on him of a notice requiring him to do so, the High Court has the following powers.

(2)

On an application made by any creditor or contributory of the company, or by the registrar, the High Court may make an order directing the liquidator to make good the default within such time as may be specified in the order.

(3)

The High Court's order may provide that all costs of and incidental to the application shall be borne by the liquidator.

(4)

Nothing in this Article prejudices the operation of any statutory provision imposing penalties on a liquidator in respect of any such default as is mentioned in paragraph (1).

Removal: vacation of office

Removal, etc. (voluntary winding up)145.

(1)

This Article applies with respect to the removal from office and vacation of office of the liquidator of a company which is being wound up voluntarily.

(2)

Subject to paragraph (3), the liquidator may be removed from office only by an order of the High Court or—

(a) F316

in the case of a members' voluntary winding up, by a general meeting of the company summoned specially for that purpose, or

(b)

in the case of a creditors' voluntary winding up, by a general meeting of the company's creditors summoned specially for that purpose in accordance with the rules.

(3)

Where the liquidator was appointed by the High Court under Article 94, a meeting such as is mentioned in paragraph (2) shall be summoned for the purpose of replacing him only if he thinks fit or the Court so directs or the meeting is requested, in accordance with the rules—

(a)

in the case of a members' voluntary winding up, by members representing not less than one‐half of the total voting rights of all the members having at the date of the request a right to vote at the meeting, or

(b)

in the case of a creditors' voluntary winding up, by not less than one‐half, in value, of the company's creditors.

(4)

A liquidator shall vacate office if he ceases to be a person who is qualified to act as an insolvency practitioner in relation to the company.

(5)

A liquidator may, in the prescribed circumstances, resign his office by giving notice of his resignation to the registrar.

(6)

Where—

(a) F316

in the case of a members' voluntary winding up, a final meeting of the company has been held under Article 80, or

(b) F316

in the case of a creditors' voluntary winding up, final meetings of the company and of the creditors have been held under Article 92,

the liquidator whose report was considered at the meeting or meetingsshall vacate office as soon as he has complied with paragraph (3) ofthat Article and has given notice to the registrar that the meeting or meetings have been held and of the decisions (if any) of the meeting or meetings.F316

Annotations:
Amendments (Textual)

F316mod. by SR 2004/307

Removal, etc. (winding up by the High Court)146.

(1)

This Article applies with respect to the removal from office and vacation of office of the liquidator of a company which is being wound up by the High Court, or of a provisional liquidator.

(2)

Subject to paragraphs (3) and (4), the liquidator may be removed from office only by an order of the High Court or by a general meeting of the company's creditors summoned specially for that purpose in accordance with the rules; and a provisional liquidator may be removed from office only by an order of the Court.

(3)

Where—

(a)

the official receiver is liquidator otherwise than in succession under Article 116(3) to a person who held office as a result of a nomination by a meeting of the company's creditors or contributories, or

(b)

the liquidator was appointed by the High Court otherwise than under Article 118(4)(a) or 119(1), or was appointed by the Department,

a general meeting of the company's creditors shall be summoned for the purpose of replacing him only if he thinks fit, or the Court so directs, or the meeting is requested, in accordance with the rules, by not less than one‐quarter, in value, of the creditors.

(4)

If appointed by the Department, the liquidator may be removed from office by a direction of the Department.

(5)

A liquidator or provisional liquidator, not being the official receiver, shall vacate office if he ceases to be a person who is qualified to act as an insolvency practitioner in relation to the company.

(6)

A liquidator may, in the prescribed circumstances, resign his office by giving notice of his resignation to the High Court.

(7)

Where a final meeting has been held under Article 124 (liquidator's report on completion of winding up), the liquidator whose report was considered at the meeting shall vacate office as soon as he has given notice to the High Court and the registrar that the meeting has been held and of the decisions (if any) of the meeting.

Release of liquidator

Release (voluntary winding up)147.

(1)

This Article applies with respect to the release of the liquidator of a company which is being wound up voluntarily.

(2)

A person who has ceased to be a liquidator shall have his release with effect from the following time, that is to say—

(a) F317

in the case of a person who has been removed from office by a general meeting of the company or by a general meeting of the company's creditors that has not resolved against his release or who has died, the time at which notice is given to the registrar in accordance with the rules that that person has ceased to hold office;

(b)

in the case of a person who has been removed from office by a general meeting of the company's creditors that has resolved against his release, or by the High Court, or who has vacated office under Article 145(4), such time as the Department may, on the application of that person, determine;

(c)

in the case of a person who has resigned, such time as may be prescribed;

(d)

in the case of a person who has vacated office under Article 145(6)(a), the time at which he vacated office;

(e)

in the case of a person who has vacated office under sub‐paragraph (b) of Article 145(6)—

(i)

if the final meeting of the creditors referred to in that sub‐paragraph has resolved against that person's release, such time as the Department may, on an application by that person, determine, and

(ii)

if that meeting has not resolved against that person's release, the time at which he vacated office.

(3)

Where a liquidator has his release under paragraph (2), he is, with effect from the time specified in that paragraph, discharged from all liability both in respect of acts or omissions of his in the winding up and otherwise in relation to his conduct as liquidator.

(4)

Nothing in this Article prevents the exercise, in relation to a person who has had his release under paragraph (2), of the High Court's powers under Article 176 (summary remedy against delinquent directors, liquidators, etc.).

Annotations:
Amendments (Textual)

F317mod. by SR 2004/307

Release (winding up by the High Court)148.

(1)

This Article applies with respect to the release of the liquidator of a company which is being wound up by the High Court, or of a provisional liquidator.

(2)

Where the official receiver has ceased to be liquidator and a person becomes liquidator in his stead, the official receiver has his release with effect from the following time, that is to say—

(a)

in a case where that person was nominated by a general meeting of creditors or contributories, or was appointed by the Department, the time at which the official receiver gives notice to the High Court that he has been replaced;

(b)

in a case where that person is appointed by the Court, such time as the Court may determine.

(3)

If the official receiver while he is a liquidator gives notice to the Department that the winding up is for practical purposes complete, he has his release with effect from such time as the Department may determine.

(4)

A person other than the official receiver who has ceased to be a liquidator has his release with effect from the following time, that is to say—

(a)

in the case of a person who has been removed from office by a general meeting of creditors that has not resolved against his release or who has died, the time at which notice is given to the High Court in accordance with the rules that that person has ceased to hold office;

(b)

in the case of a person who has been removed from office by a general meeting of creditors that has resolved against his release, or by the High Court or the Department, or who has vacated office under Article 146(5), such time as the Department may, on an application by that person, determine;

(c)

in the case of a person who has resigned, such time as may be prescribed;

(d)

in the case of a person who has vacated office under Article 146(7)—

(i)

if the final meeting referred to in that paragraph has resolved against that person's release, such time as the Department may, on an application by that person, determine, and

(ii)

if that meeting has not so resolved, the time at which that person vacated office.

(5)

A person who has ceased to hold office as a provisional liquidator has his release with effect from such time as the High Court may, on an application by him, determine.

(6)

Where the official receiver or a liquidator or provisional liquidator has his release under this Article, he is, with effect from the time specified in the preceding provisions of this Article, discharged from all liability both in respect of acts or omissions of his in the winding up and otherwise in relation to his conduct as liquidator or provisional liquidator.

(7)

Nothing in this Article prevents the exercise, in relation to a person who has had his release under this Article, of the High Court's powers under Article 176 (summary remedy against delinquent directors, liquidators, etc.).

CHAPTER VIIIPROVISIONS OF GENERAL APPLICATION IN WINDING UP

F318Moratorium: order of priority of payment of debts

Moratorium debts etc: priority148A

(1)

This Article applies where proceedings for the winding up of a company are begun before the end of the period of 12 weeks beginning with the day after the end of any moratorium for the company under Part 1A.

(2)

In the winding up, the following are payable out of the company's assets (in the order of priority shown) in preference to all other claims—

(a)

any prescribed fees or expenses of the official receiver acting in any capacity in relation to the company;

(b)

moratorium debts and priority pre-moratorium debts.

(3)

In paragraph (2)(b) “priority pre-moratorium debt” means—

(a)

any pre-moratorium debt that is payable in respect of—

(i)

the monitor's remuneration or expenses,

(ii)

goods or services supplied during the moratorium,

(iii)

rent in respect of a period during the moratorium, or

(iv)

wages or salary arising under a contract of employment, so far as relating to a period of employment before or during the moratorium,

(b)

any pre-moratorium debt that—

(i)

consists of a liability to make a redundancy payment, and

(ii)

fell due before or during the moratorium, and

(c)

any pre-moratorium debt that—

(i)

arises under a contract or other instrument involving financial services,

(ii)

fell due before or during the moratorium, and

(iii)

is not relevant accelerated debt (see paragraph (4)).

(4)

For the purposes of paragraph (3)(c)—

“relevant accelerated debt” means any pre-moratorium debt that fell due during the relevant period by reason of the operation of, or the exercise of rights under, an acceleration or early termination clause in a contract or other instrument involving financial services;

“the relevant period” means the period—

(a)

beginning with the day on which the statement under Article 13BC(1)(e) is made, and

(b)

ending with the last day of the moratorium.

(5)

The rules may make provision as to the order in which the debts mentioned in paragraph (2)(b) rank among themselves in a case where the assets of the company are insufficient to meet them in full.

(6)

Regulations may amend this Article for the purposes of changing the definition of “moratorium debt” or “priority pre-moratorium debt” in this Article.

(7)

Regulations under paragraph (6) may make consequential, supplementary, incidental or transitional provision or savings.

(8)

Regulations may not be made under paragraph (6) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

(9)

For the purposes of this Article proceedings for the winding up of a company are begun when—

(a)

a winding-up petition is presented, or

(b)

a resolution for voluntary winding up is passed.

(10)

Any rules made under Article 13D(4) (meaning of supply of goods or services) apply also for the purposes of paragraph (3)(a)(ii) of this Article.

(11)

In this Article—

“acceleration or early termination clause”, in relation to a contract or other instrument involving financial services, means a provision of the contract or other instrument—

(a)

under which, on the happening of an event—

  1. (i)

    a debt or other liability falls due earlier than it otherwise would, or

  2. (ii)

    a debt or other liability is terminated and replaced by another debt or liability, or

(b)

which confers on a party a right which, if exercised, will result in —

  1. (i)

    a debt or other liability falling due earlier than it otherwise would, or

  2. (ii)

    a debt or other liability being terminated and replaced by another debt or liability;

“contract or other instrument involving financial services” has the same meaning as it has for the purposes of Article 13D (see Schedule ZA2);

“monitor's remuneration or expenses” has the meaning given by Article 13D;

“moratorium debt” has the meaning given by Article 13HD;

“pre-moratorium debt” has the meaning given by Article 13HD;

“redundancy payment” has the meaning given by Article 13D;

“wages or salary” has the meaning given by Article 13D.

Preferential debts

Preferential debts (general provision)149.

(1)

In a winding up the company's preferential debts F319... shall be paid in priority to all other debts F320after the payment of—

(a)

any liabilities to which Article 148A applies, and

(b)

expenses of the winding up.

F321(1A)

Ordinary preferential debts rank equally among themselves F322... and shall be paid in full, unless the assets are insufficient to meet them, in which case they abate in equal proportions.

(1B)

Secondary preferential debts rank equally among themselves after the ordinary preferential debts and shall be paid in full, unless the assets are insufficient to meet them, in which case they abate in equal proportions.

(2)

Preferential debts—

F323(a)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)

so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures secured by, or holders of, any floating charge created by the company, and shall be paid accordingly out of any property comprised in or subject to that charge.

F324(3)

In this Article “preferential debts”, “ordinary preferential debts” and “secondary preferential debts” each has the meaning given in Article 346.

Preferential charge on goods distrained F325, etc150.

(1)

This Article applies where a company is being wound up by the High Court, and is without prejudice to Article 108 (avoidance of sequestration or distress).

F326(2)

Paragraph (2A) applies where—

(a)

any person has distrained upon the goods or effects of the company, or

(b)

Her Majesty's Revenue and Customs has been paid any amount from an account of the company under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement by deduction from accounts),

within the 3 months immediately preceding the date of the winding-up order.

(2A)

Where this paragraph applies—

(a)

in a case within paragraph (2)(a), the goods or effects, or the proceeds of their sale, and

(b)

in a case within paragraph (2)(b), the amount in question,

is charged for the benefit of the company with the preferential debts of the company to the extent that the company's property is for the time being insufficient for meeting those debts.

(3)

Where by virtue of a charge under paragraph F327(2A) any person surrenders any goods or effects to a company or makes a payment to a company, that person ranks, in respect of the amount of the proceeds of sale of those goods or effects by the liquidator or (as the case may be) the amount of the payment, as a preferential creditor of the company, except as against so much of the company's property as is available for the payment of preferential creditors by virtue of the surrender or payment.

F328Non-preferential debts

Non-preferential debts of financial institutions150ZZA.

(1)

This Article applies in the winding up of a company that is a relevant financial institution.

(2)

The company’s ordinary non-preferential debts are to be paid in priority to its secondary non-preferential debts.

(3)

The company’s secondary non-preferential debts—

(a)

are to be paid in priority to its tertiary non-preferential debts, and

(b)

rank equally among themselves after the ordinary non-preferential debts and are to be paid in full, unless the assets are insufficient to meet them, in which case they abate in equal proportions.

(4)

See Article 347A for definitions relevant to this Article.

F329Property subject to floating charge

F330Payment of expenses of winding up150ZA

(1)

The expenses of winding up, so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over any claims to property comprised in or subject to any floating charge created by the company and shall be paid out of any such property accordingly.

(2)

In paragraph (1)—

(a)

the reference to assets of the company available for payment of general creditors does not include any amount made available under Article 150A(2)(a);

(b)

the reference to claims to property comprised in or subject to a floating charge is to the claims of—

(i)

the holders of debentures secured by, or holders of, the floating charge, and

(ii)

any preferential creditors entitled to be paid out of that property in priority to them.

(3)

Provision may be made by rules restricting the application of paragraph (1), in such circumstances as may be prescribed, to expenses authorised or approved—

(a)

by the holders of debentures secured by, or holders of, the floating charge and by any preferential creditors entitled to be paid in priority to them, or

(b)

by the Court.

(4)

References in this Article to the expenses of the winding up are to all expenses properly incurred in the winding up, including the remuneration of the liquidator.

F331Share of assets for unsecured creditors150A.

(1)

This Article applies where a floating charge relates to property of a company—

(a)

which has gone into liquidation,

(b)

which is in administration,

(c)

of which there is a provisional liquidator, or

(d)

of which there is a receiver.

(2)

The liquidator, administrator or receiver—

(a)

shall make a prescribed part of the company's net property available for the satisfaction of unsecured debts, and

(b)

shall not distribute that part to the proprietor of a floating charge except in so far as it exceeds the amount required for the satisfaction of unsecured debts.

(3)

Paragraph (2) shall not apply to a company if—

(a)

the company's net property is less than the prescribed minimum, and

(b)

the liquidator, administrator or receiver thinks that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits.

(4)

Paragraph (2) shall also not apply to a company if or in so far as it is disapplied by—

(a)

a voluntary arrangement in respect of the company, or

(b)

a compromise or arrangement agreed under F332Part 26 F333or 26A of the Companies Act 2006 (arrangements and reconstructions).

(5)

Paragraph (2) shall also not apply to a company if—

(a)

the liquidator, administrator or receiver applies to the High Court for an order under this paragraph on the ground that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits, and

(b)

the Court orders that paragraph (2) shall not apply.

(6)

In paragraphs (2) and (3) a company's net property is the amount of its property which would, but for this Article, be available for satisfaction of claims of holders of debentures secured by, or holders of, any floating charge created by the company.

(7)

An order under paragraph (2) prescribing part of a company's net property may, in particular, provide for its calculation—

(a)

as a percentage of the company's net property, or

(b)

as an aggregate of different percentages of different parts of the company's net property.

(8)

An order under this Article shall be subject to negative resolution.

(9)

In this Article—

“floating charge” means a charge which is a floating charge on its creation and which is created after the first order under paragraph (2)(a) comes into operation, and

“prescribed” means prescribed by order by the Department.

(10)

An order under this Article may include transitional or incidental provision.

Special managers

Power to appoint special manager151.

(1)

Where a company has gone into liquidation or a provisional liquidator has been appointed, the High Court may, on an application under this Article, appoint any person to be the special manager of the business or property of the company.

(2)

The application may be made by the liquidator or provisional liquidator in any case where it appears to him that the nature of the business or property of the company, or the interests of the company's creditors or contributories or members generally, require the appointment of another person to manage the company's business or property.

(3)

The special manager has such powers as may be entrusted to him by the High Court.

(4)

The High Court's power to entrust powers to the special manager includes power to direct that any provision of this Order that has effect in relation to the provisional liquidator or liquidator of a company shall have the like effect in relation to the special manager for the purposes of the carrying out by him of any of the functions of the provisional liquidator or liquidator.

(5)

The special manager shall—

(a)

give such security as may be prescribed;

(b)

prepare and keep such accounts as may be prescribed; and

(c)

produce those accounts in accordance with the rules to the Department or to such other persons as may be prescribed.

Disclaimer

Power to disclaim onerous property152.

(1)

Subject to the provisions of this Article and Article 153, where a company is being wound up, the liquidator may, by the giving of the prescribed notice, disclaim any onerous property and may do so notwithstanding that he has taken possession of it, endeavoured to sell it, or otherwise exercised rights of ownership in relation to it.

(2)

The following is onerous property for the purposes of this Article—

(a)

any unprofitable contract, and

(b)

any other property of the company which is unsaleable or not readily saleable or is such that it may give rise to a liability to pay money or perform any other onerous act.

(3)

A disclaimer under this Article—

(a)

operates so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the company in or in respect of the property disclaimed; but

(b)

does not, except so far as is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person.

(4)

A notice of disclaimer shall not be given under this Article in respect of any property if—

(a)

a person interested in the property has applied in writing to the liquidator or one of this predecessors as liquidator requiring the liquidator or that predecessor to decide whether he will disclaim or not, and

(b)

the period of 28 days from the day on which that application was made, or such longer period as the High Court may allow, has expired without a notice of disclaimer having been given under this Article in respect of that property.

(5)

Any person sustaining loss or damage in consequence of the operation of a disclaimer under this Article is deemed a creditor ofthe company to the extent of the loss or damage and accordingly may prove for the loss or damage in the winding up.

Disclaimer of leaseholds153.

(1)

The disclaimer under Article 152 of any property of a leasehold nature does not take effect unless a copy of the disclaimer has been served (so far as the liquidator is aware of their addresses) on every person claiming under the company as underlessee or mortgagee and either—

(a)

no application under Article 155 is made with respect to that property before the expiration of 14 days from the day on which the last notice served under this paragraph was served; or

(b)

where such an application has been made, the High Court directs that the disclaimer shall take effect.

(2)

Where the High Court gives a direction under paragraph (1)(b) it may also, instead of or in addition to any order it makes under Article 155, make such orders with respect to fixtures, tenant's improvements and other matters arising out of the lease as it thinks fit.

(3)

For the purposes of this Article, property held under a fee farm grant creating the relation of landlord and tenant is property of a leasehold nature and a reference to an underlessee includes a person who holds a lease from the fee farm grantee.

Land subject to rentcharge154.

(1)

The following applies where, in consequence of the disclaimer under Article 152 of any land subject to a rentcharge, that land vests by operation of law in the Crown or any other person (referred to in paragraph (2) as “the proprietor”).

(2)

The proprietor and the successors in title of the proprietor are not subject to any personal liability in respect of any sums becoming due under the rentcharge except sums becoming due after the proprietor, or some person claiming under or through the proprietor, has taken possession or control of the land or has entered into occupation of it.

Powers of High Court (general)155.

(1)

Where the liquidator has disclaimed property under Article 152 an application under this Article may be made to the High Court by—

(a)

any person who claims an interest in the disclaimed property, or

(b)

any person who is under any liability in respect of the disclaimed property, not being a liability discharged by the disclaimer.

(2)

Subject to paragraph (3) and Article 156, the High Court may on the application make an order, on such terms as it thinks fit, for the vesting of the disclaimed property in, or for its delivery to—

(a)

a person entitled to it or a trustee for such a person, or

(b)

a person subject to such a liability as is mentioned in paragraph (1)(b) or a trustee for such a person.

(3)

The High Court shall not make an order under paragraph (2)(b) except where it appears to the Court that it would be just to do so for the purpose of compensating the person subject to the liability in respect of the disclaimer.

(4)

The effect of any order under this Article shall be taken into account in assessing for the purpose of Article 152(5) the extent of any loss or damage sustained by any person in consequence of the disclaimer.

(5)

An order under this Article vesting property in any person need not be completed by conveyance, assignment or transfer.

Powers of High Court (leaseholds)156.

(1)

The High Court shall not make an order under Article 155 vesting property of a leasehold nature in any person claiming under the company as underlessee or mortgagee except on terms making that person—

(a)

subject to the same liabilities and obligations as the company was subject to under the lease at the commencement of the winding up, or

(b)

if the Court thinks fit, subject to the same liabilities and obligations as that person would be subject to if the lease had been assigned to him at the commencement of the winding up.

(2)

For the purposes of an order under Article 155 relating to only part of any property comprised in a lease, the requirements of paragraph (1) apply as if the lease comprised only the property to which the order relates.

(3)

Where paragraph (1) applies and no person claiming under the company as underlessee or mortgagee is willing to accept an order under Article 155 on the terms required by virtue of that paragraph, the High Court may, by order under that Article, vest the company's estate or interest in the property in any person who is liable (whether personally or in a representative capacity, and whether alone or jointly with the company) to perform the lessee's covenants in the lease.

(4)

An order of the High Court under paragraph (3) may vest that estate and interest in such a person freed and discharged from all estates, incumbrances and interests created by the company.

(5)

Where paragraph (1) applies and a person claiming under the company as underlessee or mortgagee declines to accept an order under Article 155, that person is excluded from all interest in the property.

(6)

Paragraph (3) of Article 153 shall apply for the purposes of this Article as it applies for the purposes of that Article.

Miscellaneous matters

Rescission of contracts by the High Court157.

(1)

The High Court may, on the application of a person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non‐performance of the contract, or otherwise as the Court thinks just.

(2)

Any damages payable under the order to such a person may be proved by him as a debt in the winding up.

Power to make over assets to employees158. F334

(1)

On the winding up of a company (whether by the High Court or voluntarily), the liquidator may, subject to the provisions of this Article, make any payment whch the company has, before the commencement of the winding up, decided to make under F335section 247 of the Companies Act 2006 (power to provide for employees or former employees on cessation or transfer of business).

F336(2)

The liquidator may, after the winding up has commenced, make any such provision as is mentioned in section 247(1) if—

(a)

the company's liabilities have been fully satisfied and provision has been made for the expenses of the winding up,

(b)

the exercise of the power has been sanctioned by a resolution of the company, and

(c)

any requirements of the company's F337articles as to the exercise of the power conferred by section 247(1) are complied with.

(3)

Any payment which may be made by a company under this Article (that is, a payment after the commencement of its winding up) may be made out of the company's assets which are available to the members on the winding up.

(4)

On a winding up by the High Court, the exercise by the liquidator of his powers under this Article is subject to the Court's control, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of the power.

(5)

Paragraphs (1) and (2) have effect notwithstanding anything in any rule of law or in Article 93 of this Order (property of company after satisfaction of liabilities to be distributed among members).

Notification that company is in liquidation159.

F338(1)

When a company is being wound up, whether by the High Court or voluntarily—

(a)

every invoice, order for goods F339or services, business letter or order form (whether in hard copy, electronic or any other form) issued by or on behalf of the company, or a liquidator of the company or a receiver or manager of the company's property, F340. . . and

(b)

all the company's websites,

must contain a statement that the company is being wound up.

(2)

If default is made in complying with this Article, the company and any of the following persons who knowingly and wilfully authorises or permits the default, namely, any officer of the company, any liquidator of the company and any receiver or manager, shall be guilty of an offence.

Interest on debts160.

(1)

In a winding up interest is payable in accordance with this Article on any debt proved in the winding up, including so much of any such debt as represents interest on the remainder.

(2)

Any surplus remaining after the payment of the debts proved in a winding up shall, before being applied for any other purpose, be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the company went into liquidation.

(3)

All interest under this Article ranks equally, whether or not the debts on which it is payable rank equally.

(4)

The rate of interest payble under this Article in respect of any debt ( “the official rate”) is whichever is the greater of—

(a)

the rate applicable to a money judgment of the High Court on the day on which the company went into liquidation, and

(b)

the rate applicable to that debt apart from the winding up.

Company's books to be evidence161.

Where a company is being wound up, all books and papers of the company and of the liquidators are, as between the contributories of the company, prima facie evidence of the truth of all matters purporting to be recorded in them.

Information as to pending liquidations162.

(1)

If the winding up of a company is not concluded within one year from its commencement, the liquidator shall, at such intervals as may be prescribed, until the winding up is concluded, send to the registrar a statement in the prescribed form and containing the prescribed particulars with respect to the proceedings in, and position of, the liquidation.

(2)

If a liquidator contravenes this Article, he shall be guilty of an offence and for continued contravention, he shall be guilty of a continuing offence.

Resolutions passed at adjourned meetings163. F341

Where a resolution is passed at an adjourned meeting of a company's creditors or contributories, the resolution is treated for all purposes as having been passed on the date on which it was in fact passed, and not as having been passed on any earlier date.

Annotations:
Amendments (Textual)

F341mod. by SR 2004/307

Meeting to ascertain wishes of creditors or contributories164.

(1)

The High Court may—

(a)

as to all matters relating to the winding up of a company, have regard to the wishes of the creditors or contributories (as proved to it by any sufficient evidence), and

(b)

if it thinks fit, for the purpose of ascertaining those wishes, direct meetings of the creditors or contributories to be called, held and conducted in such manner as the Court directs, and appoint a person to act as chairman of any such meeting and report the result of it to the Court.

(2)

In the case of creditors, regard shall be had to the value of each creditor's debt.

(3) F342

In the case of contributories, regard shall be had to the number of votes conferred on each contributory F343. . . .

Affidavits, etc., in United Kingdom and elsewhere165.

(1)

An affidavit required to be sworn under or for the purposes of this Part may be sworn in Northern Ireland before any court, judge or person lawfully authorised to take and receive affidavits, and shall, if sworn in Great Britain or elsewhere in Her Majesty's dominions before any court, judge or person lawfully authorised to take and receive affidavits, or before any of Her Majesty's consuls or vice‐consuls in any place outside Her Majesty's dominions, be treated as an affidavit sworn under or for the purposes of this Part.

(2)

All courts, judges,F344 lay magistrates, commissioners and persons acting judicially shall take judicial notice of the seal or stamp or signature (as the case may be) of any such court, judge, person, consul or vice‐consul attached, appended or subscribed to any such affidavit, or to any other document to be used for the purposes of this Part.

CHAPTER IXDISSOLUTION OF COMPANIES AFTER WINDING UP

Dissolution (voluntary winding up)166.

(1)

This Article applies, in the case of a company wound up voluntarily, where the liquidator has sent to the registrar his final account and return under Article 80 (members' voluntary) or Article 92 (creditors' voluntary).

(2)

The registrar on receiving the account F345... and return shall forthwith register them; and on the expiration of 3 months from the registration of the return the company is deemed to be dissolved F345....

F346(2A)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F346(2B)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)

However, the High Court may, on the application of the liquidator or any other person who appears to the Court to be interested, make an order deferring the date at which the dissolution of the company is to take effect for such time as the Court thinks fit.

(4)

The person on whose application an order of the High Court under this Article is made shall within 7 days from the making of the order deliver to the registrar F347a copy of the order for registration; and if that person contravenes this paragraph he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Early dissolution167.

(1)

Where an order for the winding up of a company has been made by the High Court, the official receiver, if—

(a)

he is the liquidator of the company, and

(b)

it appears to him—

(i)

that the realisable assets of the company are insufficient to cover the expenses of the winding up, and

(ii)

that the affairs of the company do not require any further investigation,

may at any time apply to the registrar for the early dissolution of the company.

F348(1A)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F348(1B)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)

Before making F349that application, the official receiver shall give not less than 28 days' notice of his intention to do so to the company's creditors and contributories and, if there is an administrative receiver of the company, to that receiver.

(3)

With the giving of that notice the official receiver ceases (subject to any directions under Article 168) to be required toperform any duties imposed on him in relation to the company, its creditors or contributories by virtue of any provision of this Order, apart from a duty to make an application under paragraph (1) F350....

(4)

On the receipt of the official receiver's application under paragraph (1) F351... the registrar shall forthwith register it F351... and, F352subject to paragraph (7), at the expiration of 3 months from the day of the registration of the application, the company shall be dissolved F353....

F354(5)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F354(6)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F355(7)

The Department may, on the application of the official receiver or any other person who appears to the Department to be interested, give directions under Article 168 at any time before the end of F356that period.

Consequence of notice under Article 167168.

(1)

Where a notice has been given under Article 167(2), the official receiver or any creditor or contributory of the company, or the administrative receiver of the company (if there is one) may apply to the Department for directions under this Article.

(2)

The grounds on which that application may be made are—

(a)

that the realisable assets of the company are sufficient to cover the expenses of the winding up;

(b)

that the affairs of the company do require further investigation; or

(c)

that for any other reason the early dissolution of the company is inappropriate.

(3)

Directions under this Article—

(a)

are directions making such provision as the Department thinks fit for enabling the winding up of the company to proceed as if no notice had been given under Article 167(2), and

(b)

may, in the case of an application under F357Article 167(7), include a direction deferring the date at which the dissolution of the company is to take effect for such period as the Department thinks fit.

(4)

An appeal to the High Court lies from any decision of the Department on an application for directions under this Article.

(5)

The person on whose application any directions are given under this Article, or in whose favour an appeal with respect to an application for such directions is determined, shall, within 7 days from the giving of the directions or the determination of the appeal, deliver to the registrar for registration such a copy of the directions or determination as is prescribed.

(6)

If a person without reasonable excuse contravenes paragraph (5), he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

Dissolution otherwise than under Article 167169.

(1)

Where the registrar receives—

(a)

a notice served for the purposes of Article 146(7) (final meeting of creditors and vacation of office by liquidator), or

(b)

a notice from the official receiver that the winding up of a company by the High Court is complete,

the registrar shall, on receipt of the notice F358..., forthwith register it; and, subject to paragraphs (2) to (4), at the expiration of 3 months from the day of the registration F358... of the notice F358..., the company shall be dissolved.

F359(1A)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F359(1B)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)

The Department may, on the application of the official receiver or any other person who appears to the Department to be interested, give a direction deferring the date at which the dissolution of the company is to take effect for such period as the Department thinks fit.

(3)

An appeal to the High Court lies from any decision of the Department on an application for a direction under paragraph (2).

(4)

The person—

(a)

on whose application a direction is given under paragraph (2); or

(b)

in whose favour an appeal with respect to an application for such a direction is determined;

shall, within 7 days from the giving of the direction, the determination of the appeal or the making of the order, deliver to the registrar for registration such a copy of the direction or determination as is prescribed.

(5)

If a person without reasonable excuse contravenes paragraph (4), he shall be guilty of an offence and, for continued contravention, he shall be guilty of a continuing offence.

CHAPTER XMALPRACTICE BEFORE AND DURING LIQUIDATION; PENALISATION OF COMPANIES AND COMPANY OFFICERS; INVESTIGATIONS AND PROSECUTIONS

Annotations:
Modifications etc. (not altering text)

C58mod. by SR 2004/307

Offences of fraud, deception, etc.

Fraud, etc., in anticipation of winding up170.

(1) F360

When a company is ordered to be wound up by the High Court, or passes a resolution for voluntary winding up, any person who, being a past or present officer of the company, has, within the 12 months immediately preceding the commencement of the winding up—

(a)

concealed any part of the company's property to the value of £500 or more, or concealed any debt due to or from the company, or

(b)

fraudulently removed any part of the company's property to the value of £500 or more, or

(c)

concealed, destroyed, mutilated or falsified any book or paper affecting or relating to the company's property or affairs, or

(d)

made any false entry in any book or paper affecting or relating to the company's property or affairs, or

(e)

fraudulently parted with, altered or made any omission in any document affecting or relating to the company's property or affairs, or

(f)

pawned, pledged or disposed of any property of the company which has been obtained on credit and has not been paid for (unless the pawning, pledging or disposal was in the ordinary way of the company's business),

shall be guilty of an offence.

(2)

Such a person as is mentioned in paragraph (1) shall be guilty of an offence if within the period mentioned in that paragraph he has been privy to the doing by others of any of the things mentioned in sub‐paragraphs (c), (d) and (e) of that paragraph; and he shall be guilty of an offence if, at any time after the commencement of the winding up, he does any of the things mentioned in sub‐paragraphs (a) to (f) of that paragraph, or is privy to the doing by others of any of the things mentioned in sub‐paragraphs (c) to (e) of that paragraph.

(3)

For the purposes of this Article, “officer” includes a shadow director.

(4)

It is a defence—

(a)

for a person charged under sub‐paragraph (a) or (f) of paragraph (1) (or under paragraph (2) in respect of the things mentioned in either of those sub‐paragraphs) to prove that he had no intent to defraud, and

(b)

for a person charged under sub‐paragraph (c) or (d) of paragraph (1) (or under paragraph (2) in respect of the things mentioned in either of those sub‐paragraphs) to prove that he had no intent to conceal the state of affairs of the company or to defeat the law.

(5)

Where a person pawns, pledges or disposes of any property in circumstances which amount to an offence under paragraph (1)(f), every person who takes in pawn or pledge, or otherwise receives, the property knowing it to be pawned, pledged or disposed of in such circumstances, shall be guilty of an offence and shall, on conviction on indictment, be liable to the same penalty as if he had been convicted of handling stolen goods.

(6)

The money sums specified in sub‐paragraphs (a) and (b) of paragraph (1) are subject to increase or reduction by order under Article 362(1)(a).

Transactions in fraud of creditors171.

F361(1)

When a company is ordered to be wound up by the High Court or passes a resolution for voluntary winding up, a person who, being at the time an officer of the company,—

(a)

within the 5 years immediately preceding the commencement of the winding up, has made or caused to be made any gift or transfer of, or charge on, or has caused or connived at the enforcement of a judgment against, the company's property, or

(b)

has concealed or removed any part of the company's property since, or within the 2 months immediately preceding, the date of any unsatisfied judgment or order for the payment of money obtained against the company,

shall be guilty of an offence.

(2)

It is a defence for a person charged under paragraph (1) to prove that, at the time of the conduct constituting the offence, he had no intent to defraud the company's creditors.

Misconduct in course of winding up172.

(1)

When a company is being wound up, whether by the High Court or voluntarily, any person who, being a past or present officer of the company,—

(a)

does not to the best of his knowledge and belief fully and truly discover to the liquidator all the company's property, and how and to whom and for what consideration and when the company disposed of any part of that property (except such part as has been disposed of in the ordinary way of the company's business), or

(b)

does not deliver up to the liquidator (or as he directs) all such part of the company's property as is in his custody or under his control, and which he is required by law to deliver up, or

(c)

does not deliver up to the liquidator (or as he directs) all books and papers in his custody or under his control belonging to the company and which he is required by law to deliver up, or

(d)

knowing or believing that a false debt has been proved by any person in the winding up, fails to inform the liquidator as soon as practicable, or

(e)

after the commencement of the winding up, prevents the production of any book or paper affecting or relating to the company's property or affairs,

shall be guilty of an offence.

(2)

Any person mentioned in paragraph (1) who, after the commencement of the winding up, attempts to account for any part of the company's property by fictitious losses or expenses shall be guilty of an offence; and if he so attempts at any meeting of the company's creditors within the 12 months immediately preceding the commencement of the winding up he shall be guilty of an offence.

(3)

For the purposes of this Article, “officer” includes a shadow director.

(4)

It is a defence—

(a)

for a person charged under sub‐paragraph (a), (b) or (c) of paragraph (1) to prove that he had no intent to defraud, and

(b)

for a person charged under sub‐paragraph (e) of that paragraph to prove that he had no intent to conceal the state of affairs of the company or to defeat the law.

Falsification of company's books173.

When a company is being wound up, an officer or contributory of the company who destroys, mutilates, alters or falsifies any books, papers or securities, or makes or is privy to the making of any false or fraudulent entry in any register, accounting records or document belonging to the company with intent to defraud or deceive any person shall be guilty of an offence.

Material omissions from statement relating to company's affairs174.

(1)

When a company is being wound up, whether by the High Court or voluntarily, any person who, being a past or present officer of the company, makes any material omission in any statement relating to the company's affairs shall be guilty of an offence.

(2) F362

When a company has been ordered to be wound up by the High Court, or has passed a resolution for voluntary winding up, any person mentioned in paragraph (1) who, prior to the winding up, has made any material omission in any such statement shall be guilty of an offence.

(3)

For the purposes of this Article, “officer” includes a shadow director.

(4)

It is a defence for a person charged under this Article to prove that he had no intent to defraud.

Annotations:
Amendments (Textual)

F362mod. by SR 2004/307

False representations to creditors175.

(1)

When a company is being wound up, whether by the High Court or voluntarily, any person who, being a past or present officer of the company,—

(a)

makes any false representation or commits any other fraud for the purpose of obtaining the consent of the company's creditors or any of them to an agreement with reference to the company's affairs or to the winding up; or

(b)

prior to the winding up, has made any false representation, or committed any other fraud, for the purpose mentioned in sub‐paragraph (a);

shall be guilty of an offence.

(2)

For the purposes of this Article, “officer” includes a shadow director.

Penalisation of directors and officers

Summary remedy against delinquent directors, liquidators, etc.176.

(1)

This Article applies if in the course of the winding up of a company it appears that a person who—

(a)

is or has been an officer of the company,

(b)

has acted as liquidatorF363. . . or administrative receiver of the company, or

(c)

not being a person falling within sub‐paragraph (a) or (b), is or has been concerned, or has taken part, in the promotion, formation or management of the company,

has misapplied or retained, or become accountable for, any money or other property of the company, or been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the company.

(2)

The reference in paragraph (1) to any misfeasance or breach of any fiduciary or other duty in relation to the company includes, in the case of a person who has acted as liquidatorF364. . . of the company, any misfeasance or breach of any fiduciary or other duty in connection with the carrying out of his functions as liquidatorF364. . . of the company.

(3)

The High Court may, on the application of the official receiver or the liquidator, or of any creditor or contributory, examine into the conduct of the person falling within paragraph (1) and order him—

(a)

to repay, restore or account for the money or property, or any part of it, with interest at such rate as the Court thinks just, or

(b)

to contribute such sum to the company's assets by way of compensation in respect of the misfeasance or breach of fiduciary or other duty as the Court thinks just.

(4)

The power to make an application under paragraph (3) in relation to a person who has acted as liquidatorF365. . . of the company is not exercisable, except with the leave of the High Court, afterF366he has had his release.

(5)

The power of a contributory to make an application under paragraph (3) is not exercisable except with the leave of the High Court, but is exercisable notwithstanding that he will not benefit from any order the Court may make on the application.

(6)

F367. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fraudulent trading177.

If in the course of the winding up of a company it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, the High Court, on the application of the liquidator, may declare that any persons who were knowingly parties to the carrying on of the business in such manner are to be liable to make such contributions (if any) to the company's assets as the Court thinks proper.

Wrongful trading178.

(1)

Without prejudice to Article 177 and subject to paragraph (3), if in the course of the winding up of a company it appears that paragraph (2) applies in relation to a person who is or has been a director of the company, the High Court, on the application of the liquidator, may declare that that person is to be liable to make such contribution (if any) to the company's assets as the Court thinks proper.

(2) F368

This paragraph applies in relation to a person if—

(a)

the company has gone into insolvent liquidation,

(b)

at some time before the commencement of the winding up of the company, that person knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation, and

(c)

that person was a director of the company at that time,

but the High Court shall not make a declaration under this Article in any case where the time mentioned in sub‐paragraph (b) was before the coming into operation of this Article.

(3)

The High Court shall not make a declaration under this Article with respect to any person if it is satisfied that after the condition specified in paragraph (2)(b) was first satisfied in relation to him that person took every step with a view to minimising the potential loss to the company's creditors as (assuming him to have known that there was no reasonable prospect that the company would avoid going into insolvent liquidation) he ought to have taken.

(4)

For the purposes of paragraphs (2) and (3), the facts which a director of a company ought to know or ascertain, the conclusions which he ought to reach and the steps which he ought to take are those which would be known or ascertained, or reached or taken, by a reasonably diligent person having both—

(a)

the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company, and

(b)

the general knowledge, skill and experience that that director has.

(5)

The reference in paragraph (4) to the functions carried out in relation to a company by a director of the company includes any functions which he does not carry out but which have been entrusted to him.

(6)

For the purposes of this paragraph a company goes into insolvent liquidation if it goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up.

F369(7)

In this Article “director” includes a shadow director.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F370

Annotations:
Amendments (Textual)

F370mod. by SR 2004/307

Proceedings under Articles 177 and 178179.

(1) F371

On the hearing of an application under Article 177 or 178, the liquidator may himself give evidence or call witnesses.

(2) F371

Where under either Article the High Court makes a declaration, it may give such further directions as it thinks proper for giving effect to the declaration; and in particular, the Court may—

(a)

provide for the liability of any person under the declaration to be a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in a mortgage or charge on assets of the company held by or vested in him, or any person on his behalf, or any person claiming as assignee from or through the person liable or any person acting on his behalf, and

(b)

make such further order as may be necessary for enforcing any charge imposed under this paragraph.

(3)

For the purposes of paragraph (2), “assignee”

(a)

includes a person to whom or in whose favour, by the directions of the person made liable, the debt, obligation, mortgage or charge was created, issued or transferred or the interest created, but

(b)

does not include an assignee for valuable consideration (not including consideration by way of marriageF372 or the formation of a civil partnership) given in good faith and without notice of any of the matters on the ground of which the declaration is made.

(4) F371

Where the High Court makes a declaration under either Article in relation to a person who is a creditor of the company, it may direct that the whole or any part of any debt owed by the company to that person and any interest thereon shall rank in priority after all other debts owed by the company and after any interest on those debts.

(5) F371

Articles 177 and 178 have effect notwithstanding that the person concerned may be criminally liable in respect of matters on the ground of which the declaration under the Article is to be made.

(6)

F373. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction on re‐use of company names180.

(1)

This Article applies to a person where a company ( “the liquidating company”) has gone into insolvent liquidation on or after the coming into operation of this Article and he was a director or shadow director of the company at any time within the period of 12 months immediately preceding the day before it went into liquidation.

(2)

For the purposes of this Article, a name is a prohibited name in relation to such a person if—

(a)

it is a name by which the liquidating company was known at any time in that period, or

(b)

it is a name which is so similar to a name falling within sub‐paragraph (a) as to suggest an association with that company.

(3)

Except with the leave of the High Court or in such circumstances as may be prescribed, a person to whom this Article applies shall not at any time within 5 years from the day on which the liquidating company went into liquidation—

(a)

be a director of any other company that is known by a prohibited name, or

(b)

in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of any such company, or

(c)

in any way, whether directly or indirectly, be concerned or take part in the carrying on of a business carried on (otherwise than by a company) under a prohibited name.

(4)

If a person contravenes this Article he shall be guilty of an offence.

(5)

On an application for leave under paragraph (3), the Department or the official receiver may appear and call the attention of the High Court to any matters which seem to be relevant.

(6)

References in this Article, in relation to any time, to a name by which a company is known are to the name of the company at that time or to any name under which the company carries on business at that time.

(7)

For the purposes of this Article a company goes into insolvent liquidation if it goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up.

F374(8)

In this Article “company” includes a company which may be wound up under Part 6 (unregistered companies).

Personal liability for debts, following contravention of Article 180181.

(1)

A person is personally responsible for all the relevant debts of a company if at any time—

(a)

in contravention of Article 180, he is involved in the management of the company, or

(b)

as a person who is involved in the management of the company, he acts or is willing to act on instructions given (without the leave of the High Court) by a person whom he knows at that time to be in contravention in relation to the company of Article 180.

(2)

Where a person is personally responsible under this Article for the relevant debts of a company, he is jointly and severally liable in respect of those debts with the company and any other person who, whether under this Article or otherwise, is so liable.

(3)

For the purposes of this Article the relevant debts of a company are—

(a)

in relation to a person who is personally responsible under sub‐paragraph(a) of paragraph (1), such debts and other liabilities of the company as are incurred at a time when that person was involved in the management of the company, and

(b)

in relation to a person who is personally responsible under sub‐paragraph (b) of paragraph (1), such debts and other liabilities of the company as are incurred at a time when that person was acting or was willing to act on instructions given as mentioned in that sub‐paragraph.

(4)

For the purposes of this Article, a person is involved in the management of a company if he is a director of the company or if he is concerned, whether directly or indirectly, or takes part, in the management of the company.

(5)

For the purposes of this Article a person who, as a person involved in the management of a company, has at any time acted on instructions given (without the leave of the High Court) by a person whom he knew at that time to be in contravention in relation to the company of Article 180 is presumed, unless the contrary is shown, to have been willing at any time thereafter to act on any instructions given by that person.

F375(6)

In this Article “company” has the same meaning as in Article 180.

Investigation and prosecution of malpractice

Prosecution of delinquent officers and members of company182.

(1) F376

If it appears to the High Court in the course of a winding up by the Court that any past or present officer, or any member, of the company has been guilty of any offence in relation to the company for which he is criminally liable, the Court may (either on the application of a person interested in the winding up or of its own motion) direct the liquidator to refer the matter toF377 the Department.

(2) F376

If in the case of a winding up by the High Court it appears to the liquidator, not being the official receiver, that any past or present officer of the company, or any member of it, has been guilty of any offence in relation to the company for which he is criminally liable, the liquidator shall report the matter to the official receiver.

(3) F376

If it appears to the liquidator in the course of a voluntary winding up that any past or present officer of the company, or any member of it, has been guilty of any offence in relation to the company for which he is criminally liable, he shall—

F377(a)

forthwith report the matter to the Department, and

(b)

furnish to the Department such information and give to it such access to and facilities for inspecting and taking copies of documents (being information or documents in the possession or under the control of the liquidator and relating to the matter in question) as the Department requires.

F377(4)

Where a report is made to the Department under paragraph (3), the Department may, for the purpose of investigating the matter reported to it and such other matters relating to the affairs of the company as appear to it to require investigation, exercise any of the powers which are exercisable by inspectors appointed under F378section 431 or 432 of the Companies Act 1985 to investigate a company's affairs.

(5) F376

If it appears to the High Court in the course of a voluntary winding up that—

(a)

any past or present officer of the company, or any member of it, has been guilty of any offence in relation to the company for which he is criminally liable, and

(b)

no report with respect to the matter has been made by the liquidatorF379. . . under paragraph (3),

the Court may (on the application of any person interested in the winding up or of its own motion) direct the liquidator to make such a report.

(6)

On a report being made under paragraph (5), this Article has effect as though the report had been made in pursuance of paragraph (3).

Obligations arising under Article 182183.

(1)

For the purpose of an investigation by the DepartmentF380 in consequence of a report made to it under Article 182(3), any obligation imposed on a person by any provision of F381the Companies Act 1985 to produce documents or give information to, or otherwise to assist, inspectors appointed as mentioned inF380 Article 182(4) is to be regarded as an obligation similarly to assist the Department in its investigation.

(2)

An answer given by a person to a question put to him in exercise of the powers conferred by Article 182(4) may be used in evidence against him.

F382(2A)

However, in criminal proceedings in which that person is charged with an offence to which this paragraph applies—

(a)

no evidence relating to the answer may be adduced, and

(b)

no question relating to it may be asked,

by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.

(2B)

Paragraph (2A) applies to any offence other than an offence under Article 7 or 10 of the Perjury (Northern Ireland) Order 1979 (NI 19) (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath).

(3)

Where criminal proceedings are instituted byF380 the Director of Public Prosecutions for Northern Ireland or the Department following any report or reference under Article 182, the liquidator and every officer and agent of the company past and present (other than the defendant) shall give toF380 the Director of Public Prosecutions for Northern Ireland or the Department (as the case may be) all assistance in connection with the prosecution which he is reasonably able to give.

(4)

In paragraph (3), “agent” includes any banker or solicitor of the company and any person employed by the company as auditor, whether that person is or is not an officer of the company.

(5)

If a person fails or neglects to give assistance in the manner required by paragraph (3), the High Court may, on the application of theF380 Director of Public Prosecutions for Northern Ireland or the Department (as the case may be) direct the person to comply with that paragraph; and if the application is made with respect to a liquidator, the Court may (unless it appears that the failure or neglect to comply was due to the liquidator not having in his hands sufficient assets of the company to enable him to do so) direct that the costs shall be borne by the liquidator personally.

PART VIWINDING UP OF UNREGISTERED COMPANIES

F383Meaning of “unregistered company”184.

For the purposes of this Part “unregistered company” includes any association and any company, with the following exceptions—

(a)

a railway company incorporated by a statutory provision;

(b)

a company registered under the Companies Act 2006 in any part of the United Kingdom.

Winding up of unregistered companies185.

(1)

Subject to the provisions of this Part, any unregistered company may be wound up under this Order; and all the provisions of this Order F384. . . about winding up apply to an unregistered company with the exceptions and additions mentioned in paragraphs (2) to (4).

(2)

If an unregistered company has a principal place of business situated in England and Wales or Scotland, it shall not be wound up under this Part unless it has a principal place of business situated in Northern IrelandF385....

F386(2A)

For all purposes of winding up, the principal place of business in Northern Ireland of the unregistered company is deemed to be the registered office of the company.

(3)

No unregistered company shall be wound up under this Order voluntarilyF387, except in accordance with the F388EU Regulation.

(4)

The circumstances in which an unregistered company may be wound up are as follows—

(a)

if the company is dissolved, or has ceased to carry on business, or is carrying on business only for the purpose of winding up its affairs;

(b)

if the company is unable to pay its debts;

(c)

if the High Court is of opinion that it is just and equitable that the company should be wound up.

Inability to pay debts: unpaid creditor for £750 or more186.

(1)

An unregistered company is deemed (for the purposes of Article 185) unable to pay its debts if there is a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding £750 then due and—

(a)

the creditor has served on the company, by leaving at its principal place of business in Northern Ireland, or by delivering to the secretary or some director or principal officer of the company, or by otherwise serving in such manner as the High Court may approve or direct, a written demand F389(known as “the statutory demand”) in the prescribed form requiring the company to pay the sum due, and

(b)

the company has for 3 weeks from the service of the demand neglected to pay the sum or to secure or compound for it to the creditor's satisfaction.

(2)

The money sum for the time being specified in paragraph (1) is subject to increase or reduction by order under Article 362(1)(a); but no increase in the sum so specified affects any case in which the winding‐up petition was presented before the coming into operation of the increase.

Inability to pay debts: debt remaining unsatisfied after action brought187.

An unregistered company is deemed (for the purposes of Article 185) unable to pay its debts if an action or other proceeding has been instituted against any member for any debt or demand due, or claimed to be due, from the company, or from him in his character of member, and—

(a)

notice in writing of the institution of the action or proceeding has been served on the company by leaving it at the company's principal place of business in Northern Ireland (or by delivering it to the secretary, or some director or principal officer of the company, or by otherwise serving it in such manner as the High Court may approve or direct), and

(b)

the company has not within 3 weeks from service of the notice paid, secured or compounded for the debt or demand, or procured the action or proceeding to be stayed, or indemnified the defendant to his reasonable satisfaction against the action or proceeding, and against all costs and damages to be incurred by him because of it.

Inability to pay debts: other cases188.

(1)

An unregistered company is deemed (for the purposes of Article 185) unable to pay its debts—

(a)

if, in Northern Ireland, a certificate of unenforceability has been granted in respect of a judgment against the company under Article 19 of the Judgments Enforcement (Northern Ireland) Order 1981F390;

(b)

if, in England and Wales, execution or other process issued on a judgment, decree or order obtained in any court in favour of a creditor against the company, or any member of it as such, or any person authorised to be sued as nominal defendant on behalf of the company, is returned unsatisfied;

(c)

if, in Scotland, the induciae of a charge for payment on an extract decree, or an extract registered bond, or an extract registered protest, have expired without payment being made;

(d)

it is otherwise proved to the satisfaction of the High Court that the company is unable to pay its debts as they fall due.

(2)

An unregistered company is also deemed unable to pay its debts if it is proved to the satisfaction of the High Court that the value of the company's assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.

Company incorporated outside Northern Ireland may be wound up though dissolved189.

F391(1)

Where a company incorporated outside Northern Ireland which has been carrying on business in Northern Ireland ceases to carry on business in Northern Ireland, it may be wound up as an unregistered company under this Order, notwithstanding that it has been dissolved or otherwise ceased to exist as a company under or by virtue of the laws of the country under which it was incorporated.

F391(2)

This Article is subject to the F392EU Regulation.

Contributories in winding up of unregistered company190.

(1)

In the event of an unregistered company being wound up, every person is deemed a contributory who is liable to pay or contribute to the payment of any debt or liability of the company, or to pay or contribute to the payment of any sum for the adjustment of the rights of members among themselves, or to pay or contribute to the payment of the costs of winding up the company.

(2)

Every contributory is liable to contribute to the company's assets all sums due from him in respect of any such liability as is mentioned in paragraph (1).

(3)

F393. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power of High Court to stay or restrain proceedings191.

The provisions of this Part with respect to staying or restraining actions and proceedings against a company at any time after the presentation of a petition for winding up and before the making of awinding‐up order extend, in the case of an unregistered company, where the application to stay or restrain is presented by a creditor, to actions and proceedings against any contributory of the company.

Actions stayed on winding‐up order192.

Where an order has been made for winding up an unregistered company, no action or proceeding shall be proceeded with or commenced against any contributory of the company in respect of any debt of the company, except by leave of the High Court, and subject to such terms as the Court may impose.

Provisions of this Part to be cumulative193.

(1)

The provisions of this Part with respect to unregistered companies are in addition to and not in restriction of any provisions in Part V with respect to winding up companies by the High Court; and the Court or liquidator may exercise any powers or do any act in the case of unregistered companies which might be exercised or done by it or him in winding up F394companies registered under the Companies Act 2006 in Northern Ireland.

(2)

F395. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART VIIMISCELLANEOUS PROVISIONS APPLYING TO COMPANIES WHICH ARE INSOLVENT OR IN LIQUIDATION

Office‐holders

Holders of office to be qualified insolvency practitioners194.

(1)

F396. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)

Where an administrative receiver of a company is appointed, he must be a person who is so qualified.

(3)

Where a company goes into liquidation, the liquidator must be a person who is so qualified.

(4)

Where a provisional liquidator is appointed, he must be a person who is so qualified.

(5)

Paragraphs (3) and (4) are without prejudice to any statutory provision under which the official receiver is to be, or may be, liquidator or provisional liquidator.

Appointment to office of two or more persons195.

(1)

This Article applies if an appointment or nomination of any person to the office ofF397. . . administrative receiver, liquidator or provisional liquidator—

(a)

relates to more than one person, or

(b)

has the effect that the office is to be held by more than one person.

(2)

The appointment or nomination shall declare whether any act required or authorised under any statutory provision to be done by theF398. . . administrative receiver, liquidator or provisional liquidator is to be done by all or any one or more of the persons for the time being holding the office in question.

Validity of office‐holder's acts196.

The acts of an individual asF399. . . administrative receiver, liquidator or provisional liquidator of a company are valid notwithstanding any defect in his appointment, nomination or qualifications.

Management by administrators, liquidators, etc.

Supplies of water, electricity, etc.197. F400

(1)

This Article applies in the case of a company where—

F401(a)

the company enters administration, or

(b)

an administrative receiver is appointed, or

F402(ba)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)

a voluntary arrangementF403 approved under Part II, has taken effect, or

(d)

the company goes into liquidation, or

(e)

a provisional liquidator is appointed;

and “the office‐holder” means the administrator, the administrative receiver F404..., the supervisor of the voluntary arrangement, the liquidator or the provisional liquidator, as the case may be.

(2)

If a request is made by or with the concurrence of the office‐holder for the giving, after the effective date, of any of the supplies mentioned in paragraph (3), the supplier—

(a)

may make it a condition of the giving of the supply that the office‐holder personally guarantees the payment of any charges in respect of the supply, but

(b)

shall not make it a condition of the giving of the supply, or do anything which has the effect of making it a condition of the giving of the supply, that any outstanding charges in respect of a supply given to the company before the effective date are paid.

(3)

The supplies referred to in paragraph (2) are—

(a)

a supply of electricity byF405 a public electricity supplier within the meaning of Part II of the Electricity (Northern Ireland) Order 1992,

F406(aza)

a supply of electricity by a class of person within Class A (small supply) or Class B (resale) of Schedule 3 to the Electricity (Class Exemptions from the Requirement for a Licence) Order (Northern Ireland) 2013 (S.R. 2013/93);

F407(aa)

a supply of gas by the holder of a licence under Article 8 of the Gas (Northern Ireland) Order 1996;

F408(b)

a supply of water or sewerage services by a water or sewerage undertaker;

F409(ba)

a supply of water by a person who has an interest in the premises to which the supply is given;

F410(c)

a supply of communications services by a provider of a public electronic communications service,

F411(d)

a supply of communications services by a person who carries on a business which includes giving such supplies;

(e)

a supply of goods or services mentioned in paragraph (3A) by a person who carries on a business which includes giving such supplies, where the supply is for the purpose of enabling or facilitating anything to be done by electronic means;

F410and in this paragraph “communications services” do not include electronic communications services to the extent that they are used to broadcast or transmit programme services (within the meaning of the Communications Act 2003).

F412(3A)

The goods and services referred to in paragraph (3)(e) are—

(a)

point of sale terminals;

(b)

computer hardware and software;

(c)

information, advice and technical assistance in connection with the use of information technology;

(d)

data storage and processing;

(e)

website hosting.

(4)

“The effective date” for the purposes of this Article is whichever is applicable of the following dates—

F413(a)

the date on which the company entered administration

(b)

the date on which the administrative receiver was appointed (or, if he was appointed in succession to another administrative receiver, the date on which the first of his predecessors was appointed),

F414(ba)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)

the date on which the voluntary arrangementF403 took effect,

(d)

the date on which the company went into liquidation,

(e)

the date on which the provisional liquidator was appointed.

F415Further protection of essential supplies197A

(1)

An insolvency-related term of a contract for the supply of essential goods or services to a company ceases to have effect if—

(a)

the company enters administration, or

(b)

a voluntary arrangement approved under Part 2 takes effect in relation to the company.

(2)

An insolvency-related term of a contract does not cease to have effect by virtue of paragraph (1) to the extent that—

(a)

it provides for the contract or the supply to terminate, or any other thing to take place, because the company becomes subject to an insolvency procedure other than administration or a voluntary arrangement;

(b)

it entitles a supplier to terminate the contract or the supply, or do any other thing, because the company becomes subject to an insolvency procedure other than administration or a voluntary arrangement; or

(c)

it entitles a supplier to terminate the contract or the supply because of an event that occurs, or may occur, after the company enters administration or the voluntary arrangement takes effect.

(3)

Where an insolvency-related term of a contract ceases to have effect under this Article the supplier may—

(a)

terminate the contract, if the condition in paragraph (4) is met;

(b)

terminate the supply, if the condition in paragraph (5) is met.

(4)

The condition in this paragraph is that—

(a)

the insolvency office-holder consents to the termination of the contract,

(b)

the High Court grants permission for the termination of the contract, or

(c)

any charges in respect of the supply that are incurred after the company entered administration or the voluntary arrangement took effect are not paid within the period of 28 days beginning with the day on which payment is due.

The High Court may grant permission under sub-paragraph (b) only if satisfied that the continuation of the contract would cause the supplier hardship.

(5)

The condition in this paragraph is that—

(a)

the supplier gives written notice to the insolvency office-holder that the supply will be terminated unless the office-holder personally guarantees the payment of any charges in respect of the continuation of the supply after the company entered administration or the voluntary arrangement took effect, and

(b)

the insolvency office-holder does not give that guarantee within the period of 14 days beginning with the day the notice is received.

(6)

For the purposes of securing that the interests of suppliers are protected, where—

(a)

an insolvency-related term of a contract (the “original term”) ceases to have effect by virtue of paragraph (1), and

(b)

the company subsequently enters administration, or a voluntary arrangement subsequently has effect in relation to it,

the contract is treated for the purposes of paragraphs (1) to (5) as if, immediately before the subsequent administration is entered into or the subsequent voluntary arrangement takes effect, it included an insolvency-related term identical to the original term.

(7)

A contract for the supply of essential goods or services is a contract for a supply mentioned in Article 197(3).

(8)

An insolvency-related term of a contract for the supply of essential goods or services to a company is a provision of the contract under which—

(a)

the contract or the supply would terminate, or any other thing would take place, because the company enters administration or the voluntary arrangement takes effect,

(b)

the supplier would be entitled to terminate the contract or the supply, or to do any other thing, because the company enters administration or the voluntary arrangement takes effect, or

(c)

the supplier would be entitled to terminate the contract or the supply because of an event that occurred before the company enters administration or the voluntary arrangement takes effect.

(9)

In this Article “insolvency office-holder” means—

(a)

in a case where a company enters administration, the administrator;

(b)

in a case where a voluntary arrangement under Part 2 takes effect in relation to a company, the supervisor of the voluntary arrangement.

F416Protection of supplies of goods and services197B

(1)

This Article applies where a company becomes subject to a relevant insolvency procedure.

(2)

A company becomes subject to a relevant insolvency procedure for the purposes of this Article where—

(a)

a moratorium under Part 1A comes into force for the company,

(b)

the company enters administration,

(c)

an administrative receiver of the company is appointed (otherwise than in succession to another administrative receiver),

(d)

a voluntary arrangement approved under Part 2 takes effect in relation to the company,

(e)

the company goes into liquidation,

(f)

a provisional liquidator of the company is appointed (otherwise than in succession to another provisional liquidator), or

(g)

a court order is made under section 901C(1) of the Companies Act 2006 in relation to the company (order summoning meeting relating to compromise or arrangement).

(3)

A provision of a contract for the supply of goods or services to the company ceases to have effect when the company becomes subject to the relevant insolvency procedure if and to the extent that, under the provision—

(a)

the contract or the supply would terminate, or any other thing would take place, because the company becomes subject to the relevant insolvency procedure, or

(b)

the supplier would be entitled to terminate the contract or the supply, or to do any other thing, because the company becomes subject to the relevant insolvency procedure.

(4)

Where—

(a)

under a provision of a contract for the supply of goods or services to the company the supplier is entitled to terminate the contract or the supply because of an event occurring before the start of the insolvency period, and

(b)

the entitlement arises before the start of that period,

the entitlement may not be exercised during that period.

(5)

Where a provision of a contract ceases to have effect under paragraph (3) or an entitlement under a provision of a contract is not exercisable under paragraph (4), the supplier may terminate the contract if—

(a)

in a case where the company has become subject to a relevant insolvency procedure as specified in paragraph (2)(b), (c), (e) or (f), the office-holder consents to the termination of the contract,

(b)

in any other case, the company consents to the termination of the contract, or

(c)

the High Court is satisfied that the continuation of the contract would cause the supplier hardship and grants permission for the termination of the contract.

(6)

Where a provision of a contract ceases to have effect under paragraph (3) and the company becomes subject to a further relevant insolvency procedure, the supplier may terminate the contract in accordance with paragraph (5)(a) to (c).

(7)

The supplier shall not make it a condition of any supply of goods and services after the time when the company becomes subject to the relevant insolvency procedure, or do anything which has the effect of making it a condition of such a supply, that any outstanding charges in respect of a supply made to the company before that time are paid.

(8)

In this Article “the insolvency period”, in relation to a relevant insolvency procedure, means the period beginning when the company becomes subject to the relevant insolvency procedure and ending—

(a)

in the case of a moratorium under Part 1A, when the moratorium comes to an end,

(b)

in the case of the company entering administration, when the appointment of the administrator ceases to have effect under —

(i)

paragraphs 77 to 85 of Schedule B1, or

(ii)

an order under section 901F of the Companies Act 2006,

(c)

in the case of the appointment of an administrative receiver of the company, when the receiver or any successor to the receiver ceases to hold office without a successor being appointed,

(d)

in the case of a voluntary arrangement approved under Part 2 taking effect in relation to the company, when the arrangement ceases to have effect,

(e)

in the case of the company going into liquidation, when the liquidator has—

(i)

pursuant to Article 80(1), laid the account of the winding up before a general meeting of the company and given an explanation of it,

(ii)

pursuant to Article 92(1), laid the account of the winding up before a general meeting of the company and a meeting of the creditors and given an explanation of it to each meeting, or

(iii)

pursuant to Article 124(1), given the liquidator's report of the winding up to a general meeting of the company's creditors,

or when the appointment of the liquidator ceases to have effect under an order under section 901F of the Companies Act 2006,

(f)

in the case of the appointment of a provisional liquidator for the company, when the provisional liquidator or any successor to the provisional liquidator ceases to hold office without a successor being appointed, and

(g)

in the case of the making of a court order under section 901C(1) of the Companies Act 2006 in relation to the company, when—

(i)

an order made by the High Court under section 901F of that Act takes effect, or

(ii)

the High Court decides not to make such an order.

(9)

In this Article “office-holder”, in relation to a company which has entered into an insolvency procedure as specified in paragraph (2)(b), (c), (e) or (f), means the administrator, administrative receiver, liquidator or provisional liquidator respectively.

(10)

Schedule 2ZZA provides for exclusions from the operation of this Article.

Powers to amend Article 197B and Schedule 2ZZA197C

(1)

Regulations may omit any of sub-paragraphs (a) to (g) of Article 197B(2) (relevant insolvency procedures).

(2)

Regulations may amend Schedule 2ZZA so as to—

(a)

remove or amend any exclusion from Article 197B for the time being specified there, or

(b)

add further exclusions from Article 197B.

(3)

In paragraph (2), references to exclusions from Article 197B are to circumstances in which Article 197B, or any provision of that Article, does not apply.

(4)

The circumstances referred to in paragraph (3) may be framed by reference to kinds of company, supplier, contract, goods or services or in any other way.

(5)

Regulations under this Article may make—

(a)

consequential provision;

(b)

transitional and supplementary provision.

(6)

Regulations under this Article made by virtue of paragraph (5) may in particular make provision amending this Order or any other statutory provision whenever passed or made (including, if paragraph 1(1) or (2) of Schedule 2ZZA is omitted, provision omitting Article 197A or 197 respectively).

(7)

Regulations may not be made under this Article unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

Getting in the company's property198.

(1)

This Article applies in the case of a company where—

F417(a)

the company enters administration, or

(b)

an administrative receiver is appointed, or

(c)

the company goes into liquidation, or

(d)

a provisional liquidator is appointed;

and “the office‐holder” means the administrator, the administrative receiver, the liquidator or the provisional liquidator, as the case may be.

(2)

Where any person has in his possession or control any property, books, papers or records to which the company appears to be entitled, the High Court may require that person forthwith (or within such period as the Court may direct) to pay, deliver, convey, surrender or transfer the property, books, papers or records to the office‐holder.

(3)

Where the office‐holder—

(a)

seizes or disposes of any property which is not property of the company, and

(b)

at the time of seizure or disposal believes, and has reasonable grounds for believing, that he is entitled (whether in pursuance of an order of the High Court or otherwise) to seize or dispose of that property,

paragraph (4) has effect.

(4)

In that case the office‐holder—

(a)

is not liable to any person in respect of any loss or damage resulting from the seizure or disposal except in so far as that loss or damage is caused by the office‐holder's own negligence, and

(b)

has a lien on the property, or the proceeds of its sale, for such expenses as were incurred in connection with the seizure or disposal.

Duty to co‐operate with office‐holder199.

(1)

This Article applies as does Article 198; and it also applies, in the case of a company in respect of which a winding‐up order has been made by the High Court, as if references to the office‐holder included the official receiver, whether or not he is the liquidator.

(2)

Each of the persons mentioned in paragraph (3) shall—

(a)

give to the office‐holder such information concerning the company and its promotion, formation, business, dealings, affairs or property as the office‐holder may at any time after the effective date reasonably require, and

(b)

attend on the office‐holder at such times as the latter may reasonably require.

(3)

The persons referred to in paragraph (2) are—

(a)

those who are or have at any time been officers of the company,

(b)

those who have taken part in the formation of the company at any time within one year before the effective date,

(c)

those who are in the employment of the company, or have been in its employment (including employment under a contract for services) within that year, and are in the office‐holder's opinion capable of giving information which he requires,

(d)

those who are, or have within that year been, officers of, or in the employment (including employment under a contract for services) of, another company which is, or within that year was, an officer of the company in question, and

(e)

in the case of a company being wound up by the High Court, any person who has acted as administrator, administrative receiver or liquidator of the company.

(4)

For the purposes of paragraphs (2) and (3), “the effective date” is whichever is applicable of the following dates—

F418(a)

the date on which the company entered administration,

(b)

the date on which the administrative receiver was appointed or, if he was appointed in succession to another administrative receiver, the date on which the first of his predecessors was appointed,

(c)

the date on which the provisional liquidator was appointed, and

(d)

the date on which the company went into liquidation.

(5)

If a person without reasonable excuse fails to comply with any obligation imposed by this Article, he shall be guilty of an offence and, for continued contravention, shall be guilty of a continuing offence.

Inquiry into company's dealings, etc.200.

(1)

This Article applies as does Article 198; and it also applies, in the case of a company in respect of which a winding‐up order has been made by the High Court, as if references to the office‐holder included the official receiver, whether or not he is the liquidator.

(2)

The High Court may, on the application of the office‐holder, summon to appear before it—

(a)

any officer of the company,

(b)

any person known or suspected to have in his possession any property of the company or supposed to be indebted to the company, or

(c)

any person whom the Court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company.

(3)

The High Court may require any such person as is mentioned in paragraph (2)(a) to (c) to submit an affidavit to the Court containing an account of his dealings with the company or to produce any books, papers or other records in his possession or under his control relating to the company or the matters mentioned in sub‐paragraph (c) of that paragraph.

(4)

The following applies in a case where—

(a)

a person without reasonable excuse fails to appear before the High Court when he is summoned to do so under this Article, or

(b)

there are reasonable grounds for believing that a person has absconded, or is about to abscond, with a view to avoiding his appearance before the Court under this Article.

(5)

The High Court may, for the purpose of bringing that person and anything in his possession before the Court, cause a warrant to be issued to a constable—

(a)

for the arrest of that person, and

(b)

for the seizure of any books, papers, records, money or goods in that person's possession.

(6)

The High Court may authorise a person arrested under such a warrant to be kept in custody, and anything seized under such a warrant to be held, in accordance with the rules, until that person is brought before the Court under the warrant or until such other time as the Court may order.

High Court's enforcement powers under Article 200201.

(1)

If it appears to the High Court, on consideration of any evidence obtained under Article 200 or this Article, that any person has in his possession any property of the company, the Court may, on the application of the office‐holder, order that person to deliver the whole or any part of the property to the office‐holder at such time, in such manner and on such terms as the Court thinks fit.

(2)

If it appears to the High Court, on consideration of any evidence so obtained, that any person is indebted to the company, the Court may, on the application of the office‐holder, order that person to pay to the office‐holder, at such time and in such manner as the Court may direct, the whole or any part of the amount due, whether in full discharge of the debt or otherwise, as the Court thinks fit.

(3)

The High Court may, if it thinks fit, order that any person liable to be summoned to appear before it under Article 200 or this Article shall be examined on oath, either orally or by interrogatories, concerning the company or the matters mentioned in Article 200(2)(c).

Adjustment of prior transactions (administration and liquidation)

Transactions at an undervalue202.

(1)

This Article applies in the case of a company where—

F419(a)

the company enters administration, or

(b)

the company goes into liquidation;

and “the office‐holder” means the administrator or the liquidator, as the case may be.

(2)

Where the company has at a relevant time (as defined in Article 204) entered into a transaction with any person at an undervalue, the office‐holder may apply to the High Court for an order under this Article.

(3)

Subject to paragraph (5) the High Court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if the company had not entered into that transaction.

(4)

For the purposes of this Article and Article 205, a company enters into a transaction with a person at an undervalue if—

(a)

the company makes a gift to that person or otherwise enters into a transaction with that person on terms that provide for the company to receive no consideration, or

(b)

the company enters into a transaction with that person for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by the company.

(5)

The High Court shall not make an order under this Article in respect of a transaction at an undervalue if it is satisfied—

(a)

that the company which entered into the transaction did so in good faith and for the purpose of carrying on its business, and

(b)

that at the time it did so there were reasonable grounds for believing that the transaction would benefit the company.

Preferences203.

(1)

This Article applies as does Article 202.

(2)

Where the company has at a relevant time (as defined in Article 204) given a preference to any person, the office‐holder may apply to the High Court for an order under this Article.

(3)

Subject to paragraph (5) and Article 205(2), the High Court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if the company had not given that preference.

(4)

For the purposes of this Article and Article 205, a company gives a preference to a person if—

(a)

that person is one of the company's creditors or a surety or guarantor for any of the company's debts or other liabilities, and

(b)

the company does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which, in the event of the company going into insolvent liquidation, will be better than the position he would have been in if that thing had not been done.

(5)

The High Court shall not make an order under this Article in respect of a preference given to any person unless the company which gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in paragraph (4)(b).

(6)

A company which has given a preference to a person connected with the company (otherwise than by reason only of being its employee) at the time the preference was given is presumed, unless the contrary is shown, to have been influenced in deciding to give it by such a desire as is mentioned in paragraph (5).

(7)

The fact that something has been done in pursuance of the order of a court does not, without more, prevent the doing or suffering of that thing from constituting the giving of a preference.

“Relevant time” under Articles 202, 203204.

(1)

Subject to paragraph (2), the time at which a company enters into a transaction at an undervalue or gives a preference is a relevant time if the transaction is entered into, or the preference given—

(a)

in the case of a transaction at an undervalue or of a preference which is given to a person who is connected with the company (otherwise than by reason only of being its employee), at a time in the period of 2 years ending with the onset of insolvency,

(b)

in the case of a preference which is not such a transaction and is not so given, at a time in the period of 6 months ending with the onset of insolvency,F420. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F421(c)

in either case, at a time between the making of an administration application in respect of the company and the making of an administration order on that application, and

(d)

in either case, at a time between the filing with the Court of a copy of notice of intention to appoint an administrator under paragraph 15 or 23 of Schedule B1 and the making of an appointment under that paragraph.

(2)

Where a company enters into a transaction at an undervalue or gives a preference at a time mentioned in paragraph (1)(a) or (b), that time is not a relevant time for the purposes of Article 202 or 203 unless the company—

(a)

is at that time unable to pay its debts within the meaning of Article 103, or

(b)

becomes unable to pay its debts within the meaning of Article 103 in consequence of the transaction or preference;

but the requirements of this paragraph are presumed to be satisfied, unless the contrary is shown, in relation to any transaction at an undervalue which is entered into by a company with a person who is connected with the company.

(3)

For the purposes of paragraph (1), the onset of insolvency is—

F422(a)

in a case where Article 202 or 203 applies by reason of an administrator of a company being appointed by administration order, the date on which the administration application is made,

(b)

in a case where Article 202 or 203 applies by reason of an administrator of a company being appointed under paragraph 15 or 23 of Schedule B1 following filing with the High Court of a copy of a notice of intention to appoint under that paragraph, the date on which the copy of the notice is filed,

(c)

in a case where Article 202 or 203 applies by reason of an administrator of a company being appointed otherwise than as mentioned in sub-paragraph (a) or (b), the date on which the appointment takes effect,

(d)

in a case where Article 202 or 203 applies by reason of a company going into liquidation F423... at the time when the appointment of an administrator ceases to have effect, the date on which the company entered administration (or, if relevant, the date on which the application for the administration order was made or a copy of the notice of intention to appoint was filed), and

(e)

in a case where Article 202 or 203 applies by reason of a company going into liquidation at any other time, the date of the commencement of the winding up.

Orders under Articles 202, 203205.

(1)

Without prejudice to the generality of Articles 202(3) and 203(3), an order under either of those Articles with respect to a transaction or preference entered into or given by a company may (subject to paragraph (2))—

(a)

require any property transferred as part of the transaction, or in connection with the giving of the preference, to be vested in the company,

(b)

require any property to be so vested if it represents in any person's hands the application either of the proceeds of sale of property so transferred or of money so transferred,

(c)

release or discharge (in whole or in part) any security given by the company,

(d)

require any person to pay, in respect of benefits received by him from the company, such sums to the office‐holder as the High Court may direct,

(e)

provide for any surety or guarantor whose obligations to any person were released or discharged (in whole or in part) under the transaction, or by the giving of the preference, to be under such new or revived obligations to that person as the Court thinks appropriate,

(f)

provide for security to be provided for the discharge of any obligation imposed by or arising under the order, for such an obligation to be charged on any property and for the security or charge to have the same priority as a security or charge released or discharged (in whole or in part) under the transaction or by the giving of the preference, and

(g)

provide for the extent to which any person whose property is vested by the order in the company, or on whom obligations are imposed by the order, is to be able to prove in the winding up of the company for debts or other liabilities which arose from, or were released or discharged (in whole or in part) under or by, the transaction or the giving of the preference.

(2)

An order under Article 202 or 203 may affect the property of, or impose any obligation on, any person whether or not he is the person with whom the company in question entered into the transaction or (as the case may be) the person to whom the preference was given; but such an order—

(a)

shall not prejudice any interest in property which was acquired from a person other than the company and was acquiredF424 in good faith and for value, or prejudice any interest deriving from such an interest, and

(b)

shall not require a person who received a benefit from the transaction or preferenceF424 in good faith and for value to pay a sum to the office‐holder, except where that person was a party to the transaction or the payment is to be in respect of a preference given to that person at a time when he was a creditor of the company.

F425(2A)

Where a person has acquired an interest in property from a person other than the company in question, or has received a benefit from the transaction or preference, and at the time of that acquisition or receipt—

(a)

he had notice of the relevant surrounding circumstances and of the relevant proceedings, or

(b)

he was connected with, or was an associate of, either the company in question or the person with whom that company entered into the transaction or to whom that company gave the preference,

then, unless the contrary is shown, it shall be presumed for the purposes of sub‐paragraph (a) or (as the case may be) sub‐paragraph (b) of paragraph (2) that the interest was acquired or the benefit was received otherwise than in good faith.

F426(3)

For the purposes of paragraph (2A)(a), the relevant surrounding circumstances are (as the case may require)—

(a)

the fact that the company in question entered into the transaction at an undervalue; or

(b)

the circumstances which amounted to the giving of the preference by the company in question;

and paragraphs (3A) to (3C) have effect to determine whether, for those purposes, a person has notice of the relevant proceedings.

F427(3A)

Where Article 202 or 203 applies by reason of a company's entering administration, a person has notice of the relevant proceedings if he has notice that—

(a)

an administration application has been made,

(b)

an administration order has been made,

(c)

a copy of a notice of intention to appoint an administrator under paragraph 15 or 23 of Schedule B1 has been filed, or

(d)

notice of the appointment of an administrator has been filed under paragraph 19 or 30 of that Schedule.

F428(3B)

Where Article 202 or 203 applies by reason of a company's going into liquidation at the time when the appointment of an administrator of the company ceases to have effect, a person has notice of the relevant proceedings if he has notice that—

(a)

an administration application has been made,

(b)

an administration order has been made,

(c)

a copy of a notice of intention to appoint an administrator under paragraph 15 or 23 of Schedule B1 has been filed,

(d)

notice of the appointment of an administrator has been filed under paragraph 19 or 30 of that Schedule, or

(e)

the company has gone into liquidation.

(3C)

In a case where Article 202 or 203 applies by reason of the company in question going into liquidation at any other time, a person has notice of the relevant proceedings if he has notice—

(a)

where the company goes into liquidation on the making of a winding‐up order, of the fact that the petition on which the winding‐up order is made has been presented or of the fact that the company has gone into liquidation;

(b)

in any other case, of the fact that the company has gone into liquidation.

(4)

The provisions of Articles 202 to 204 and this Article apply without prejudice to the availability of any other remedy, even in relation to a transaction or preference which the company had no power to enter into or give.

Extortionate credit transactions206.

(1)

This Article applies as does Article 202, and where the company is, or has been, a party to a transaction for, or involving, the provision of credit to the company.

(2)

The High Court may, on the application of the office‐holder, make an order with respect to the transaction if the transaction is or was extortionate and was entered into in the period of 3 years ending withF429the day on which the company entered administration or went into liquidation.

(3)

For the purposes of this Article a transaction is extortionate if, having regard to the risk accepted by the person providing the credit—

(a)

the terms of it are or were such as to require grossly exorbitant payments to be made (whether unconditionally or in certain contingencies) in respect of the provision of the credit, or

(b)

it otherwise grossly contravened ordinary principles of fair dealing;

and it shall be presumed, unless the contrary is proved, that a transaction with respect to which an application is made under this Article is or, as the case may be, was extortionate.

(4)

An order under this Article with respect to any transaction may contain such one or more of the following as the High Court thinks fit, that is to say—

(a)

provision setting aside the whole or part of any obligation created by the transaction,

(b)

provision otherwise varying the terms of the transaction or varying the terms on which any security for the purposes of the transaction is held,

(c)

provision requiring any person who is or was a party to the transaction to pay to the office‐holder any sums paid to that person, by virtue of the transaction, by the company,

(d)

provision requiring any person to surrender to the office‐holder any property held by him as security for the purposes of the transaction,

(e)

provision directing accounts to be taken between any persons.

(5)

The powers conferred by this Article are exercisable in relation to any transaction concurrently with any powers exercisable in relation to that transaction as a transaction at an undervalue.

Avoidance of certain floating charges207.

(1)

This Article applies as does Article 202.

(2)

Subject to the following provisions of this Article, a floating charge on the company's undertaking or property created at a relevant time is invalid except to the extent of the aggregate of—

(a)

the value of so much of the consideration for the creation of the charge as consists of money paid, or goods or services supplied, to the company at the same time as, or after, the creation of the charge,

(b)

the value of so much of that consideration as consists of the discharge or reduction, at the same time as, or after, the creation of the charge, of any debt of the company, and

(c)

the amount of such interest (if any) as is payable on the amount falling within sub‐paragraph (a) or (b) in pursuance of any agreement under which the money was so paid, the goods or services were so supplied or the debt was so discharged or reduced.

(3)

Subject to paragraph (4), the time at which a floating charge is created by a company is a relevant time for the purposes of this Article if the charge is created—

(a)

in the case of a charge which is created in favour of a person who is connected with the company, at a time in the period of 2 years ending with the onset of insolvency,

(b)

in the case of a charge which is created in favour of any other person, at a time in the period of 12 months ending with the onset of insolvency,F430. . .

F431(c)

in either case, at a time between the making of an administration application in respect of the company and the making of an administration order on that application, or

(d)

in either case, at a time between the filing with the High Court of a copy of notice of intention to appoint an administrator under paragraph 15 or 23 of Schedule B1 and the making of an appointment under that paragraph.

(4)

Where a company creates a floating charge at a time mentioned in paragraph (3)(b) and the person in favour of whom the charge is created is not connected with the company, that time is not a relevant time for the purposes of this Article unless the company—

(a)

is at that time unable to pay its debts within the meaning of Article 103, or

(b)

becomes unable to pay its debts within the meaning of Article 103 in consequence of the transaction under which the charge is created.

(5)

For the purposes of paragraph (3), the onset of insolvency is—

F432(a)

in a case where this Article applies by reason of an administrator of a company being appointed by administration order, the date on which the administration application is made,

(b)

in a case where this Article applies by reason of an administrator of a company being appointed under paragraph 15 or 23 of Schedule B1 following filing with the High Court of a copy of notice of intention to appoint under that paragraph, the date on which the copy of the notice is filed,

(c)

in a case where this Article applies by reason of an administrator of a company being appointed otherwise than as mentioned in sub-paragraph (a) or (b), the date on which the appointment takes effect, and

(d)

in a case where this Article applies by reason of a company going into liquidation, the date of the commencement of the winding up.

(6)

For the purposes of paragraph (2)(a) the value of any goods or services supplied by way of consideration for a floating charge is the amount in money which at the time they were supplied could reasonably have been expected to be obtained for supplying the goods or services in the ordinary course of business and on the same terms (apart from the consideration) as those on which they were supplied to the company.

Unenforceability of liens on books, etc.208.

(1)

This Article applies in the case of a company where—

F433(a)

the company enters administration, or

(b)

the company goes into liquidation, or

(c)

a provisional liquidator is appointed;

and the office‐holder means the administrator, the liquidator or the provisional liquidator, as the case may be.

(2)

Subject to paragraph (3), a lien or other right to retain possession of any of the books, papers or other records of the company is unenforceable to the extent that its enforcement would deny possession of any books, papers or other records to the office‐holder.

(3)

Paragraph (2) does not apply to a lien on documents which give a title to property and are held as such.

F434PARTS 7A TO 10INSOLVENCY OF INDIVIDUALS; BANKRUPTCY

F435PART 7ADEBT RELIEF ORDERS

Preliminary

Debt relief orders208A

(1)

An individual who is unable to pay his debts may apply for an order under this Part (“a debt relief order”) to be made in respect of his qualifying debts.

(2)

In this Part “qualifying debt” means (subject to paragraph (3)) a debt which—

(a)

is for a liquidated sum payable either immediately or at some certain future time; and

(b)

is not an excluded debt.

(3)

A debt is not a qualifying debt to the extent that it is secured.

(4)

In this Part “excluded debt” means a debt of any description prescribed for the purposes of this paragraph.

Applications for a debt relief order

Making of application208B

(1)

An application for a debt relief order must be made to the official receiver through an approved intermediary.

(2)

The application must include—

(a)

a list of the debts to which the debtor is subject at the date of the application, specifying the amount of each debt (including any interest, penalty or other sum that has become payable in relation to that debt on or before that date) and the creditor to whom it is owed;

(b)

details of any security held in respect of any of those debts; and

(c)

such other information about the debtor's affairs (including his creditors, debts and liabilities and his income and assets) as may be prescribed.

(3)

The rules may make further provision as to—

(a)

the form of an application for a debt relief order;

(b)

the manner in which an application is to be made; and

(c)

information and documents to be supplied in support of an application.

(4)

For the purposes of this Part an application is not to be regarded as having been made until—

(a)

the application has been submitted to the official receiver; and

(b)

any fee required in connection with the application by an order under Article 361 has been paid to such person as the order may specify.

Duty of official receiver to consider and determine application208C

(1)

This Article applies where an application for a debt relief order is made.

(2)

The official receiver may stay consideration of the application until he has received answers to any queries raised with the debtor in relation to anything connected with the application.

(3)

The official receiver must determine the application by—

(a)

deciding whether to refuse the application;

(b)

if he does not refuse it, by making a debt relief order in relation to the specified debts he is satisfied were qualifying debts of the debtor at the application date;

but he may only refuse the application if he is authorised or required to do so by any of the following provisions of this Article.

(4)

The official receiver may refuse the application if he considers that—

(a)

the application does not meet all the requirements imposed by or under Article 208B;

(b)

any queries raised with the debtor have not been answered to the satisfaction of the official receiver within such time as he may specify when they are raised;

(c)

the debtor has made any false representation or omission in making the application or on supplying any information or documents in support of it.

(5)

The official receiver must refuse the application if he is not satisfied that—

(a)

the debtor is an individual who is unable to pay his debts;

(b)

at least one of the specified debts was a qualifying debt of the debtor at the application date;

(c)

each of the conditions set out in Part 1 of Schedule 2ZA is met.

(6)

The official receiver may refuse the application if he is not satisfied that each condition specified in Part 2 of Schedule 2ZA is met.

(7)

If the official receiver refuses an application he must give reasons for his refusal to the debtor in the prescribed manner.

(8)

In this Article “specified debt” means a debt specified in the application.

Presumptions applicable to the determination of an application208D

(1)

The following presumptions are to apply to the determination of an application for a debt relief order.

(2)

The official receiver must presume that the debtor is an individual who is unable to pay his debts at the determination date if—

(a)

that appears to the official receiver to be the case at the application date from the information supplied in the application and he has no reason to believe that the information supplied is incomplete or inaccurate; and

(b)

he has no reason to believe that, by virtue of a change in the debtor's financial circumstances since the application date, the debtor may be able to pay his debts.

(3)

The official receiver must presume that a specified debt (of the amount specified in the application and owed to the creditor so specified) is a qualifying debt at the application date if—

(a)

that appears to him to be the case from the information supplied in the application; and

(b)

he has no reason to believe that the information supplied is incomplete or inaccurate.

(4)

The official receiver must presume that the condition specified in paragraph 1 of Schedule 2ZA is met if—

(a)

that appears to him to be the case from the information supplied in the application;

(b)

any prescribed verification checks relating to the condition have been made; and

(c)

he has no reason to believe that the information supplied is incomplete or inaccurate.

(5)

The official receiver must presume that any other condition specified in Part 1 or 2 of Schedule 2ZA is met if—

(a)

that appears to him to have been the case as at the application date from the information supplied in the application and he has no reason to believe that the information supplied is incomplete or inaccurate;

(b)

any prescribed verification checks relating to the condition have been made; and

(c)

he has no reason to believe that, by virtue of a change in circumstances since the application date, the condition may no longer be met.

(6)

References in this Article to information supplied in the application include information supplied to the official receiver in support of the application.

(7)

In this Article “specified debt” means a debt specified in the application.

Making and effect of debt relief order

Making of debt relief orders208E

(1)

This Article applies where the official receiver makes a debt relief order on determining an application under Article 208C.

(2)

The order must be made in the prescribed form.

(3)

The order must include a list of the debts which the official receiver is satisfied were qualifying debts of the debtor at the application date, specifying the amount of the debt at that time and the creditor to whom it was then owed.

(4)

The official receiver must—

(a)

give a copy of the order to the debtor; and

(b)

make an entry for the order in the register containing the prescribed information about the order or the debtor.

(5)

The rules may make provision as to other steps to be taken by the official receiver or the debtor on the making of the order.

(6)

Those steps may include in particular notifying each creditor to whom a qualifying debt specified in the order is owed of—

(a)

the making of the order and its effect,

(b)

the grounds on which a creditor may object under Article 208K, and

(c)

any other prescribed information.

(7)

In this Part the date on which an entry relating to the making of a debt relief order is first made in the register is referred to as “the effective date”.

Effect of debt relief order on administration order208F

Where—

(a)

a debt relief order is made; and

(b)

immediately before the order is made, an administration order under Part 6 of the Judgments Enforcement Order is in force in respect of the debtor,

the administration order ceases to be in force when the debt relief order is made.

Moratorium from qualifying debts208G

(1)

A moratorium commences on the effective date for a debt relief order in relation to each qualifying debt specified in the order (“a specified qualifying debt”).

(2)

During the moratorium, the creditor to whom a specified qualifying debt is owed—

(a)

has no remedy in respect of the debt, and

(b)

may not—

(i)

commence a creditor's petition in respect of the debt, or

(ii)

otherwise commence any action or other legal proceedings against the debtor for the debt,

except with the permission of the High Court and on such terms as the Court may impose.

(3)

If on the effective date a creditor to whom a specified qualifying debt is owed has any such petition, action or other proceeding as mentioned in paragraph (2)(b) pending in any court, that court may—

(a)

stay the proceedings on the petition, action or other proceedings (as the case may be), or

(b)

allow them to continue on such terms as that court thinks fit.

(4)

In paragraph (2)(a) and (b) references to the debt include a reference to any interest, penalty or other sum that becomes payable in relation to that debt after the application date.

(5)

Nothing in this Article affects the right of a secured creditor of the debtor to enforce his security.

The moratorium period208H

(1)

The moratorium relating to the qualifying debts specified in a debt relief order continues for the period of one year beginning with the effective date for the order, unless—

(a)

the moratorium terminates early; or

(b)

the moratorium period is extended by the official receiver under this Article or by the High Court under Article 208M.

(2)

The official receiver may only extend the moratorium period for the purpose of—

(a)

carrying out or completing an investigation under Article 208K;

(b)

taking any action he considers necessary (whether as a result of an investigation or otherwise) in relation to the order; or

(c)

in a case where he has decided to revoke the order, providing the debtor with the opportunity to make arrangements for making payments towards his debts.

(3)

The official receiver may not extend the moratorium period for the purpose mentioned in paragraph (2)(a) without the permission of the High Court.

(4)

The official receiver may not extend the moratorium period beyond the end of the period of 3 months beginning after the end of the initial period of one year mentioned in paragraph (1).

(5)

The moratorium period may be extended more than once, but any extension (whether by the official receiver or by the High Court) must be made before the moratorium would otherwise end.

(6)

References in this Part to a moratorium terminating early are to its terminating before the end of what would otherwise be the moratorium period, whether on the revocation of the order or by virtue of any other statutory provision.

Discharge from qualifying debts208I

(1)

Subject to the following provisions of this Article, at the end of the moratorium applicable to a debt relief order the debtor is discharged from all the qualifying debts specified in the order (including all interest, penalties and other sums which may have become payable in relation to those debts since the application date).

(2)

Paragraph (1) does not apply if the moratorium terminates early.

(3)

Paragraph (1) does not apply in relation to any qualifying debt which the debtor incurred in respect of any fraud or fraudulent breach of trust to which the debtor was a party.

(4)

The discharge of the debtor under paragraph (1) does not release any other person from—

(a)

any liability (whether as partner or co-trustee of the debtor or otherwise) from which the debtor is released by the discharge; or

(b)

any liability as surety for the debtor or as a person in the nature of such a surety.

(5)

If the order is revoked by the High Court under Article 208M after the end of the moratorium period, the qualifying debts specified in the order shall (so far as practicable) be treated as though paragraph (1) had never applied to them.

Duties of debtor

Providing assistance to official receiver, etc.208J

(1)

The duties in this Article apply to a debtor at any time after the making of an application by him for a debt relief order.

(2)

The debtor must—

(a)

give to the official receiver such information as to his affairs,

(b)

attend on the official receiver at such times, and

(c)

do all such other things,

as the official receiver may reasonably require for the purpose of carrying out his functions in relation to the application or, as the case may be, the debt relief order made as a result of the application.

(3)

The debtor must notify the official receiver as soon as reasonably practicable if he becomes aware of—

(a)

any error in, or omission from, the information supplied to the official receiver in, or in support of, the application;

(b)

any change in his circumstances between the application date and the determination date that would affect (or would have affected) the determination of the application.

(4)

The duties under paragraphs (2) and (3) apply after (as well as before) the determination of the application, for as long as the official receiver is able to exercise functions of the kind mentioned in paragraph (2).

(5)

If a debt relief order is made as a result of the application, the debtor must notify the official receiver as soon as reasonably practicable if—

(a)

there is an increase in his income during the moratorium period applicable to the order;

(b)

he acquires any property or any property is devolved upon him during that period;

(c)

he becomes aware of any error in or omission from any information supplied by him to the official receiver after the determination date.

(6)

A notification under paragraph (3) or (5) must give the prescribed particulars (if any) of the matter being notified.

Objections, investigations and revocation

Objections and investigations208K

(1)

Any person specified in a debt relief order as a creditor to whom a specified qualifying debt is owed may object to—

(a)

the making of the order;

(b)

the inclusion of the debt in the list of the debtor's qualifying debts; or

(c)

the details of the debt specified in the order.

(2)

An objection under paragraph (1) must be—

(a)

made during the moratorium period relating to the order and within the prescribed period for objections;

(b)

made to the official receiver in the prescribed manner;

(c)

based on a prescribed ground;

(d)

supported by any information and documents as may be prescribed;

and the prescribed period mentioned in sub-paragraph (a) must not be less than 28 days after the creditor in question has been notified of the making of the order.

(3)

The official receiver must consider every objection made to him under this Article.

(4)

The official receiver may—

(a)

as part of his consideration of an objection, or

(b)

on his own initiative,

carry out an investigation of any matter that appears to the official receiver to be relevant to the making of any decision mentioned in paragraph (5) in relation to a debt relief order or the debtor.

(5)

The decisions to which an investigation may be directed are—

(a)

whether the order should be revoked or amended under Article 208L;

(b)

whether an application should be made to the High Court under Article 208M; or

(c)

whether any other steps should be taken in relation to the debtor.

(6)

The power to carry out an investigation under this Article is exercisable after (as well as during) the moratorium relating to the order.

(7)

The official receiver may require any person to give him such information and assistance as he may reasonably require in connection with an investigation under this Article.

(8)

Subject to anything prescribed in the rules as to the procedure to be followed in carrying out an investigation under this Article, an investigation may be carried out by the official receiver in such manner as he thinks fit.

Power of official receiver to revoke or amend a debt relief order208L

(1)

The official receiver may revoke or amend a debt relief order during the applicable moratorium period in the circumstances provided for by this Article.

(2)

The official receiver may revoke the order on the ground that—

(a)

any information supplied to him by the debtor—

(i)

in, or in support of, the application, or

(ii)

after the determination date,

was incomplete, incorrect or otherwise misleading;

(b)

the debtor has failed to comply with a duty under Article 208J;

(c)

a bankruptcy order has been made in relation to the debtor; or

(d)

the debtor has made a proposal under Chapter 2 of Part 8 (or has notified the official receiver of his intention to do so).

(3)

The official receiver may revoke the order on the ground that he should not have been satisfied—

(a)

that the debts specified in the order were qualifying debts of the debtor as at the application date;

(b)

that the conditions specified in Part 1 of Schedule 2ZA were met;

(c)

that the conditions specified in Part 2 of that Schedule were met or that any failure to meet such a condition did not prevent his making the order.

(4)

The official receiver may revoke the order on the ground that either or both of the conditions in paragraphs 7 and 8 of Schedule 2ZA (monthly surplus income and property) are not met at any time after the order was made. For this purpose those paragraphs are to be read as if references to the determination date were references to the time in question.

(5)

Where the official receiver decides to revoke the order, he may revoke it either—

(a)

with immediate effect, or

(b)

with effect from such date (not more than 3 months after the date of the decision) as he may specify.

(6)

In considering when the revocation should take effect the official receiver must consider (in the light of the grounds on which the decision to revoke was made and all the other circumstances of the case) whether the debtor ought to be given the opportunity to make arrangements for making payments towards his debts.

(7)

If the order has been revoked with effect from a specified date the official receiver may, if he thinks it appropriate to do so at any time before that date, revoke the order with immediate effect.

(8)

The official receiver may amend a debt relief order for the purpose of correcting an error in or omission from anything specified in the order.

(9)

But paragraph (8) does not permit the official receiver to add any debts that were not specified in the application for the debt relief order to the list of qualifying debts.

(10)

The rules may make further provision as to the procedure to be followed by the official receiver in the exercise of his powers under this Article.

Role of the High Court

Powers of High Court in relation to debt relief orders208M

(1)

Any person may make an application to the High Court if he is dissatisfied by any act, omission or decision of the official receiver in connection with a debt relief order or an application for such an order.

(2)

The official receiver may make an application to the High Court for directions or an order in relation to any matter arising in connection with a debt relief order or an application for such an order.

(3)

The matters referred to in paragraph (2) include, among other things, matters relating to the debtor's compliance with any duty arising under Article 208J.

(4)

An application under this Article may, subject to anything in the rules, be made at any time.

(5)

The High Court may extend the moratorium period applicable to a debt relief order for the purposes of determining an application under this Article.

(6)

On an application under this Article the High Court may dismiss the application or do one or more of the following—

(a)

quash the whole or part of any act or decision of the official receiver;

(b)

give the official receiver directions (including a direction that he reconsider any matter in relation to which his act or decision has been quashed under sub-paragraph (a));

(c)

make an order for the enforcement of any obligation on the debtor arising by virtue of a duty under Article 208J;

(d)

extend the moratorium period applicable to the debt relief order;

(e)

make an order revoking or amending the debt relief order;

(f)

make an order under Article 208N; or

(g)

make such other order as the Court thinks fit.

(7)

An order under paragraph (6)(e) for the revocation of a debt relief order—

(a)

may be made during the moratorium period applicable to the debt relief order or at any time after that period has ended;

(b)

may be made on the High Court's own motion if the Court has made a bankruptcy order in relation to the debtor during that period;

(c)

may provide for the revocation of the order to take effect on such terms and at such a time as the Court may specify.

(8)

An order under paragraph (6)(e) for the amendment of a debt relief order may not add any debts that were not specified in the application for the debt relief order to the list of qualifying debts.

Inquiry into debtor's dealings and property208N

(1)

An order under this Article may be made by the High Court on the application of the official receiver.

(2)

An order under this Article is an order summoning any of the following persons to appear before the High Court—

(a)

the debtor;

(b)

the debtor's spouse or former spouse or the debtor's civil partner or former civil partner;

(c)

any person appearing to the Court to be able to give information or assistance concerning the debtor or his dealings, affairs and property.

(3)

The High Court may require a person falling within paragraph (2)(c)—

(a)

to provide a written account of his dealings with the debtor; or

(b)

to produce any documents in his possession or under his control relating to the debtor or to the debtor's dealings, affairs or property.

(4)

Paragraph (5) applies where a person fails without reasonable excuse to appear before the High Court when he is summoned to do so by an order under this Article.

(5)

The High Court may cause a warrant to be issued to a constable—

(a)

for the arrest of that person, and

(b)

for the seizure of any records or other documents in that person's possession.

(6)

The High Court may authorise a person arrested under such a warrant to be kept in custody, and anything seized under such a warrant to be held, in accordance with the rules, until that person is brought before the Court under the warrant or until such other time as the Court may order.

Offences

False representations and omissions208O

(1)

A person who makes an application for a debt relief order shall be guilty of an offence if he knowingly or recklessly makes any false representation or omission in making the application or providing any information or documents to the official receiver in support of the application.

(2)

A person who makes an application for a debt relief order shall be guilty of an offence if—

(a)

he intentionally fails to comply with a duty under Article 208J(3) in connection with the application; or

(b)

he knowingly or recklessly makes any false representation or omission in providing any information to the official receiver in connection with such a duty or otherwise in connection with the application.

(3)

It is immaterial for the purposes of an offence under paragraph (1) or (2) whether or not a debt relief order is made as a result of the application.

(4)

A person in respect of whom a debt relief order is made shall be guilty of an offence if—

(a)

he intentionally fails to comply with a duty under Article 208J(5) in connection with the order; or

(b)

he knowingly or recklessly makes any false representation or omission in providing information to the official receiver in connection with such a duty or otherwise in connection with the performance by the official receiver of functions in relation to the order.

(5)

It is immaterial for the purposes of an offence under paragraph (4)—

(a)

whether the offence is committed during or after the moratorium period; and

(b)

whether or not the order is revoked after the conduct constituting the offence takes place.

Concealment or falsification of documents208P

(1)

A person in respect of whom a debt relief order is made shall be guilty of an offence if, during the moratorium period in relation to that order—

(a)

he does not provide, at the request of the official receiver, all his books, papers and other records of which he has possession or control and which relate to his affairs;

(b)

he prevents the production to the official receiver of any books, papers or other records relating to his affairs;

(c)

he conceals, destroys, mutilates or falsifies, or causes or permits the concealment, destruction, mutilation or falsification of, any books, papers or other records relating to his affairs;

(d)

he makes, or causes or permits the making of, any false entries in any book, document or record relating to his affairs; or

(e)

he disposes of, or alters or makes any omission in, or causes or permits the disposal, altering or making of any omission in, any book, document or record relating to his affairs.

(2)

A person in respect of whom a debt relief order is made shall be guilty of an offence if—

(a)

he did anything falling within sub-paragraphs (c) to (e) of paragraph (1) during the period of 12 months ending with the application date; or

(b)

he did anything falling within sub-paragraphs (b) to (e) of paragraph (1) after that date but before the effective date.

(3)

It shall be a defence for a person charged with an offence under this Article to prove that, in respect of the conduct constituting the offence, he had no intent to defraud or to conceal the state of his affairs.

(4)

In its application to a trading record paragraph (2)(a) has effect as if the reference to 12 months were a reference to 2 years.

(5)

In paragraph (4) “trading record” means a book, document or record which shows or explains the transactions or financial position of a person's business, including—

(a)

a periodic record of cash paid and received,

(b)

a statement of periodic stock-taking, and

(c)

except in the case of goods sold by way of retail trade, a record of goods sold and purchased which identifies the buyer and seller or enables them to be identified.

(6)

It is immaterial for the purposes of an offence under this Article whether or not the debt relief order in question is revoked after the conduct constituting the offence takes place (but no offence is committed under this Article by virtue of conduct occurring after the order is revoked).

Fraudulent disposal of property208Q

(1)

A person in respect of whom a debt relief order is made shall be guilty of an offence if he made or caused to be made any gift or transfer of his property during the period between—

(a)

the start of the period of 2 years ending with the application date; and

(b)

the end of the moratorium period.

(2)

The reference in paragraph (1) to making a transfer of any property includes causing or conniving at the enforcement of a judgment, or the levying of any execution, against that property.

(3)

It shall be a defence for a person charged with an offence under this Article to prove that, in respect of the conduct constituting the offence, he had no intent to defraud or to conceal the state of his affairs.

(4)

For the purposes of paragraph (3) a person is to be taken to have proved that he had no such intent if—

(a)

sufficient evidence is adduced to raise an issue as to whether he had such intent; and

(b)

the contrary is not proved beyond reasonable doubt.

(5)

It is immaterial for the purposes of this Article whether or not the debt relief order in question is revoked after the conduct constituting an offence takes place (but no offence is committed by virtue of conduct occurring after the order is revoked).

Fraudulent dealing with property obtained on credit208R

(1)

A person in respect of whom a debt relief order is made shall be guilty of an offence if during the relevant period he disposed of any property which he had obtained on credit and, at the time he disposed of it, had not paid for it.

(2)

Any other person shall be guilty of an offence if during the relevant period he acquired or received property from a person in respect of whom a debt relief order was made (the “debtor”) knowing or believing—

(a)

that the debtor owed money in respect of the property, and

(b)

that the debtor did not intend, or was unlikely to be able, to pay the money he so owed.

(3)

In paragraphs (1) and (2) “relevant period” means the period between—

(a)

the start of the period of 2 years ending with the application date; and

(b)

the determination date.

(4)

In the case of an offence under paragraph (1) or (2) it shall be a defence for the person charged to prove that the disposal, acquisition or receipt of the property was in the ordinary course of a business carried on by the debtor at the time of the disposal, acquisition or receipt.

(5)

In determining for the purposes of paragraph (4) whether any property is disposed of, acquired or received in the ordinary course of a business carried on by the debtor, regard may be had, in particular, to the price paid for the property.

(6)

It shall be a defence for a person charged with an offence under paragraph (1) to prove that, in respect of the conduct constituting the offence, he had no intent to defraud or to conceal the state of his affairs.

(7)

In this Article references to disposing of property include pawning or pledging it; and references to acquiring or receiving property shall be read accordingly.

(8)

It is immaterial for the purposes of this Article whether or not the debt relief order in question is revoked after the conduct constituting an offence takes place (but no offence is committed by virtue of conduct occurring after the order is revoked).

Obtaining credit or engaging in business208S

(1)

A person in respect of whom a debt relief order is made shall be guilty of an offence if, during the relevant period—

(a)

he obtains credit (either alone or jointly with any other person) without giving the person from whom he obtains the credit the relevant information about his status; or

(b)

he engages directly or indirectly in any business under a name other than that in which the order was made without disclosing to all persons with whom he enters into any business transaction the name in which the order was made.

(2)

For the purposes of paragraph (1)(a) the relevant information about a person's status is the information that—

(a)

a moratorium is in force in relation to the debt relief order,

(b)

a debt relief restrictions order is in force in respect of him, or

(c)

both a moratorium and a debt relief restrictions order are in force,

as the case may be.

(3)

In paragraph (1) “relevant period” means—

(a)

the moratorium period relating to the debt relief order, or

(b)

the period for which a debt relief restrictions order is in force in respect of the person in respect of whom the debt relief order is made,

as the case may be.

(4)

Paragraph (1)(a) does not apply if the amount of the credit is less than the amount (if any) specified by order under Article 362(1)(b).

(5)

The reference in paragraph (1)(a) to a person obtaining credit includes the following cases—

(a)

where goods are bailed to him under a hire-purchase agreement, or agreed to be sold to him under a conditional sale agreement;

(b)

where he is paid in advance (in money or otherwise) for the supply of goods or services.

Offences: supplementary208T

(1)

Proceedings for an offence under this Part may only be instituted by the Director of Public Prosecutions for Northern Ireland.

(2)

It is not a defence in proceedings for an offence under this Part that anything relied on, in whole or in part, as constituting the offence was done outside Northern Ireland.

(3)

A person guilty of an offence under this Part is liable to imprisonment or a fine, or both.

Supplementary

Approved intermediaries208U

(1)

In this Part “approved intermediary” means an individual for the time being approved by a competent authority to act as an intermediary between a person wishing to make an application for a debt relief order and the official receiver.

(2)

In this Article “competent authority” means a person or body for the time being designated by the Department for the purposes of granting approvals under this Article.

(3)

Designation as a competent authority may be limited so as to permit the authority only to approve persons of a particular description.

(4)

The Department may by regulations make provision as to—

(a)

the procedure for designating persons or bodies as competent authorities;

(b)

descriptions of individuals who are ineligible to be approved under this Article;

(c)

the procedure for granting approvals under this Article;

(d)

the withdrawal of designations or approvals under this Article;

and provision made under sub-paragraph (a) or (c) may include provision requiring the payment of fees.

(5)

The rules may make provision about the activities to be carried out by an approved intermediary in connection with an application for a debt relief order, which may in particular include—

(a)

assisting the debtor in making the application;

(b)

checking that the application has been properly completed;

(c)

sending the application to the official receiver.

(6)

The rules may also make provision about other activities to be carried out by approved intermediaries.

(7)

An approved intermediary may not charge a debtor any fee in connection with an application for a debt relief order.

(8)

An approved intermediary is not liable to any person in damages for anything done or omitted to be done when acting (or purporting to act) as an approved intermediary in connection with a particular application by a debtor for a debt relief order.

(9)

Paragraph (8) does not apply if the act or omission was in bad faith.

(10)

The Department may, out of the proceeds of fees charged under Article 361(1)(za), make payments to competent authorities or approved intermediaries in connection with the exercise of the functions of approved intermediaries under this Part.

Debt relief restrictions orders and undertakings208V

Schedule 2ZB (which makes provision about debt relief restrictions orders and debt relief restrictions undertakings) has effect.

Register of debt relief orders, etc.208W

The Department must maintain a register of matters relating to—

(a)

debt relief orders;

(b)

debt relief restrictions orders; and

(c)

debt relief restrictions undertakings.

Interpretation208X

(1)

In this Part—

“the application date”, in relation to a debt relief order or an application for a debt relief order, means the date on which the application for the order is made to the official receiver;

“approved intermediary” has the meaning given in Article 208U(1);

“debt relief order” means an order made by the official receiver under this Part;

“debtor” means—

(a)

in relation to an application for a debt relief order, the applicant; and

(b)

in relation to a debt relief order, the person in relation to whom the order is made;

“debt relief restrictions order” and “debt relief restrictions undertaking” means an order made, or an undertaking accepted, under Schedule 2ZB;

“the determination date”, in relation to a debt relief order or an application for a debt relief order, means the date on which the application for the order is determined by the official receiver;

“the effective date” has the meaning given in Article 208E(7);

“excluded debt” is to be construed in accordance with Article 208A;

“moratorium” and “moratorium period” are to be construed in accordance with Articles 208G and 208H;

“qualifying debt”, in relation to a debtor, has the meaning given in Article 208A(2);

“the register” means the register maintained under Article 208W;

“specified qualifying debt” has the meaning given in Article 208G(1).

(2)

In this Part references to a creditor specified in a debt relief order as the person to whom a qualifying debt is owed by the debtor include a reference to any person to whom the right to claim the whole or any part of the debt has passed, by assignment or operation of law, after the date of the application for the order.

PART VIIIINDIVIDUAL VOLUNTARY ARRANGEMENTS

CHAPTER IDEEDS OF ARRANGEMENT

Deeds of arrangement to which this Chapter appliesF436209.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Registration of deeds of arrangement

Registrar and deputy registrarF436210.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Mode of registrationF436211.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Form of registerF436212.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rectification of registerF436213.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Avoidance of deeds of arrangement

Avoidance of unregistered deeds of arrangementF436214.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Avoidance of deeds of arrangement unless assented to by a majority of the creditorsF436215.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deeds otherwise void or voidableF436216.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions as to trustees

Notice to creditors of avoidance of deedF436217.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trustee acting when deed of arrangement voidF436218.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Protection of trustees under void deedsF436219.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of expenses incurred by trusteesF436220.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Security by trusteeF436221.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transmission of accountsF436222.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Preferential payment to creditorF436223.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

Applications to the High CourtF436224.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inspection of register, etc., certified copies and evidenceF436225.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IIVOLUNTARY ARRANGEMENTS

Moratorium for insolvent debtor

Interim order of High Court226.

(1)

In the circumstances specified in Articles 227 and 229, the High Court may in the case of a debtor (being an individual) make an interim order under this Article.

(2)

An interim order has the effect that, during the period for which it is in force—

(a)

no bankruptcy petition relating to the debtor may be presented or proceeded with,

F437(aa)

F437no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the debtor in respect of a failure by the debtor to comply with any term or condition of his tenancy of such premises, except with the leave of the High Court, and

(b)

no other proceedings, and no execution or other legal process, may be commenced or continuedF437 and no distress may be levied against the debtor or his property except with the leave of the High Court.

Application for interim order227.

(1)

Application to the High Court for an interim order may be made where the debtor intends to make a proposalF438 under this Part, that is, a proposal to his creditors for a composition in satisfaction of his debts or a scheme of arrangement of his affairs (referred to, in either case, as a “voluntary arrangement”).

(2)

The proposal must provide for some person ( “the nominee”) to act in relation to the voluntary arrangement either as trustee or otherwise for the purpose of supervising its implementationF438 and the nominee must be a person who is qualified to act as an insolvency practitioner, or authorised to act as nominee, in relation to the voluntary arrangement.

(3)

Subject to paragraphs (4) and (5), the application may be made—

(a)

if the debtor is an undischarged bankrupt, by the debtor, the trustee of his estate, or the official receiver, and

(b)

in any other case, by the debtor.

(4)

An application shall not be made under paragraph (3)(a) unless the debtor has given notice ofF439 the proposal to the official receiver and, if there is one, the trustee of his estate.

(5)

An application shall not be made while a bankruptcy petition presented by the debtor is pending, if the High Court has, under Article 247, appointed an insolvency practitioner to inquire into the debtor's affairs and report.

Effect of application228.

(1)

At any time when an application under Article 227 for an interim order is pending

F440(a)

no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the debtor in respect of a failure by the debtor to comply with any term or condition of his tenancy of such premises, except with the leave of the High Court, and

F440(b)

, the High Court mayF440 forbid the levying of any distress on the debtor's property or its subsequent sale, or both, and stay any action, proceedings, execution or other legal process against the property or person of the debtor.

(2)

Any court in which proceedings are pending against an individual may, on proof that an application under Article 227 has been made in respect of that individual, either stay the proceedings or allow them to continue on such terms as it thinks fit.

Cases in which interim order can be made229.

(1)

The High Court shall not make an interim order on an application under Article 227 unless it is satisfied—

(a)

that the debtor intends to makeF441 a proposal under this Part;

(b)

that on the day of the making of the application the debtor was an undischarged bankrupt or was able to petition for his own bankruptcy;

(c)

that no previous application has been made by the debtor for an interim order within the 12 months immediately preceding that day; and

(d)

that the nominee under the debtor's proposalF442. . . is willing to act in relation to the proposal.

(2)

The High Court may make an order if it thinks that it would be appropriate to do so for the purpose of facilitating the consideration and implementation of the debtor's proposal.

(3)

Where the debtor is an undischarged bankrupt, the interim order may contain provision as to the conduct of the bankruptcy, and the administration of the bankrupt's estate, during the period for which the order is in force.

(4)

Subject to paragraph (5), the provision contained in an interim order by virtue of paragraph (3) may include provision staying proceedings in the bankruptcy or modifying any provision in Parts VIII to X, and any provision of the rules in their application to the debtor's bankruptcy.

(5)

An interim order shall not, in relation to a bankrupt, make provision relaxing or removing any of the requirements of provisions in Parts VIII to X, or of the rules, unless the High Court is satisfied that that provision is unlikely to result in any significant diminution in, or in the value of, the debtor's estate for the purposes of the bankruptcy.

(6)

Subject to Articles 230, 233, 234 and 236, an interim order made on an application under Article 227 ceases to have effect on the expiration of 14 days from the day on which it is made.

Nominee's report on debtor's proposal230.

(1)

Where an interim order has been made on an application under Article 227, the nominee shall, before the order ceases to have effect, submit a report to the High Court stating—

(a)

F443whether, in his opinion, the voluntary arrangement which the debtor is proposing has a reasonable prospect of being approved and implemented,

F443(aa)

whether, in his opinion, a meeting of the debtor's creditors should be summoned to consider the debtor's proposal, and

(b)

if in his opinion such a meeting should be summoned, the date on which, and time and place at which, he proposes the meeting should be held.

(2)

For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee—

(a)

a document setting out the terms of the voluntary arrangement which the debtor is proposing, and

(b)

a statement of his affairs containing—

(i)

such particulars of his creditors and of his debts and other liabilities and of his assets as may be prescribed, and

(ii)

such other information as may be prescribed.

F444(3)

The High Court may—

(a)

on an application made by the debtor in a case where the nominee has failed to submit the report required by this Article or has died, or

(b)

on an application made by the debtor or the nominee in a case where it is impracticable or inappropriate for the nominee to continue to act as such,

direct that the nominee shall be replaced as such by another person qualified to act as an insolvency practitioner, or authorised to act as nominee, in relation to the voluntary arrangement.

(3A)

The High Court may, on an application made by the debtor in a case where the nominee has failed to submit the report required by this Article, direct that the interim order shall continue, or (if it has ceased to have effect) be renewed, for such further period as the Court may specify in the direction.

(4)

The High Court may, on the application of the nominee, extend the period for which the interim order has effect so as to enable the nominee to have more time to prepare his report.

(5)

If the High Court is satisfied on receiving the nominee's report that a meeting of the debtor's creditors should be summoned to consider the debtor's proposal, the Court shall direct that the period for which the interim order has effect shall be extended, for such further period as it may specify in the direction, for the purpose of enabling the debtor's proposal to be considered by his creditors in accordance with the following provisions of this Chapter.

(6)

The High Court may discharge the interim order if it is satisfied, on the application of the nominee—

(a)

that the debtor has failed to comply with his obligations under paragraph (2), or

(b)

that for any other reason it would be inappropriate for a meeting of the debtor's creditors to be summoned to consider the debtor's proposal.

F445Procedure where no interim order made

Debtor's proposal and nominee's report230A.

(1)

This Article applies where a debtor (being an individual)—

(a)

intends to make a proposal under this Part (but an interim order has not been made in relation to the proposal and no application for such an order is pending), and

(b)

if he is an undischarged bankrupt, has given notice of the proposal to the official receiver and, if there is one, the trustee of his estate,

unless a bankruptcy petition presented by the debtor is pending and the High Court has, under Article 247, appointed an insolvency practitioner to inquire into the debtor's affairs and report.

(2)

For the purpose of enabling the nominee to prepare a report to the High Court, the debtor shall submit to the nominee—

(a)

a document setting out the terms of the voluntary arrangement which the debtor is proposing, and

(b)

a statement of his affairs containing—

(i)

such particulars of his creditors and of his debts and other liabilities and of his assets as may be prescribed, and

(ii)

such other information as may be prescribed.

(3)

If the nominee is of the opinion that the debtor is an undischarged bankrupt, or is able to petition for his own bankruptcy, the nominee shall, within 14 days (or such longer period as the High Court may allow) after receiving the document and statement mentioned in paragraph (2), submit a report to the Court stating—

(a)

whether, in his opinion, the voluntary arrangement which the debtor is proposing has a reasonable prospect of being approved and implemented,

(b)

whether, in his opinion, a meeting of the debtor's creditors should be summoned to consider the debtor's proposal, and

(c)

if in his opinion such a meeting should be summoned, the date on which, and time and place at which, he proposes the meeting should be held.

(4)

The High Court may—

(a)

on an application made by the debtor in a case where the nominee has failed to submit the report required by this Article or has died, or

(b)

on an application made by the debtor or the nominee in a case where it is impracticable or inappropriate for the nominee to continue to act as such,

direct that the nominee shall be replaced as such by another person qualified to act as an insolvency practitioner, or authorised to act as nominee, in relation to the voluntary arrangement.

(5)

The High Court may, on an application made by the nominee, extend the period within which the nominee is to submit his report.

F446Creditors' meeting

Summoning of creditors' meeting231.

(1)

Where it has been reported to the High Court under Article 230F447 or 230A that a meeting of the debtor's creditors should be summoned, the nominee (or his replacement under ArticleF448 230(3) or 230A(4)) shall, unless the Court otherwise directs, summon that meeting for the time, date and place proposed in his report.

(2)

The persons to be summoned to the meeting are every creditor of the debtor of whose claim and address the person summoning the meeting is aware.

(3)

For this purpose the creditors of a debtor who is an undischarged bankrupt include—

(a)

every person who is a creditor of the bankrupt in respect of a bankruptcy debt, and

(b)

every person who would be such a creditor if the bankruptcy had commenced on the day on which notice of the meeting is given.

Consideration and implementation of debtor's proposal

Decisions of creditors' meeting232.

(1)

A creditors' meeting summoned under Article 231 shall decide whether to approve the proposed voluntary arrangement.

(2)

The meeting may approve the proposed voluntary arrangement with modifications, but shall not do so unless the debtor consents to each modification.

(3)

Subject to paragraph (4), the modifications subject to which the proposed voluntary arrangement may be approved may include one conferring the functions proposed to be conferred on the nominee on another person qualified to act as an insolvency practitionerF449 or authorised to act as nominee, in relation to the voluntary arrangement.

(4)

The modifications mentioned in paragraph (3) shall not include any modification by virtue of which the proposal ceases to be a proposalF449 under this Part.

(5)

The meeting shall not approve any proposal or modification which affects the right of a secured creditor of the debtor to enforce his security, except with the concurrence of the creditor concerned.

(6)

Subject to paragraph (7), the meeting shall not approve any proposal or modification under which—

(a)

any preferential debt of the debtor is to be paid otherwise than in priority to such of his debts as are not preferential debts, F450...

F451(aa)

any ordinary preferential debt of the debtor is to be paid otherwise than in priority to any secondary preferential debts that the debtor may have,

(b)

a preferential creditor of the debtor is to be paid an amount in respect of F452an ordinary preferential debt that bears to that debt a smaller proportion than is borne to F453another ordinary preferential debt by the amount that is to be paid in respect of that other debt, F454F455...

(c)

a preferential creditor of the debtor is to be paid an amount in respect of a secondary preferential debt that bears to that debt a smaller proportion than is borne to another secondary preferential debt by the amount that is to be paid in respect of that other debt, F456or

(d)

if the debtor is a relevant financial institution (see Article 347A), any non-preferential debt is to be paid otherwise than in accordance with the rules in Article 300(3A) (reading references to the bankrupt as references to the debtor).

(7)

The meeting may approve a proposal or modification such as is mentioned in paragraph (6) with the concurrence of the F457... creditor concerned.

(8)

Subject to paragraphs (2) to (7), the meeting shall be conducted in accordance with the rules.

(9)

In this Article “preferential debt” F458, “ordinary preferential debt” and “secondary preferential debt” each has the meaning given by Article 346; and “preferential creditor” is to be construed accordingly.

Report of decisions to High Court233.

(1)

After the conclusion in accordance with the rules of the meeting summoned under Article 231, the chairman of the meeting shall report the result of it to the High Court and, immediately after so reporting, shall give notice of the result of the meeting to such persons as may be prescribed.

(2)

If the report is that the meeting has declined (with or without modifications) to approve the debtor's proposal, the High Court may discharge any interim order which is in force in relation to the debtor.

Effect of approval234.

(1)

This Article has effect where the meeting summoned under Article 231 approves the proposed voluntary arrangement (with or without modifications).

(2)

The approved arrangement—

(a)

takes effect as if made by the debtor at the meeting, and

F459(b)

binds every person who in accordance with the rules—

(i)

was entitled to vote at the meeting (whether or not he was present or represented at it), or

(ii)

would have been so entitled if he had had notice of it,

as if he were a party to the arrangement.

F459(2A)

If—

(a)

when the arrangement ceases to have effect any amount payable under the arrangement to a person bound by virtue of paragraph (2)(b)(ii) has not been paid, and

(b)

the arrangement did not come to an end prematurely,

the debtor shall at that time become liable to pay to that person the amount payable under the arrangement.

F460(3)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)

Any interim order in force in relation to the debtor immediately preceding the expiration of the period of 28 days from the day on which the report with respect to the creditors' meeting was made to the High Court under Article 233 ceases to have effect at the end of that period.

(5)

Paragraph (4) applies except to such extent as the High Court may direct for the purposes of any application under Article 236.

(6)

Where proceedings on a bankruptcy petition have been stayed by an interim order which ceases to have effect under paragraph (4), that petition is deemed, unless the High Court otherwise orders, to have been dismissed.

F461Additional effect on undischarged bankrupt235.

(1)

This Article applies where—

(a)

the creditors' meeting summoned under Article 231 approves the proposed voluntary arrangement (with or without modifications), and

(b)

the debtor is an undischarged bankrupt.

(2)

Where this Article applies the High Court shall annul the bankruptcy order on an application made—

(a)

by the bankrupt, or

(b)

where the bankrupt has not made an application within the prescribed period, by the official receiver.

(3)

An application under paragraph (2) may not be made—

(a)

during the period specified in Article 236(3)(a) during which the decision of the creditors' meeting can be challenged by application under Article 236,

(b)

while an application under that Article is pending, or

(c)

while an appeal in respect of an application under that Article is pending or may be brought.

(4)

Where this Article applies the Court may give such directions about the conduct of the bankruptcy and the administration of the bankrupt's estate as it thinks appropriate for facilitating the implementation of the approved voluntary arrangement.

Challenge of meeting's decision236.

(1)

Subject to the following provisions of this Article, an application to the High Court may be made, by any of the persons specified in paragraph (2) on one or both of the following grounds, namely—

(a)

that a voluntary arrangement approved by a creditors' meeting summoned under Article 231 unfairly prejudices the interests of a creditor of the debtor;

(b)

that there has been some material irregularity at or in relation to such a meeting.

(2)

The persons who may apply under this Article are—

(a)

the debtor;

F462(b)

a person who—

(i)

was entitled, in accordance with the rules, to vote at the creditors' meeting, or

(ii)

would have been so entitled if he had had notice of it,

(c)

the nominee (or his replacement under ArticleF462 230(3), 230A(4) or 232(3)); and

(d)

if the debtor is an undischarged bankrupt, the trustee of his estate or the official receiver.

(3)

An application under this Article shall not be made

F463(a)

after the expiration of 28 days from the day on which the report of the creditors' meeting was made to the High Court under Article 233F463 or

F463(b)

in the case of a person who was not given notice of the creditor's meeting, after the end of the period of 28 days beginning with the day on which he became aware that the meeting had taken place,

F463 but (subject to that) an application made by a person within paragraph (2)(b)(ii) on the ground that the arrangement prejudices his interests may be made after the arrangement has ceased to have effect, unless it has come to an end prematurely..

(4)

Where on an application under this Article the High Court is satisfied as to either of the grounds mentioned in paragraph (1), it may do one or both of the following, namely—

(a)

revoke or suspend any approval given by the meeting;

(b)

give a direction to any person for the summoning of a further meeting of the debtor's creditors to consider any revised proposal the debtor may make or, in a case falling within paragraph (1)(b), to reconsider his original proposal.

(5)

Where at any time after giving a direction under paragraph (4)(b) for the summoning of a meeting to consider a revised proposal the High Court is satisfied that the debtor does not intend to submit such a proposal, the Court shall revoke the direction and revoke or suspend any approval given at the previous meeting.

(6)

Where the High Court gives a direction under paragraph (4)(b), it may also give a direction continuing or, as the case may require, renewing, for such period as may be specified in the direction, the effect in relation to the debtor of any interim order.

(7)

In any case where the High Court, on an application made under this Article with respect to a creditors' meeting, gives a direction under paragraph (4)(b) or revokes or suspends an approval under paragraph (4)(a) or (5), the Court may give such supplemental directions as it thinks fit and, in particular, directions with respect to—

(a)

things done since the meeting under any voluntary arrangement approved by the meeting, and

(b)

such things done since the meeting as could not have been done if an interim order had been in force in relation to the debtor when they were done.

(8)

Except in pursuance of the preceding provisions of this Article, an approval given at a creditors' meeting summoned under Article 231 is not invalidated by any irregularity at or in relation to the meeting.

F464False representations etc.236A.

(1)

If for the purpose of obtaining the approval of his creditors to a proposal for a voluntary arrangement, the debtor—

(a)

makes any false representation, or

(b)

fraudulently does, or omits to do, anything,

he shall be guilty of an offence.

(2)

Paragraph (1) applies even if the proposal is not approved.

Prosecution of delinquent debtors236B.

(1)

This Article applies where a voluntary arrangement approved by a creditors' meeting summoned under Article 231 has taken effect.

(2)

If it appears to the nominee or supervisor that the debtor has been guilty of any offence in connection with the arrangement for which he is criminally liable, he shall forthwith—

(a)

report the matter to the Department, and

(b)

provide the Department with such information and give the Department such access to and facilities for inspecting and taking copies of documents (being information or documents in his possession or under his control and relating to the matter in question) as the Department requires.

(3)

Where the Director of Public Prosecutions for Northern Ireland institutes criminal proceedings following any report under paragraph (2), the nominee or, as the case may be, supervisor shall give the Director all assistance in connection with the prosecution which he is reasonably able to give.

(4)

The High Court may, on the application of the Director of Public Prosecutions for Northern Ireland, direct a nominee or supervisor to comply with paragraph (3) if he has failed to do so.

Arrangements coming to an end prematurely236C.

For the purposes of this Part, a voluntary arrangement approved by a creditors' meeting summoned under Article 231 comes to an end prematurely if, when it ceases to have effect, it has not been fully implemented in respect of all persons bound by the arrangement by virtue of Article 234(2)(b)(i).

Implementation and supervision of approved voluntary arrangement237.

(1)

This Article applies where a voluntary arrangement approved by a creditors' meeting summoned under Article 231 has taken effect.

(2)

The person who is for the time being carrying out, in relation to the voluntary arrangement, the functions conferred by virtue of the approval on the nominee (or his replacement under ArticleF465 230(3), 230A(4) or 232(3)) shall be known as the supervisor of the voluntary arrangement.

(3)

If the debtor, any of his creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the High Court; and on such an application the Court may—

(a)

confirm, reverse or modify any act or decision of the supervisor,

(b)

give him directions, or

(c)

make such other order as it thinks fit.

(4)

The supervisor may apply to the High Court for directions in relation to any particular matter arising under the voluntary arrangement.

(5)

Without prejudice to section 40(2) of the Trustee Act (Northern Ireland) 1958F466 (power of court to appoint trustees), the High Court may, whenever—

(a)

it is expedient to appoint a person to carry out the functions of the supervisor, and

(b)

it is inexpedient, difficult or impracticable for an appointment to be made without the assistance of the Court,

make an order appointing a person who is qualified to act as an insolvency practitionerF465 or authorised to act as supervisor, in relation to the voluntary arrangement, either in substitution for the existing supervisor or to fill a vacancy.

(6)

The power conferred by paragraph (5) is exercisable so as to increase the number of persons exercising the functions of the supervisor or, where there is more than one person exercising those functions, so as to replace one of more of those persons.

F467Fast-track voluntary arrangement

Availability237A.

Article 237B applies where an individual debtor intends to make a proposal to his creditors for a voluntary arrangement and—

(a)

the debtor is an undischarged bankrupt,

(b)

the official receiver is specified in the proposal as the nominee in relation to the voluntary arrangement, and

(c)

no interim order is applied for under Article 227.

Decision237B.

(1)

The debtor may submit to the official receiver—

(a)

a document setting out the terms of the voluntary arrangement which the debtor is proposing, and

(b)

a statement of his affairs containing such particulars as may be prescribed of his creditors, debts, other liabilities and assets and such other information as may be prescribed.

(2)

If the official receiver thinks that the voluntary arrangement proposed has a reasonable prospect of being approved and implemented, he may make arrangements for inviting creditors to decide whether to approve it.

(3)

For the purposes of paragraph (2) a person is a “creditor” only if—

(a)

he is a creditor of the debtor in respect of a bankruptcy debt, and

(b)

the official receiver is aware of his claim and his address.

(4)

Arrangements made under paragraph (2)—

(a)

must include the provision to each creditor of a copy of the proposed voluntary arrangement,

(b)

must include the provision to each creditor of information about the criteria by reference to which the official receiver will determine whether the creditors approve or reject the proposed voluntary arrangement, and

(c)

may not include an opportunity for modifications to the proposed voluntary arrangement to be suggested or made.

(5)

Where a debtor submits documents to the official receiver under paragraph (1) no application under Article 227 for an interim order may be made in respect of the debtor until the official receiver has—

(a)

made arrangements as described in paragraph (2), or

(b)

informed the debtor that he does not intend to make arrangements (whether because he does not think the voluntary arrangement has a reasonable prospect of being approved and implemented or because he declines to act).

Result237C.

As soon as is reasonably practicable after the implementation of arrangements under Article 237B(2) the official receiver shall report to the High Court F468, and notify the Department, whether the proposed voluntary arrangement has been approved or rejected.

Approval of voluntary arrangement237D.

(1)

This Article applies where the official receiver reports to the High Court under Article 237C that a proposed voluntary arrangement has been approved.

(2)

The voluntary arrangement—

(a)

takes effect,

(b)

binds the debtor, and

(c)

binds every person who was entitled to participate in the arrangements made under Article 237B(2).

(3)

The High Court shall annul the bankruptcy order in respect of the debtor on an application made by the official receiver.

(4)

An application under paragraph (3) may not be made—

(a)

during the period specified in Article 237F(3) during which the voluntary arrangement can be challenged by application under Article 237F(2),

(b)

while an application under that Article is pending, or

(c)

while an appeal in respect of an application under that Article is pending or may be brought.

(5)

The High Court may give such directions about the conduct of the bankruptcy and the administration of the bankrupt's estate as it thinks appropriate for facilitating the implementation of the approved voluntary arrangement.

F469(6)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)

A reference in this Order or another statutory provision to a voluntary arrangement approved under this Part includes a reference to a voluntary arrangement which has effect by virtue of this Article.

Implementation237E.

Article 237 shall apply to a voluntary arrangement which has effect by virtue of Article 237D(2) as it applies to a voluntary arrangement approved by a creditors' meeting.

Revocation237F.

(1)

The High Court may make an order revoking a voluntary arrangement which has effect by virtue of Article 237D(2) on the ground—

(a)

that it unfairly prejudices the interests of a creditor of the debtor, or

(b)

that a material irregularity occurred in relation to the arrangements made under Article 237B(2).

(2)

An order under paragraph (1) may be made only on the application of—

(a)

the debtor,

(b)

a person who was entitled to participate in the arrangements made under Article 237B(2),

(c)

the trustee of the bankrupt's estate, or

(d)

the official receiver.

(3)

An application under paragraph (2) may not be made after the end of the period of 28 days beginning with the date on which the official receiver makes his report to the High Court under Article 237C.

(4)

But a creditor who was not made aware of the arrangements under Article 237B(2) at the time when they were made may make an application under paragraph (2) during the period of 28 days beginning with the date on which he becomes aware of the voluntary arrangement.

Offences237G.

(1)

Article 236A shall have effect in relation to obtaining approval to a proposal for a voluntary arrangement under Article 237D.

(2)

Article 236B shall have effect in relation to a voluntary arrangement which has effect by virtue of Article 237D(2) (for which purposes the words “by a creditors' meeting summoned under Article 231” shall be disregarded).

PART IXBANKRUPTCY

CHAPTER IBANKRUPTCY PETITIONS; BANKRUPTCY ORDERS

Preliminary

Who may present a bankruptcy petition238.

(1)

A petition for a bankruptcy order (a bankruptcy petition) to be made against an individual may be presented to the High Court in accordance with the following provisions of this Part—

(a)

by one of the individual's creditors or jointly by more than one of them,

(b)

by the individual himself,

F470(ba)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F470(bb)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)

by the supervisor of, or any person (other than the individual) who is for the time being bound by, a voluntary arrangement proposed by the individual and approved under Part VIII,F471. . .

(d)

F472. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)

Subject to those provisions, the High Court may make a bankruptcy order on any such petition.

F473Conditions to be satisfied in respect of debtor239.

(1)

A bankruptcy petition may be presented to the High Court under Article 238(1)(a) or (b) only if—

(a)

the centre of the debtor's main interests is in Northern Ireland,

(b)

the centre of the debtor's main interests is in a member State of the European Union F474other than Denmark F475... and the debtor has an establishment in Northern Ireland, or

(c)

F476... the test in paragraph (2) is met.

(2)

The test is that—

(a)

the debtor is domiciled in Northern Ireland, or

(b)

the debtor is personally present in Northern Ireland on the day on which the petition is presented, or

(c)

at any time in the period of three years ending with the day on which the petition is presented, the debtor—

(i)

has been ordinarily resident, or has had a place of residence, in Northern Ireland, or

(ii)

has carried on business in Northern Ireland.

(3)

The reference in paragraph (2) to the debtor carrying on business includes—

(a)

the carrying on of business by a firm or partnership of which the debtor is a member, and

(b)

the carrying on of business by an agent or manager for the debtor or for such a firm or partnership.

(4)

In this Article—

(a)

references to the centre of the debtor's main interests have the same meaning as in Article 3 of the EU Regulation, and

(b)

“establishment” has the same meaning as in Article 2(10) of the EU Regulation.

Other preliminary conditions240.

(1)

Where a bankruptcy petition relating to an individual is presented by a person who is entitled to present a petition under 2 or more sub‐paragraphs of Article 238(1), the petition is to be treated for the purposes of this Part as a petition under such one of those sub‐paragraphs as may be specified in the petition.

(2)

A bankruptcy petition shall not be withdrawn without the leave of the High Court.

(3)

The High Court may, if it appears to it appropriate to do so on the grounds that there has been a contravention of the rules or for any other reason, dismiss a bankruptcy petition or stay proceedings on such a petition; and, where it stays proceedings on a petition, it may do so on such terms and conditions as it thinks fit.

Creditor's petition

Grounds of creditor's petition241.

(1)

A creditor's petition must be in respect of one or more debts owed by the debtor, and the petitioning creditor or each of the petitioning creditors must be a person to whom the debt or (as the case may be) at least one of the debts is owed.

(2)

Subject to Articles 242 to 244, a creditor's petition may be presented to the High Court in respect of a debt or debts only if, at the time the petition is presented—

(a)

the amount of the debt, or the aggregate amount of the debts, is equal to or exceeds the bankruptcy level,

(b)

the debt, or each of the debts, is for a liquidated sum payable to the petitioning creditor, or one or more of the petitioning creditors, either immediately or at some certain, future time, and is unsecured,

(c)

the debt, or each of the debts, is a debt which the debtor appears either to be unable to pay or to have no reasonable prospect of being able to pay, and

(d)

there is no outstanding application to set aside a statutory demand served (under Article 242) in respect of the debt or any of the debts.

(3)

“The bankruptcy level” is F477£5,000; but the Department may by order subject to affirmative resolution substitute any amount specified in the order for that amount or (as the case may be) for the amount which by virtue of such an order is for the time being the amount of the bankruptcy level.

Definition of “inability to pay”, etc.; the statutory demand242.

(1)

For the purposes of Article 241(2)(c), the debtor appears to be unable to pay a debt if, but only if, the debt is payable immediately and either—

(a)

the petitioning creditor to whom the debt is owed has served on the debtor F478a written demand (known as “the statutory demand”) in the prescribed form requiring him to pay the debt or to secure or compound for it to the satisfaction of the creditor, at least 3 weeks have elapsed since the demand was served and the demand has been neither complied with nor set aside in accordance with the rules; or

(b)

a certificate of unenforceability has been granted under Article 19 of the Judgments Enforcement (Northern Ireland) Order 1981F479 in respect of the debt on a judgment or order of any court in favour of the petitioning creditor, or one or more of the petitioning creditors to whom the debt is owed.

(2)

For the purposes of Article 241(2)(c) the debtor appears to have no reasonable prospect of being able to pay a debt if, but only if, the debt is not immediately payable and—

(a)

the petitioning creditor to whom it is owed has served on the debtor F480a written demand (also known as “the statutory demand”) in the prescribed form requiring him to establish to the satisfaction of the creditor that there is a reasonable prospect that the debtor will be able to pay the debt when it falls due,

(b)

at least 3 weeks have elapsed since the demand was served, and

(c)

the demand has been neither complied with nor set aside in accordance with the rules.

Creditor with security243.

(1)

A debt which is the debt, or one of the debts, in respect of which a creditor's petition is presented need not be unsecured if either—

(a)

the petition contains a statement by the person having the right to enforce the security that he is willing, in the event of a bankruptcy order being made, to give up his security for the benefit of all the bankrupt's creditors, or

(b)

the petition is expressed not to be made in respect of the secured part of the debt and contains a statement by that person of the estimated value at the date of the petition of the security for the secured part of the debt.

(2)

In a case falling within paragraph (1)(b) the secured and unsecured parts of the debt are to be treated for the purposes of Articles 241 to 2 44 as separate debts.

Expedited petition244.

In the case of a creditor's petition presented wholly or partly in respect of a debt which is the subject of a statutory demand under Article 242, the petition may be presented before the expiration of the period of 3 weeks mentioned in that Article if there is a serious possibility that the debtor's property or the value of any of his property will be significantly diminished during that period and the petition contains a statement to that effect.

Proceedings on creditor's petition245.

(1)

The High Court shall not make a bankruptcy order on a creditor's petition unless it is satisfied that the debt, or one of the debts, in respect of which the petition was presented is either—

(a)

a debt which, having been payable at the date of the petition or having since become payable, has been neither paid nor secured or compounded for, or

(b)

a debt which the debtor has no reasonable prospect of being able to pay when it falls due.

(2)

In a case in which the petition contains such a statement as is required by Article 244, the High Court shall not make a bankruptcy order within 3 weeks from the service of any statutory demand under Article 242.

(3)

The High Court may dismiss the petition if it is satisfied that the debtor is able to pay all his debts or is satisfied—

(a)

that the debtor has made an offer to secure or compound for a debt in respect of which the petition is presented,

(b)

that the acceptance of that offer would have required the dismissal of the petition, and

(c)

that the offer has been unreasonably refused;

and, in determining for the purposes of this paragraph whether the debtor is able to pay all his debts, the Court shall take into account his contingent and prospective liabilities.

(4)

In determining for the purposes of this Article what constitutes a reasonable prospect that a debtor will be able to pay a debt when it falls due, it is to be assumed that the prospect given by the facts and other matters known to the creditor at the time he entered into the transaction resulting in the debt was a reasonable prospect.

(5)

Nothing in Articles 241 to 244 and this Article prejudices the power of the High Court, in accordance with the rules, to authorise a creditor's petition to be amended by the omission of any creditor or debt and to be proceeded with as if things done for the purposes of those Articles and this Article had been done only by or in relation to the remaining creditors or debts.

Debtor's petition

Grounds of debtor's petitionF481246.

A joint debtor's petition in Form 8 in Schedule 3 to the Insolvent Partnerships Order (Northern Ireland) 1991 may be presented to the High Court by individual members only on the grounds that the partnership is unable to pay its debts.

Annotations:
Amendments (Textual)

F481SR 1991/366

Appointment of insolvency practitioner by the High Court247.

(1)

Subject to Article 248, on the hearing of a debtor's petition the High Court shall not make a bankruptcy order if it appears to the Court—

(a)

that if a bankruptcy order were made the aggregate amount of the bankruptcy debts, so far as unsecured, would be less than the small bankruptcies level,

(b)

that if a bankruptcy order were made, the value of the bankrupt's estate would be equal to or more than the minimum amount,

(c)

that within the 5 years immediately preceding the presentation of the petition the debtor has neither been adjudged bankrupt nor made a composition with his creditors in satisfaction of his debts or a scheme of arrangement of his affairs, and

(d)

that it would be appropriate to appoint a person to prepare a report under Article 248;

and in this paragraph “the minimum amount” and “the small bankruptcies level” mean such amounts as may for the time being be specified by order under Article 362(1)(b).

(2)

Where on the hearing of the petition it appears to the High Court as mentioned in paragraph (1), the Court shall appoint a person who is qualified to act as an insolvency practitioner in relation to the debtor—

(a)

to prepare a report under Article 248, and

(b)

subject to Article 232(3), to act in relation to any voluntary arrangement to which the report relates either as trustee or otherwise for the purpose of supervising its implementation.

Action on report of insolvency practitioner248.

(1)

A person appointed under Article 247 shall inquire into the debtor's affairs and, within such period as the High Court may direct, shall submit a report to the Court stating whether the debtor is willing, for the purposes of Part VIII, to make a proposal for a voluntary arrangement.

(2)

A report which states that the debtor is willing as is mentioned in paragraph (1) shall also state—

(a)

whether, in the opinion of the person making the report, a meeting of the debtor's creditors should be summoned to consider the proposal, and

(b)

if in that person's opinion such a meeting should be summoned, the date on which, and time and place at which, he proposes the meeting should be held.

(3)

On considering a report under this Article the High Court may—

(a)

without any application, make an interim order under Article 226, if it thinks that it is appropriate to do so for the purpose of facilitating the consideration and implementation of the debtor's proposal, or

(b)

if it thinks it would be inappropriate to make such an order, make a bankruptcy order.

(4)

An interim order made by virtue of this Article ceases to have effect at the end of such period as the High Court may specify for the purpose of enabling the debtor's proposal to be considered by his creditors in accordance with the applicable provisions of Part VIII.

(5)

Where it has been reported to the High Court under this Article that a meeting of the debtor's creditors should be summoned, the person making the report shall, unless the Court otherwise directs, summon that meeting for the time, date and place proposed in his report; and the meeting is then deemed to have been sum‐moned under Article 231, and paragraphs (2) and (3) of that Article, and Articles 232 to 237 apply accordingly.

F482 Debtor who meets conditions for a debt relief order248A

(1)

This Article applies where, on the hearing of a debtor's petition—

(a)

it appears to the High Court that a debt relief order would be made in relation to the debtor if, instead of presenting the petition, he had made an application under Part 7A; and

(b)

the Court does not appoint an insolvency practitioner under Article 247.

(2)

If the High Court thinks it would be in the debtor's interests to apply for a debt relief order instead of proceeding on the petition, the Court may refer the debtor to an approved intermediary (within the meaning of Part 7A) for the purposes of making an application for a debt relief order.

(3)

Where a reference is made under paragraph (2) the High Court shall stay proceedings on the petition on such terms and conditions as it thinks fit; but if following the reference a debt relief order is made in relation to the debtor the Court shall dismiss the petition.

Summary administration249.

F483. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other cases for special consideration

Default in connection with voluntary arrangement250.

(1)

The High Court shall not make a bankruptcy order on a petition under Article 238(1)(c) (supervisor of, or person bound by, voluntary arrangement proposed and approved) unless it is satisfied—

(a)

that the debtor has failed to comply with his obligations under the voluntary arrangement, or

(b)

that information which was false or misleading in any material particular or which contained material omissions—

(i)

was contained in any statement of affairs or other document supplied by the debtor under Part VIII to any person, or

(ii)

was otherwise made available by the debtor to his creditors at or in connection with a meeting summoned under that Part, or

(c)

that the debtor has failed to do all such things as may for the purposes of the voluntary arrangement have been reasonably required of him by the supervisor of the arrangement.

(2)

Where a bankruptcy order is made on a petition under Article 238(1)(c), any costs properly incurred as costs of the administration of the voluntary arrangement in question shall be a first charge on the bankrupt's estate.

Petition in respect of a solicitor251.

F484. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commencement and duration of bankruptcy; discharge

Commencement and continuance252.

The bankruptcy of an individual against whom a bankuptcy order has been made—

(a)

commences with the day on which the order is made, and

(b)

continues until the individual is discharged under the following provisions of this Chapter.

F485Duration253.

(1)

A bankrupt is discharged from bankruptcy at the end of the period of one year beginning with the date on which the bankruptcy commences.

F486(2)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)

On the application of the official receiver or the trustee of a bankrupt's estate, the High Court may order that the period specified in paragraph (1) shall cease to run until—

(a)

the end of a specified period, or

(b)

the fulfilment of a specified condition.

(4)

The High Court may make an order under paragraph (3) only if satisfied that the bankrupt has failed or is failing to comply with an obligation under this Part.

(5)

In paragraph (3)(b) “condition” includes a condition requiring that the High Court be satisfied of something.

(6)

This Article is without prejudice to any power of the High Court to annul a bankruptcy order.

(7)

Nothing in this Article applies to a bankrupt who is a solicitor.

F487Discharge where bankrupt is a solicitor254.

F488(1)

A bankrupt who is a solicitor is discharged from bankruptcy by an order of the High Court under this Article.

(1A)

An application for an order under this Article may be made at any time.

(2)

On an application under this Article the High Court may—

(a)

refuse to discharge the bankrupt from bankruptcy,

(b)

make an order discharging him absolutely, or

(c)

make an order discharging him subject to such conditions with respect to any income which may subsequently become due to him, or with respect to property devolving upon him, or acquired by him, after his discharge, as may be specified in the order.

(3)

The High Court may provide for an order falling within paragraph (2)(b) or (c) to have immediate effect or to have its effect suspended for such period, or until the fulfilment of such conditions (including a condition requiring the Court to be satisfied as to any matter), as may be specified in the order.

Effect of discharge255.

(1)

Subject to the following provisions of this Article, where a bankrupt is discharged, the discharge releases him from all the bankruptcy debts, but has no effect—

(a)

on the functions (so far as they remain to be carried out) of the trustee of his estate, or

(b)

on the operation, for the purposes of the carrying out of those functions, of the provisions of this Part;

and, in particular, discharge does not affect the right of any creditor of the bankrupt to prove in the bankruptcy for any debt from which the bankrupt is released.

(2)

Discharge does not affect the right of any secured creditor of the bankrupt to enforce his security for the payment of a debt from which the bankrupt is released.

(3)

Discharge does not release the bankrupt from any bankruptcy debt which he incurred in respect of, or forebearance in respect of which was secured by means of, any fraud or fraudulent breach of trust to which he was a party.

(4)

Discharge does not release the bankrupt from any liability in respect of a fine imposed for an offence or from any liability under a recognisance except, in the case of a penalty imposed for an offence under a statutory provision relating to the public revenue or of a recognisance, with the consent of the Treasury.

F489(4A)

In paragraph (4) the reference to a fine includes a reference to a confiscation order under Part 2, 3 or 4 of the Proceeds of Crime Act 2002.

(5)

Discharge does not, except to such extent and on such conditions as the High Court may direct, release the bankrupt from any bankruptcy debt which—

(a)

consists in a liability to pay damages for negligence, nuisance or breach of a statutory, contractual or other duty, or to pay damages by virtue of Part II of the Consumer Protection (Northern Ireland) Order 1987F490, being in either case damages in respect of personal injuries to any person, or

(b)

arises under any order made in family proceedings or in domestic proceedingsF491 or under a maintenance assessment made under the Child Support (Northern Ireland) Order 1991.

(6)

Discharge does not release the bankrupt from such other bankruptcy debts, not being debts provable in his bankruptcy, as are prescribed.

(7)

Discharge does not release any person other than the bankrupt from any liability (whether as partner or co‐trustee of the bankrupt or otherwise) from which the bankrupt is released by the discharge, or from any liability as surety for the bankrupt or as a person in the nature of such a surety.

(8)

In this Article—

  • “domestic proceedings” means domestic proceedings within the meaning of the Magistrates' Courts (Northern Ireland) Order 1981F492;

  • F493“family proceedings” has the meaning given by Article 12(5) of the Family Law (Northern Ireland) Order 1993;

  • “fine” includes any pecuniary penalty, pecuniary forfeiture or pecuniary compensation payable on a conviction; and

  • “personal injuries” includes death and any disease or other impairment of a person's physical or mental condition.

F494Post-discharge restrictions255A.

Schedule 2A (bankruptcy restrictions order and bankruptcy restrictions undertaking) shall have effect.

Power of High Court to annul bankruptcy order256.

(1)

The High Court may annul a bankruptcy order if it at any time appears to the Court—

(a)

that, on any grounds existing at the time the order was made, the order ought not to have been made, or

(b)

that, to the extent required by the rules, the bankruptcy debts and the expenses of the bankruptcy have all, since the making of the order, been either paid or secured for to the satisfaction of the Court.

(2)

The High Court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy.

(3)

F495. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)

Where the High Court annuls a bankruptcy order (whether under this Article or under Article 235F496 or 237D)—

(a)

any sale or other disposition of property, payment made or other thing duly done, under any provision in Parts VIII to X, by or under the authority of the official receiver or a trustee of the bankrupt's estate or by the Court is valid, but

(b)

if any of the bankrupt's estate is then vested, under any such provision, in such a trustee, it shall vest in such person as the Court may appoint or, in default of any such appointment, revert to the bankrupt on such terms (if any) as the Court may direct;

and the Court may include in its order such supplemental provisions as may be authorised by the rules.

(5)

F497. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IIPROTECTION OF BANKRUPT'S ESTATE AND INVESTIGATION OF HIS AFFAIRS

F498Bankrupt's home ceasing to form part of estate256A.

(1)

This Article applies where property comprised in the bankrupt's estate consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of—

(a)

the bankrupt,

(b)

the bankrupt's spouse F499or civil partner , or

(c)

a former spouse F500or former civil partner of the bankrupt.

(2)

At the end of the period of 3 years beginning with the date of the bankruptcy the interest mentioned in paragraph (1) shall—

(a)

cease to be comprised in the bankrupt's estate, and

(b)

vest in the bankrupt (without conveyance, assignment or transfer).

(3)

Paragraph (2) shall not apply if during the period mentioned in that paragraph—

(a)

the trustee realises the interest mentioned in paragraph (1),

(b)

the trustee applies for an order for sale in respect of the dwelling-house,

(c)

the trustee applies for an order for possession of the dwelling-house,

(d)

the trustee applies for an order under Article 286 in Chapter IV in respect of that interest, or

(e)

the trustee and the bankrupt agree that the bankrupt shall incur a specified liability to his estate (with or without the addition of interest from the date of the agreement) in consideration of which the interest mentioned in paragraph (1) shall cease to form part of the estate.

(4)

Where an application of a kind described in paragraph (3)(b) to (d) is made during the period mentioned in paragraph (2) and is dismissed, unless the High Court orders otherwise the interest to which the application relates shall on the dismissal of the application—

(a)

cease to be comprised in the bankrupt's estate, and

(b)

vest in the bankrupt (without conveyance, assignment or transfer).

(5)

If the bankrupt does not inform the trustee or the official receiver of his interest in a property before the end of the period of 3 months beginning with the date of the bankruptcy, the period of 3 years mentioned in paragraph (2)—

(a)

shall not begin with the date of the bankruptcy, but

(b)

shall begin with the date on which the trustee or official receiver becomes aware of the bankrupt's interest.

(6)

The High Court may substitute for the period of 3 years mentioned in paragraph (2) a longer period—

(a)

in prescribed circumstances, and

(b)

in such other circumstances as the Court thinks appropriate.

(7)

The rules may make provision for this Article to have effect with the substitution of a shorter period for the period of 3 years mentioned in paragraph (2) in specified circumstances (which may be described by reference to action to be taken by a trustee in bankruptcy).

(8)

The rules may also, in particular, make provision—

(a)

requiring or enabling the trustee of a bankrupt's estate to give notice that this Article applies or does not apply;

(b)

about the effect of a notice under sub-paragraph (a);

(c)

requiring the trustee of a bankrupt's estate to make an application to the Land Registry or the Registry of Deeds.

(9)

Rules under paragraph (8)(b) may, in particular—

(a)

disapply this Article;

(b)

enable the High Court to disapply this Article;

(c)

make provision in consequence of a disapplication of this Article;

(d)

enable the Court to make provision in consequence of a disapplication of this Article;

(e)

make provision (which may include provision conferring jurisdiction on a court or tribunal) about compensation.

Restrictions on dispositions of property257.

(1)

Where a person is adjudged bankrupt, any disposition of property made by that person in the period to which this Article applies is void except to the extent that it is or was made with the consent of the High Court, or is or was subsequently ratified by the Court.

(2)

Paragraph (1) applies to a payment (whether in cash or otherwise) as it applies to a disposition of property and, accordingly, where any payment is void by virtue of that paragraph, the person paid shall hold the sum paid for the bankrupt as part of his estate.

(3)

This Article applies to the period beginning with the day of the presentation of the petition for the bankruptcy order and ending with the vesting, under Articles 278 to 308, of the bankrupt's estate in a trustee.

(4)

The preceding provisions of this Article do not give a remedy against any person—

(a)

in respect of any property or payment which he received before the commencement of the bankruptcy in good faith, for value and without notice that the petition had been presented, or

(b)

in respect of any interest in property which derives from an interest in respect of which there is, by virtue of this paragraph, no remedy.

(5)

Where after the commencement of his bankruptcy the bankrupt has incurred a debt to a banker or other person by reason of the making of a payment which is void under this Article, that debt is deemed for the purposes of any of Parts VIII to X to have been incurred before the commencement of the bankruptcy unless—

(a)

that banker or person had notice of the bankruptcy before the debt was incurred, or

(b)

it is not reasonably practicable for the amount of the payment to be recovered from the person to whom it was made.

(6)

A disposition of property is void under this Article notwithstanding that the property is not or, as the case may be, would not be comprised in the bankrupt's estate; but nothing in this Article affects any disposition made by a person of property held by him on trust for any other person.

Restriction on proceedings and remedies258.

(1)

At any time when proceedings on a bankruptcy petition are pending or an individual has been adjudged bankrupt the High Court may stay any action, proceedings, execution or other legal process against the property or person of the debtor or, as the case may be, of the bankrupt.

(2)

Any court in which proceedings are pending against any individual may, on proof that a bankruptcy petition has been presented in respect of that individual or that he is an undischarged bankrupt, either stay the proceedings or allow them to continue on such terms as it thinks fit.

(3)

Subject to paragraph (4) and to Part VI of the Judgments Enforcement (Northern Ireland) Order 1981F501 after the making of a bankruptcy order no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall—

(a)

have any remedy against the property or person of the bankrupt in respect of that debt, or

(b)

before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the High Court and on such terms as the Court may impose.

(4)

Nothing in Parts VIII to X affects any right of distress against property comprised in a bankrupt's estate and such right is exercisable notwithstanding that the property has vested in the trustee.

(5)

Subject to paragraphs (6) and (7), paragraph (3) does not affect the right of a secured creditor of the bankrupt to enforce his security.

(6)

Where any goods of an undischarged bankrupt are held by any person by way of pledge, pawn or other security, the official receiver may, after giving notice in writing of his intention to do so, inspect the goods.

(7)

Where a notice such as is mentioned in paragraph (6) has been given to any person, that person is not entitled, without leave of the High Court, to realise his security unless he has given the trustee of the bankrupt's estate a reasonable opportunity of inspecting the goods and of exercising the bankrupt's right of redemption.

(8)

References in this Article to the property or goods of the bankrupt are to any of his property or goods, whether or not comprised in his estate.

Power to appoint interim receiver259.

(1)

The High Court may, if it is shown to be necessary for the protection of the debtor's property, at any time after the presentation of a bankruptcy petition and before making a bankruptcy order, appoint the official receiver to be interim receiver of the debtor's property.

(2)

Where the High Court has, on a debtor's petition, appointed an insolvency practitioner under Article 247 and it is shown to the Court as mentioned in paragraph (1) of this Article, the Court may, without making a bankruptcy order, appoint that practitioner, instead of the official receiver, to be interim receiver of the debtor's property.

(3)

The High Court may by an order appointing any person to be an interim receiver direct that his powers shall be limited or restrictedin any respect; but, save as so directed, an interim receiver has, in relation to the debtor's property, all the rights, powers, duties and immunities of a receiver and manager under Article 260.

(4)

An order of the High Court appointing any person to be an interim receiver shall require that person to take immediate possession of the debtor's property or, as the case may be, the part of it to which his powers as interim receiver are limited.

(5)

Where an interim receiver has been appointed, the debtor shall give him such inventory of his property and such other information, and shall attend on the interim receiver at such times, as the latter may for the purpose of carrying out his functions under this Article reasonably require.

(6)

Where an interim receiver is appointed, Article 258(3) applies for the period between the appointment and the making of a bankruptcy order on the petition, or the dismissal of the petition, as if the appointment were the making of such an order.

(7)

A person ceases to be interim receiver of a debtor's property if the bankruptcy petition relating to the debtor is dismissed, if a bankruptcy order is made on the petition or if the High Court by order otherwise terminates the appointment.

(8)

References in this Article to the debtor's property are to all his property, whether or not it would be comprised in his estate if he were adjudged bankrupt.

Receivership pending appointment of trustee260.

(1)

Between the making of a bankruptcy order and the time at which the bankrupt's estate vests in a trustee under Articles 278 to 308, the official receiver is the receiver and (subject to Article 341 (special manager)) the manager of the bankrupt's estate and is under a duty to act as such.

(2)

The function of the official receiver while acting as receiver or manager of the bankrupt's estate under this Article is to protect the estate; and for this purpose—

(a)

he has the same powers as if he were a receiver or manager appointed by the High Court, and

(b)

he is entitled to sell or otherwise dispose of any perishable goods comprised in the estate and any other goods so comprised the value of which is likely to diminish if they are not disposed of.

(3)

The official receiver while acting as receiver or manager of the estate under this Article—

(a)

shall take all such steps as he thinks fit for protecting any property which may be claimed for the estate by the trustee of that estate,

(b)

is not, except in pursuance of directions given by the Department, required to do anything that involves his incurring expenditure,

(c)

may, if he thinks fit (and shall, if so directed by the High Court) at any time summon a general meeting of the bankrupt's creditors.

(4)

Where—

(a)

the official receiver acting as receiver or manager of the estate under this Article seizes or disposes of any property which is not comprised in the estate, and

(b)

at the time of the seizure or disposal the official receiver believes, and has reasonable grounds for believing, that he is entitled (whether in pursuance of an order of the High Court or otherwise) to seize or dispose of that property,

the official receiver is not to be liable to any person in respect of any loss or damage resulting from the seizure or disposal except in so far as that loss or damage is caused by his negligence; and he has a lienon the property, or the proceeds of its sale, for such of the expenses of the bankruptcy as were incurred in connection with the seizure or disposal.

(5)

This Article does not apply where by virtue of Article 270 (appointment of trustee; special cases) the bankrupt's estate vests in a trustee immediately on the making of the bankruptcy order.

Statement of affairs261. F502

(1)

Where a bankruptcy order has been made otherwise than on a debtor's petition, the bankrupt shall submit a statement of his affairs to the official receiver within 21 days from the commencement of the bankruptcy.

(2)

The statement of affairs shall contain—

(a)

such particulars of the bankrupt's creditors and of his debts and other liabilities and of his assets as may be prescribed, and

(b)

such other information as may be prescribed.

(3)

The official receiver may, if he thinks fit—

(a)

release the bankrupt from his duty under paragraph (1), or

(b)

extend the period specified in paragraph (1);

and where the official receiver has refused to exercise a power conferred by this Article, the High Court, if it thinks fit, may exercise it.

(4)

A bankrupt who—

(a)

without reasonable excuse fails to comply with the obligation imposed by this Article, or

(b)

without reasonable excuse submits a statement of affairs that does not comply with the prescribed requirements,

is guilty of a contempt of court and liable to be punished accordingly (in addition to any other punishment to which he may be subject).

Annotations:
Amendments (Textual)

F502mod. by SR 1991/365

F503Investigatory duties of official receiver262.

(1)

The official receiver shall—

(a)

investigate the conduct and affairs of each bankrupt (including his conduct and affairs before the making of the bankruptcy order), and

(b)

make such report (if any) to the High Court as the official receiver thinks fit.

(2)

Paragraph (1) shall not apply to a case in which the official receiver thinks an investigation under that paragraph unnecessary.

(3)

Where a bankrupt makes an application for discharge under Article 254—

(a)

the official receiver shall make a report to the Court about such matters as may be prescribed, and

(b)

the Court shall consider the report before determining the application.

(4)

A report by the official receiver under this Article shall in any proceedings be prima facie evidence of the facts stated in it.

Public examination of bankrupt263.

(1)

Where a bankruptcy order has been made, the official receiver may at any time before the discharge of the bankrupt apply to the High Court for the public examination of the bankrupt.

(2)

Unless the High Court otherwise orders, the official receiver shall make an application under paragraph (1) if notice requiring him to do so is given to him, in accordance with the rules, by one of the bankrupt's creditors with the concurrence of not less than one‐half, in value, of those creditors (including the creditor giving notice).

(3)

On an application under paragraph (1), the High Court shall direct that a public examination of the bankrupt shall be held on a day appointed by the Court; and the bankrupt shall attend on that day and be publicly examined as to his affairs, dealings and property.

(4)

The following may take part in the public examination of the bankrupt and may question him concerning his affairs, dealings and property and the causes of his failure, namely—

(a)

the official receiver,

(b)

the trustee of the bankrupt's estate, if his appointment has taken effect,

(c)

any person who has been appointed as special manager of the bankrupt's estate or business,

(d)

any creditor of the bankrupt who has tendered a proof in the bankruptcy.

(5)

If a bankrupt without reasonable excuse fails at any time to attend his public examination under this Article he is guilty of a contempt of court and liable to be punished accordingly (in addition to any other punishment to which he may be subject).

Duties of bankrupt in relation to official receiver264.

(1)

Where a bankruptcy order has been made, the bankrupt is under a duty—

(a)

to deliver possession of his estate to the official receiver, and

(b)

to deliver up to the official receiver all books, papers and other records of which he has possession or control and which relate to his estate and affairs (including any which would be privileged from disclosure in any proceedings).

(2)

In the case of any part of the bankrupt's estate which consists of things possession of which cannot be delivered to the official receiver, and in the case of any property that may be claimed for the bankrupt's estate by the trustee, it is the bankrupt's duty to do all such things as may reasonably be required by the official receiver for the protection of those things or that property.

(3)

Paragraphs (1) and (2) do not apply where by virtue of Article 270 the bankrupt's estate vests in a trustee immediately on the making of the bankruptcy order.

F504(4)

The bankrupt shall give the official receiver such inventory of his estate and such other information, and shall attend on the official receiver at such times, as the official receiver may reasonably require—

(a)

for a purpose of this Chapter, or

(b)

in connection with the making of a bankruptcy restrictions order.

(5)

Paragraph (4) applies to a bankrupt after his discharge.

(6)

If the bankrupt without reasonable excuse fails to comply with any obligation imposed by this Article, he is guilty of a contempt of court and liable to be punished accordingly (in addition to any other punishment to which he may be subject).

CHAPTER IIITRUSTEES IN BANKRUPTCY

Tenure of office as trustee

Power to make appointments265.

(1)

The power to appoint a person as trustee of a bankrupt's estate (whether the first such trustee or a trustee appointed to fill any vacancy) is exercisable—

(a)

F505. . . by a general meeting of the bankrupt's creditors;

(b)

under Articles 268(2), 269(2) or 273(6) by the Department; or

(c)

under Article 270, by the High Court.

(2)

No person may be appointed as trustee of a bankrupt's estate unless he is, at the time of the appointment, qualified to act as an insolvency practitioner in relation to the bankrupt.

(3)

Any power to appoint a person as trustee of a bankrupt's estate includes power to appoint 2 or more persons as joint trustees; but such an appointment must make provision as to the circumstances in which the trustees must act together and the circumstances in which one or more of them may act for the others.

(4)

Subject to paragraph (5), the appointment of any person as trustee takes effect at the time specified in his certificate of appointment.

(5)

The appointment of any person as trustee takes effect only if that person accepts the appointment in accordance with the rules.

(6)

This Article is without prejudice to the provisions of this Chapter under which the official receiver is, in certain circumstances, to be trustee of the estate.

Summoning of meeting to appoint first trustee266.

(1)

Subject to Articles 267(3) and 270(5), where a bankruptcy order has been madeF506. . . the official receiver shall, as soon as practicable within the 12 weeks from the day on which the order was made, decide whether to summon a general meeting of the bankrupt's creditors for the purpose of appointing a trustee of the bankrupt's estate.

(2)

Subject to Article 267, if the official receiver decides not to summon such a meeting, he shall, before the expiration of the period of 12 weeks mentioned in paragraph (1), give notice of his decision to the High Court and to every creditor of the bankrupt who is known to the official receiver or is identified in the bankrupt's statement of affairs.

(3)

As from the giving to the High Court of a notice under paragraph (2), the official receiver is the trustee of the bankrupt's estate.

Power of creditors to requisition meeting267.

(1)

Where in the case of any bankruptcy—

(a)

the official receiver has not yet summoned, or has decided not to summon, a general meeting of the bankrupt's creditors for the purpose of appointing the trustee,F507. . .

(b)

F508. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

any creditor of the bankrupt may request the official receiver to summon such a meeting for that purpose.

(2)

If such a request appears to the official receiver to be made with the concurrence of not less than one‐quarter, in value, of the bankrupt's creditors (including the creditor making the request), the official receiver shall summon the requested meeting.

(3)

Accordingly, where the duty imposed by paragraph (2) has arisen, the official receiver is required neither to reach a decision for the purposes of Article 266(1) nor (if he has reached one) to serve any notice under Article 266(2).

Failure of meeting to appoint trustee268.

(1)

If a meeting summoned under Article 266 or 267 is held but no appointment of a person as trustee is made, the official receiver shall decide whether to refer the need for an appointment to the Department.

(2)

On a reference made in pursuance of that decision, the Department shall either make an appointment or decline to make one.

(3)

If—

(a)

the official receiver decides not to refer the need for an appointment to the Department, or

(b)

on such a reference the Department declines to make an appointment,

the official receiver shall give notice of his decision or, as the case may be, of the Department's decision to the High Court.

(4)

As from the giving of notice under paragraph (3) in a case in which no notice has been given under Article 266(2), the official receiver shall be trustee of the bankrupt's estate.

Appointment of trustee by Department269.

(1)

At any time when the official receiver is the trustee of a bankrupt's estate by virtue of any provision of this Chapter he may apply to the Department for the appointment of a person as trustee instead of the official receiver.

(2)

On an application under paragraph (1) the Department shall either make an appointment or decline to make one.

(3)

Such an application may be made notwithstanding that the Department has declined to make an appointment either on a previous application under paragraph (1) or on a reference under Article 268 or under Article 273(4).

(4)

Where the trustee of a bankrupt's estate has been appointed by the Department (whether under this Article or otherwise), the trustee shall give notice to the bankrupt's creditors of his appointment or, if the High Court so allows, shall advertise his appointment in accordance with the Court's directions.

(5)

In that notice or advertisement the trustee shall—

(a)

state whether he proposes to summon a general meeting of the bankrupt's creditors for the purpose of establishing a creditors' committee under Article 274, and

(b)

if he does not propose to summon such a meeting, set out the power of the creditors under this Part to require him to summon one.

Special cases270.

(1)

F509. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)

F509. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)

Where a bankruptcy order is made in a case in which an insolvency practitioner's report has been submitted to the High Court under Article 248F510. . . , the Court, if it thinks fit, may on making the order appoint the person who made the report as trustee.

(4)

Where a bankruptcy order is made (whether or not on a petition under Article 238(1)(c)) at a time when there is a supervisor of a voluntary arrangement approved in relation to the bankrupt under Part VIII, the High Court, if it thinks fit, may on making the order appoint the supervisor of the arrangement as trustee.

(5)

Where an appointment is made under paragraph (3) or (4), the official receiver is not under the duty imposed by Article 266(1) (to decide whether or not to summon a meeting of creditors).

(6)

Where the trustee of a bankrupt's estate has been appointed by the High Court, the trustee shall give notice to the bankrupt's creditors of his appointment or, if the Court so allows, shall advertise his appointment in accordance with the directions of the Court.

(7)

In that notice or advertisement he shall—

(a)

state whether he proposes to summon a general meeting of the bankrupt's creditors for the purpose of establishing a creditors' committee under Article 274, and

(b)

if he does not propose to summon such a meeting, set out the power of the creditors under this Part to require him to summon one.

Removal of trustee; vacation of office271.

(1)

Subject to paragraph (4), the trustee of a bankrupt's estate may be removed from office only by an order of the High Court or by a general meeting of the bankrupt's creditors summoned specially for that purpose in accordance with the rules.

(2)

F511. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)

Where the official receiver is trustee by virtue of Article 266(3) or 268(4) or a trustee is appointed by the Department or (otherwise than under Article 270(4)) by the High Court, a general meeting of the bankrupt's creditors shall be summoned for the purpose of replacing the trustee only if—

(a)

the trustee thinks fit, or

(b)

the High Court so directs, or

(c)

the meeting is requested by one of the bankrupt's creditors with the concurrence of not less than one‐quarter, in value, of the creditors (including the creditor making the request).

(4)

If the trustee was appointed by the Department, he may be removed by a direction of the Department.

(5)

The trustee (not being the official receiver) shall vacate office if he ceases to be a person who is for the time being qualified to act as an insolvency practitioner in relation to the bankrupt.

(6)

The trustee may, in the prescribed circumstances, resign his office by giving notice of his resignation to the High Court.

(7)

The trustee shall vacate office on giving notice to the High Court that a final meeting has been held under Article 304 and of the decision (if any) of that meeting.

(8)

The trustee shall vacate office if the bankruptcy order is annulled.

Release of trustee272.

(1)

Where the official receiver has ceased to be the trustee of a bankrupt's estate and a person is appointed in his stead, the official receiver shall have his release with effect from the following time, that is to say—

(a)

where that person is appointed by a general meeting of the bankrupt's creditors or by the Department, the time at which the official receiver gives notice to the High Court that he has been replaced, and

(b)

where that person is appointed by the High Court, such time as the Court may determine.

(2)

If the official receiver while he is the trustee gives notice to the Department that the administration of the bankrupt's estate in accordance with Chapter IV is for practical purposes complete, he shall have his release with effect from such time as the Department may determine.

(3)

A person other than the official receiver who has ceased to be the trustee shall have his release with effect from the following time, that is to say—

(a)

in the case of a person who has been removed from office by a general meeting of the bankrupt's creditors that has not resolved against his release or who has died, the time at which notice is given to the High Court in accordance with the rules that that person has ceased to hold office;

(b)

in the case of a person who has been removed from office by a general meeting of the bankrupt's creditors that has resolved against his release, or by the High Court, or by the Department, or who has vacated office under Article 271(5), such time as the Department may, on an application by that person, determine;

(c)

in the case of a person who has resigned, such time as may be prescribed;

(d)

in the case of a person who has vacated office under Article 271(7)—

(i)

if the final meeting referred to in that paragraph has resolved against that person's release, such time as the Department may, on an application by that person, determine; and

(ii)

if that meeting has not so resolved, the time at which the person vacated office.

(4)

Where a bankruptcy order is annulled, the trustee at the time of the annulment has his release with effect from such time as the High Court may determine.

(5)

Where the official receiver or the trustee has his release under this Article, he shall, with effect from the time specified in paragraphs (1) to (4), be discharged from all liability both in respect of acts or omissions of his in the administration of the estate and otherwise in relation to his conduct as trustee.

(6)

Nothing in this Article prevents the exercise, in relation to a person who has had his release under this Article, of the High Court's powers under Article 277.

Vacancy in office of trustee273.

(1)

This Article applies where the appointment of any person as trustee of a bankrupt's estate fails to take effect or, such an appointment having taken effect, there is otherwise a vacancy in the office of trustee.

(2)

The official receiver shall be trustee until the vacancy is filled.

(3)

The official receiver may summon a general meeting of the bankrupt's creditors for the purpose of filling the vacancy and shall summon such a meeting if required to do so in pursuance of Article 287(9) (creditors' requisition).

(4)

If at the expiration of 28 days from the day on which the vacancy first came to the official receiver's attention he has not summoned, and is not proposing to summon, a general meeting of creditors for the purpose of filling the vacancy, he shall refer the need for an appointment to the Department.

(5)

F512. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)

On a reference to the Department under paragraph (4)F513. . . the Department shall either make an appointment or decline to make one.

(7)

If on a reference under paragraph (4)F513. . . no appointment is made, the official receiver shall continue to be trustee of the bankrupt's estate, but without prejudice to his power to make a further reference.

(8)

References in this Article to a vacancy include a case where it is necessary, in relation to any property which is or may be comprised in a bankrupt's estate, to revive the trusteeship of that estate after the holding of a final meeting summoned under Article 304 or the giving by the official receiver of notice under Article 272(2).

Control of trustee

Creditors' committee274.

(1)

Subject to paragraph (2), a general meeting of a bankrupt's creditors (whether summoned under the preceding provisions of this Chapter or otherwise) may, in accordance with the rules, establish a committee ( “the creditors' committee”) to exercise the functions conferred on it by or under this Order.

(2)

A general meeting of the bankrupt's creditors shall not establish such a committee, or confer any functions on such a committee, at any time when the official receiver is the trustee of the bankrupt's estate, except in connection with an appointment made by that meeting of a person to be trustee instead of the official receiver.

Exercise by Department of functions of creditors' committee275.

(1)

The creditors' committee is not to be able or required to carry out its functions at any time when the official receiver is trustee of the bankrupt's estate; but at any such time the functions of the committee under this Order shall be vested in the Department, except to the extent that the rules otherwise provide.

(2)

Where in the case of any bankruptcy there is for the time being no creditors' committee and the trustee of the bankrupt's estate is a person other than the official receiver, the functions of such a committee shall be vested in the Department, except to the extent that the rules otherwise provide.

General control of trustee by the High Court276.

(1)

If a bankrupt or any of his creditors or any other person is dissatisfied by any act, omission or decision of a trustee of the bankrupt's estate, he may apply to the High Court; and on such an application the Court may confirm, reverse or modify any act or decision of the trustee, may give him directions or may make such other order as it thinks fit.

(2)

The trustee of a bankrupt's estate may apply to the High Court for directions in relation to any particular matter arising under the bankruptcy.

F514(2A)

Where at any time after a bankruptcy petition has been presented to the High Court against any person, whether under the provisions of the Insolvent Partnerships Order (Northern Ireland) 1995 or not, the attention of the Court is drawn to the fact that the person in question is a member of an insolvent partnership, the Court may make an order as to the future conduct of the insolvency proceedings and any such order may apply any provisions of that Order with any necessary modifications.

(2B)

Where a bankruptcy petition has been presented against more than one individual in the circumstances mentioned in paragraph (2A), the High Court may give such directions for consolidating the proceedings, or any of them, as it thinks just.

(2C)

Any order or directions under paragraph (2A) or (2B) may be made or given on the application of the official receiver, any responsible insolvency practitioner, the trustee of the partnership, or any other interested person and may include provisions as to the administration of the joint estate of the partnership, and in paricular how it and the separate estate of any member are to be administered.

Annotations:
Amendments (Textual)

F514SR 1995/225

Liability of trustee277.

(1)

Where on an application under this Article the High Court is satisfied—

(a)

that the trustee of a bankrupt's estate has misapplied or retained, or become accountable for, any money or other property comprised in the bankrupt's estate, or

(b)

that a bankrupt's estate has suffered any loss in consequence of any misfeasance or breach of fiduciary or other duty by a trustee of the estate in the carrying out of his functions,

the Court may order the trustee, for the benefit of the estate, to repay, restore or account for money or other property (together with interest at such rate as the Court thinks just) or, as the case may require, to pay such sum by way of compensation in respect of the misfeasance or breach of fiduciary or other duty as the Court thinks just.

(2)

Paragraph (1) is without prejudice to any liability arising apart from this Article.

(3)

An application under this Article may be made by the official receiver, the Department, a creditor of the bankrupt or (whether or not there is, or is likely to be, a surplus for the purposes of Article 303(5) (final distribution)) the bankrupt himself.

(4)

Where an application under paragraph (3) is to be made by the bankrupt or if it is to be made after the trustee has had his release under Article 272, the leave of the High Court is required for the making of the application.

(5)

Where—

(a)

the trustee seizes or disposes of any property which is not comprised in the bankrupt's estate, and

(b)

at the time of the seizure or disposal the trustee believes, and has reasonable grounds for believing, that he is entitled (whether in pursuance of an order of the High Court or otherwise) to seize or dispose of that property,

the trustee is not liable to any person (whether under this Article or otherwise) in respect of any loss or damage resulting from the seizure or disposal except in so far as that loss or damage is caused by the negligence of the trustee; and he has a lien on the property, or the proceeds of its sale, for such of the expenses of the bankruptcy as were incurred in connection with the seizure or disposal.

CHAPTER IVADMINISTRATION BY TRUSTEE

Preliminary

General functions of trustee278.

(1)

This Chapter applies in relation to any bankruptcy where either—

(a)

the appointment of a person as trustee of a bankrupt's estate takes effect, or

(b)

the official receiver becomes trustee of a bankrupt's estate.

(2)

The function of the trustee is to get in, realise and distribute the bankrupt's estate in accordance with the following provisions of this Chapter; and in the carrying out of that function and in the management of the bankrupt's estate the trustee is entitled, subject to those provisions, to use his own discretion.

(3)

It is the duty of the trustee, if he is not the official receiver—

(a)

to furnish the official receiver with such information,

(b)

to produce to the official receiver, and permit inspection by the official receiver of, such books, papers and other records, and

(c)

to give the official receiver such other assistance,

as the official receiver may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy.

(4)

The official name of the trustee shall be “the trustee of the estate of a bankrupt” (inserting the name of the bankrupt); but he may be referred to as “the trustee in bankruptcy” of the particular bankrupt.

Acquisition, control and realisation of bankrupt's estate

Vesting of bankrupt's estate in trustee279.

(1)

The bankrupt's estate shall vest in the trustee immediately on his appointment taking effect or, in the case of the official receiver, on his becoming trustee.

(2)

Where any property which is, or is to be, comprised in the bankrupt's estate vests in the trustee (whether under this Article or under any other provision of this Part), it shall so vest without any conveyance, assignment or transfer.

F515 Property subject to restraint order279A

(1)

This Article applies where—

(a)

property is excluded from the bankrupt’s estate by virtue of section 423(2)(a) of the Proceeds of Crime Act 2002 (property subject to a restraint order),

(b)

an order under F516section 50, 67A, 128, 131A, 198 or 215A of that Act has not been made in respect of the property, F517...

(c)

the restraint order is discharged F518, and

(d)

immediately after the discharge of the restraint order the property is not detained under or by virtue of section 44A, 47J, 122A, 127J, 193A or 195J of that Act.

F519(2)

The property vests in the trustee as part of the bankrupt's estate.

(3)

But paragraph (2) does not apply to the proceeds of property realised by a management receiver under section 49(2)(d) or 197(2)(d) of that Act (realisation of property to meet receiver’s remuneration and expenses).

F520Property released from detention279AA

(1)

This Article applies where—

(a)

property is excluded from the bankrupt's estate by virtue of section 423(2)(b) of the Proceeds of Crime Act 2002 (property detained under certain provisions),

(b)

no order is in force in respect of the property under section 41, 50, 120, 128, 190 or 198 of that Act, and

(c)

the property is released.

(2)

The property vests in the trustee as part of the bankrupt's estate.

Property in respect of which receivership or administration order made279B

(1)

This Article applies where—

(a)

property is excluded from the bankrupt’s estate by virtue of F521section 423(2)(c) of the Proceeds of Crime Act 2002 (property in respect of which an order for the appointment of a receiver or administrator under certain provisions of that Act is in force),

(b)

a confiscation order is made under section 6, 92 or 156 of that Act,

(c)

the amount payable under the confiscation order is fully paid, and

(d)

any of the property remains in the hands of the receiver or administrator (as the case may be).

(2)

The property vests in the trustee as part of the bankrupt’s estate.

F515F522Property in respect of which realisation order made279BA

(1)

This Article applies where—

(a)

property is excluded from the bankrupt's estate by virtue of section 423(2)(d) of the Proceeds of Crime Act 2002 (property in respect of which an order has been made authorising realisation of the property by an appropriate officer),

(b)

a confiscation order is made under section 6, 92 or 156 of that Act,

(c)

the amount payable under the confiscation order is fully paid, and

(d)

any of the property remains in the hands of the appropriate officer.

(2)

The property vests in the trustee as part of the bankrupt's estate.

Property subject to certain orders where confiscation order discharged or quashed279C

(1)

This Article applies where—

(a)

property is excluded from the bankrupt’s estate by virtue of section 423(2)(a), (b), (c) or (d) of the Proceeds of Crime Act 2002 (property F523excluded from the bankrupt's estate),

(b)

a confiscation order is made under section 6, 92 or 156 of that Act, and

(c)

the confiscation order is discharged under section 30, 114 or 180 of that Act (as the case may be) or quashed under that Act or in pursuance of any enactment relating to appeals against conviction or sentence.

F524(2)

Any such property vests in the trustee as part of the bankrupt's estate if it is in the hands of—

(a)

a receiver appointed under Part 2 or 4 of that Act,

(b)

an administrator appointed under Part 3 of that Act,

(c)

an appropriate officer (within the meaning of section 41A, 120A or 190A of that Act).

(3)

But paragraph (2) does not apply to the proceeds of property realised by a management receiver under section 49(2)(d) or 197(2)(d) of that Act (realisation of property to meet receiver’s remuneration and expenses).

After‐acquired property280.

(1)

Subject to this Article and Article 282, the trustee may by notice in writing claim for the bankrupt's estate any property which has been acquired by, or has devolved upon, the bankrupt since the commencement of the bankruptcy.

(2)

A notice under this Article shall not be served in respect of—

(a)

any property falling within paragraph (2) or (3) of Article 11,

F525(aa)

any property vesting in the bankrupt by virtue of Article 256A in Chapter II,

(b)

any property which by virtue of any other statutory provision is excluded from the bankrupt's estate, or

(c)

without prejudice to Article 254(2)(c) (order of High Court on application for discharge), any property which is acquired by, or devolves upon, the bankrupt after his discharge.

(3)

Subject to F526paragraphs (4) and (4A), upon the service on the bankrupt of a notice under this Article the property to which the notice relates shall vest in the trustee as part of the bankrupt's estate; and the trustee's title to that property has relation back to the time at which the property was acquired by, or devolved upon, the bankrupt.

(4)

Where, whether before or after service F527on the bankrupt of a notice under this Article—

(a)

a person acquires property in good faith, for value and without notice of the bankruptcy, F528...

F528(b)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

the trustee is not in respect of that property F529... entitled by virtue of this Article to any remedy against that person F530..., or any person whose title to any property derives from that person F530....

F531(4A)

Where a banker enters into a transaction beforeservice on the banker of a notice under this Article (and whether before or after service on the bankrupt of a notice under this Article) the trustee is not in respect of that transaction entitled by virtue of this Article to any remedy against the banker.

This paragraph applies whether or not the banker has notice of the bankruptcy.

(5)

References in this Article to property do not include any property which, as part of the bankrupt's income, may be the subject of an income payments order under Article 283.

Vesting in trustee of certain items of excess value281.

(1)

Subject to Article 282, where—

(a)

property is excluded by virtue of Article 11(2) (tools of trade, household effects, etc.) from the bankrupt's estate, and

(b)

it appears to the trustee that the realisable value of the whole or any part of that property exceeds the cost of a reasonable replacement for that property or that part of it,

the trustee may by notice in writing claim that property or, as the case may be, that part of it for the bankrupt's estate.

(2)

Upon the service on the bankrupt of a notice under this Article, the property to which the notice relates vests in the trustee as part of the bankrupt's estate; and, except against a purchaser in good faith, for value and without notice of the bankruptcy, the trustee's title to that property has relation back to the commencement of the bankruptcy.

(3)

The trustee shall apply funds comprised in the estate to the purchase by or on behalf of the bankrupt of a reasonable replacement for any property vested in the trustee under this Article; and the duty imposed by this paragraph has priority over the obligation of the trustee to distribute the estate.

(4)

For the purposes of this Article property is a reasonable replacement for other property if it is reasonably adequate for meeting the needs met by the other property.

Time‐limit for notice under Article 280 or 281282.

(1)

Except with the leave of the High Court, a notice shall not be served—

(a)

under Article 280, after the expiration of 42 days from the day on which it first came to the knowledge of the trustee that the property in question had been acquired by, or had devolved upon, the bankrupt;

(b)

under Article 281, after the expiration of 42 days from the day on which the property in question first came to the knowledge of the trustee.

(2)

For the purposes of this Article—

(a)

anything which comes to the knowledge of the trustee is deemed in relation to any successor of his as trustee to have come to the knowledge of the successor at the same time; and

(b)

anything which comes (otherwise than under sub‐paragraph (a)) to the knowledge of a person before he is the trustee is deemed to come to his knowledge on his appointment taking effect or, in the case of the official receiver, on his becoming trustee.

Income payments orders283.

(1)

The High Court mayF532. . . make an order ( “an income payments order”) claiming for the bankrupt's estate so much of the income of the bankrupt during the period for which the order is in force as may be specified in the order.

F533(1A)

An income payments order may be made only on an application instituted—

(a)

by the trustee, and

(b)

before the discharge of the bankrupt.

(2)

The High Court shall not make an income payments order the effect of which would be to reduce the income of the bankruptF534 when taken together with any payments to which paragraph (8) applies below what appears to the Court to be necessary for meeting the reasonable domestic needs of the bankrupt and his family.

(3)

An income payments order shall, in respect of any payment of income to which it is to apply, either—

(a)

require the bankrupt to pay the trustee an amount equal to so much of that payment as is claimed by the order, or

(b)

require the person making the payment to pay so much of it as is so claimed to the trustee, instead of to the bankrupt.

(4)

Where the High Court makes an income payments order it may, if it thinks fit, discharge or vary any attachment of earnings order that is for the time being in force to secure payments by the bankrupt.

(5)

Sums received by the trustee under an income payments order form part of the bankrupt's estate.

F535(6)

An income payments order shall specify the period during which it is to have effect; and that period—

(a)

may end after the discharge of the bankrupt, but

(b)

may not end after the period of 3 years beginning with the date on which the order is made.

(6A)

An income payments order may (subject to paragraph (6)(b)) be varied on the application of the trustee or the bankrupt (whether before or after discharge).

(6B)

Where the Court has made an income payments order in relation to a bankrupt who is a solicitor, nothing in paragraph (6) shall affect the continuance of a condition with respect to income specified in an order made under Article 254(2)(c).

(7)

For the purposes of this Article the income of the bankrupt comprises every payment in the nature of income which is from time to time made to him or to which he from time to time becomes entitled, including any payment in respect of the carrying on of any business or in respect of any office or employmentF536 andF537 (despite anything in Article 12 or 13 of the Welfare Reform and Pensions (Northern Ireland) Order 1999) any payment under a pension scheme but excluding any scheme to which paragraph (8) applies.

F536(8)

This paragraph applies to—

(a)

payments by way of guaranteed minimum pension; F538 ...

F539 (b)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)

In this Article, “guaranteed minimum pension” F540has the same meaning as in the Pension Schemes (Northern Ireland) Act 1993.

F541Income payments agreement283A.

(1)

In this Article “income payments agreement” means a written agreement between a bankrupt and his trustee or between a bankrupt and the official receiver which provides—

(a)

that the bankrupt is to pay to the trustee or the official receiver an amount equal to a specified part or proportion of the bankrupt's income for a specified period, or

(b)

that a third person is to pay to the trustee or the official receiver a specified proportion of money due to the bankrupt by way of income for a specified period.

(2)

A provision of an income payments agreement of a kind specified in paragraph (1)(a) or (b) may be enforced as if it were a provision of an income payments order.

(3)

While an income payments agreement is in force the High Court may, on the application of the bankrupt, his trustee or the official receiver, discharge or vary an attachment of earnings order that is for the time being in force to secure payments by the bankrupt.

(4)

The following provisions of Article 283 shall apply to an income payments agreement as they apply to an income payments order—

(a)

paragraph (5) (receipts to form part of estate), and

(b)

paragraphs (7) to (9) (meaning of income).

(5)

An income payments agreement must specify the period during which it is to have effect; and that period—

(a)

may end after the discharge of the bankrupt, but

(b)

may not end after the period of 3 years beginning with the date on which the agreement is made.

(6)

An income payments agreement may (subject to paragraph (5)(b)) be varied—

(a)

by written agreement between the parties, or

(b)

by the High Court on an application made by the bankrupt, the trustee or the official receiver.

(7)

The High Court—

(a)

may not vary an income payments agreement so as to include provision of a kind which could not be included in an income payments order, and

(b)

shall grant an application to vary an income payments agreement if and to the extent that the Court thinks variation necessary to avoid the effect mentioned in Article 283(2).

Acquisition by trustee of control284.

(1)

The trustee shall take possession of all books, papers and other records which relate to the bankrupt's estate or affairs andwhich belong to him or are in his possession or under his control (including any which would be privileged from disclosure in any proceedings).

(2)

In relation to, and for the purpose of acquiring or retaining possession of, the bankrupt's estate, the trustee is in the same position as if he were a receiver of property appointed by the High Court; and the Court may, on his application, enforce such acquisition or retention accordingly.

(3)

Where any part of the bankrupt's estate consists of stock or shares in a company, shares in a ship or any other property transferable in the books of a company, office or person, the trustee may exercise the right to transfer the property to the same extent as the bankrupt might have exercised it if he had not become bankrupt.

(4)

Where any part of the estate consists of things in action, they are deemed to have been assigned to the trustee; but notice of the deemed assignment need not be given except in so far as it is necessary, in a case where the deemed assignment is from the bankrupt himself, for protecting the priority of the trustee.

(5)

Where any goods comprised in the estate are held by any person by way of pledge, pawn or other security and no notice has been served in respect of those goods by the official receiver under paragraph (6) of Article 258 (restriction on realising security), the trustee may serve such a notice in respect of the goods; and whether or not a notice has been served under this paragraph or that paragraph, the trustee may, if he thinks fit, exercise the bankrupt's right of redemption in respect of any such goods.

(6)

A notice served by the trustee under paragraph (5) has the same effect as a notice served by the official receiver under Article 258(6).

Obligation to surrender control to trustee285.

(1)

Without prejudice to the general duties of the bankrupt under Article 306, the bankrupt shall deliver up to the trustee possession of any property, books, papers or other records of which he has possession or control and of which the trustee is required to take possession.

(2)

If any of the following is in possession of any property, books, papers or other records of which the trustee is required to take possession, namely—

(a)

the official receiver,

(b)

a person who has ceased to be trustee of the bankrupt's estate, or

(c)

a person who has been the supervisor of a voluntary arrangement approved in relation to the bankrupt under Part VIII,

the official receiver or, as the case may be, that person shall deliver up possession of the property, books, papers or records to the trustee.

(3)

Any banker or agent of the bankrupt or any other person who holds any property to the account of, or for, the bankrupt shall pay or deliver to the trustee all property in his possession or under his control which forms part of the bankrupt's estate and which he is not by law entitled to retain as against the bankrupt or trustee.

(4)

If any person without reasonable excuse fails to comply with any obligation imposed by this Article, he is guilty of a contempt of court and liable to be punished accordingly (in addition to any other punishment to which he may be subject).

Charge on bankrupt's home286.

(1)

Where any property consisting of an interest in a dwelling house which is occupied by the bankrupt or by his spouse or former spouseF542 or by his civil partner or former civil partner is comprised in the bankrupt's estate and the trustee is, for any reason, unable for the time being to realise that property, the trustee may apply to the High Court for an order imposing a charge on the property for the benefit of the bankrupt's estate.

(2)

If on an application under this Article the High Court imposes a charge on any property, the benefit of that charge shall be comprised in the bankrupt's estate and is enforceableF543, up to the charged value from time to time, for the payment of any amount which is payable otherwise than to the bankrupt out of the estate and of interest on that amount at the prescribed rate.

F544(2A)

In paragraph (2) “the charged value” means—

(a)

the amount specified in the charging order as the value of the bankrupt's interest in the property at the date of the order, plus

(b)

interest on that amount from the date of the charging order at the prescribed rate.

(2B)

In determining the value of an interest for the purposes of this Article the High Court shall disregard any matter which it is required to disregard by the rules.

(3)

An order under this Article made in respect of property vested in the trustee shall provide, in accordance with the rules, for the property to cease to be comprised in the bankrupt's estate and, subject to the charge (and any prior charge), to vest in the bankrupt.

(4)

An order under this Article may be made either absolutely or subject to conditions as to notifying the bankrupt or any person holding any interest in the property to which the order relates or as to the time when the charge is to become enforceable, or as to other matters.

(5)

Subject to any provision made by rules, a charge imposed by an order under this Article shall have the like effect and shall be enforceable in the same courts and in the same manner as an equitable charge created by the bankrupt by writing under his hand.

(6)

The High Court may at any time, on the application of the bankrupt or of any person holding any interest in the property to which the order relates make an order discharging or varying the order imposing a charge on the property.

(7)

Where an order under this Article has been protected by an entry registered under the Land Registration Act (Northern Ireland ) 1970F545 or the Registration of Deeds Acts, an order under paragraph (6) discharging that order may direct that the entry be vacated.

F546(8)

But an order under paragraph (6) may not vary a charged value.

F547Low value home: application for sale, possession or charge286A.

(1)

This Article applies where—

(a)

property comprised in the bankrupt's estate consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of—

(i)

the bankrupt,

(ii)

the bankrupt's spouse F548or civil partner , or

(iii)

a former spouse F549or former civil partner of the bankrupt, and

(b)

the trustee applies for an order for the sale of the property, for an order for possession of the property or for an order under Article 286 in respect of the property.

(2)

The High Court shall dismiss the application if the value of the interest is below such amount as may for the time being be specified for the purposes of this paragraph by order under Article 362(1)(b).

(3)

In determining the value of an interest for the purposes of this Article the High Court shall disregard any matter which it is required to disregard by the order which specifies the amount for the purposes of paragraph (2).

Powers of trustee287.

(1)

The trustee may—

(a)

with the permission of the creditors' committee or the High Court, exercise any of the powers specified in Part I of Schedule 3, and

(b)

without that permission, exercise any of the general powers specified in Part II of Schedule 3.

(2)

With the permission of the creditors' committee or the High Court, the trustee may appoint the bankrupt—

(a)

to superintend the management of his estate or any part of it,

(b)

to carry on his business (if any) for the benefit of his creditors, or

(c)

in any other respect to assist in administering the estate in such manner and on such terms as the trustee may direct.

(3)

A permission given for the purposes of paragraph (1)(a) or (2) shall not be a general permission but shall relate to a particular proposed exercise of the power in question; and a person dealing with the trustee in good faith and for value is not to be concerned to enquire whether any permission required in either case has been given.

(4)

Subject to paragraph (5), where the trustee has done anything without the permission required by paragraph (1)(a) or (2), the High Court or the creditors' committee may, for the purpose of enabling him to meet his expenses out of the bankrupt's estate, ratify what the trustee has done.

(5)

The committee shall not ratify the trustee's action under paragraph (4) unless it is satisfied that the trustee has acted in a case of urgency and has sought its ratification without undue delay.

(6)

Part III of Schedule 3 has effect with respect to the things which the trustee is able to do for the purposes of, or in connection with, the exercise of any of his powers under Parts VIII to X.

(7)

Where the trustee (not being the official receiver) in exercise of the powers conferred on him by any provision in Parts VIII to X—

(a)

disposes of any property comprised in the bankrupt's estate to an associate of the bankrupt, or

(b)

employs a solicitor,

he shall, if there is for the time being a creditors' committee, give notice to the committee of that exercise of his powers.

(8)

Without prejudice to the generality of paragraph (6) and Part III of Schedule 3, the trustee may, if he thinks fit, at any time summon a general meeting of the bankrupt's creditors.

(9)

Subject to the preceding provisions in Part VIII and this Part, he shall summon such a meeting if he is requested to do so by a creditor of the bankrupt and the request is made with the concurrence of not less than one‐tenth, in value, of the bankrupt's creditors (including the creditor making the request).

(10)

Nothing in this Order is to be construed as restricting the capacity of the trustee to exercise any of his powers outside Northern Ireland.

Disclaimer of onerous property

Disclaimer (general power)288.

(1)

Subject to paragraph (4) and Articles 289 to 291, the trustee may, by the giving of the prescribed notice, disclaim any onerous property and do so notwithstanding that he has taken possession of it, endeavoured to sell it or otherwise exercised rights of ownership in relation to it.

(2)

The following is onerous property for the purposes of this Article, that is to say—

(a)

any unprofitable contract, and

(b)

any other property comprised in the bankrupt's estate which is unsaleable or not readily saleable, or is such that it may give rise to a liability to pay money or perform any other onerous act.

(3)

A disclaimer under this Article—

(a)

operates so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the bankrupt and his estate in or in respect of the property disclaimed, and

(b)

discharges the trustee from all personal liability in respect of that property as from the commencement of his trusteeship,

but does not, except so far as is necessary for the purpose of releasing the bankrupt, the bankrupt's estate and the trustee from any liability, affect the rights or liabilities of any other person.

(4)

A notice of disclaimer shall not be given under this Article in respect of any property that has been claimed for the estate under Article 280 (after‐acquired property) or 281 (personal property of bankrupt exceeding reasonable replacement value), except with the leave of the High Court.

(5)

Any person sustaining loss or damage in consequence of the operation of a disclaimer under this Article is deemed to be a creditor of the bankrupt to the extent of the loss or damage and accordingly may prove for the loss or damage as a bankruptcy debt.

Notice requiring trustee's decision289.

(1)

Notice of disclaimer shall not be given under Article 288 in respect of any property if—

(a)

a person interested in the property has applied in writing to the trustee or one of his predecessors as trustee requiring the trustee or that predecessor to decide whether he will disclaim or not, and

(b)

the period of 28 days from the day on which that application was made has expired without a notice of disclaimer having been given under Article 288 in respect of that property.

(2)

The trustee is deemed to have adopted any contract which by virtue of this Article he is not entitled to disclaim.

Disclaimer of leaseholds290.

(1)

The disclaimer of any property of a leasehold nature does not take effect unless a copy of the disclaimer has been served (so far as the trustee is aware of their addresses) on every person claiming under the bankrupt as underlessee of mortgagee and either—

(a)

no application under Article 293 is made with respect to the property before the expiration of 14 days from the day on which the last notice served under this paragraph was served, or

(b)

where such an application has been made, the High Court directs that the disclaimer is to take effect.

(2)

Where the High Court gives a direction under paragraph (1)(b) it may also, instead of or in addition to any order it makes under Article 293, make such orders with respect to fixtures, tenant's improvements and other matters arising out of the lease as it thinks fit.

(3)

For the purposes of this Article, property held under a fee farm grant creating the relation of landlord and tenant is property of a leasehold nature and a reference to an underlessee includes a person who holds a lease from the fee farm grantee.

Disclaimer of dwelling house291.

Without prejudice to Article 290, the disclaimer of any property in a dwelling house does not take effect unless a copy of the disclaimer has been served (so far as the trustee is aware of their addresses) on every person in occupation of or claiming a right to occupy the dwelling house and either—

(a)

no application under Article 293 is made with respect to the property before the expiration of 14 days from the day on which the last notice served under this Article was served, or

(b)

where such an application has been made, the High Court directs that the disclaimer is to take effect.

Disclaimer of land subject to rentcharge292.

(1)

The following applies where, in consequence of the disclaimer under Article 288 of any land subject to a rentcharge, that land vests by operation of law in the Crown or any other person (referred to in paragraph (2) as “the proprietor”).

(2)

The proprietor, and the successors in title of the proprietor, are not subject to any personal liability in respect of any sums becoming due under the rentcharge, except sums becoming due after the proprietor, or some person claiming under or through the proprietor, has taken possession or control of the land or has entered into occupation of it.

High Court order vesting disclaimed property293.

(1)

This Article and Article 294 apply where the trustee has disclaimed property under Article 288.

(2)

An application may be made to the High Court under this Article by—

(a)

any person who claims an interest in the disclaimed property,

(b)

any person who is under any liability in respect of the disclaimed property, not being a liability discharged by the disclaimer, or

(c)

where the disclaimed property is property in a dwelling house, any person who at the time when the bankruptcy petition was presented was in occupation of or entitled to occupy the dwelling house.

(3)

Subject to the following provisions of this Article and to Article 294, the High Court may, on an application under this Article, make an order on such terms as it thinks fit for the vesting of the disclaimed property in, or for its delivery to—

(a)

a person entitled to it or a trustee for such a person,

(b)

a person subject to such a liability as is mentioned in paragraph (2)(b) or a trustee for such a person, or

(c)

where the disclaimed property is property in a dwelling house, any person who at the time when the bankruptcy petition was presented was in occupation of or entitled to occupy the dwelling house.

(4)

The High Court shall not make an order by virtue of paragraph (3)(b) except where it appears to the Court that it would be just to do so for the purpose of compensating the person subject to the liability in respect of the disclaimer.

(5)

The effect of any order under this Article shall be taken into account in assessing for the purposes of Article 288(5) the extent of any loss or damage sustained by any person in consequence of the disclaimer.

(6)

An order under this Article vesting property in any person need not be completed by any conveyance, assignment or transfer.

Order under Article 293 in respect of leaseholds294.

(1)

The High Court shall not make an order under Article 293 vesting property of a leasehold nature in any person, except on terms making that person—

(a)

subject to the same liabilities and obligations as the bankrupt was subject to under the lease on the day the bankruptcy petition was presented, or

(b)

if the Court thinks fit, subject to the same liabilities and obligations as that person would be subject to if the lease had been assigned to him on that day.

(2)

For the purposes of an order under Article 293 relating to only part of any property comprised in a lease, the requirements of paragraph (1) apply as if the lease comprised only the property to which the order relates.

(3)

Where paragraph (1) applies and no person is willing to accept an order under Article 293 on the terms required by that paragraph, the High Court may (by order under Article 293) vest the estate or interest of the bankrupt in the property in any person who is liable (whether personally or in a representative capacity and whether alone or jointly with the bankrupt) to perform the lessee's covenants in the lease.

(4)

An order of the High Court under paragraph (3) may vest that estate and interest in such a person freed and discharged from all estates, incumbrances and interests created by the bankrupt.

(5)

Where paragraph (1) applies and a person declines to accept any order under Article 293, that person shall be excluded from all interest in the property.

(6)

Paragraph (3) of Article 290 shall apply for the purposes of this Article as it applies for the purposes of that Article.

Distribution of bankrupt's estate

Proof of debts295.

(1)

Subject to this Article and Article 296, the proof of any bankruptcy debt by a secured or unsecured creditor of the bankrupt and the admission or rejection of any proof shall take place in accordance with the rules.

(2)

Where a bankruptcy debt bears interest, that interest is provable as part of the debt except in so far as it is payable in respect of any period after the commencement of the bankruptcy.

(3)

The trustee shall estimate the value of any bankruptcy debt which, by reason of its being subject to any contingency or contingencies or for any other reason, does not bear a certain value.

(4)

Where the value of a bankruptcy debt is estimated by the trustee under paragraph (3) or, by virtue of Article 276, by the High Court, the amount provable in the bankruptcy in respect of the debt is the amount of the estimate.

Mutual credit and set‐off296.

(1)

This Article applies where before the commencement of the bankruptcy there have been mutual credits, mutual debts or othermutual dealings between the bankrupt and any creditor of the bankrupt proving or claiming to prove for a bankruptcy debt.

(2)

An account shall be taken of what is due from each party to the other in respect of the mutual dealings and the sums due from one party shall be set off against the sums due from the other.

(3)

Sums due from the bankrupt to another party shall not be included in the account taken under paragraph (2) if that other party had notice at the time they became due that a bankruptcy petition relating to the bankrupt was pending.

(4)

Only the balance (if any) of the account taken under paragraph (2) is provable as a bankruptcy debt or, as the case may be, to be paid to the trustee as part of the bankrupt's estate.

Distribution by means of dividend297.

(1)

Whenever the trustee has sufficient funds in hand for the purpose he shall, subject to the retention of such sums as may be necessary for the expenses of the bankruptcy, declare and distribute dividends among the creditors in respect of the bankruptcy debts which they have respectively proved.

(2)

The trustee shall give notice of his intention to declare and distribute a dividend.

(3)

Where the trustee has declared a dividend, he shall give notice of the dividend and of how it is proposed to distribute it; and a notice given under this paragraph shall contain the prescribed particulars of the bankrupt's estate.

(4)

In the calculation and distribution of a dividend the trustee shall make provision—

(a)

for any bankruptcy debts which appear to him to be due to persons who, by reason of the distance of their place of residence, may not have had sufficient time to tender and establish their proofs,

(b)

for any bankruptcy debts which are the subject of claims which have not yet been determined, and

(c)

for disputed proofs and claims.

Claims by unsatisfied creditors298.

(1)

A creditor who has not proved his debt before the declaration of any dividend is not entitled to disturb, by reason that he has not participated in it, the distribution of that dividend or any other dividend declared before his debt was proved, but—

(a)

when he has proved that debt he is entitled to be paid, out of any money for the time being available for the payment of any further dividend, any dividend or dividends which he has failed to receive; and

(b)

any dividend or dividends payable under sub‐paragraph (a) shall be paid before that money is applied to the payment of any such further dividend.

(2)

No action lies against the trustee for a dividend, but if the trustee refuses to pay a dividend the High Court may, if it thinks fit, order him to pay it and also to pay, out of his own money—

(a)

interest on the dividend, at the rate applicable to a money judgment of the Court at the time it was withheld, from that time, and

(b)

the costs of the proceedings in which the order to pay is made.

Distribution of property in specie299.

(1)

Without prejudice to Articles 288 to 292 (disclaimer), the trustee may, with the permission of the creditors' committee, divide in its existing form among the bankrupt's creditors, according to its estimated value, any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold.

(2)

A permission given for the purposes of paragraph (1) shall not be a general permission but shall relate to a particular proposed exercise of the power in question; and a person dealing with the trustee in good faith and for value is not to be concerned to enquire whether any permission required by paragraph (1) has been given.

(3)

Where the trustee has done anything without the permission required by paragraph (1), the High Court or the creditors' committee may, for the purpose of enabling him to meet his expenses out of the bankrupt's estate, ratify what the trustee has done.

(4)

The committee shall not ratify the trustee's action under paragraph (3) unless it is satisfied that the trustee acted in a case of urgency and has sought its ratification without undue delay.

Priority of debts300.

(1)

In the distribution of the bankrupt's estate, his preferential debts F550... shall be paid in priority to other debts.

F551(1A)

Ordinary preferential debts rank equally among themselves after the expenses of the bankruptcy and shall be paid in full, unless the bankrupt’s estate is insufficient to meet them, in which case they abate in equal proportions between themselves.

(1B)

Secondary preferential debts rank equally among themselves after the ordinary preferential debts and shall be paid in full, unless the bankrupt’s estate is insufficient to meet them, in which case they abate in equal proportions between themselves.

F552(2)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)

Debts which are neither preferential debts nor debts to which Article 302 applies also rank equally between themselves and, after the preferential debts, shall be paid in full unless the bankrupt's estate is insufficient for meeting them, in which case they abate in equal proportions between themselves.

F553(3A)

If the bankrupt is a relevant financial institution, paragraph (3) does not apply but—

(a)

the bankrupt’s ordinary non-preferential debts are to be paid in priority to the bankrupt’s secondary non-preferential debts,

(b)

the bankrupt’s ordinary non-preferential debts rank equally among themselves after the secondary preferential debts and are to be paid in full, unless the bankrupt’s estate is insufficient to meet them, in which case they abate in equal proportions,

(c)

the bankrupt’s secondary non-preferential debts are to be paid in priority to the bankrupt’s tertiary non-preferential debts, and

(d)

the bankrupt’s secondary non-preferential debts rank equally among themselves after the ordinary non-preferential debts and are to be paid in full, unless the bankrupt’s estate is insufficient to meet them, in which case they abate in equal proportions.

See Article 347A for definitions relevant to this paragraph.

(4)

Any surplus remaining after the payment of the debts F554—

(a)

where paragraph (3) applies, that are preferential or rank equally under that paragraph, or

(b)

where paragraph (3A) applies, that are preferential or are referred to in that paragraph,

shall be applied in paying interest on those debts in respect of the F555periods during which they have been outstanding since the commencement of the bankruptcy; and interest on preferential debts ranks equally with interest on debts other than preferential debts.

(5)

The rate of interest payable under paragraph (4) in respect of any debt is whichever is the greater of the following—

(a)

the rate applicable to a money judgment of the High Court at the commencement of the bankruptcy, and

(b)

the rate applicable to that debt apart from the bankruptcy.

(6)

This Article and Article 302 are without prejudice to any provision of this Order or any other statutory provision under which the payment of any debt or the making of any other payment is, in the event of bankruptcy, to have a particular priority or to be postponed.

F556(7)

In this Article “preferential debts”, “ordinary preferential debts” and “secondary preferential debts” each has the meaning given in Article 346.

Preferential charge on goods distrained301.

F557(1)

Paragraph (1A) applies where—

(a)

any person has distrained upon the goods or effects of an individual who is adjudged bankrupt within 3 months from the distraint, or

(b)

Her Majesty's Revenue and Customs has been paid any amount from an account of an individual under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement by deduction from accounts) and the individual is adjudged bankrupt within 3 months from the payment.

(1A)

Where this paragraph applies—

(a)

in a case within paragraph (1)(a), the goods or effects, or the proceeds of their sale, and

(b)

in a case within paragraph (1)(b), the amount in question,

is charged for the benefit of the bankrupt's estate with the preferential debts of the bankrupt to the extent that the bankrupt's estate is for the time being insufficient for meeting them.

(2)

Where by virtue of a charge under paragraph F558(1A) any person surrenders any goods or effects to the trustee of a bankrupt's estate or makes a payment to such a trustee, that person ranks, in respect of the amount of the proceeds of the sale of those goods or effects by the trustee or (as the case may be) the amount of the payment, as a preferential creditor of the bankrupt, except as against so much of the bankrupt's estate as is available for the payment of preferential creditors by virtue of the surrender or payment.

Debts to spouseF559 or civil partner302.

(1)

This Article applies to bankruptcy debts owed in respect of credit provided by a person who (whether or not the bankrupt's spouseF559 or civil partner at the time the credit was provided) was the bankrupt's spouseF559 or civil partner at the commencement of the bankruptcy.

(2)

Such debts—

(a)

rank in priority after the F560... interest required to be paid in pursuance of Article F561300(4), and

(b)

are payable with interest at the rate specified in Article 300(5) in respect of the period during which they have been outstanding since the commencement of the bankruptcy;

and the interest payable under sub‐paragraph (b) has the same priority as the debts on which it is payable.

Final distribution303.

(1)

When the trustee has realised all the bankrupt's estate or so much of it as can, in the trustee's opinion, be realised without needlessly protracting the trusteeship, he shall give notice in the prescribed manner either—

(a)

of his intention to declare a final dividend, or

(b)

that no dividend, or further dividend, will be declared.

(2)

The notice under paragraph (1) shall contain the prescribed particulars and shall require claims against the bankrupt's estate to be established by a date ( “the final date”) specified in the notice.

(3)

The High Court may, on the application of any person, postpone the final date.

(4)

After the final date, the trustee shall—

(a)

defray any outstanding expenses of the bankruptcy out of the bankrupt's estate, and

(b) F562

if he intends to declare a final dividend, declare and distribute that dividend without regard to the claim of any person in respect of a debt not already proved in the bankruptcy.

(5)

If a surplus remains after payment in full and with interest of all the bankrupt's creditors and the payment of the expenses of the bankruptcy, the bankrupt is entitled to the surplus.

F563(6)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Final meeting304.

(1)

Subject to the provisions of this Article and to Article 305, this Article applies where—

(a)

it appears to the trustee that the administration of the bankrupt's estate in accordance with this Chapter is for practical purposes complete, and

(b)

the trustee is not the official receiver.

(2)

The trustee shall summon a final general meeting of the bankrupt's creditors which—

(a)

shall receive the trustee's report of his administration of the bankrupt's estate, and

(b)

shall determine whether the trustee should have his release under Article 272.

(3)

The trustee may, if he thinks fit, give the notice summoning the final general meeting at the same time as giving notice under Article 303(1); but, if summoned for an earlier date, that meeting shall be adjourned (and, if necessary, further adjourned) until a date on which the trustee is able to report to the meeting that the administration of the bankrupt's estate is for practical purposes complete.

(4)

In the administration of the estate it is the trustee's duty to retain sufficient sums from the estate to cover the expenses of summoning and holding the meeting required by this Article.

Saving for bankrupt's home305.

(1)

This Article applies where—

(a)

there is comprised in the bankrupt's estate property consisting of an interest in a dwelling house which is occupied by the bankrupt or by his spouse or former spouseF564 or by his civil partner or former civil partner, and

(b)

the trustee has been unable for any reason to realise that property.

(2)

The trustee shall not summon a meeting under Article 304 unless either—

(a)

the High Court has made an order under Article 286 imposing a charge on that property for the benefit of the bankrupt's estate, or

(b)

the Court has declined, on an application under that Article, to make such an order, or

(c)

the Department has issued a certificate to the trustee stating that it would be inappropriate or inexpedient for such an application to be made in the case in question.

Supplemental

Duties of bankrupt in relation to trustee306.

(1)

The bankrupt shall—

(a)

give to the trustee such information as to his affairs,

(b)

attend on the trustee at such times, and

(c)

do all such other things,

as the trustee may for the purposes of carrying out his functions under Parts VIII to X reasonably require.

(2)

Where at any time after the commencement of the bankruptcy any property is acquired by, or devolves upon, the bankrupt or there is an increase of the bankrupt's income, the bankrupt shall, within the prescribed period, give the trustee notice of the property or, as the case may be, of the increase.

(3)

Paragraph (1) applies to a bankrupt after his discharge.

(4)

If the bankrupt without reasonable excuse fails to comply with any obligation imposed by this Article, he is guilty of a contempt of court and liable to be punished accordingly (in addition to any other punishment to which he may be subject).

Stay of distribution in case of second bankruptcy307.

(1)

This Article and Article 308 apply where a bankruptcy order is made against an undischarged bankrupt; and in both Articles—

(a)

“the later bankruptcy” means the bankruptcy arising from that order,

(b)

“the earlier bankruptcy” means the bankruptcy (or, as the case may be, most recent bankruptcy) from which the bankrupt has not been discharged at the commencement of the later bankruptcy, and

(c)

“the existing trustee” means the trustee (if any) of the bankrupt's estate for the purposes of the earlier bankruptcy.

(2)

Without prejudice to Article 257 (restrictions on dispositions of property following bankruptcy order), where the existing trustee has been given the prescribed notice of the presentation of the petition for the later bankruptcy, any distribution or other disposition by him of anything to which paragraph (3) applies, if made after the giving of the notice, is void except to the extent that it was made with the consent of the High Court or is or was subsequently ratified by the Court.

(3)

This paragraph applies to—

(a)

any property which is vested in the existing trustee under Article 280(3) (after‐acquired property);

(b)

any money paid to the existing trustee in pursuance of an income payments order under Article 283; and

(c)

any property or money which is, or in the hands of the existing trustee represents, the proceeds of sale or application of property or money falling within sub‐paragraph (a) or (b).

Adjustment between earlier and later bankruptcy estates308.

(1)

With effect from the commencement of the later bankruptcy anything to which Article 307(3) applies which, immediately before the commencement of that bankruptcy, is comprised in the bankrupt's estate for the purposes of the earlier bankruptcy is to be treated as comprised in the bankrupt's estate for the purposes of the later bankruptcy and, until there is a trustee of that estate, is to be dealt with by the existing trustee in accordance with the rules.

(2)

Any sums which in pursuance of an income payments order under Article 283 are payable after the commencement of the later bankruptcy to the existing trustee shall form part of the bankrupt's estate for the purposes of the later bankruptcy; and the High Court may give such consequential directions for the modification of the order as it thinks fit.

(3)

Anything comprised in a bankrupt's estate by virtue of paragraph (1) or (2) is so comprised subject to a first charge in favour of the existing trustee for any bankruptcy expenses incurred by him in relation thereto.

(4)

Except as provided by paragraphs (1) and (2) and in Article 307, property which is, or by virtue of Article 281 (personal property of bankrupt exceeding reasonable replacement value) is capable of being, comprised in the bankrupt's estate for the purposes of the earlier bankruptcy, or of any bankruptcy prior to it, shall not be comprised in his estate for the purposes of the later bankruptcy.

(5)

The creditors of the bankrupt in the earlier bankruptcy and the creditors of the bankrupt in any bankruptcy prior to the earlier one, are not to be creditors of his in the later bankruptcy in respect of the same debts; but the existing trustee may prove in the later bankruptcy for—

(a)

the unsatisfied balance of the debts (including any debt under this paragraph) provable against the bankrupt's estate in the earlier bankruptcy;

(b)

any interest payable on that balance; and

(c)

any unpaid expenses of the earlier bankruptcy.

(6)

Any amount provable under paragraph (5) ranks in priority after all the other debts provable in the later bankruptcy and after interest on those debts and, accordingly, shall not be paid unless those debts and that interest have first been paid in full.

CHAPTER VEFFECT OF BANKRUPTCY ON CERTAIN RIGHTS, TRANSACTIONS, ETC.

Rights of occupation

Rights of occupation, etc., of bankrupt's spouse F565or civil partner309.

(1)

Nothing occurring in the initial period of the bankruptcy (that is to say, the period beginning with the day of the presentation of the petition for the bankruptcy order and ending with the vesting of the bankrupt's estate in a trustee) is to be taken as having given rise to anyF566F567 home rights under the Family Homes and Domestic Violence (Northern Ireland) Order 1998 in relation to a dwelling house comprised in the bankrupt's estate.

(2)

WhereF567 a spouse's or civil partner's home rightsF566 under the Order of 1998 are a charge on the estate or interest of the other spouseF567 or civil partner, or of trustees for the other spouseF567 or civil partner, and the other spouseF567 or civil partner is adjudged bankrupt—

(a)

the charge continues to subsist notwithstanding the bankruptcy and, subject to the provisions of that Order, binds the trustee of the bankrupt's estate and persons deriving title under that trustee, and

(b)

any application for an order underF566 Article 11 of that Order shall be made to the High Court.

(3)

Notwithstanding any provision of the Partition Act 1868F568, where a person and his spouse or former spouseF567 or civil partner or former civil partner have a legal or equitable estate in a dwelling house vested in them jointly or as tenants in common and that person is adjudged bankrupt, in a suit for partition maintained by the trustee of the bankrupt's estate the High Court may make such order as it thinks fit.

(4)

On an application such as is mentioned in paragraph (2) or in a suit such as is mentioned in paragraph (3) the High Court shall make such order under paragraph (3) orF566 Article 11 of the Order of 1998 as it thinks just and reasonable having regard to—

(a)

the interests of the bankrupt's creditors,

(b)

the conduct of the spouse or former spouse F569or civil partner or former civil partner, so far as contributing to the bankruptcy,

(c)

the needs and financial resources of the spouse or former spouse F569or civil partner or former civil partner,

(d)

the needs of any children, and

(e)

all the circumstances of the case other than the needs of the bankrupt.

(5)

Where such an application is made or such a suit is maintained after the expiration of one year from the first vesting under Chapter IV of the bankrupt's estate in a trustee, the High Court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt's creditors outweigh all other considerations.

Rights of occupation of bankrupt310.

(1)

This Article applies where—

(a)

a person who is entitled to occupy a dwelling house by virtue of a beneficial estate or interest is adjudged bankrupt, and

(b)

any persons under the age of 18 with whom that person had at some time occupied that dwelling house had their home with that person at the time when the bankruptcy petition was presented and at the commencement of the bankruptcy.

(2)

Whether or not the bankrupt'sF570 spouse or civil partner (if any) has home rightsF571 under the Family Homes and Domestic Violence (Northern Ireland) Order 1998

(a)

the bankrupt has the following rights as against the trustee of his estate—

(i)

if in occupation, a right not to be evicted or excluded from the dwelling house or any part of it, except with the leave of the High Court,

(ii)

if not in occupation, a right with the leave of the Court to enter into and occupy the dwelling house, and

(b)

the bankrupt's rights are a charge, having the like priority as an equitable interest created immediately before the commencement of the bankruptcy, on so much of his estate or interest in the dwelling house as vests in the trustee.

F571(3)

The Order of 1998 has effect, with the necessary modifications, as if—

(a)

the rights conferred by sub-paragraph (a) of paragraph (2) wereF570 home rights under that Order,

(b)

any application for leave such as is mentioned in that sub-paragraph were an application for an order under Article 11 of that Order, and

(c)

any charge under sub-paragraph (b) of that paragraph on the estate or interest of the trustee were a charge under that Order on the estate or interest of a spouseF570 or civil partner.

(4)

Any application for leave such as is mentioned in paragraph (2)(a) or otherwise by virtue of this Article for an order underF571 Article 11 of the Order of 1998 shall be made to the High Court.

(5)

On such an application the High Court shall make such order underF571 Article 11 of the Order of 1998 as it thinks just and reasonable having regard to the interests of the creditors, to the bankrupt's financial resources, to the needs of the children and to all the circumstances of the case other than the needs of the bankrupt.

(6)

Where such an application is made after the expiration of one year from the first vesting (under Chapter IV) of the bankrupt's estate in a trustee, the High Court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt's creditors outweigh all other considerations.

Payments in respect of premises occupied by bankrupt311.

Where any premises comprised in a bankrupt's estate are occupied by him (whether by virtue of Article 310 or otherwise) on condition that he makes payments towards satisfying any liability arising under a mortgage of the premises or otherwise towards the outgoings of the premises, the bankrupt does not, by virtue of those payments, acquire any interest in the premises.

Adjustment of prior transactions, etc.

Transactions at an undervalue312.

(1)

Subject to the following provisions of this Article and to Articles 314 and 315, where an individual is adjudged bankrupt and he has at a relevant time (defined in Article 314) entered into a transaction with any person at an undervalue, the trustee of the bankrupt's estate may apply to the High Court for an order under this Article.

(2)

The High Court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if that individual had not entered into that transaction.

(3)

For the purposes of this Article and Articles 314 and 315, an individual enters into a transaction with a person at an undervalue if—

(a)

he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration.

(b)

he enters into a transaction with that person in consideration of marriageF572 or the formation of a civil partnership, or

(c)

he enters into a transaction with that person for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by the individual.

Preferences313.

(1)

Subject to the following provisions of this Article and Articles 314 and 315, where an individual is adjudged bankrupt and he has at a relevant time (defined in Article 314) given a preference to any person, the trustee of the bankrupt's estate may apply to the High Court for an order under this Article.

(2)

The High Court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that preference.

(3)

For the purposes of this Article and Articles 314 and 315, an individual gives a preference to a person if—

(a)

that person is one of the individual's creditors or a surety or guarantor for any of his debts or other liabilities, and

(b)

the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which, in the event of the individual's bankruptcy, will be better than the position he would have been in if that thing had not been done.

(4)

The High Court shall not make an order under this Article in respect of a preference given to any person unless the individual who gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in paragraph (3)(b).

(5)

An individual who has given a preference to a person who, at the time the preference was given, was an associate of his (otherwise than by reason only of being his employee) is presumed, unless the contrary is shown, to have been influenced in deciding to give it by such a desire as is mentioned in paragraph (4).

(6)

The fact that something has been done in pursuance of the order of a court does not, without more, prevent the doing or suffering of that thing from constituting the giving of a preference.

“Relevant time” under Articles 312, 313314.

(1)

Subject to the provisions of this Article, the time at which an individual enters into a transaction at an undervalue or gives a preference is a relevant time if the transaction is entered into or the preference given—

(a)

in the case of a transaction at an undervalue, at a time within the 5 years immediately preceding the day of the presentation of the bankruptcy petition on which the individual is adjudged bankrupt,

(b)

in the case of a preference which is not a transaction at an undervalue and is given to a person who is an associate of the individual (otherwise than by reason only of being his employee), at a time within the 2 years immediately preceding that day, and

(c)

in any other case of a preference which is not a transaction at an undervalue, at a time within the 6 months immediately preceding that day.

(2)

Where an individual enters into a transaction at an undervalue or gives a preference at a time mentioned in sub‐paragraph (a), (b) or (c) of paragraph (1) (not being, in the case of a transaction at an undervalue, a time less than 2 years before the expiration of the period of 5 years mentioned in sub‐paragraph (a)), that time is not a relevant time for the purposes of Articles 312 and 313 unless the individual—

(a)

is insolvent at that time, or

(b)

becomes insolvent in consequence of the transaction or preference;

but the requirements of this paragraph are presumed to be satisfied, unless the contrary is shown, in relation to any transaction at an undervalue which is entered into by an individual with a person who is an associate of his (otherwise than by reason only of being his employee).

(3)

For the purposes of paragraph (2), an individual is insolvent if—

(a)

he is unable to pay his debts as they fall due, or

(b)

the value of his assets is less than the amount of his liabilities, taking into account his contingent and prospective liabilities.

Orders under Articles 312, 313315.

(1)

Without prejudice to the generality of Article 312(2) or 313(2), an order under either of those Articles with respect to a transaction or preference entered into or given by an individual who is subsequently adjudged bankrupt may (subject as follows)—

(a)

require any property transferred as part of the transaction, or in connection with the giving of the preference, to be vested in the trustee of the bankrupt's estate as part of that estate;

(b)

require any property to be so vested if it represents in any person's hands the application either of the proceeds of sale of property so transferred or of money so transferred;

(c)

release or discharge (in whole or in part) any security given by the individual;

(d)

require any person to pay, in respect of benefits received by him from the individual, such sums to the trustee of his estate as the High Court may direct;

(e)

provide for any surety or guarantor whose obligations to any person were released or discharged (in whole or in part) under the transaction or by the giving of the preference to be under such new or revived obligations to that person as the Court thinks appropriate;

(f)

provide for security to be provided for the discharge of any obligation imposed by or arising under the order, for such an obligation to be charged on any property and for the security or charge to have the same priority as a security or charge released or discharged (in whole or in part) under the transaction or by the giving of the preference; and

(g)

provide for the extent to which any person whose property is vested by the order in the trustee of the bankrupt's estate, or on whom obligations are imposed by the order, is to be able to prove in the bankruptcy for debts or other liabilities which arose from, or were released or discharged (in whole or in part) under or by, the transaction or the giving of the preference.

(2)

An order under Article 312 or 313 may affect the property of, or impose any obligation on, any person whether or not he is the person with whom the individual in question entered into the transaction or, as the case may be, the person to whom the preference was given; but such an order—

(a)

shall not prejudice any interest in property which was acquired from a person other than that individual and was acquiredF573 in good faith and for value, or prejudice any interest deriving from such an interest, and

(b)

shall not require a person who received a benefit from the transaction or preferenceF573 in good faith and for value to pay a sum to the trustee of the bankrupt's estate, except where he was a party to the transaction or the payment is to be in respect of a preference given to that person at a time when he was a creditor of that individual.

F574(2A)

Where a person has acquired an interest in property from a person other than the individual in question, or has received a benefit from the transaction or preference, and at the time of that acquisition or receipt—

(a)

he had notice of the relevant surrounding circumstances and of the relevant proceedings, or

(b)

he was an associate of, or was connected with, either the individual in question or the person with whom that individual entered into the transaction or to whom that individual gave the preference,

then, unless the contrary is shown, it shall be presumed for the purposes of sub‐paragraph (a) or (as the case may be) sub‐paragraph (b) of paragraph (2) that the interest was acquired or the benefit was received otherwise than in good faith.

(3)

Any sums required to be paid to the trustee in acordance with an order under Article 312 or 313 shall be comprised in the bankrupt's estate.

F575(4)

For the purposes of paragraph (2A)(a), the relevant surrounding circumstances are (as the case may require)—

(a)

the fact that the individual in question entered into the transaction at an undervalue; or

(b)

the circumstances which amounted to the giving of the preference by the individual in question.

(5)

For the purposes of paragraph (2A)(a), a person has notice of the relevant proceedings if he has notice—

(a)

of the fact that the petition on which the individual in question is adjudged bankrupt has been presented; or

(b)

of the fact that the individual in question has been adjudged bankrupt.

(6)

Article 7 shall apply for the purposes of paragraph (2A)(b) as it applies for the purposes of F576Parts 1A to 7.

F577Recovery of excessive pension contributions315A. F578

(1)

Where an individual who is adjudged bankrupt—

(a)

has rights under an approved pension arrangement, or

(b)

has excluded rights under an unapproved pension arrangement,

the trustee of the bankrupt's estate may apply to the High Court for an order under this Article.

(2)

If the High Court is satisfied—

(a)

that the rights under the arrangement are to any extent, and whether directly or indirectly, the fruits of relevant contributions, and

(b)

that the making of any of the relevant contributions ( “the excessive contributions”) has unfairly prejudiced the individual's creditors,

the Court may make such order as it thinks fit for restoring the position to what it would have been had the excessive contributions not been made.

(3)

Paragraph (4) applies where the High Court is satisfied that the value of the rights under the arrangement is, as a result of rights of the individual under the arrangement or any other pension arrangement having at any time become subject to a debit under Article 26(1)(a) of the Welfare Reform Order (debits giving effect to pension-sharing), less than it would otherwise have been.

(4)

Where this paragraph applies—

(a)

any relevant contributions which were represented by the rights which became subject to the debit shall, for the purposes of paragraph (2), be taken to be contributions of which the rights under the arrangement are the fruits, and

(b)

where the relevant contributions represented by the rights under the arrangement (including those so represented by virtue of sub-paragraph (a)) are not all excessive contributions, relevant contributions which are represented by the rights under the arrangement otherwise than by virtue of sub-paragraph (a) shall be treated as excessive contributions before any which are so represented by virtue of that sub-paragraph.

(5)

In paragraphs (2) to (4) “relevant contributions” means contributions to the arrangement or any other pension arrangement—

(a)

which the individual has at any time made on his own behalf, or

(b)

which have at any time been made on his behalf.

(6)

The High Court shall, in determining whether it is satisfied under paragraph (2)(b), consider in particular—

(a)

whether any of the contributions were made for the purpose of putting assets beyond the reach of the individual's creditors or any of them, and

(b)

whether the total amount of any contributions—

(i)

made by or on behalf of the individual to pension arrangements, and

(ii)

represented (whether directly or indirectly) by rights under approved pension arrangements or excluded rights under unapproved pension arrangements,

is an amount which is excessive in view of the individual's circumstances when those contributions were made.

(7)

For the purposes of this Article and Articles 315B and 315C ( “the recovery provisions”), rights of an individual under an unapproved pension arrangement are excluded rights if they are rights which are excluded from his estate by virtue of regulations under Article 13 of the Welfare Reform Order.

(8)

In the recovery provisions—

  • “approved pension arrangement” has the same meaning as in Article 12 of the Welfare Reform Order,

  • “unapproved pension arrangement” has the same meaning as in Article 13 of that Order.

Orders under Article 315A315B. F579

(1)

Without prejudice to the generality of Article 315A(2), an order under Article 315A may include provision—

(a)

requiring the person responsible for the arrangement to pay an amount to the individual's trustee in bankruptcy,

(b)

adjusting the liabilities of the arrangement in respect of the individual,

(c)

adjusting any liabilities of the arrangement in respect of any other person that derive, directly or indirectly, from rights of the individual under the arrangement,

(d)

for the recovery by the person responsible for the arrangement (whether by deduction from any amount which that person is ordered to pay or otherwise) of costs incurred by that person in complying in the bankrupt's case with any requirement under Article 315C(1) or in giving effect to the order.

(2)

In paragraph (1), references to adjusting the liabilities of the arrangement in respect of a person include (in particular) reducing the amount of any benefit or future benefit to which that person is entitled under the arrangement.

(3)

In paragraph (1)(c), the reference to liabilities of the arrangement does not include liabilities in respect of a person which result from giving effect to an order or provision falling within Article 25(1) of the Welfare Reform Order (pension sharing orders and agreements).

(4)

The maximum amount which the person responsible for an arrangement may be required to pay by an order under Article 315A is the lesser of—

(a)

the amount of the excessive contributions, and

(b)

the value of the individual's rights under the arrangement (if the arrangement is an approved pension arrangement) or of his excluded rights under the arrangement (if the arrangement is an unapproved pension arrangement).

(5)

An order under Article 315A which requires the person responsible for an arrangement to pay an amount ( “the restoration amount”) to the individual's trustee in bankruptcy must provide for the liabilities of the arrangement to be correspondingly reduced.

(6)

For the purposes of paragraph (5), liabilities are correspondingly reduced if the difference between—

(a)

the amount of the liabilities immediately before the reduction, and

(b)

the amount of the liabilities immediately after the reduction,

is equal to the restoration amount.

(7)

An order under Article 315A in respect of an arrangement—

(a)

shall be binding on the person responsible for the arrangement, and

(b)

overrides provisions of the arrangement to the extent that they conflict with the provisions of the order.

Annotations:
Amendments (Textual)

F579functions transf. SR 1999/481

Orders under Article 315A: supplementaryF580315C.

(1)

The person responsible for—

(a)

an approved pension arrangement under which a bankrupt has rights,

(b)

an unapproved pension arrangement under which a bankrupt has excluded rights, or

(c)

a pension arrangement under which a bankrupt has at any time had rights,

shall, on the bankrupt's trustee in bankruptcy making a written request, provide the trustee with such information about the arrangement and rights as the trustee may reasonably require for, or in connection with, the making of applications under Article 315A.

(2)

Nothing in—

(a)

any provision of section 155 of the Pension Schemes (Northern Ireland) Act 1993 or Article 89 of thePensions (Northern Ireland) Order 1995 (which prevent assignment and the making of orders that restrain a person from receiving anything which he is prevented from assigning),

(b)

any statutory provision (whether passed or made before or after the making of the Welfare Reform Order) corresponding to any of the provisions mentioned in sub-paragraph (a), or

(c)

any provision of the arrangement in question corresponding to any of those provisions,

applies to the High Court exercising its powers under Article 315A.

(3)

Where any sum is required by an order under Article 315A to be paid to the trustee in bankruptcy, that sum shall be comprised in the bankrupt's estate.

(4)

Regulations may, for the purposes of the recovery provisions, make provision about the calculation and verification of—

(a)

any such value as is mentioned in Article 315B(4)(b);

(b)

any such amounts as are mentioned in Article 315B(6)(a) and (b).

(5)

The power conferred by paragraph (4) includes power to provide for calculation or verification—

(a)

in such manner as may, in the particular case, be approved by a prescribed person; or

F581(b)

in accordance with guidance from time to time prepared by a prescribed person.

(6)

References in the recovery provisions to the person responsible for a pension arrangement are to—

(a)

the trustees, managers or provider of the arrangement, or

(b)

the person having functions in relation to the arrangement corresponding to those of a trustee, manager or provider.

(7)

In this Article and Articles 315A and 315B—

  • “the Department” means the Department of Health and Social Services;

  • “prescribed” means prescribed by regulations;

  • “the recovery provisions” means this Article and Articles 315A and 315B;

  • “regulations” means regulations made by the Department;

  • “the Welfare Reform Order” means the Welfare Reform and Pensions (Northern Ireland) Order 1999.

(8)

Regulations under the recovery provisions may contain such incidental, supplemental and transitional provisions as appear to the Department necessary or expedient.

(9)

Regulations under the recovery provisions shall be subject to negative resolution.

F582Recovery of excessive contributions in pension-sharing cases315D. F583

(1)

For the purposes of Articles 312, 314 and 315, a pension-sharing transaction shall be taken—

(a)

to be a transaction, entered into by the transferor with the transferee, by which the appropriate amount is transferred by the transferor to the transferee; and

(b)

to be capable of being a transaction entered into at an undervalue only so far as it is a transfer of so much of the appropriate amount as is recoverable.

(2)

For the purposes of Articles 313 to 315, a pension-sharing transaction shall be taken—

(a)

to be something (namely a transfer of the appropriate amount to the transferee) done by the transferor; and

(b)

to be capable of being a preference given to the transferee only so far as it is a transfer of so much of the appropriate amount as is recoverable.

(3)

If on an application under Article 312 or 313 any question arises as to whether, or the extent to which, the appropriate amount in the case of a pension-sharing transaction is recoverable, the question shall be determined in accordance with paragraphs (4) to (8).

(4)

The High Court shall first determine the extent (if any) to which the transferor's rights under the shared arrangement at the time of the transaction appear to have been (whether directly or indirectly) the fruits of contributions ( “personal contributions”)—

(a)

which the transferor has at any time made on his own behalf, or

(b)

which have at any time been made on the transferor's behalf,

to the shared arrangement or any other pension arrangement.

(5)

Where it appears that those rights were to any extent the fruits of personal contributions, the High Court shall then determine the extent (if any) to which those rights appear to have been the fruits of personal contributions whose making has unfairly prejudiced the transferor's creditors ( “the unfair contributions”).

(6)

If it appears to the High Court that the extent to which those rights were the fruits of the unfair contributions is such that the transfer of the appropriate amount could have been made out of rights under the shared arrangement which were not the fruits of the unfair contributions, then the appropriate amount is not recoverable.

(7)

If it appears to the High Court that the transfer could not have been wholly so made, then the appropriate amount is recoverable to the extent to which it appears to the Court that the transfer could not have been so made.

(8)

In making the determination mentioned in paragraph (5) the High Court shall consider in particular—

(a)

whether any of the personal contributions were made for the purpose of putting assets beyond the reach of the transferor's creditors or any of them, and

(b)

whether the total amount of any personal contributions represented, at the time the pension-sharing transaction was made, by rights under pension arrangements is an amount which is excessive in view of the transferor's circumstances when those contributions were made.

(9)

In this Article and Articles 315E and 315F—

  • “appropriate amount”, in relation to a pension-sharing transaction, means the appropriate amount in relation to that transaction for the purposes of Article 26(1) of the Welfare Reform Order (creation of pension credits and debits);

  • “pension-sharing transaction” means an order or provision falling within Article 25(1) of the Welfare Reform Order (orders and agreements which activate pension-sharing);

  • “shared arrangement”, in relation to a pension-sharing transaction, means the pension arrangement to which the transaction relates;

  • “transferee”, in relation to a pension-sharing transaction, means the person for whose benefit the transaction is made;

  • “transferor”, in relation to a pension-sharing transaction, means the person to whose rights the transaction relates;

  • “the Welfare Reform Order” means the Welfare Reform and Pensions (Northern Ireland) Order 1999.

Orders under Article 312 or 313 in respect of pension-sharing transactions315E. F584

(1)

This Article and Article 315F apply if the High Court is making an order under Article 312 or 313 in a case where—

(a)

the transaction or preference is, or is any part of, a pension-sharing transaction, and

(b)

the transferee has rights under a pension arrangement ( “the destination arrangement”, which maybe the shared arrangement or any other pension arrangement) that are derived, directly or indirectly, from the pension-sharing transaction.

(2)

Without prejudice to the generality of Article 312(2) or 313(2), or of Article 315, the order may include provision—

(a)

requiring the person responsible for the destination arrangement to pay an amount to the transferor's trustee in bankruptcy,

(b)

adjusting the liabilities of the destination arrangement in respect of the transferee,

(c)

adjusting any liabilities of the destination arrangement in respect of any other person that derive, directly or indirectly, from rights of the transferee under the destination arrangement,

(d)

for the recovery by the person responsible for the destination arrangement (whether by deduction from any amount which that person is ordered to pay or otherwise) of costs incurred by that person in complying in the transferor's case with any requirement under Article 315F(1) or in giving effect to the order,

(e)

for the recovery, from the transferor's trustee in bankruptcy, by the person responsible for a pension arrangement, of costs incurred by that person in complying in the transferor's case with any requirement under Article 315F(2) or (3).

(3)

In paragraph (2), references to adjusting the liabilities of the destination arrangement in respect of a person include (in particular) reducing the amount of any benefit or future benefit to which that person is entitled under the arrangement.

(4)

The maximum amount which the person responsible for the destination arrangement may be required to pay by the order is the smallest of—

(a)

so much of the appropriate amount as, in accordance with Article 315D is recoverable,

(b)

so much (if any) of the amount of the unfair contributions (within the meaning given by Article 315D(5)) as is not recoverable by way of an order under Article 315A containing provision such as is mentioned in Article 315B(1)(a), and

(c)

the value of the transferee's rights under the destination arrangement so far as they are derived, directly or indirectly, from the pension-sharing transaction.

(5)

If the order requires the person responsible for the destination arrangement to pay an amount ( “the restoration amount”) to the transferor's trustee in bankruptcy it must provide for the liabilities of the arrangement to be correspondingly reduced.

(6)

For the purposes of paragraph (5), liabilities are correspondingly reduced if the difference between—

(a)

the amount of the liabilities immediately before the reduction, and

(b)

the amount of the liabilities immediately after the reduction,

is equal to the restoration amount.

(7)

The order—

(a)

shall be binding on the person responsible for the destination arrangement, and

(b)

overrides provisions of the destination arrangement to the extent that they conflict with the provisions of the order.

Annotations:
Amendments (Textual)

F584functions transf. SR 1999/481

Orders under Article 312 or 313 in pension-sharing cases: supplementaryF585315F.

(1)

On the transferor's trustee in bankruptcy making a written request to the person responsible for the destination arrangement, that person shall provide the trustee with such information about—

(a)

the arrangement,

(b)

the transferee's rights under it, and

(c)

where the destination arrangement is the shared arrangement, the transferor's rights under it,

as the trustee may reasonably require for, or in connection with, the making of applications under Articles 312 and 313.

(2)

Where the shared arrangement is not the destination arrangement, the person responsible for the shared arrangement shall, on the transferor's trustee in bankruptcy making a written request to that person, provide the trustee with such information about—

(a)

the arrangement, and

(b)

the transferor's rights under it,

as the trustee may reasonably require for, or in connection with, the making of applications under Articles 312 and 313.

(3)

On the transferor's trustee in bankruptcy making a written request to the person responsible for any intermediate arrangement, that person shall provide the trustee with such information about—

(a)

the arrangement, and

(b)

the transferee's rights under it,

as the trustee may reasonably require for, or in connection with, the making of applications under Articles 312 and 313.

(4)

In paragraph (3) “intermediate arrangement” means a pension arrangement, other than the shared arrangement or the destination arrangement, in relation to which the following conditions are fulfilled—

(a)

there was a time when the transferee had rights under the arrangement that were derived (directly or indirectly) from the pension-sharing transaction, and

(b)

the transferee's rights under the destination arrangement (so far as derived from the pension-sharing transaction) are to any extent derived (directly or indirectly) from the rights mentioned in sub-paragraph (a).

(5)

Nothing in—

(a)

any provision of section 155 of thePension Schemes (Northern Ireland) Act 1993 or Article 89 of thePensions (Northern Ireland) Order 1995 (which prevent assignment and the making of orders which restrain a person from receiving anything which he is prevented from assigning),

(b)

any statutory provision (whether passed or made before or after the making of the Welfare Reform Order) corresponding to any of the provisions mentioned in sub-paragraph (a), or

(c)

any provision of the destination arrangement corresponding to any of those provisions,

applies to the High Court exercising its powers under Article 312 or 313.

(6)

Regulations may, for the purposes of Articles 312 to 315, Articles 315D and 315E and this Article, make provision about the calculation and verification of—

(a)

any such value as is mentioned in Article 315E(4)(c);

(b)

any such amounts as are mentioned in Article 315E(6)(a) and (b).

(7)

The power conferred by paragraph (6) includes power to provide for calculation or verification—

(a)

in such manner as may, in the particular case, be approved by a prescribed person; or

F586(b)

in accordance with guidance from time to time prepared by a prescribed person.

(8)

In Article 315E and this Article, references to the person responsible for a pension arrangement are to—

(a)

the trustees, managers or provider of the arrangement, or

(b)

the person having functions in relation to the arrangement corresponding to those of a trustee, manager or provider.

(9)

In this Article—

  • “the Department” means the Department of Health and Social Services;

  • “prescribed” means prescribed by regulations;

  • “regulations” means regulations made by the Department.

(10)

Regulations under this Article may contain such incidental, supplemental and transitional provisions as appear to the Department necessary or expedient.

(11)

Regulations under this Article shall be subject to negative resolution.

Extortionate credit transactions316.

(1)

This Article applies where a person is adjudged bankrupt who is or has been a party to a transaction for, or involving, the provision to him of credit.

(2)

The High Court may, on the application of the trustee of the bankrupt's estate, make an order with respect to the transaction if the transaction is or was extortionate and was not entered into more than the 3 years immediately preceding the commencement of the bankruptcy.

(3)

For the purposes of this Article a transaction is extortionate if, having regard to the risk accepted by the person providing the credit—

(a)

the terms of it are or were such as to require grossly exorbitant payments to be made (whether unconditionally or in certain contingencies) in respect of the provision of the credit, or

(b)

it otherwise grossly contravened ordinary principles of fair dealing;

and it shall be presumed, unless the contrary is proved, that a transaction with respect to which an application is made under this Article is or, as the case may be, was extortionate.

(4)

An order under this Article with respect to any transaction may contain such one or more of the following as the High Court thinks fit, that is to say—

(a)

provision setting aside the whole or part of any obligation created by the transaction;

(b)

provision otherwise varying the terms of the transaction or varying the terms on which any security for the purposes of the transaction is held;

(c)

provision requiring any person who is or was party to the transaction to pay to the trustee any sums paid to that person, by virtue of the transaction, by the bankrupt;

(d)

provision requiring any person to surrender to the trustee any property held by him as security for the purposes of the transaction;

(e)

provision directing accounts to be taken between any persons.

(5)

Any sums or property required to be paid or surrendered to the trustee in accordance with an order under this Article shall be comprised in the bankrupt's estate.

(6)

F587. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)

The powers conferred by this Article are exercisable in relation to any transaction concurrently with any powers exercisable under this Order in relation to that transaction as a transaction at an undervalue.

Avoidance of general assignment of book debts317.

(1)

This Article applies where a person engaged in any business makes a general assignment to another person of his existing or future book debts, or any class of them, and is subsequently adjudged bankrupt.

(2)

The assignment is void against the trustee of the bankrupt's estate as regards book debts which were not paid before the presentation of the bankruptcy petition, unless the assignment has been registered under the Bills of Sale (Ireland) Acts 1879F588 and 1883F589.

(3)

For the purposes of paragraphs (1) and (2)—

(a)

“assignment” includes an assignment by way of security or charge on book debts, and

(b)

“general assignment” does not include—

(i)

an assignment of book debts due at the date of the assignment from specified debtors or of debts becoming due under specified contracts, or

(ii)

an assignment of book debts included either in a transfer of a business made in good faith and for value or in an assignment of assets for the benefit of creditors generally.

(4)

For the purposes of registration under the Acts of 1879 and 1883 an assignment of book debts is to be treated as if it were a bill of sale given otherwise than by way of security for the payment of a sum of money; and the provisions of those Acts with respect to the registration of bills of sale apply accordingly with such necessary modifications as may be made by rules under those Acts.

Contracts to which bankrupt is a party318.

(1)

This Article applies where a contract has been made with a person who is subsequently adjudged bankrupt.

(2)

The High Court may, on the application of any other party to the contract, make an order discharging obligations under the contract on such terms as to payment by the applicant or the bankrupt of damages for non‐performance or otherwise as appear to the Court to be equitable.

(3)

Any damages payable by the bankrupt by virtue of an order of the High Court under this Article are provable as a bankruptcy debt.

(4)

Where an undischarged bankrupt is a contractor in respect of any contract jointly with any person, that person may sue or be sued in respect of the contract without the joinder of the bankrupt.

Apprenticeships, etc.319.

(1)

This Article applies where—

(a)

a bankruptcy order is made in respect of an individual to whom another individual was an apprentice or articled clerk at the time when the petition on which the order was made was presented, and

(b)

the bankrupt or the apprentice or clerk gives notice to the trustee terminating the apprenticeship or articles.

(2)

Subject to paragraph (6), the indenture of apprenticeship or, as the case may be, the articles of agreement shall be discharged with effect from the commencement of the bankruptcy.

(3)

If any money has been paid by or on behalf of the apprentice or clerk to the bankrupt as a fee, the trustee may, on an application made by or on behalf of the apprentice or clerk, pay such sum to the apprentice or clerk as the trustee thinks reasonable, having regard to—

(a)

the amount of the fee,

(b)

the proportion of the period in respect of which the fee was paid that has been served by the apprentice or clerk before the commencement of the bankruptcy, and

(c)

the other circumstances of the case.

(4)

The power of the trustee to make a payment under paragraph (3) has priority over his obligation to distribute the bankrupt's estate.

(5)

Instead of making a payment under paragraph (3), the trustee may, if it appears to him expedient to do so on an application made by or on behalf of the apprentice or clerk, transfer the indenture or articles to a person other than the bankrupt.

(6)

Where a transfer is made under paragraph (5), paragraph (2) has effect only as between the apprentice or clerk and the bankrupt.

Unenforceability of liens on books, etc.320.

(1)

Subject to paragraph (2), a lien or other right to retain possession of any of the books, papers or other records of a bankrupt is unenforceable to the extent that its enforcement would denypossession of any books, papers or other records to the official receiver or the trustee of the bankrupt's estate.

(2)

Paragraph (1) does not apply to a lien on documents which give a title to property and are held as such.

F590Arbitration agreements to which bankrupt is party.320A.

(1)

This Article applies where a bankrupt had become party to a contract containing an arbitration agreement before the commencement of his bankruptcy.

(2)

If the trustee in bankruptcy adopts the contract, the arbitration agreement is enforceable by or against the trustee in relation to matters arising from or connected with the contract.

(3)

If the trustee in bankruptcy does not adopt the contract and a matter to which the arbitration agreement applies requires to be determined in connection with or for the purposes of the bankruptcy proceedings—

(a)

the trustee with the consent of the creditors' committee, or

(b)

any other party to the agreement,

may apply to the court which may, if it thinks fit in all the circumstances of the case, order that the matter be referred to arbitration in accordance with the arbitration agreement.

(4)

In this Article—

  • “arbitration agreement” has the same meaning as in Part I of the Arbitration Act 1996; and

  • “the court” means the court which has jurisdiction in the bankruptcy proceedings.

CHAPTER VIBANKRUPTCY OFFENCES

Preliminary

Scheme of this Chapter321.

(1)

Subject to Article 331(3), this Chapter applies where the High Court has made a bankruptcy order on a bankruptcy petition.

(2)

This Chapter applies whether or not the bankruptcy order is annulled under Article 256, but proceedings for an offence under this Chapter shall not be instituted after the annulment.

(3)

Without prejudice to his liability in respect of a subsequent bankruptcy, the bankrupt is not guilty of an offence under this Chapter in respect of anything done after his discharge; but nothing in Parts VIII to X prevents the institution of proceedings against a discharged bankrupt for an offence committed before his discharge.

F591(3A)

Paragraph (3) is without prejudice to any provision of this Chapter which applies to a person in respect of whom a bankruptcy restrictions order is in force.

(4)

It is not a defence in proceedings for an offence under this Chapter that anything relied on, in whole or in part, as constituting that offence was done outside Northern Ireland.

(5)

Proceedings for an offence under this Chapter or under the rules shall not be instituted except by the Department or by or with the consent of the Director of Public Prosecutions for Northern Ireland.

Definitions for the purposes of this Chapter322.

In this Chapter—

(a)

references to property comprised in the bankrupt's estate or to property possession of which is required to be delivered up to the official receiver or the trustee of the bankrupt's estate include any property which would be such property if a notice in respect of it were given under Article 280 (after‐acquired property) or 281 (personal property and effects of bankrupt having more than replacement value);

(b)

“the initial period” means the period between the presentation of the bankruptcy petition and the commencement of the bankruptcy; and

(c)

a reference to a number of months or years immediately preceding petition is to that period ending with the presentation of the bankruptcy petition.

Defence of innocent intention323.

Where in the case of an offence under any provision of this Chapter it is stated that this Article applies, it shall be a defence for the person charged to prove that, at the time of the conduct constituting the offence, he had no intent to defraud or to conceal the state of his affairs.

Wrongdoing by the bankrupt before and after bankruptcy

Non‐disclosure324.

(1)

The bankrupt shall be guilty of an offence if—

(a)

he does not to the best of his knowledge and belief disclose all the property comprised in his estate to the official receiver or the trustee, or

(b)

he does not inform the official receiver or the trustee of any disposal of any property which but for the disposal would be so comprised, stating how, when, to whom and for what consideration the property was disposed of.

(2)

Paragraph (1)(b) does not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family.

(3)

Article 323 applies to an offence under this Article.

Concealment of property325.

(1)

The bankrupt shall be guilty of an offence if—

(a)

he does not deliver up possession to the official receiver or trustee, or as the official receiver or trustee may direct, of such part of the property comprised in his estate as is in his possession or under his control and possession of which he is required by law so to deliver up,

(b)

he conceals any debt due to or from him or conceals any property the value of which is not less than the amount specified by order under Article 362(1)(b) and possession of which he is required to deliver up to the official receiver or trustee, or

(c)

in the 12 months immediately preceding petition, or in the initial period, he did anything which would have been an offence under sub‐paragraph (b) if the bankruptcy order had been made immediately before he did it.

(2)

Article 323 applies to an offence under paragraph (1).

(3)

The bankrupt shall be guilty of an offence if he removes, or in the initial period removed, any property the value of which was not less than the amount specified by order under Article 362(1)(b) and possession of which he has or would have been required to deliver up to the official receiver or the trustee.

(4)

Article 323 applies to an offence under paragraph (3).

(5)

The bankrupt shall be guilty of an offence if he without reasonable excuse fails, on being required to do so by the official receiver F592, the trustee or the High Court—

(a)

to account for the loss of any substantial part of his property incurred in the 12 months immediately preceding petition or in the initial period, or

(b)

to give a satisfactory explanation of the manner in which such a loss was incurred.

Concealment of books and papers; falsification326.

(1)

The bankrupt shall be guilty of an offence if he does not deliver up possession to the official receiver or the trustee, or as the official receiver or trustee may direct, of all books, papers and other records of which he has possession or control and which relate to his estate or his affairs.

(2)

The bankrupt shall be guilty of an offence if—

(a)

he prevents, or in the initial period prevented, the production of any books, papers or records relating to his estate or affairs;

(b)

he conceals, destroys, mutilates or falsifies, or causes or permits the concealment, destruction, mutilation or falsification of, any books, papers or other records relating to his estate or affairs;

(c)

he makes, or causes or permits the making of, any false entries in any book, document or record relating to his estate or affairs; or

(d)

in the 12 months immediately preceding petition, or in the initial period, he did anything which would have been an offence under sub‐paragraph (b) or (c) if the bankruptcy order had been made before he did it.

(3)

The bankrupt shall be guilty of an offence if—

(a)

he disposes of, or alters or makes any omission in, or causes or permits the disposal, altering or making of any omission in, any book, document or record relating to his estate or affairs, or

(b)

in the 12 months immediately preceding petition, or in the initial period, he did anything which would have been an offence under sub‐paragraph (a) if the bankruptcy order had been made before he did it.

(4)

Article 323 applies to an offence under this Article.

F593(5)

In their application to a trading record paragraphs (2)(d) and (3)(b) shall have effect as if the reference to 12 months were a reference to two years.

(6)

In paragraph (5) “trading record” means a book, document or record which shows or explains the transactions or financial position of a person's business, including—

(a)

a periodic record of cash paid and received,

(b)

a statement of periodic stock-taking, and

(c)

except in the case of goods sold by way of retail trade, a record of goods sold and purchased which identifies the buyer and seller or enables them to be identified.

False statements327.

(1)

The bankrupt shall be guilty of an offence if he makes or has made any material omission in any statement made under any provision in Parts VIII to X and relating to his affairs.

(2)

Article 323 applies to an offence under paragraph (1).

(3)

The bankrupt shall be guilty of an offence if—

(a)

knowing or believing that a false debt has been proved by any person under the bankruptcy, he fails to inform the trustee as soon as practicable; or

(b)

he attempts to account for any part of his property by fictitious losses or expenses; or

(c)

at any meeting of his creditors in the 12 months immediately preceding petition or (whether or not at such a meeting) at any time in the initial period, he did anything which would have been an offence under sub‐paragraph (b) if the bankruptcy order had been made before he did it; or

(d)

he is, or at any time has been, guilty of any false representation or other fraud for the purpose of obtaining the consent of his creditors, or any of them, to an agreement with reference to his affairs or to his bankruptcy.

Fraudulent disposal of property328.

(1)

The bankrupt shall by guilty of an offence if he makes or causes to be made, or has in the 5 years immediately preceding the commencement of the bankruptcy made or caused to be made, any gift or transfer of, or any charge on, his property.

(2)

The reference to making a transfer of or charge on any property includes causing or conniving at the enforcement of a judgment, or the levying of any execution, against that property.

(3)

The bankrupt shall be guilty of an offence if he conceals or removes, or has at any time before the commencement of the bankruptcy concealed or removed, any part of his property after, or within the 2 months immediately preceding, the date on which a judgment or order for the payment of money has been obtained against him, being a judgment or order which was not satisfied before the commencement of the bankruptcy.

(4)

Article 323 applies to an offence under this Article.

Absconding329.

(1)

The bankrupt shall be guilty of an offence if—

(a)

he leaves, or attempts or makes preparations to leave, Northern Ireland with any property the value of which is not less than the amount specified by order under Article 362(1)(b) and possession of which he is required to deliver up to the official receiver or the trustee, or

(b)

in the 6 months immediately preceding petition, or in the initial period, he did anything which would have been an offence under sub‐paragraph (a) if the bankruptcy order had been made immediately before he did it.

(2)

Article 323 applies to an offence under this Article.

Fraudulent dealing with property obtained on credit330.

(1)

The bankrupt shall be guilty of an offence if, in the 12 months immediately preceding petition, or in the initial period, he disposed of any property which he had obtained on credit and, at the time he disposed of it, had not paid for.

(2)

Article 323 applies to an offence under paragraph (1).

(3)

A person shall be guilty of an offence if, in the 12 months immediately preceding petition or in the initial period, he acquired or received property from the bankrupt knowing or believing—

(a)

that the bankrupt owed money in respect of the property, and

(b)

that the bankrupt did not intend, or was unlikely to be able, to pay the money he so owed.

(4)

In the case of an offence under paragraph (1) or (3) it shall be a defence for the person charged to prove that the disposal, acquisition or receipt of the property was in the ordinary course of a business carried on by the bankrupt at the time of the disposal, acquisition or receipt.

(5)

In determining for the purposes of this Article whether any property is disposed of, acquired or received in the ordinary course of a business carried on by the bankrupt, regard may be had, in particular, to the price paid for the property.

(6)

In this Article references to disposing of property include pawning or pledging it; and references to acquiring or receiving property shall be read accordingly.

Obtaining credit; engaging in business331.

(1)

The bankrupt shall be guilty of an offence if—

(a)

either alone or jointly with any other person, he obtains credit to the extent of the amount specified by order under Article 362(1)(b) or more without giving the person from whom he obtains it the relevant information about his status; or

(b)

he engages (whether directly or indirectly) in any business under a name other than that in which he was adjudged bankrupt without disclosing to all persons with whom he enters into any business transaction the name in which he was so adjudged.

(2)

The reference to the bankrupt obtaining credit includes the following cases—

(a)

where goods are bailed to him under a hire‐purchase agreement, or agreed to be sold to him under a conditional sale agreement, and

(b)

where he is paid in advance (whether in money or otherwise) for the supply of goods or services.

(3)

A person whose estate has been sequestrated in Scotland, or who has been adjudged bankrupt in England and Wales, shall be guilty of an offence if, before his discharge, he does anything in Northern Ireland which would be an offence under paragraph (1) if he were an undischarged bankrupt and the sequestration of his estate or the adjudication in England and Wales were an adjudication under this Part.

(4)

For the purposes of paragraph (1)(a), the relevant information about the status of the person in question is the information that he is an undischarged bankrupt or, as the case may be, that his estate has been sequestrated in Scotland and that he has not been discharged.

F594(5)

This Article applies to the bankrupt after discharge while a bankruptcy restrictions order is in force in respect of him.

(6)

For the purposes of paragraph (1)(a) as it applies by virtue of paragraph (5), the relevant information about the status of the person in question is the information that a bankruptcy restrictions order is in force in respect of him.

Failure to keep proper accounts of business332.

F595. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gambling333.

F596. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER VIIPOWERS OF HIGH COURT IN BANKRUPTCY

General control of High Court334.

(1)

Every bankruptcy is under the general control of the High Court and, subject to the provisions in Parts VIII to X, theCourt has full power to decide all questions of priorities and all other questions, whether of law or fact, arising in any bankruptcy.

(2)

Without prejudice to any other provision in Parts VIII to X, an undischarged bankrupt or a discharged bankrupt whose estate is still being administered under Chapter IV shall do all such things as he may be directed to do by the High Court for the purposes of his bankruptcy or, as the case may be, the administration of that estate.

(3)

The official receiver or the trustee of a bankrupt's estate may at any time apply to the High Court for a direction under paragraph (2).

(4)

If any person without reasonable excuse fails to comply with any obligation imposed on him by paragraph (2), he is guilty of a contempt of court and liable to be punished accordingly (in addition to any other punishment to which he may be subject).

Power of arrest335.

(1)

In the cases specified in paragraph (2) the High Court may cause a warrant to be issued to a constable—

(a)

for the arrest of a debtor to whom a bankruptcy petition relates or of an undischarged bankrupt, or of a dischargedbankrupt whose estate is still being administered under Chapter IV, and

(b)

for the seizure of any books, papers, records, money or goods in the possession of a person arrested under the warrant,

and may authorise a person arrested under such a warrant to be kept in custody, and anything seized under such a warrant to be held, in accordance with the rules, until such time as the Court may order.

(2)

The powers conferred by paragraph (1) are exercisable in relation to a debtor or undischarged or discharged bankrupt if, at any time after the presentation of the bankruptcy petition relating to him or the making of the bankruptcy order against him, it appears to the High Court—

(a)

that there are reasonable grounds for believing that he has absconded, or is about to abscond, with a view to avoiding or delaying the payment of any of his debts or his appearance to a bankruptcy petition or to avoiding, delaying or disrupting any proceedings in bankruptcy against him or any examination of his affairs, or

(b)

that he is about to remove his goods with a view to preventing or delaying possession being taken of them by the official receiver or the trustee of his estate, or

(c)

that there are reasonable grounds for believing that he has concealed or destroyed, or is about to conceal or destroy, any of his goods or any books, papers or records which might be of use to his creditors in the course of his bankruptcy or in connection with the administration of his estate, or

(d)

that he has, without the leave of the official receiver or the trustee of his estate, removed any goods in his possession which exceed in value such amount specified in an order under Article 362(1)(b) for the purposes of this sub‐paragraph, or

(e)

that he has failed, without reasonable excuse, to attend any examination ordered by the Court.

Seizure of bankrupt's property336.

(1)

At any time after a bankruptcy order has been made, the High Court may, on the application of the official receiver or the trustee of the bankrupt's estate, issue a warrant authorising the person to whom it is directed to seize any property comprised in the bankrupt's estate which is, or any books, papers or records relating to the bankrupt's estate or affairs which are, in the possession or under the control of the bankrupt or any other person who is required to deliver the property, books, papers or records to the official receiver or trustee.

(2)

Any person executing a warrant under this Article may, for the purpose of seizing any property comprised in the bankrupt's estate or any books, papers or records relating to the bankrupt's estate or affairs, break open any premises where the bankrupt or anything that may be seized under the warrant is or is believed to be and any receptacle of the bankrupt which contains or is believed to contain anything that may be so seized.

(3)

If, after a bankruptcy order has been made, the High Court is satisfied that any property comprised in the bankrupt's estate is, or any books, papers or records relating to the bankrupt's estate or affairs are, concealed in any premises not belonging to him, it may issue a warrant authorising any constable to search those premises for the property, books, papers or records.

(4)

A warrant under paragraph (3) shall not be executed except in the prescribed manner and in accordance with its terms.

Inquiry into bankrupt's dealings and property337.

(1)

At any time after a bankruptcy order has been made the High Court may, on the application of the official receiver or the trustee of the bankrupt's estate, summon to appear before it—

(a)

the bankrupt or the bankrupt's spouse or former spouseF597 or civil partner or former civil partner,

(b)

any person known or believed to have any property comprised in the bankrupt's estate in his possession or to be indebted to the bankrupt,

(c)

any person appearing to the Court to be able to give informtion concerning the bankrupt or the bankrupt's dealings, affairs or property.

(2)

The High Court may require any person such as is mentioned in paragraph (1)(b) or (c) to submit an affidavit to the Court containing an account of his dealings with the bankrupt or to produce any documents in his possession or under his control relating to the bankrupt or the bankrupt's dealings, affairs or property.

(3)

Without prejudice to Article 335, paragraphs (4) and (5) apply in a case where—

(a)

a person without reasonable excuse fails to appear before the High Court when he is summoned to do so under this Article, or

(b)

there are reasonable grounds for believing that a person has absconded, or is about to abscond, with a view to avoiding his appearance before the Court under this Article.

(4)

The High Court may, for the purpose of bringing that person and anything in his possession before the Court, cause a warrant to be issued to a constable—

(a)

for the arrest of that person, and

(b)

for the seizure of any books, papers, records, money or goods in that person's possession.

(5)

The High Court may authorise a person arrested under such a warrant to be kept in custody, and anything seized under such a warrant to be held, in accordance with the rules, until that person is brought before the Court under the warrant or until such other time as the Court may order.

High Court's enforcement powers under Article 337338.

(1)

If it appears to the High Court, on consideration of any evidence obtained under Article 337 or this Article, that any person has in his possession any property comprised in the bankrupt's estate, the Court may, on the application of the official receiver or the trustee of the bankrupt's estate, order that person to deliver the whole or any part of the property to the official receiver or the trustee at such time, in such manner and on such terms as the Court thinks fit.

(2)

If it appears to the High Court, on consideration of any evidence obtained under Article 337 or this Article, that any person is indebted to the bankrupt, the Court may, on the application of the official receiver or the trustee of the bankrupt's estate, order that person to pay to the official receiver or trustee, at such time and in such manner as the Court may direct, the whole or part of the amount due, whether in full discharge of the debt or otherwise as the Court thinks fit.

(3)

The High Court may, if it thinks fit, order that any person liable to be summoned to appear before it under Article 337 or this Article shall be examined on oath, either orally or by interrogatories, concerning the bankrupt or the bankrupt's dealings, affairs and property.

Provision corresponding to Article 337, where interim receiver appointed339.

Articles 337 and 338 apply where an interim receiver has been appointed under Article 259 as they apply where a bankruptcy order has been made, as if—

(a)

references to the official receiver or the trustee were to the interim receiver, and

(b)

references to the bankrupt and to his estate were (respectively) to the debtor and his property.

Order for production of documents by Inland Revenue340.

(1)

For the purposes of an examination under Article 263 (public examination of bankrupt) or proceedings under Articles 337 to 339, the High Court may, on the application of the official receiver or the trustee of the bankrupt's estate, order an inland revenue official to produce to the Court—

(a)

any return, account or accounts submitted (whether before or after the commencement of the bankruptcy) by the bankrupt to any inland revenue official,

(b)

any assessment or determination made (whether before or after the commencement of the bankruptcy) in relation to the bankrupt by any inland revenue official, or

(c)

any correspondence (whether before or after the commencement of the bankruptcy) between the bankrupt and any inland revenue official.

(2)

Where the High Court has made an order under paragraph (1) for the purposes of any examination or proceedings, the Court may, at any time after the document to which the order relates is produced to it, by order authorise the disclosure of the document, or of any part of its contents, to the official receiver, the trustee of the bankrupt's estate or the bankrupt's creditors.

(3)

The High Court shall not address an order under paragraph (1) to an inland revenue official unless it is satisfied that that office is dealing, or has dealt, with the affairs of the bankrupt.

(4)

Where any document to which an order under paragraph (1) relates is not in the possession of the official to whom the order is addressed, it is the duty of that official to take all reasonable steps to secure possession of it and, if he fails to do so, to report the reasons for his failure to the High Court.

(5)

Where any document to which an order under paragraph (1) relates is in the possession of an inland revenue official other than the one to whom the order is addressed, it is the duty of the official in possession of the document, at the request of the official to whom the order is addressed, to deliver it to the official making the request.

(6)

In this Article “inland revenue official” means any inspector or collector of taxes appointed by the Commissioners of Inland Revenue or any person appointed by the Commissioners to serve in any other capacity.

(7)

This Article does not apply for the purposes of an examination under Articles 337 and 338 which takes place by virtue of Article 339 (interim receiver).

Power to appoint special manager341.

(1)

The High Court may, on an application under this Article, appoint any person to be the special manager—

(a)

of a bankrupt's estate, or

(b)

of the business of an undischarged bankrupt, or

(c)

of the property or business of a debtor in whose case the official receiver has been appointed interim receiver under Article 259.

(2)

An application under this Article may be made by the official receiver or the trustee of the bankrupt's estate in any case where it appears to the official receiver or trustee that the nature of the estate, property or business, or the interests of the creditors generally, require the appointment of another person to manage the estate, property or business.

(3)

A special manager appointed under this Article has such powers as may be entrusted to him by the High Court.

(4)

The power of the High Court under paragraph (3) to entrust powers to a special manager includes power to direct that any provision in Parts VIII to X that has effect in relation to the official receiver, interim receiver or trustee shall have the like effect in relation to the special manager for the purposes of the carrying out by the special manager of any of the functions of the official receiver, interim receiver or trustee.

(5)

A special manager appointed under this Article shall—

(a)

give such security as may be prescribed,

(b)

prepare and keep such accounts as may be prescribed, and

(c)

produce those accounts in accordance with the rules to the Department or to such other persons as may be prescribed.

Re‐direction of bankrupt's letters, etc.342.

(1)

Where a bankruptcy order has been made, the High Court may, on the application of the official receiver or the trustee of the bankrupt's estate, orderF598 a postal operator (within the meaning F599of Part 3 of the Postal Services Act 2011) to re‐direct and send or deliver to the official receiver or trustee or otherwise any postal packet (within the meaning ofF600 Part 3 of the Postal Services Act 2011) which would otherwise be sent or delivered by them to the bankrupt at such place or places as may be specified in the order.

(2)

An order under this Article has effect for such period, not exceeding 3 months, as may be specified in the order.

PART XINDIVIDUAL INSOLVENCY: GENERAL PROVISIONS

Supplies of water, electricity, etc.343. F601

(1)

This Article applies where on any day ( “the relevant day”)—

(a)

a bankruptcy order is made against an individual or an interim receiver of an individual's property is appointed, or

(b)

a voluntary arrangement proposed by an individual is approved under Chapter II of Part VIII, F602...

F602(c)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and “the office‐holder” means the official receiver, the trustee in bankruptcy, the interim receiver F603or, the supervisor of the voluntary arrangement F604..., as the case may be.

(2)

If a request falling within paragraph (3) is made for the giving after the relevant day of any of the supplies mentioned in paragraph (4), the supplier—

(a)

may make it a condition of the giving of the supply that the office‐holder personally guarantees the payment of any charges in respect of the supply, but

(b)

shall not make it a condition of the giving of the supply, or do anything which has the effect of making it a condition of the giving of the supply, that any outstanding charges in respect of a supply given to the individual before the relevant day are paid.

(3)

A request falls within this paragraph if it is made—

(a)

by or with the concurrence of the office‐holder, and

(b)

for the purposes of any business which is or has been carried on by the individual, by a firm or partnership of which the individual is or was a member, or by an agent or manager for the individual or for such a firm or partnership.

(4)

The supplies referred to in paragraph (2) are—

(a)

a supply of electricity byF605 a public electricity supplier within the meaning of Part II of the Electricity (Northern Ireland) Order 1992,

F606(aa)

a supply of gas by a holder of a licence under Article 8 of the Gas (Northern Ireland) Order 1996;

F607(b)

a supply of water or sewerage services by a water or sewerage undertaker;

F608(c)

a supply of communications services by a provider of aF609 public electronic communications service,

and in this paragraph “communications services” do not include electronic communications services to the extent that they are used to broadcast or transmit programme services (within the meaning of the Communications Act 2003).

Time‐limits344.

Where by any provision in F610Parts 7A to 10 F611... or by the rules the time for doing anything is limited, the High Court may extend the time, either before or after it has expired, on such terms, if any, as it thinks fit.

Formal defects345.

The acts of a person as the trustee of a bankrupt's estate or as a special manager, and the acts of the creditors' committee established for any bankruptcy, are valid notwithstanding any defect in the appointment, election or qualifications of the trustee or manager or, as the case may be, of any member of the committee.

PARTS XI TO XIVMISCELLANEOUS MATTERS BEARING ON BOTH COMPANY AND INDIVIDUAL INSOLVENCY

PART XIPREFERENTIAL F612AND NON-PREFERENTIAL DEBTS IN COMPANY AND INDIVIDUAL INSOLVENCY

Categories of preferential debts346.

(1) F613

A reference in this Order to the preferential debts of a company or an individual is to the debts listed in Schedule 4F614 (contributions to occupational pension schemes; remuneration, &c. of employees; levies on coal and steel production F615; debts owed to the Financial Services Compensation Scheme F616; deposits covered by the Financial Services Compensation Scheme; other deposits F617; certain HMRC debts); and references to preferential creditors are to be read accordingly.

F618(1A)

A reference in this Order to the “ordinary preferential debts” of a company or an individual is to the preferential debts listed in any of paragraphs 8 to 18 of Schedule 4 to this Order.

(1B)

A reference in this Order to the “secondary preferential debts” of a company or an individual is to the preferential debts listed in paragraphs 19 F619, 20 or 22 of Schedule 4 to this Order.

(2) F613

In Schedule 4 “the debtor” means the company or the individual concerned.

(3)

Schedule 4 is to be read with Schedule 4 to the Social Security Pensions (Northern Ireland) Order 1975F620 (occupational pension scheme contributions).

“The relevant date”347.

(1)

This Article explains references in Schedule 4 to the relevant date (being the date which determines the existence and amount of a preferential debt).

(2)

For the purposes of Article 17 (meetings to consider company voluntary arrangement), the relevant date in relation to a company which is not being wound up is—

F621(a)

if the company is in administration, the date on which it entered administration, and

(b)

if the company is not in administration, the date on which the voluntary arrangement takes effect.

F622(2A)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)

In relation to a company which is being wound up, the following applies—

(a)

if the winding up is by the High Court, and the winding‐up order was made immediately upon the discharge of an administration order, the relevant date isF623the date on which the company entered administration;

F624(aa)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F624(ab)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)

if the case does not fall within sub‐paragraph (a)F625... and the company—

(i)

is being wound up by the Court, and

(ii)

had not commenced to be wound up voluntarily before the date of the making of the winding‐up order,

the relevant date is the date of the appointment (or first appointment) of a provisional liquidator or, if no such appointment has been made, the date of the winding‐up order;

F626(ba)

if the case does not fall within sub-paragraph (a)F627... or (b) and the company is being wound up following administration pursuant to paragraph 84 of Schedule B1, the relevant date is the date on which the company entered administration;

(c) F628

if the case does not fall withinF629 sub-paragraph (a), F630... (b) or (ba), the relevant date is the date of the passing of the resolution for the winding up of the company.

F631(3A)

In relation to a company which is in administration (and to which no other provision of this Article applies) the relevant date is the date on which the company enters administration.

(4)

In relation to a company in receivership (where Article 50 applies), the relevant date is the date of the appointment of the receiver by debenture‐holders.

(5) F628

For the purposes of Article 232 (meeting to consider individual voluntary arrangements), the relevant date is, in relation to a debtor who is not an undischarged bankrupt

F632(a)

where an interim order has been made under Article 226 with respect to his proposal, the date of that order, and

(b)

in any other case, the date on which the voluntary arrangement takes effect.

(6) F628

In relation to a bankrupt, the following applies—

(a)

where at the time the bankruptcy order was made there was an interim receiver appointed under Article 259, the relevant date is the date on which the interim receiver was first appointed after the presentation of the bankruptcy petition;

(b)

otherwise, the relevant date is the date of the making of the bankruptcy order.

F633(7)

Nothing in this Article affects the definition of “the relevant date” in Article 5(1A).

F634Financial institutions and their non-preferential debts347A.

(1)

In this Order “relevant financial institution” means any of the following—

(a)

a credit institution,

(b)

an investment firm,

(c)

a financial holding company,

(d)

a mixed financial holding company.

(e)

a financial institution which is—

(i)

a subsidiary of an entity referred to in sub-paragraphs (a) to (d), and

(ii)

covered by the supervision of that entity on a consolidated basis in accordance with Articles 6 to 17 of Regulation (EU) No 575/2013, or

(f)

a mixed-activity holding company.

(2)

The definitions in Article 4 of Regulation (EU) No. 575/2013 apply for the purposes of paragraph (1).

(3)

In this Order, in relation to a relevant financial institution—

(a)

“ordinary non-preferential debts” means non-preferential debts which are neither secondary non-preferential debts nor tertiary non-preferential debts;

(b)

“secondary non-preferential debts” means non-preferential debts issued under an instrument where—

(i)

the original contractual maturity of the instrument is of at least one year,

(ii)

the instrument is not a derivative and contains no embedded derivative, and

(iii)

the relevant contractual documentation and where applicable the prospectus related to the issue of the debts explain the priority of the debts under this Order, and

(c)

“tertiary non-preferential debts” means all subordinated debts, including (but not limited to) debts under Common Equity Tier 1 instruments, Additional Tier 1 instruments and Tier 2 instruments (all within the meaning of Part 1 of the Banking Act 2009).

(4)

In paragraph(3)(b), “derivative” has the same meaning as in Article 2(5) of Regulation (EU) No 648/2012.

(5)

For the purposes of paragraph (3)(b)(ii) an instrument does not contain an embedded derivative merely because—

(a)

it provides for a variable interest rate derived from a broadly used reference rate, or

(b)

it is not denominated in the domestic currency of the person issuing the debt (provided that the principal, repayment and interest are denominated in the same currency).

PART XIIINSOLVENCY PRACTITIONERS AND THEIR QUALIFICATION

Restrictions on unqualified persons acting as liquidator, trustee in bankruptcy, etc.

Acting as insolvency practitioner without qualification348.

(1) F635

A person who acts as an insolvency practitioner in relation to a company or an individual at a time when he is not qualified to do so shall be guilty of an offence.

F636(1A)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)

This Article does not apply to the official receiver.

Authorisation of nominees and supervisorsF637348A.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F638Official receiver as nominee or supervisor348B.

(1)

The official receiver is authorised to act as nominee or supervisor in relation to a voluntary arrangement approved under Chapter II of Part VIII provided that the debtor is an undischarged bankrupt when the arrangement is proposed.

(2)

The Department may by order repeal the proviso in paragraph (1).

(3)

An order under paragraph (2) shall be subject to negative resolution.

The requisite qualification, and the means of obtaining it

Persons not qualified to act as insolvency practitioners349.

(1)

A person who is not an individual is not qualified to act as an insolvency practitioner.

F639(2)

A person is not qualified to act as an insolvency practitioner at any time unless at that time the person is appropriately authorised under Article 349A of this Order.

(3)

A person is not qualified to act as an insolvency practitioner in relation to another person at any time unless—

(a)

there is in force at that time security, and

(b)

that security meets the prescribed requirements with respect to his so acting in relation to that other person.

(4)

A person is not qualified to act as an insolvency practitioner at any time if at that time—

(a)

he has been adjudged bankrupt F640under this Order or the 1986 Act or sequestration of his estate has been awarded and (in either case) he has not been discharged,

F641(aa)

a moratorium period under a debt relief order F642under this Order or the 1986 Act applies in relation to him,

F643(b)

he is subject to a disqualification order made or a disqualification undertaking accepted under the Company Directors Disqualification Act 1986 or the Company Directors Disqualification (Northern Ireland) Order 2002, or

(c)

he is a patient within the meaning of Part VII of the Mental Health Act 1983F644, section 125(1) of the Mental Health (Scotland) Act 1984F645 or Part VIII of the Mental Health (Northern Ireland) Order 1986F646.

F647(5)

A person is not qualified to act as an insolvency practitioner while there is in force in respect of that person—

(a)

a bankruptcy restrictions order under this Order, the 1986 Act or the Bankruptcy (Scotland) Act 1985 F648or 2016, or

(b)

a debt relief restrictions order under this Order or the 1986 Act.

(6)

In this Article “the 1986 Act” means the Insolvency Act 1986.

F649Authorisation349A

(1)

In this Part—

“partial authorisation” means authorisation to act as an insolvency practitioner—

(a)

only in relation to companies, or

(b)

only in relation to individuals;

“full authorisation” means authorisation to act as an insolvency practitioner in relation to companies, individuals and insolvent partnerships;

“partially authorised” and “fully authorised” are to be construed accordingly.

(2)

A person is fully authorised under this Article to act as an insolvency practitioner by virtue of being a member of a professional body recognised under Article 350(1) and being permitted to act as an insolvency practitioner for all purposes by or under the rules of that body.

(3)

A person is partially authorised under this Article to act as an insolvency practitioner—

(a)

by virtue of being a member of a professional body recognised under Article 350(1) and being permitted to act as an insolvency practitioner in relation only to companies or only to individuals by or under the rules of that body, or

(b)

by virtue of being a member of a professional body recognised under Article 350(2) and being permitted to act as an insolvency practitioner by or under the rules of that body.

Partial authorisation: acting in relation to partnerships349B

(1)

A person who is partially authorised to act as an insolvency practitioner in relation to companies may nonetheless not accept an appointment to actin relation to a company if at the time of the appointment the person is aware that the company—

(a)

is or was a member of a partnership; and

(b)

has outstanding liabilities in relation to the partnership.

(2)

A person who is partially authorised to act as an insolvency practitioner in relation to individuals may nonetheless not accept an appointment to act in relation to an individual if at the time of the appointment the person is aware that the individual—

(a)

is or was a member of a partnership other than a Scottish partnership, and

(b)

has outstanding liabilities in relation to the partnership.

(3)

Subject to paragraph (9), a person who is partially authorised to act as an insolvency practitioner in relation to companies may nonetheless not continue to actin relation to a company if the person becomes aware that the company—

(a)

is or was a member of a partnership, and

(b)

has outstanding liabilities in relation to the partnership,

unless the person is granted permission to continue to act by the High Court.

(4)

Subject to paragraph (9), a person who is partially authorised to act as an insolvency practitioner in relation to individuals may nonetheless not continue to act in relation to an individual if the person becomes aware that the individual—

(a)

is or was a member of a partnership other than a Scottish partnership, and

(b)

has outstanding liabilities in relation to the partnership,

unless the person is granted permission to continue to act by the High Court.

(5)

The High Court may granta person permission to continue to act for the purposes of paragraph (3) or (4) if it is satisfied that the person is competent to do so.

(6)

A person who is partially authorised and becomes aware as mentioned in paragraph (3) or (4) may alternatively apply to the High Court for an order (a “ replacement order ”) appointing in his or her place a person who is fully authorised to act as an insolvency practitioner in relation to the company or (as the case may be) the individual.

(7)

A person may apply to the High Court for permission to continue to act or for a replacement order under—

(a)

where acting in relation to a company, this Article or, if it applies, Article 143(5B);

(b)

where acting in relation to an individual, this Article or, if it applies, Article 276(2C).

(8)

A person who acts as an insolvency practitioner in contravention ofany of paragraphs (1) to (4) is guilty of an offence under Article 348 (acting without qualification).

(9)

A person does not contravene paragraph (3) or (4) by continuing to act as an insolvency practitioner during the permitted period if, within the period of 7 business days beginning with the day after the day on which the person becomes aware as mentioned inthe paragraph, the person—

(a)

applies to the High Court for permission to continue to act, or

(b)

applies to the High Court for a replacement order.

(10)

For the purposes of paragraph (9)—

“business day” means any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday in Northern Ireland under the Banking and Financial Dealings Act 1971;

“permitted period” means the period beginning with the day on which the person became aware as mentioned in paragraph (3) or (4) and ending on the earlier of—

(a)

the expiry of the period of 6 weeks beginning with the day on which the person applies to the High Court as mentioned in paragraph (9)(a) or (b), and

(b)

the day on which the High Court disposes of the application (by granting or refusing it

“replacement order” has the meaning given by paragraph (6).

F650Recognised professional bodies350.

(1)

The Department may by order, if satisfied that a body meets the requirements of paragraph (4), declare the body to be a recognisedprofessional body which is capable of providing its insolvency specialist members with full authorisation or partial authorisation.

(2)

The Department may by order, if satisfied that a body meets the requirements of paragraph (4), declare the body to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order (as to which, see Article 349A(1)).

(3)

Article 350A makes provision about the making by a body of an application to the Department for an order under this Article.

(4)

The requirements are that—

(a)

the body regulates (or is going to regulate) the practice of a profession;

(b)

the body has rules which it is going to maintain and enforce for securing that its insolvency specialist members—

(i)

are fit and proper persons to act as insolvency practitioners; and

(ii)

meet acceptable requirements as to education and practical training and experience; and

(c)

the body's rules and practices for or in connection with authorising persons to act as insolvency practitioners, and its rules and practices for or in connection with regulating persons acting as such, are designed to ensure that the regulatory objectives are met (as to which, see Article 350C).

(5)

An order of the Department under this Article has effect from such date as is specified in the order.

(6)

An order under this Article may be revoked by an order under Article 350L or 350N (and see Article 361A(1)(b)).

(7)

In this Part—

(a)

references to members of a recognised professional body are to persons who, whether members of that body or not, are subject to its rules in the practice of the profession in question;

(b)

references to insolvency specialist members of a professional body are to members who are permitted by or under the rules of the body to act as insolvency practitioners.

(8)

A reference in this Part to a recognised professional body is to a body recognised under this Article (and see Articles 350L(6) and 350N(5)).

F650Application for recognition as recognised professional body350A

(1)

An application for an order under Article 350(1) or (2) must—

(a)

be made to the Department in such form and manner as the Department may require;

(b)

be accompanied by such information as the Department may require;

(c)

be supplemented by such additional information as the Department may require at any time between receiving the application and determining it.

(2)

The requirements which may be imposed under paragraph (1) may differ as between different applications.

(3)

The Department may require information provided under this Article to be in such form, and verified in such manner, as the Department may specify.

(4)

An application for an order under Article 350(1) or (2) must be accompanied by—

(a)

a copy of the applicant's rules;

(b)

a copy of the applicant's policies and practices; and

(c)

a copy of any guidance issued by the applicant in writing.

(5)

The reference in paragraph (4)(c) to guidance issued by the applicant is a reference to guidance or recommendations which are—

(a)

issued or made by it which will apply to its insolvency specialist members or to persons seeking to become such members;

(b)

relevant for the purposes of this Part; and

(c)

intended to have continuing effect,

including guidance or recommendations relating to the admission or expulsion of members.

(6)

The Department may refuse an application for an order under Article350(1) or (2) if the Department considers that recognition of the body concerned is unnecessary having regard to the existence of one or more other bodies which have been or are likely to be recognised under Article 350.

(7)

Paragraph (8) applies where the Department refuses an application for an order under Article 350(1) or (2); and it applies regardless of whether the application is refused on the ground mentioned in paragraph (6), because the Department is not satisfied as mentioned in Article 350(1) or (2) or because a fee has not been paid (see Article 361A(1)(b)).

(8)

The Department must give the applicant a written notice of the Department's decision; and the notice must set out the reasons for refusing the application.

F651Regulatory objectives

Application of regulatory objectives350B

(1)

In discharging regulatory functions, a recognised professional body must, so far as is reasonably practicable, act in a way—

(a)

which is compatible with the regulatory objectives; and

(b)

which the body considers most appropriate for the purpose of meeting those objectives.

(2)

In discharging functions under this Part, the Department must have regard to the regulatory objectives.

Meaning of “regulatory functions” and “regulatory objectives”350C

(1)

This Article has effect for the purposes of this Part.

(2)

“Regulatory functions”, in relation to a recognised professional body, means any functions the body has—

(a)

under or in relation to its arrangements for or in connection with—

(i)

authorising persons to act as insolvency practitioners; or

(ii)

regulating persons acting as insolvency practitioners; or

(b)

in connection with the making or alteration of those arrangements.

(3)

“Regulatory objectives” means the objectives of—

(a)

having a system of regulating persons acting as insolvency practitioners that—

(i)

secures fair treatment for persons affected by their acts and omissions;

(ii)

reflects the regulatory principles; and

(iii)

ensures consistent outcomes;

(b)

encouraging an independent and competitive insolvency-practitioner profession whose members—

(i)

provide high quality services at a cost to the recipient which is fair and reasonable;

(ii)

act transparently and with integrity; and

(iii)

consider the interests of all creditors in any particular case;

(c)

promoting the maximisation of the value of returns to creditors and promptness in making those returns; and

(d)

protecting and promoting the public interest.

(4)

In paragraph (3)(a), “regulatory principles” means—

(a)

the principles that regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed; and

(b)

any other principle appearing to the body concerned (in the case of the duty under Article 350B(1)), or to the Department (in the case of the duty under Article 350B(2)), to lead to best regulatory practice.

F652Oversight of recognised professional bodies

Directions350D

(1)

This Article applies if the Department is satisfied that an act or omission of a recognised professional body (or a series of such acts or omissions) in discharging one or more of its regulatory functions has had, or is likely to have, an adverse impact on the achievement of one or more of the regulatory objectives.

(2)

The Department may, if in all the circumstances of the case satisfied that it is appropriate to do so, direct the body to take such steps as the Department considers will counter the adverse impact, mitigate its effect or prevent its occurrence or recurrence.

(3)

A direction under this Article may require a recognised professional body—

(a)

to take only such steps as it has power to take under its regulatory arrangements;

(b)

to take steps with a view to the modification of any part of its regulatory arrangements.

(4)

A direction under this Article may require a recognised professional body—

(a)

to take steps with a view to the institution of, or otherwise in respect of, specific regulatory proceedings;

(b)

to take steps in respect of all, or a specified class of, such proceedings.

(5)

For the purposes of this Article, a direction to take steps includes a direction which requires a recognised professional body to refrain from taking a particular course of action.

(6)

In this Article “regulatory arrangements”, in relation to a recognised professional body, means the arrangements that the body has for or in connection with—

(a)

authorising persons to act as insolvency practitioners; or

(b)

regulating persons acting as insolvency practitioners.

Directions: procedure350E

(1)

Before giving a recognised professional body a direction under Article 350D, the Department must give the body a notice accompanied by a draft of the proposed direction.

(2)

The notice under paragraph (1) must—

(a)

state that the Department proposes to give the body a direction in the form of the accompanying draft;

(b)

specify why the Department has reached the conclusions mentioned in Article 350D(1) and (2); and

(c)

specify a period within which the body may make written representations with respect to the proposal.

(3)

The period specified under paragraph (2)(c)—

(a)

must begin with the date on which the notice is given to the body; and

(b)

must not be less than 28 days.

(4)

On the expiry of that period, the Department must decide whether to give the body the proposed direction.

(5)

The Department must give notice of that decision to the body.

(6)

Where the Department decides to give the proposed direction, the notice under paragraph (5) must—

(a)

contain the direction;

(b)

state the time at which the direction is to take effect; and

(c)

specify the Department's reasons for the decision to give the direction.

(7)

Where the Department decides to give the proposed direction, the Department must publish the notice under paragraph (5); but this paragraph does not apply to a direction to take any step with a view to the institution of, or otherwise in respect of, regulatory proceedings against an individual.

(8)

The Department may revoke a direction under Article 350D; and, where doing so, the Department—

(a)

must give the body to which the direction was given notice of the revocation; and

(b)

must publish the notice and, if the notice under paragraph (5) was published under paragraph (7), must do so (if possible) in the same manner as that in which that notice was published.

Financial penalty350F

(1)

This Article applies if the Department is satisfied—

(a)

that a recognised professional body has failed to comply with a requirement to which this Article applies; and

(b)

that, in all the circumstances of the case, it is appropriate to impose a financial penalty on the body.

(2)

This Article applies to a requirement imposed on the recognised professional body—

(a)

by a direction given under Article 350D; or

(b)

by a provision of this Order or of subordinate legislation under this Order.

(3)

The Department may impose a financial penalty, in respect of the failure, of such amount as the Department considers appropriate.

(4)

In deciding what amount is appropriate, the Department—

(a)

must have regard to the nature of the requirement which has not been complied with; and

(b)

must not take into account the Department's costs in discharging functions under this Part.

(5)

A financial penalty under this Article is payable to the Department; and sums received by the Department in respect of a financial penalty under this Article (including by way of interest) are to be paid into the Consolidated Fund.

(6)

In Articles 350G to 350I, “penalty” means a financial penalty under this Article.

Financial penalty: procedure350G

(1)

Before imposing a penalty on a recognised professional body, the Department must give notice to the body—

(a)

stating that the Department proposes to impose a penalty and the amount of the proposed penalty;

(b)

specifying the requirement in question;

(c)

stating why the Department is satisfied as mentioned in Article 350F(1); and

(d)

specifying a period within which the body may make written representations with respect to the proposal.

(2)

The period specified under paragraph (1)(d)—

(a)

must begin with the date on which the notice is given to the body; and

(b)

must not be less than 28 days.

(3)

On the expiry of that period, the Department must decide—

(a)

whether to impose a penalty; and

(b)

whether the penalty should be the amount stated in the notice or a reduced amount.

(4)

The Department must give notice of the decision to the body.

(5)

Where the Department decides to impose a penalty, the notice under paragraph (4) must—

(a)

state that the Department has imposed a penalty on the body and its amount;

(b)

specify the requirement in question and state—

(i)

why it appears to the Department that the requirement has not been complied with; or

(ii)

where, by that time, the requirement has been complied with, why it appeared to the Department when giving the notice under paragraph (1) that the requirement had not been complied with; and

(c)

specify a time by which the penalty is required to be paid.

(6)

The time specified under paragraph (5)(c) must be at least three months after the date on which the notice under paragraph (4) is given to the body.

(7)

Where the Department decides to impose a penalty, the Department must publish the notice under paragraph (4).

(8)

The Department may rescind or reduce a penalty imposed on a recognised professional body; and, where doing so, the Department—

(a)

must give the body notice that the penalty has been rescinded or reduced to the amount stated in the notice; and

(b)

must publish the notice; and it must (if possible) be published in the same manner as that in which the notice under paragraph (4) was published.

Appeal against financial penalty350H

(1)

A recognised professional body on which a penalty is imposed may appeal to the High Court on one or more of the appeal grounds.

(2)

The appeal grounds are—

(a)

that the imposition of the penalty was not within the Department's power under Article 350F;

(b)

that the requirement in respect of which the penalty was imposed had been complied with before the notice under Article 350G(1) was given;

(c)

that the requirements of Article 350G have not been complied with in relation to the imposition of the penalty and the interests of the body have been substantially prejudiced as a result;

(d)

that the amount of the penalty is unreasonable;

(e)

that it was unreasonable of the Department to require the penalty imposed to be paid by the time specified in the notice under Article 350G(5)(c).

(3)

An appeal under this Article must be made within the period of three months beginning with the day on which the notice under Article 350G(4) in respect of the penalty is given to the body.

(4)

On an appeal under this Article the Court may—

(a)

quash the penalty;

(b)

substitute a penalty of such lesser amount as the Court considers appropriate; or

(c)

in the case of the appeal ground in paragraph (2)(e), substitute for the time imposed by the Department a different time.

(5)

Where the Court substitutes a penalty of a lesser amount, it may require the payment of interest on the substituted penalty from such time, and at such rate, as it considers just and equitable.

(6)

Where the Court substitutes a later time for the time specified in the notice under Article 350G(5)(c), it may require the payment of interest on the penalty from the substituted time at such rate as it considers just and equitable.

(7)

Where the Court dismisses the appeal, it may require the payment of interest on the penalty from the time specified in the notice under Article 350G(5)(c) at such rate as it considers just and equitable.

Recovery of financial penalties350I

(1)

If the whole or part of a penalty is not paid by the time by which it is required to be paid, the unpaid balance from time to time carries interest at the rate for the time being applicable to a money judgment of the High Court (but this is subject to any requirement imposed by the Court under Article 350H(5), (6) or (7)).

(2)

If an appeal is made under Article 350H in relation to a penalty, the penalty is not required to be paid until the appeal has been determined or withdrawn.

(3)

Paragraph (4) applies where the whole or part of a penalty has not been paid by the time it is required to be paid and—

(a)

no appeal relating to the penalty has been made under Article 350H during the period within which an appeal may be made under that Article; or

(b)

an appeal has been made under that Article and determined or withdrawn.

(4)

The Department may recover from the recognised professional body in question, as a debt due to the Department, any of the penalty and any interest which has not been paid.

Reprimand350J

(1)

This Article applies if the Department is satisfied that an act or omission of a recognised professional body (or a series of such acts or omissions) in discharging one or more of its regulatory functions has had, or is likely to have, an adverse impact on the achievement of one or more of the regulatory objectives.

(2)

The Department may, if in all the circumstances of the case satisfied that it is appropriate to do so, publish a statement reprimanding the body for the act or omission (or series of acts or omissions).

Reprimand: procedure350K

(1)

If the Department proposes to publish a statement under Article 350J in respect of a recognised professional body, it must give the body a notice—

(a)

stating that the Department proposes to publish such a statement and setting out the terms of the proposed statement;

(b)

specifying the acts or omissions to which the proposed statement relates; and

(c)

specifying a period within which the body may make written representations with respect to the proposal.

(2)

The period specified under paragraph (1)(c)—

(a)

must begin with the date on which the notice is given to the body; and

(b)

must not be less than 28 days.

(3)

On the expiry of that period, the Department must decide whether to publish the statement.

(4)

The Department may vary the proposed statement; but before doing so, the Department must give the body notice—

(a)

setting out the proposed variation and the reasons for it; and

(b)

specifying a period within which the body may make written representations with respect to the proposed variation.

(5)

The period specified under paragraph (4)(b)—

(a)

must begin with the date on which the notice is given to the body; and

(b)

must not be less than 28 days.

(6)

On the expiry of that period, the Department must decide whether to publish the statement as varied.

F653Revocation etc. of recognition

Revocation of recognition at instigation of Department350L

(1)

An order under Article 350(1) or (2) in relation to a recognised professional body may be revoked by the Department by order if the Department is satisfied that—

(a)

an act or omission of the body (or a series of such acts or omissions) in discharging one or more of its regulatory functions has had, or is likely to have, an adverse impact on the achievement of one or more of the regulatory objectives; and

(b)

it is appropriate in all the circumstances of the case to revoke the body's recognition under Article 350.

(2)

If the condition set out in paragraph (3) is met, an order under Article 350(1) in relation to a recognised professional body may be revoked by the Department by an order which also declares the body concerned to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order (see Article 349A(1)).

(3)

The condition is that the Department is satisfied—

(a)

as mentioned in paragraph (1)(a); and

(b)

that it is appropriate in all the circumstances of the case for the body to be declared to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order.

(4)

In this Part—

(a)

an order under paragraph (1) is referred to as a “revocation order”;

(b)

an order under paragraph (2) is referred to as a “partial revocation order”.

(5)

A revocation order or partial revocation order—

(a)

has effect from such date as is specified in the order; and

(b)

may make provision for members of the body in question to continue to be treated as fully or partially authorised (as the case may be) to act as insolvency practitioners for a specified period after the order takes effect.

(6)

A partial revocation order has effect as if it were an order made under Article 350(2).

Orders under Article 350L: procedure350M

(1)

Before making a revocation order or partial revocation order in relation to a recognised professional body, the Department must give notice to the body—

(a)

stating that the Department proposes to make the order and the terms of the proposed order;

(b)

specifying the Department's reasons for proposing to make the order; and

(c)

specifying a period within which the body, members of the body or other persons likely to be affected by the proposal may make written representations with respect to it.

(2)

Where the Department gives a notice under paragraph (1), the Department must publish the notice on the same day.

(3)

The period specified under paragraph (1)(c)—

(a)

must begin with the date on which the notice is given to the body; and

(b)

must not be less than 28 days.

(4)

On the expiry of that period, the Department must decide whether to make the revocation order or (as the case may be) partial revocation order in relation to the body.

(5)

The Department must give notice of the decision to the body.

(6)

Where the Department decides to make the order, the notice under paragraph (5) must specify—

(a)

when the order is to take effect; and

(b)

the Department's reasons for making the order.

(7)

A notice under paragraph (5) must be published; and it must (if possible) be published in the same manner as that in which the notice under paragraph (1) was published.

Revocation of recognition at request of body350N

(1)

An order under Article 350(1) or (2) in relation to a recognised professional body may be revoked by the Department by order if—

(a)

the body has requested that an order be made under this paragraph; and

(b)

the Department is satisfied that it is appropriate in all the circumstances of the case to revoke the body's recognition under Article 350.

(2)

An order under Article 350(1) in relation to a recognised professional body may be revoked by the Department by an order which also declares the body concerned to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order (see Article 349A(1)) if—

(a)

the body has requested that an order be made under this paragraph; and

(b)

the Department is satisfied that it is appropriate in all the circumstances of the case for the body to be declared to be a recognised professional body which is capable of providing its insolvency specialist members with partial authorisation only of the kind specified in the order.

(3)

Where the Department decides to make an order under this Article the Department must publish a notice specifying—

(a)

when the order is to take effect; and

(b)

the Department's reasons for making the order.

(4)

An order under this Article—

(a)

has effect from such date as is specified in the order; and

(b)

may make provision for members of the body in question to continue to be treated as fully or partially authorised (as the case may be) to act as insolvency practitioners for a specified period after the order takes effect.

(5)

An order under paragraph (2) has effect as if it were an order made under Article 350(2).

F654Court sanction of insolvency practitioners in public interest cases

Direct sanction orders350O

(1)

For the purposes of this Part a “direct sanctions order” is an order made by the High Court against a person who is acting as an insolvency practitioner which—

(a)

declares that the person is no longer authorised (whether fully or partially) to act as an insolvency practitioner;

(b)

declares that the person is no longer fully authorised to act as an insolvency practitioner but remains partially authorised to act as such either in relation to companies or individuals, as specified in the order;

(c)

declares that the person's authorisation to act as an insolvency practitioner is suspended for the period specified in the order or until such time as the requirements so specified are complied with;

(d)

requires the person to comply with such other requirements as may be specified in the order while acting as an insolvency practitioner;

(e)

requires the person to make such contribution as may be specified in the order to one or more creditors of a company, individual or insolvent partnership in relation to which the person is acting or has acted as an insolvency practitioner.

(2)

Where the Court makes a direct sanctions order, the relevant recognised professional body must take all necessary steps to give effect to the order.

(3)

A direct sanctions order must not specify a contribution as mentioned in paragraph (1)(e) which is more than the remuneration that the personhas received or will receive in respect of acting as an insolvency practitioner in the case.

(4)

In this Article and Article 350P, “relevant recognised professional body”, in relation to a person who is acting as an insolvency practitioner, means the recognised professional body by virtue of which the person is authorised so to act.

Application for, and power to make, direct sanctions order350P

(1)

The Department may apply to the High Court for a direct sanctions order to be made against a person if it appears to the Department that it would be in the public interest for the order to be made.

(2)

The Department must send a copy of the application to the relevant recognised professional body.

(3)

The Court may make a direct sanctions order against a person where, on an application under this Article, the Court is satisfied that condition 1 and at least one of conditions 2, 3, 4 and 5 are met in relation to the person.

(4)

The conditions are set out in Article 350Q.

(5)

In deciding whether to make a direct sanctions order against a person the Court must have regard to the extent to which—

(a)

the relevant recognised professional body has taken action against the person in respect of the failure mentioned in condition 1; and

(b)

that action is sufficient to address the failure.

Direct sanctions order: conditions350Q

(1)

Condition 1 is that the person, in acting as an insolvency practitioner or in connection with any appointment as such, has failed to comply with—

(a)

a requirement imposed by the rules of the relevant recognised professional body;

(b)

any standards, or code of ethics, for the insolvency-practitioner profession adopted from time to time by the relevant recognised professional body.

(2)

Condition 2 is that the person—

(a)

is not a fit and proper person to act as an insolvency practitioner;

(b)

is a fit and proper person to act as an insolvency practitioner only in relation to companies, but the person's authorisation is not so limited; or

(c)

is a fit and proper person to act as an insolvency practitioner only in relation to individuals, but the person's authorisation is not so limited.

(3)

Condition 3 is that it is appropriate for the person's authorisation to act as an insolvency practitioner to be suspended for a period or until one or more requirements are complied with.

(4)

Condition 4 is that it is appropriate to impose other restrictions on the person acting as an insolvency practitioner.

(5)

Condition 5 is that loss has been suffered as a result of the failure mentioned in condition 1 by one or more creditors of a company, individual or insolvent partnership in relation to which the person is acting or has acted as an insolvency practitioner.

(6)

In this Article “relevant recognised professional body” has the same meaning as in Article 350O.

Direct sanctions direction instead of order350R

(1)

The Department may give a direction (a “direct sanctions direction”) in relation to a person acting as an insolvency practitioner to the relevant recognised professional body (instead of applying, or continuing with an application, for a direct sanctions order against the person) if the Department is satisfied that—

(a)

condition 1 and at least one of conditions 2, 3, 4 and 5 are met in relation to the person (see Article 350Q); and

(b)

it is in the public interest for the direction to be given.

(2)

But the Department may not give a direct sanctions direction in relation to a person without that person's consent.

(3)

A direct sanctions direction may require the relevant recognised professional body to take all necessary steps to secure that—

(a)

the person is no longer authorised (whether fully or partially) to act as an insolvency practitioner;

(b)

the person is no longer fully authorised to act as an insolvency practitioner but remains partially authorised to act as such either in relation to companies or individuals, as specified in the direction;

(c)

the person's authorisation to act as an insolvency practitioner is suspended for the period specified in the direction or until such time as the requirements so specified are complied with;

(d)

the person must comply with such other requirements as may be specified in the direction while acting as an insolvency practitioner;

(e)

the person makes such contribution as may be specified in the direction to one or more creditors of a company, individual or insolvent partnership in relation to which the person is acting or has acted as an insolvency practitioner.

(4)

A direct sanctions direction must not specify a contribution as mentioned in paragraph (3)(e) which is more than the remuneration that the person has received or will receive in respect of acting as an insolvency practitioner in the case.

(5)

In this Article “relevant recognised professional body” has the same meaning as in Article 350O.

F655General

Power for Department to obtain information350S

(1)

A person mentioned in paragraph (2) must give the Department such information as the Department may by notice in writing require for the exercise of the Department's functions under this Part.

(2)

Those persons are—

(a)

a recognised professional body;

(b)

any individual who is or has been authorised under Article 349A to act as an insolvency practitioner;

(c)

any person who is connected to such an individual.

(3)

A person is connected to an individual who is or has been authorised to act as an insolvency practitioner if, at any time during the authorisation—

(a)

the person was an employee of the individual;

(b)

the person acted on behalf of the individual in any other way;

(c)

the person employed the individual;

(d)

the person was a fellow employee of the individual's employer;

(e)

in a case where the individual was employed by a firm, partnership or company, the person was a member of the firm or partnership or (as the case may be) a director of the company.

(4)

In imposing a requirement under paragraph (1) the Department may specify—

(a)

the time period within which the information in question is to be given; and

(b)

the manner in which it is to be verified.

F656Compliance orders350T

(1)

If at any time it appears to the Department that—

(a)

a recognised professional body has failed to comply with a requirement imposed on it by or by virtue of this Part; or

(b)

any other person has failed to comply with a requirement imposed on the person by virtue of Article 350S,

the Department may make an application to the High Court.

(2)

If, on an application under this Article, the Court decides that the body or other person has failed to comply with the requirement in question, it may order the body or person to take such steps as the Court considers will secure that the requirement is complied with.

Authorisation by competent authorityF657351.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Grant, refusal and withdrawal of authorisationF657352.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NoticesF657353.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Right to make representationsF657354.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART XIIIPUBLIC ADMINISTRATION

Official receivers

Appointment, etc., of official receivers355.

(1)

The Department may appoint one or more than one officer of the Department as official receiver for Northern Ireland.

(2)

The Department may give directions with respect to the disposal of the business of official receivers.

Functions and status of official receivers356.

(1)

In addition to any functions conferred on him by this Order, an official receiver shall carry out such other functions as may be conferred on him by the Department.

(2)

In the exercise of the functions of his office an official receiver shall act under the general authority and direction of the Department, but shall also be an officer of the High Court.

(3)

Any property vested in an officer of the Department in his official capacity as official receiver shall, on his dying, ceasing to hold office or being otherwise succeeded in relation to the bankruptcy or winding up in question by another official receiver, vest in his successor without any conveyance, assignment or transfer.

Deputy official receivers357.

(1)

The Department may, if it thinks it expedient to do so in order to facilitate the disposal of the business of official receiver, appoint one or more than one officer of the Department as deputy official receiver.

(2)

Subject to any directions given by the Department under Article 355 or 356, a deputy official receiver has, on such conditions and for such period as may be specified in the terms of his appointment, the same status and functions as an official receiver.

Insolvency Account

Insolvency Account358.

(1)

An account, to be called the Insolvency Account, shall continue to be kept by the Department with such bank as may be agreed with the Department of Finance and Personnel.

(2)

The Department may, with the agreement of the Department of Finance and Personnel, invest any money from time to time standing to the credit of the Insolvency Account.

(3)

The Department shall in respect of each year ending on 31st March prepare an account, in such form and manner as the Department of Finance and Personnel may direct, of sums credited and debited to the Insolvency Account during that year.

(4)

On or before 31st August in each year the Department shall transmit to the Comptroller and Auditor General for Northern Ireland the account prepared under paragraph (3) in respect of the year ending on the preceding 31st March and the Comptroller and Auditor General shall examine and certify such account and the Department shall lay copies thereof, together with the report of the Comptroller and Auditor General thereon, before the Assembly.

(5)

On or before 31st March in each year the Department shall pay into the Consolidated Fund the amount of any lodgment made into the Insolvency Account of unclaimed dividends and unapplied or undistributed balances, which has remained unclaimed for a period of at least 2 years from the date of lodgment.

F658Adjustment of balances358A.

(1)

The Department of Finance and Personnel may direct the payment out of the Consolidated Fund of sums into the Insolvency Account.

(2)

The Department of Finance and Personnel shall certify to the Assembly the reason for any payment under paragraph (1).

(3)

The Department may pay sums out of the Insolvency Account into the Consolidated Fund.

Insolvency rules

Insolvency rulesF659F660F661[[[359.

(1)

The F662Department of Justice may, with the concurrence of the Department and after consultation with the committee appointed under Article 360, make rules for the purpose of giving effect to this OrderF663 or the F664EU Regulation.

F665(1A)

Rules that affect court procedure may be made under paragraph (1) only with the concurrence of the Lord Chief Justice.

(1B)

The Lord Chief Justice may nominate any of the following to exercise his functions under paragraph (1A)—

(a)

the holder of one of the offices listed in Schedule 1 to the Justice (Northern Ireland) Act 2002;

(b)

a Lord Justice of Appeal (as defined in section 88 of that Act).

(2)

Without prejudice to the generality of paragraph (1), or to any provision of this Order by virtue of which rules under this Article may be made with respect to any matter, rules under this Article may contain—

(a)

any such provision as is specified in Schedule 5 or corresponds to provision contained immediately before the coming into operation of this Order in rules made, or having effect as if made under Article 613(1) and (2) of F666the Companies (Northern Ireland) Order 1986 (old winding‐up rules), and

(b) F667

any such provision as is specified in Schedule 6 or corresponds to provision contained immediately before the coming into operation of this Order in rules made under Article 33(1) and (2) of the Bankruptcy Amendment (Northern Ireland) Order 1980F668 (old bankruptcy rules), and

(c)

provision for enabling the Master (Bankruptcy) to exercise such of the jurisdiction conferred for the purposes of this Order on the High Court as may be prescribed and for enabling the review of any such jurisdiction, and

(d)

such incidental, supplemental and transitional provision as may appear to the F669Department of Justice or, as the case may be, the Department necessary or expedient.

F663(2A) F667

For the purposes of paragraph (2), a reference in Schedule 5 or Schedule 6 to doing anything under or for the purposes of a provision of this Order includes a reference to doing anything under or for the purposes of the F670EU Regulation (in so far as the provision of this Order relates to a matter to which the F670EU Regulation applies).

(2B)

Rules under this Article for the purpose of giving effect to the F671EU Regulation may not create F672a new relevant offence (see Article 366A).

(3)

In Schedule 5 “liquidator” includes a provisional liquidator; and references in this Article to this Order are to be read as including F673the Companies Acts so far as relating to, and to matters connected with or arising out of, the insolvency or winding up of companies.

(4)

Rules under this Article shall be subject toF674 negative resolution.

(5)

Regulations made by the Department under a power conferred by rules under this Article shall be subject to affirmative resolution.

(6)

Nothing in this Article prejudices any power to make rules of court.]]]

Committee to review rules under Article 359360.

(1)

There shallF675be a committee appointed by the Lord Chief Justice to keep under review rules for the time being in force under Article 359 and to make recommendations to the F676Department of Justice as to any changes in the rules that may appear to the committee to be desirable.

(2)

The committee shall consist of—

(a)

the Chancery Judge;

(b)

the Master (Bankruptcy);

(c)

a practising barrister‐at‐law;

(d)

a practising solicitor of the Supreme Court;

(e)

a practising accountant; and

(f)

such additional persons, if any, as appear to theF677Lord Chief Justice to have qualifications or experience that would be of value to the committee in considering any matter with which it is concerned.

F678(3)

The Lord Chief Justice may nominate any of the following to exercise his functions under this Article—

(a)

the holder of one of the offices listed in Schedule 1 to the Justice (Northern Ireland) Act 2002;

(b)

a Lord Justice of Appeal (as defined in section 88 of that Act).

Fees

Fees ordersF679F680F681[[[361.

(1)

The Department may, with the concurrence of the Department of Finance and Personnel, by order subject to affirmative resolution specify the fees which shall be paid in respect of—

F682(za)

the costs of persons acting as approved intermediaries under Part 7A;

(a)

proceedings under this Order other than fees to which section 116 of the Judicature (Northern Ireland) Act 1978F683 (court fees, etc.) applies; and

(b)

the performance by the official receiver or the Department of functions under this Order;

and the Department of Finance and Personnel may direct by whom and in what manner the fees are to be collected and accounted for.

(2)

The Department may, with the concurrence of the Department of Finance and Personnel, by order subject to negative resolution provide for sums to be deposited, by such persons, in such manner and in such circumstances as may be specified in the order, by way of security for—

(a)

fees payable by virtue of this Article, and

(b) F684

fees payable to any person who has prepared an insolvency practitioner's report under Article 248.

(3)

An order under this Article may contain such incidental, supplemental, and transitional provisions as may appear to the Department or (as the case may be) the Department of Finance and Personnel necessary or expedient.

(4)

References in paragraph (1) to this Order are to be read as including F685the Companies Acts so far as relating to, and to matters connected with or arising out of, the insolvency or winding up of companies.

(5)

Nothing in this Article prejudices any power to make rules of court.]]]

F686Fees orders (supplementary)361A.

F687A1

The Department—

(a)

may, with the concurrence of the Department of Finance and Personnel, by order subject to negative resolution require a person or body to pay a fee in connection with the grant or maintenance of a designation of that person or body as a competent authority under Article 208U, and

(b)

may refuse to grant, or may withdraw, any such designation where a fee is not paid.

(1)

The Department—

(a)

may, with the concurrence of the Department of Finance and Personnel, by order subject to negative resolution require a body to pay a fee in connection with the grant or maintenance of recognition of the body under Article 350, and

(b)

may refuse recognition, or revoke an order of recognition under Article 350(1) F688or (2) by a further order, where a fee is not paid.

F689(1A)

Fees under paragraph (1) may vary according to whether the body is recognised under Article 350(1) (body providing full and partial authorisation) or under Article 350(2) (body providing partial authorisation).

F690(1B)

In setting under paragraph (1) the amount of a fee in connection with maintenance of recognition, the matters to which the Department may have regard include, in particular, the costs of the Department in connection with any functions under Articles 350D, 350E, 350J, 350K and 350N.

(2)

The Department—

(a)

may, with the concurrence of the Department of Finance and Personnel, by order subject to negative resolution require a person to pay a fee in connection with the grant or maintenance of authorisation of the person under Article 352, and

(b)

may disregard an application or withdraw an authorisation where a fee is not paid.

(3)

The Department may by order subject to negative resolution require the payment of fees in respect of—

(a)

the operation of the Insolvency Account;

(b)

payments into and out of that Account.

(4)

The Department of Finance and Personnel may direct by whom and in what manner the fees are to be collected and accounted for.

(5)

Paragraphs (3) and (5) of Article 361 apply to fees under this Article as they apply to fees under that Article.

F691(5A)

Article 350M applies for the purposes of an order under paragraph (1)(b) as it applies for the purposes of a revocation order made under Article 350L.

(6)

Nothing in this Article prejudices the provision contained in Article 361.

Specification, increase and reduction of money sums relevant in the operation of this Order

Monetary limits362.

(1)

The Department may by order—

F692(za)

increase or reduce any of the money sums for the time being specified in the following provisions of Part 1A—

  • Article 13DG(1) (maximum amount of credit which company may obtain without disclosing moratorium);

  • Article 13DJ(2) (maximum amount for certain payments without obtaining monitor consent etc);

  • Article 13G(2) (minimum value of company property concealed or fraudulently removed, affecting criminal liability of company's officer); or

(a) F693

increase or reduce any of the money sums for the time being specified in—

  • Article 103(1)(a) (minimum debt for service of demand on company by unpaid creditor);

  • Article 170(1)(a) and (b) (minimum value of company property concealed or fraudulently removed, affecting criminal liability of company's officer);

  • Article 186(1) (minimum debt for service of demand on unregistered company by unpaid creditor);

  • F694...

  • F694...

(b) F693

specify amounts for the purposes of the following provisions—

  • F695Article 208S(4) (maximum amount of credit which a person in respect of whom a debt relief order is made may obtain without disclosure of his status);

  • Article 247 (minimum value of debtor's estate determining whether immediate bankruptcy order should be made; small bankruptcies level);

  • F696Article 286A (value of property below which application for sale, possession or charge to be dismissed);

  • Article 325(1)(b) and (3) (minimum amount of concealed debt, or value of property concealed or removed, determining criminal liability under the Article);

  • Article 329(1)(a) (minimum value of property taken by a bankrupt out of Northern Ireland, determining his criminal liability);

  • Article 331(1)(a) (maximum amount of credit which bankrupt may obtain without disclosure of his status);

  • Article 332(2)(a) (exemption of bankrupt from criminal liability for failure to keep proper accounts, if unsecured debts not more than the prescribed minimum);

  • Article 335(2)(d) (minimum value of goods removed by the bankrupt, determining his liability to arrest)

  • F697paragraphs 6 to 8 of Schedule 2ZA (maximum amount of a person's debts, monthly surplus income and property for purposes of obtaining a debt relief order); F698...

F698(c)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

.

(2)

An order under this Article may contain such transitional provisions as may appear to the Department necessary or expedient.

(3)

No order shall be made under this Article unless a draft of it has been laid before, and approved by a resolution of the Assembly.

Insolvency practice

Regulations for purposes of Part XII363.

F699(1)

The Department may make regulations for the purpose of giving effect to Part 12 of this Order.

F700(2)

Without prejudice to the generality of F701paragraph (1) or any provision of Part XII by virtue of which regulations may be made with respect to any matter, F702regulations under this Article may contain —

(a)

provision as to the matters to be taken into account in determining whether a person is a fit and proper person to act as an insolvency practitioner;

(b)

provision prohibiting a person from so acting in prescribed cases, being cases in which a conflict of interest will or may arise;

(c)

provision imposing requirements with respect to—

(i)

the preparation and keeping by a person who acts as an insolvency practitioner of prescribed books, accounts and other records, and

(ii)

the production of those books, accounts and records to prescribed persons;

(d)

provision conferring power on prescribed persons—

(i)

to require any person who acts or has acted as an insolvency practitioner to answer any inquiry in relation to a case in which he is so acting or has so acted, and

(ii)

to apply to a court to examine such a person or any other person on oath concerning such a case;

(e)

provision making non‐compliance with any of the regulations a criminal offence; and

(f)

such incidental, supplemental and transitional provisions as may appear to the Department necessary or expedient.

F703(3)

In making regulations under this Article, the Department must have regard to the regulatory objectives (as defined by Article 350C(3)).

Other order‐making powers

Insolvent partnerships364. F704

(1)

The F705Department of Justice may, by order made with the concurrence ofF706 the Lord Chief Justice and the Department, provide that such provisions of this Order, Part VI of the Judgments Enforcement (Northern Ireland) Order 1981F707, the Land Registration Act (Northern Ireland) 1970F708 or the Registration of Deeds Acts as may be specified in the order shall apply in relation to insolvent partnerships with such modifications as may be so specified.

F709(1ZA)

The Lord Chief Justice of Northern Ireland may nominate any of the following to exercise his functions under paragraph (1)—

(a)

the holder of one of the offices listed in Schedule 1 to the Justice (Northern Ireland) Act 2002;

(b)

a Lord Justice of Appeal (as defined in section 88 of that Act).

F710(1A)

An order under this Article may make provision in relation to the F711EU Regulation.

(1B)

Provision made by virtue of this Article in relation to the F712EU Regulation may not create F713a new relevant offence (see Article 366A).

(2)

An order under this Article shall be subject toF714 negative resolution.

Insolvent estates of deceased persons365. F715

(1)

The F716Department of Justice may, by order made with the concurrence ofF717 the Lord Chief Justice and the Department, provide that such provisions of this Order, Part VI of the Judgments Enforcement (Northern Ireland) Order 1981, the Land Registration Act (Northern Ireland) 1970 or the Registration of Deeds Acts as may be specified in the order shall applyF718 in relation to the administration of the insolvent estates of deceased persons with such modifications as may be so specified.

F719(1ZA)

The Lord Chief Justice of Northern Ireland may nominate any of the following to exercise his functions under paragraph (1)—

(a)

the holder of one of the offices listed in Schedule 1 to the Justice (Northern Ireland) Act 2002;

(b)

a Lord Justice of Appeal (as defined in section 88 of that Act).

F720(1A)

An order under this Article may make provision in relation to the F721EU Regulation.

(1B)

Provision made by virtue of this Article in relation to the F722EU Regulation may not create F723a new relevant offence (see Article 366A).

(2)

An order under this Article shall be subject toF724negative resolution.

(3)

For the purposes of this Article the estate of a deceased person is insolvent if, when realised, it will be insufficient to meet in full all the debts and other liabilities to which it is subject.

F725Insolvent estates: joint tenancies365A.

(1)

This Article applies where—

(a)

an insolvency administration order has been made in respect of the insolvent estate of a deceased person,

(b)

the petition for the order was presented after the commencement of this Article and within the period of 5 years beginning with the day on which he died, and

(c)

immediately before his death he was beneficially entitled to an interest in any property as joint tenant.

(2)

For the purpose of securing that debts and other liabilities to which the estate is subject are met, the High Court may, on an application by the trustee appointed pursuant to the insolvency administration order, make an order under this Article requiring the survivor to pay to the trustee an amount not exceeding the value lost to the estate.

(3)

In determining whether to make an order under this Article, and the terms of such an order, the High Court must have regard to all the circumstances of the case, including the interests of the deceased's creditors and of the survivor; but, unless the circumstances are exceptional, the Court must assume that the interests of the deceased's creditors outweigh all other considerations.

(4)

The order may be made on such terms and conditions as the High Court thinks fit.

(5)

Any sums required to be paid to the trustee in accordance with an order under this Article shall be comprised in the estate.

(6)

The modifications of this Order which may be made by an order under Article 365 include any modifications which are necessary or expedient in consequence of this Article.

(7)

In this Article “survivor” means the person who, immediately before the death, was beneficially entitled as joint tenant with the deceased or, if the person who was so entitled dies after the making of the insolvency administration order, his personal representatives.

(8)

If there is more than one survivor—

(a)

an order under this Article may be made against all or any of them, but

(b)

no survivor shall be required to pay more than so much of the value lost to the estate as is properly attributable to him.

(9)

In this Article—

  • “insolvency administration order” has the same meaning as in any order under Article 365 having effect for the time being,

  • “value lost to the estate” means the amount which, if paid to the trustee, would in the High Court's opinion restore the position to what it would have been if the deceased had been adjudged bankrupt immediately before his death.

F726Formerly authorised banks366.

F727(1)

The Department may, by order subject to negative resolution, after consultation with the F728Financial Conduct Authority and the Prudential Regulation Authority provide that specified provisions in F729Parts 1A to 7 shall apply with specified modifications in relation to any person who—

(a)

has a liability in respect of a deposit which he accepted in accordance with the Banking Act 1979 or 1987, but

(b)

does not have permission under Part IV of the Financial Services and Markets Act 2000 (regulated activities) to accept deposits.

(1A)

Paragraph (1)(b) shall be construed in accordance with—

(a)

section 22 of the Financial Services and Markets Act 2000 (classes of regulated activity and categories of investment),

(b)

any relevant order under that section, and

(c)

Schedule 2 to that Act (regulated activities).

(2)

F730. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F731Meaning of “relevant offence”366A.

In Articles 359(2B), 364(1B) and 365(1B), a “relevant offence” is a criminal offence punishable with imprisonment for more than two years or punishable on summary conviction with imprisonment for more than three months or with a fine of more than level 5 on the standard scale (if not calculated on a daily basis) or with a fine of more than £100 a day.

PART XIVMISCELLANEOUS

Provisions against debt avoidance

Transactions defrauding creditors367.

(1)

This Article relates to transactions entered into at an undervalue; and a person enters into such a transaction with another person if—

(a)

he makes a gift to the other person or he otherwise enters into a transaction with the other on terms that provide for him to receive no consideration;

(b)

he enters into a transaction with the other in consideration of marriageF732 or the formation of a civil partnership; or

(c)

he enters into a transaction with the other for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by himself.

(2)

Where a person has entered into such a transaction, the High Court may, if satisfied as mentioned in paragraph (3), make such order as it thinks fit for—

(a)

restoring the position to what it would have been if the transaction had not been entered into, and

(b)

protecting the interests of persons who are victims of the transaction.

(3)

In the case of a person entering into such a transaction, an order shall only be made if the High Court is satisfied that it was entered into by him for the purpose—

(a)

of putting assets beyond the reach of a person who is making, or may at some time make, a claim against him, or

(b)

of otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make.

(4)

In relation to a transaction at an undervalue, references in this Article and Article 368 to a victim of the transaction are to a person who is, or is capable of being, prejudiced by it; and in Articles 368 and 369 the person entering into the transaction is referred to as “the debtor”.

Those who may apply for an order under Article 367368.

(1)

An application for an order under Article 367 shall not be made in relation to a transaction except—

(a)

in a case where the debtor has been adjudged bankrupt or is a body corporate which is being wound up orF733is in administration, by the official receiver, by the trustee of the bankrupt's estate or the liquidator or administrator of the body corporate or (with the leave of the High Court) by a victim of the transaction;

(b)

in a case where a victim of the transaction is bound by a voluntary arrangement approved under Part II or Part VIII, by the supervisor of the voluntary arrangement or by any person who (whether or not so bound) is such a victim; or

(c)

in any other case, by a victim of the transaction.

(2)

An application made under any of the sub‐paragraphs of paragraph (1) is to be treated as made on behalf of every victim of the transaction.

Provision which may be made by order under Article 367369.

(1)

Without prejudice to the generality of Article 367, an order made under that Article with respect to a transaction may (subject as follows)—

(a)

require any property transferred as part of the transaction to be vested in any person, either absolutely or for the benefit of all the persons on whose behalf the application for the order is treated as made;

(b)

require any property to be so vested if it represents, in any person's hands, the application either of the proceeds of sale of property so transferred or of money so transferred;

(c)

release or discharge (in whole or in part) any security given by the debtor;

(d)

require any person to pay to any other person in respect of benefits received from the debtor such sums as the High Court may direct;

(e)

provide for any surety or guarantor whose obligations to any person were released or discharged (in whole or in part) under the transaction to be under such new or revived obligations as the High Court thinks appropriate;

(f)

provide for security to be provided for the discharge of any obligation imposed by or arising under the order, for such an obligation to be charged on any property and for such security or charge to have the same priority as a security or charge released or discharged (in whole or in part) under the transaction.

(2)

An order under Article 367 may affect the property of, or impose any obligation on, any person whether or not he is the person with whom the debtor entered into the transaction; but such an order—

(a)

shall not prejudice any interest in property which was acquired from a person other than the debtor and was acquired in good faith, for value and without notice of the relevant circumstances, or prejudice any interest deriving from such an interest, and

(b)

shall not require a person who received a benefit from the transaction in good faith, for value and without notice of the relevant circumstances to pay any sum unless he was a party to the transaction.

(3)

For the purposes of this Article the relevant circumstances in relation to a transaction are the circumstances by virtue of which an order under Article 367 may be made in respect of the transaction.

(4)

In this Article “security” means any mortgage, charge, lien or other security.

Disqualifications, reviews and reports

F734Assembly disqualification370.

F735(1)

If the High Court makes any order mentioned in paragraph (1A) in respect of a member of the Assembly, the Court shall notify the presiding officer of the Assembly.

(1A)

The orders are—

(a)

a bankruptcy restrictions order;

(b)

a debt relief restrictions order;

(c)

an interim bankruptcy restrictions order; or

(d)

an interim debt relief restrictions order.

(2)

If the Department accepts a bankruptcy restrictions undertaking F736or a debt relief restrictions undertaking made by a member of the Assembly, the Department shall notify the presiding officer of the Assembly.

F737Irrelevance of privilege370A.

A statutory provision about insolvency applies in relation to a member of the Assembly irrespective of any privilege of the Assembly.

Review, etc., by High Court of its orders371.

The High Court may review, rescind or vary any order made by it in the exercise of the jurisdiction under this Order.

Annual report372.

The Department shall cause an annual general report of matters for which it and its officers, including the official receiver, are responsible under this Order to be prepared and laid before the Assembly.

Supplemental

Judicial notice of court documents376.

In all proceedings under this Order, all courts, judges and persons judicially acting, and all officers, judicial or ministerial, of any court, or employed in enforcing the process of any court shall take judicial notice—

(a)

of the signature of any officer of the High Court in Northern Ireland or of the High Court or a county court in England and Wales, or of the Court of Session or a sheriff court in Scotland, and also

(b)

of the official seal or stamp of the several offices of the High Court in Northern Ireland or England and Wales or of the Court of Session, appended to or impressed on any document made, issued or signed under the provisions of this Order or F746the Companies Acts, or any official copy of such a document.

Exemption from stamp duty377.

Stamp duty shall not be charged on—

(a)

any document, being a deed, conveyance, assignment, surrender, admission or other assurance relating solely to property which—

(i)

in the case of a winding up by the High Court or of a creditors' voluntary winding up, forms part of the company's assets; or

(ii)

is comprised in a bankrupt's estate;

and which, after the execution of that document, is or remains at law or in equity part of that company's assets or the property of the bankrupt or of the trustee in bankruptcy, as the case may require,

(b)

any order, certificate or other instrument relating solely to—

(i)

the assets of any company which is being wound up as mentioned in head (a)(i) or any proceedings under such a winding up, or

(ii)

the property of a bankrupt or any bankruptcy proceedings.

Crown application378.

For the avoidance of doubt it is hereby declared that provisions of this Order bind the Crown, including the Crown in right of Her Majesty's government in the United Kingdom, so far as affecting or relating to the following matters, namely—

(a)

remedies against, or against the property of, companies or individuals;

(b)

priorities of debts;

(c)

transactions at an undervalue or preferences;

(d)

voluntary arrangements approved under Part II or Part VIII, and

(e)

discharge from bankruptcy.

Transitional provisions and savings379. F747

The transitional provisions and savings set out in Schedule 8 shall have effect, the Schedule comprising the following Parts—

  • Part I: company insolvency and winding up (matters arising before the date of the coming into operation of this Order, and continuance of proceedings in certain cases as before that date);

  • Part II: individual insolvency (matters so arising, and continuance of bankruptcy proceedings in certain cases as before that date); and

  • Part III: other general transitional provisions and savings.

Annotations:
Amendments (Textual)

F747mod. by SR 2004/307

Art.380 rep. by 1996 NI 16

Art.381—Amendments

Art.382—Repeals

F748PART 15SUPPLEMENTARY PROVISIONS

Introductory383.

The provisions of this Part have effect for the purposes of—

(a)

F749Parts 1A to 7 (company insolvency; companies winding-up),

(b)

Articles 2 and 5 to 8 (interpretation), and

(c)

Articles 359, 360, 361 and 362 in Part 13.

Representation of corporations at meetings384.

(1)

If a corporation is a creditor or debenture-holder, it may by resolution of its directors or other governing body authorise a person or persons to act as its representative or representatives—

(a)

at any meeting of the creditors of a company held in pursuance of this Order or of rules made under it, or

(b)

at any meeting of a company held in pursuance of the provisions contained in a debenture or trust deed.

(2)

Where the corporation authorises only one person, that person is entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if it were an individual creditor or debenture-holder.

(3)

Where the corporation authorises more than one person, any one of them is entitled to exercise the same powers on behalf of the corporation as the corporation could exercise if it were an individual creditor or debenture-holder.

(4)

Where the corporation authorises more than one person and more than one of them purport to exercise a power under paragraph (3)—

(a)

if they purport to exercise the power in the same way, the power is treated as exercised in that way;

(b)

if they do not purport to exercise the power in the same way, the power is treated as not exercised.

Legal professional privilege385.

In proceedings against a person for an offence under this Order nothing in this Order is to be taken to require any person to disclose any information that he is entitled to refuse to disclose on grounds of legal professional privilege.

F750Enforcement of company's filing obligations386.

(1)

This Article applies where a company has made default in complying with any obligation under this Order—

(a)

to deliver a document to the registrar, or

(b)

to give notice to the registrar of any matter.

(2)

The registrar, or any member or creditor of the company, may give notice to the company requiring it to comply with the obligation.

(3)

If the company fails to make good the default within 14 days after service of the notice, the registrar, or any member or creditor of the company, may apply to the High Court for an order directing the company, and any specified officer of it, to make good the default within a specified time.

(4)

The High Court's order may provide that all costs of or incidental to the application are to be borne by the company or by any officers of it responsible for the default.

(5)

This Article does not affect the operation of any enactment imposing penalties on a company or its officers in respect of any such default.

Application of filing obligations to overseas companies387.

The provisions of this Order requiring documents to be forwarded or delivered to, or filed with, the registrar apply in relation to an overseas company that is required to register particulars under section 1046 of the Companies Act 2006 as they apply in relation to a company registered under that Act in Northern Ireland.