The Insolvency (Northern Ireland) Order 1989

Making, etc., of administration order N.I.

Power of High Court to make order N.I.

21.—(1) Subject to this Article, if the High Court—

(a) is satisfied that a company is or is likely to become unable to pay its debts (within the meaning of Article 103), and

(b) considers that the making of an order under this Article would be likely to achieve one or more of the purposes mentioned in paragraph (3),

the Court may make an administration order in relation to the company.

[F1 (1A) For the purposes of a petition presented by the Financial Services Authority alone or together with any other party, an authorised deposit taker who defaults in an obligation to pay any sum due and payable in respect of a relevant deposit is deemed to be unable to pay its debts as mentioned in paragraph (1).

(1B) In paragraph (1A)—

(a) “authorised deposit taker” means a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits, but excludes a person who has such permission only for the purpose of carrying on another regulated activity in accordance with that permission; and

(b) “relevant deposit” must be read with—

(i) section 22 of the Financial Services and Markets Act 2000,

(ii) any relevant order under that section, and

(iii) Schedule 2 to that Act,

but any restriction on the meaning of deposit which arises from the identity of the person making it is to be disregarded.]

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

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

(a) the survival of the company, and the whole or any part of its undertaking, as a going concern;

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

(c )F2 the sanctioning under Article 418 of the Companies Order of a compromise or arrangement between the company and any such persons as are mentioned in that Article; and

(d) a more advantageous realisation of the company's assets than would be effected on a winding up;

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

[F1 (4 )F3  An administration order shall not be made in relation to a company after it has gone into liquidation.

(5 )F3  An administration order shall not be made against a company if—

[F4 (a) it effects or carries out contracts of insurance, but is not—

(i) exempt from the general prohibition, within the meaning of section 19 of the Financial Services and Markets Act 2000, in relation to effecting or carrying out contracts of insurance,or

(ii) an authorised deposit taker within the meaning given by paragraph (1B), and effecting or carrying out contracts of insurance in the course of a banking business;]

(b) it continues to have a liability in respect of a deposit which was held by it in accordance with the Banking Act 1979 or the Banking Act 1987[F5 , but is not an authorised deposit taker, within the meaning given by paragraph (1B)].

(6 )F3  Paragraph (5)(a) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.]

[F6 (7) In this Part a reference to a company includes a reference to a company in relation to which an administration order may be made by virtue of Article 3 of the EC Regulation.]

F1 SI 2001/3649

F2 mod. by 1997 c. 32

F3 mod. by SR 2004/307

F4 SI 2004/355

F5 SI 2002/1555

F6 SR 2002/334

Application for order N.I.

22.—(1 )F7  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),[F8 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—

F9 (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).

F7 mod. by SR 2004/307

F8 1994 NI 15

F9 prosp. inserted and renumbered 1990 NI 10

Effect of application N.I.

23.—(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 )F10 no resolution may be passed or order made for the winding up of the company;

[F11 (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 )F12 for the appointment of an administrative receiver of the company, or

(c )F12 for the carrying out by such a receiver (whenever appointed) of any of his functions.

(3 )F13  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.

F10 mod. by SR 2004/307

F11 2002 NI 6

F12 mod.by 1997 c. 32

F13 mod.by 1997 c. 32

Effect of order N.I.

24.—(1) On the making of an administration order—

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

(b )F14 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 )F15 no resolution may be passed or order made for the winding up of the company;

(b )F16 no administrative receiver of the company may be appointed;

[F17 (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) F14 Where 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 )F18  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).

F14 mod.by 1997 c. 32

F15 mod. by SR 2004/307

F16 mod. by 1997 c. 32

F17 2002 NI 6

F18 mod.by 1997 c. 32

Notification of order N.I.

25.—(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.