Insurance Companies Act 1982 (repealed)

Winding up U.K.

53 Winding up of insurance companies under Companies Acts. U.K.

The court may order the winding up, in accordance with the [F1 Insolvency Act 1986] or, as the case may be, the [F2 Companies (Northern Ireland) Order 1986][F2 Insolvency (Northern Ireland) Order 1989], of an insurance company to which this Part of this Act applies and the provisions of [F3 the][F1 that Act of 1986] or, as the case may be, [F4 that Order of 1986][F4 that Order of 1989] shall apply accordingly subject to the modification that the company may be ordered to be wound up on the petition of ten or more policy holders owning policies of an aggregate value of not less than £10,000.

Such a petition shall not be presented except by leave of the court, and leave shall not be granted until a prima facie case has been established to the satisfaction of the court and until security for costs for such amount as the court may think reasonable has been given.

Textual Amendments

F1 Words inserted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14

F2 Words “Insolvency" to “1989" substituted (prosp.) for words “Companies" to “1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 33(a) (which latter words were substituted by S.I. 1986/1305 (N.I. 9), art. 23, Sch. 1 Pt. II)

F3 Word substituted by Companies Consolidation (Consequential Provisions) Act 1985 (c. 9, SIF 27), s. 30, Sch. 2

F4 Words “that" to “1989" substituted (prosp.) for words “that" to “1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 33(b) (which latter words were substituted by S.I. 1986/1305 (N.I. 9), art. 23, Sch. 1 Pt. II)

54 Winding up on petition of Secretary of State. U.K.

(1) The Secretary of State may present a petition for the winding up, in accordance with [F5 Part IV or V of the Insolvency Act 1986], of an insurance company to which this Part of this Act applies, being a company which may be wound up by the court under the provisions of that Act, on the ground—

(a) that the company is unable to pay its debts within the meaning of sections [F5 123 or sections 222 to 224] of that Act;

(b) that the company has failed to satisy an obligation to which it is or was subject by virtue of this Act or any enactment repealed by this Act or by the M1 Insurance Companies Act 1974; or

[F6 (bb) that the company has failed to satisfy an obligation to which it is subject by virtue of any provision of the law of another member State giving effect to the general insurance Directives;]

(c) that the company, being under the obligation imposed by [F7 sections 221 and 222 of the Companies Act] with respect to the keeping of accounting records, has failed to satisfy that obligation or to produce records kept in satisfaction of that obligation and that the Secretary of State is unable to ascertain its financial position.

(2) The Secretary of State may present a petition for the winding up, in accordance with the [F8 Companies (Northern Ireland) Order 1986][F8 Part V or VI of the Insolvency (Northern Ireland) Order 1989], of an insurance company to which this Part of this Act applies, being a company which may be wound up by the court under the provisions of that Act, on the ground—

(a) that the company is unable to pay its debts within the meaning of F9 [F10 Articles 479 and 480 or Articles 616 to 619][F10 Article 103 or Articles 186 to 188] of that Order

(b) that the company has failed to satisfy an obligation to which it is or was subject by virtue of this Act or any enactment repealed by this Act or by the M2 Insurance Companies Act 1980; or

[F11 (bb) that the company has failed to satisfy an obligation to which it is subject by virtue of any provision of the law of another member State giving effect to the general insurance Directives;]

(c) that the company, being under an obligation imposed by F12 Articles 229 to 231 of the [F13 Companies (Northern Ireland) Order 1986][F13 Part V or VI of the Insolvency (Northern Ireland) Order 1989] with respect to the keeping of accounting records, has failed to satisfy that obligation or to produce records kept in satisfaction of that obligation and that the Secretary of State is unable to ascertain its financial position;

and [F14 Article 433 of the said Order of 1986] shall have effect in relation to such an insurance company as if any reference to the Department of Commerce for Northern Ireland were a reference to the Secretary of State.

(3) In any proceedings on a petition to wind up an insurance company presented by the Secretary of State under subsection (1) of (2) above, evidence that the company was insolvent—

(a) at the close of the period to which—

(i) the accounts and balance sheet of the company last deposited under section 22 above; or

(ii) any statement of the company last deposited under section 25 above,

relate; or

(b) at any date or time specified in a requirement under section 42 or 44 above,

shall be evidence that the company continues to be unable to pay its debts, unless the contrary is proved.

(4) If, in the case of an insurance company to which this Part of this Act applies, being a company which may be wound up by the court under the provisions of the [F15 Insolvency Act 1986] or, as the case may be, the [F16 Companies (Northern Ireland) Order 1986][F16 Insolvency (Northern Ireland) Order 1989], it appears to the Secretary of State that it is expedient in the public interest that the company should be wound up, he may, unless the company is already being wound up by the court, present a petition for it to be so wound up if the court thinks it just and equitable for it to be so wound up.

(5) Where a petition for the winding up of an insurance company to which this Part of this Act applies is presented by a person other than the Secretary of State, a copy of the petition shall be served on him and he shall be entitled to be heard on the petition.

Textual Amendments

F5 Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14

F6 S. 54(1)(bb) inserted by S.I. 1990/1333, reg. 8(3)

F7 Words substituted by Companies Consolidation (Consequential Provisions) Act 1985 (c. 9, SIF 27), s. 30, Sch. 2

F8 Words commencing “Part V or VI" substituted (prosp.) for words “Companies (Northern Ireland) Order 1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 34(a)(i) (the latter words having previously been substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II)

F9 Words substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II

F10 Words “Article 103" to “188" substituted (prosp.) for words “Article 479" to “619" by S.I. 1989/2405 (N.I. 19), art. 1(2), 381(2), Sch. 9 para. 34(a)(ii)

F11 S. 54(2)(bb) inserted by S.I. 1990/1333, reg. 8(3)

F12 Words substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II

F13 Words “Part" to “1989" substituted (prosp.) for words “Companies" to “1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 34(a)(i)

F14 Words substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II

F15 Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14

F16 “Insolvency (Northern Ireland) Order 1989" substituted (prosp.) for “Companies (Northern Ireland) Order 1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 34(b)(i) (the latter words having previously been substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II)

Marginal Citations

M1 1974 c. 49.

M2 1980 c. 25.

55 Winding up of insurance companies with long term business. U.K.

(1) No insurance company to which this Part of this Act applies which is an unincorporated body and carries on long term business shall be made the subject of bankruptcy proceedings or, in Scotland, sequestration proceedings.

(2) No insurance company to which this Part of this Act applies which carries on long term business shall be wound up voluntarily.

(3) Section 29(1) above shall not have effect in relation to the winding up of a company to which section 28(1) above applies but, subject to subsection (4) below and to rules made by virtue of section 59(2) below, in any such winding up—

(a) the assets representing the fund or funds maintained by the company in respect of its long term business shall be available only for meeting the liabilities of the company attributable to that business;

(b) the other assets of the company shall be available only for meeting the liabilities of the company attributable to its other business.

(4) Where the value of the assets mentioned in either paragraph of subsection (3) above exceeds the amount of the liabilities mentioned in that paragraph the restriction imposed by that subsection shall not apply to so much of those assets as represents the excess.

(5) In relation to the assets falling within either paragraph of subsection (3) above the creditors mentioned in [F17 section 168(2) of the Insolvency Act 1986] or, as the case may be, [F18 paragraphs (1) to (3) of Article 500 of the Companies (Northern Ireland) Order 1986][F18 Article 143(2) of the Insolvency (Northern Ireland) Order 1989] shall be only those who are creditors in respect of liabilities falling within that paragraph; and any general meetings of creditors summoned for the purposes of that section shall accordingly be separate general meetings of the creditors in respect of the liabilities falling within each paragraph.

(6) Where under section [F19 212 of the Insolvency Act 1986] or [F20 Article 584 of the Companies (Northern Ireland) Order 1986][F20 Article 176 of the Insolvency (Northern Ireland) Order 1989] (defalcations of directors etc. disclosed in course of winding up) a court orders any money or property to be repaid or restored to a company or any sum to be contributed to its assets then, if and so far as the wrongful act which is the reason for the making of the order related to assets representing a fund or funds maintained by the company in respect of its long term business, the court shall include in the order a direction that the money, property or contribution shall be treated for the purposes of this Act as assets of that fund or those funds and this Act shall have effect accordingly.

Textual Amendments

F17 Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14

F18 Words “Article" to “1989" substituted (prosp.) for words “paragraphs" to “1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 35(a) (which latter words were substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II)

F19 Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14

F20 Words “Article" to “1989" substituted (prosp.) for words “Article" to “1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 35(b) (which latter words were substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II

56 Continuation of long term business of insurance companies in liquidation. U.K.

(1) This section has effect in relation to the winding up of an insurance company to which this Part of this Act applies, being a company carrying on long term business.

(2) The liquidator shall, unless the court otherwise orders, carry on the long term business of the company with a view to its being transferred as a going concern to another insurance company, whether an existing company or a company formed for that purpose; and, in carrying on that business as aforesaid, the liquidator may agree to the variation of any contracts of insurance in existence when the winding up order is made but shall not effect any new contracts of insurance.

(3) If the liquidator is satisfied that the interests of the creditors in respect of liabilities of the company attributable to its long term business require the appointment of a special manager of the company’s long term business, he may apply to the court, and the court may on such application appoint a special manager of that business to act during such time as the court may direct, with such powers, including any of the powers of a receiver or manager, as may be entrusted to him by the court.

(4) [F21 Section 177(5) of the Insolvency Act 1986] or, in the case of a special manager appointed in proceedings in Northern Ireland, F22 [F23 Article 517(3)] of the [F23 Companies (Northern Ireland) Order 1986][F22 Article 151(5) of the Insolvency (Northern Ireland) Order 1989] (special manager to give security and receive remuneration) shall apply to a special manager appointed under subsection (3) above as they apply to a special manager appointed under [F21 section 177 of the said Act of 1986] or, as the case may be, [F24 Article 517 of the said Order of 1986][F24 Article 151 of the said Order of 1989]

(5) The court may, if it thinks fit and subject to such conditions (if any) as it may determine, reduce the amount of the contracts made by the company in the course of carrying on its long term business.

(6) The court may, on the application of the liquidator, a special manager appointed under subsection (3) above or the Secretary of State, appoint an independent actuary to investigate the long term business of the company and to report to the liquidator, the special manager or the Secretary of State, as the case may be, on the desirability or otherwise of that business being continued and on any reduction in the contracts made in the course of carrying on that business that may be necessary for its successful continuation.

(7) Notwithstanding [F25 section 167 of, and Schedule 4 to, the Insolvency Act 1986] or, as the case may be, [F26 Article 499(1) of the said Order of 1986][F26 Article 142 of, and Schedule 2 to, the Insolvency (Northern Ireland) Order 1989] (which requires a liquidator to obtain the sanction of the court or [F27 a specified committee] for the bringing of legal proceedings in the name of and on behalf of the company) the liquidator may without any such sanction make an application in the name of and on behalf of the company under section 49 above.

(8) In this section “the court” means the court having jurisdiction to wind up the company.

Textual Amendments

F21 Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14

F22 Words “Article" to “1989" substituted (prosp.) for words “Article" to “1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 36(a)(i)

F23 Words substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II

F24 Words “Article" to “1989" substituted (prosp.) for words “Article" to “1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 36(a)(ii) (which latter words were substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II)

F25 Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14

F26 Words “Article" to “1989" substituted (prosp.) for words “Article" to “1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 36(b)(i) (which latter words were substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II

F27 Words substituted by Insolvency Act 1985 (c. 65, SIF 66), s. 235(1), Sch. 8 para. 37(3)(b) and S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 36(b)(ii)

57 Subsidiary companies. U.K.

(1) Where the insurance business or any part of the insurance business of an insurance company has been transferred to an insurance company to which this Part of this Act applies under an arrangement in pursuance of which the first-mentioned company (in this section called the subsidiary company) or the creditors thereof has or have claims against the company to which the transfer was made (in this section called the principal company), then, if the principal company is being wound up by [F28 or under the supervision of] the court, the court shall, subject to the provisions of this section, order the subsidiary company to be wound up in conjuction with the principal company, and may by the same or any subsequent order appoint the same person to be liquidator for the two companies, and make provision for such other matters as may seem to the court necessary, with a view to the companies being wound up as if they were one company.

(2) The commencement of the winding up of the principal company shall, save as otherwise ordered by the court, be the commencement of the winding up of the subsidiary company

(3) In adjusting the rights and liabilities of the members of the several companies between themselves, the court shall have regard to the constitution of the companies, and to the arrangements entered into between the companies, in the same manner as the court has regard to the rights and liabilities of different classes of contributories in the case of the winding up of a single company, or as near thereto as circumstances admit.

(4) Where any company alleged to be subsidiary is not in process of being wound up at the same time as the principal company to which it is subsidiary, the court shall not direct the subsidiary company to be wound up unless, after hearing all objections (if any) that may be urged by or on behalf of the company against its being wound up, the court is of the opinion that the company is subsidiary to the principal company, and that the winding up of the company in conjunction with the principal company is just and equitable.

(5) An application may be made in relation to the winding up of any subsidiary company in conjunction with a principal company by any creditor of, or person interested in, the principal or subsidiary company.

(6) Where a company stands in the relation of a principal company to one company, and in the relation of a subsidiary company to some other company, or where there are several companies standing in the relation of subsidiary companies to one principal company, the court may deal with any number of such companies together or in separate groups, as it thinks most expedient, upon the principles laid down in this section.

Textual Amendments

F28 Words repealed (E.W.S.) by Insolvency Act 1985 (c. 65, SIF 66), s. 235(3), Sch. 10 Pt. II and Insolvency Act 1986 (c. 45, SIF 66), s. 437, Sch. 11 para. 7

58 Reduction of contracts as alternative to winding up. U.K.

In the case of an insurance company which has been proved to be unable to pay its debts, the court may, if it thinks fit, reduce the amount of the contracts of the company on such terms and subject to such conditions as the court thinks just, in place of making a winding up order.

59 Winding up rules. U.K.

(1) Rules may be made under [F29 section][F30 411 of the Insolvency Act 1986] or F31 [F32 Article 613] of the [F32 Companies (Northern Ireland) Order 1986][F31 Article 359 of the Insolvency (Northern Ireland) Order 1989] (general rules about winding up) for determining the amount of the liabilities of an insurance company to policy holders of any class or description for the purpose of proof in a winding up and generally for carrying into effect the provisions of this Part of this Act with respect to the winding up of insurance companies.

(2) Without prejudice to the generality of subsection (1) above, rules under [F33 section][F34 411 of the Insolvency Act 1986] or, as the case may be, [F35 Article 613 of the said Order of 1986][F35 Article 359 of the said Order of 1989] may make provision for all or any of the following matters—

(a) the identification of the assets and liabilities falling within either paragraph of subsection (3) of section 55 above;

(b) the apportionment between the assets falling within paragraphs (a) and (b) of that subsection of the costs, charges and expenses of the winding up and of any debts of the company having priority under [F34 sections 175 and 176 of, and Schedule 6 to, the Insolvency Act 1986], or, as the case may be, [F36 Article 570 of, and Schedule 18 to, the Companies (Northern Ireland) Order 1986][F36 Articles 149 and 150 of, and Schedule 4 to, the Insolvency (Northern Ireland) Order 1989];

(c) the determination of the amount of liabilities of any description falling within either paragraph of that subsection for the purpose of establishing whether or not there is any such excess in respect of that paragraph as is mentioned in subsection (4) of section 55 above;

(d) the application of assets within paragraph (a) of the said subsection (3) for meeting the liabilities within that paragraph;

(e) the application of assets representing any such excess as is mentioned in the said subsection (4).

Textual Amendments

F29 Word substituted by Insolvency Act 1985 (c. 65, SIF 66), s. 235(1), Sch. 8 para. 37(4)(a)

F30 Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14

F31 Words “Article" to “1989" substituted (prosp.) for wordsArticle to1986 by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 37(a)

F32 Words substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II

F33 Word substituted by Insolvency Act 1985 (c. 65, SIF 66), s. 235(1), Sch. 8 para. 37(4)(b)

F34 Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(2), Sch. 14

F35 Words “Article" to “1989" substituted (prosp.) for words “Article" to “1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 37(b)(i) (which latter words were substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II)

F36 Words “Article" to “1989" substituted (prosp.) for words “Article" to “1986" by S.I. 1989/2405 (N.I. 19), arts. 1(2), 381(2), Sch. 9 para. 37(b)(ii) (which latter words were substituted by S.I. 1986/1035 (N.I. 9), art. 23, Sch. 1 Pt. II)