Enterprise Act 2002 (c. 40)

(The document as of February, 2008)

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(1) This section applies where a company or partnership is--

(a) in administration within the meaning of Schedule B1 to the 1986 Act, or

(b) the subject of an administration order under Part III of the 1989 Order.

(2) If the administrator thinks that the company or partnership is carrying on or has carried on a regulated activity in contravention of the general prohibition, he must report to the Authority without delay.

(3) Subsection (2) does not apply where the administration arises out of an administration order made on an application made or petition presented by the Authority. "

57 In section 362 (Financial Services Authority's right to participate in proceedings)--

(a) in subsection (1) for "presents a petition to the court under section 9 of the 1986 Act (or Article 22 of the 1989 Order)" substitute "makes an administration application under Schedule B1 to the 1986 Act (or presents a petition under Article 22 of the 1989 Order)",

(b) after subsection (1) insert--

" (1A) This section also applies in relation to--

(a) the appointment under paragraph 14 or 22 of Schedule B1 to the 1986 Act of an administrator of a company of a kind described in subsection (1)(a) to (c), or

(b) the filing with the court of a copy of notice of intention to appoint an administrator under either of those paragraphs. " ,

(d) for subsection (4) substitute--

" (4) The Authority may apply to the court under paragraph 74 of Schedule B1 to the 1986 Act (or Article 39 of the 1989 Order).

(4A) In respect of an application under subsection (4)--

(a) paragraph 74(1)(a) and (b) shall have effect as if for the words "harm the interests of the applicant (whether alone or in common with some or all other members or creditors)" there were substituted the words "harm the interests of some or all members or creditors", and

(b) Article 39 of the 1989 Order shall have effect with the omission of the words "(including at least himself"). " , and

(e) in subsection (5)(b) for "section 26 of the 1986 Act" substitute "paragraph 57 of Schedule B1 to the 1986 Act".

58 After section 362 insert--

" 362A Administrator appointed by company or directors

(1) This section applies in relation to a company of a kind described in section 362(1)(a) to (c).

(2) An administrator of the company may not be appointed under paragraph 22 of Schedule B1 to the 1986 Act without the consent of the Authority.

(3) Consent under subsection (2)--

(a) must be in writing, and

(b) must be filed with the court along with the notice of intention to appoint under paragraph 27 of that Schedule.

(4) In a case where no notice of intention to appoint is required--

(a) subsection (3)(b) shall not apply, but

(b) consent under subsection (2) must accompany the notice of appointment filed under paragraph 29 of that Schedule. "

59 In section 427A(3) (mergers and divisions of public companies) for "an administration order being in force in relation to the company" substitute "where the company is in administration".

Section 250

SCHEDULE 18 Schedule 2A to Insolvency Act 1986

" SCHEDULE 2A EXCEPTIONS TO PROHIBITION ON APPOINTMENT OF ADMINISTRATIVE RECEIVER: SUPPLEMENTARY PROVISIONS

Capital market arrangement

1 (1) For the purposes of section 72B an arrangement is a capital market arrangement if--

(a) it involves a grant of security to a person holding it as trustee for a person who holds a capital market investment issued by a party to the arrangement, or

(b) at least one party guarantees the performance of obligations of another party, or

(d) the arrangement involves an investment of a kind described in articles 83 to 85 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (options, futures and contracts for differences).

(2) For the purposes of sub-paragraph (1)--

(a) a reference to holding as trustee includes a reference to holding as nominee or agent,

(b) a reference to holding for a person who holds a capital market investment includes a reference to holding for a number of persons at least one of whom holds a capital market investment, and

(3) In section 72B(1) and this paragraph "party" to an arrangement includes a party to an agreement which--

(a) forms part of the arrangement,

(b) provides for the raising of finance as part of the arrangement, or

Capital market investment

2 (1) For the purposes of section 72B an investment is a capital market investment if it--

(a) is within article 77 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (debt instruments), and

(b) is rated, listed or traded or designed to be rated, listed or traded.

(2) In sub-paragraph (1)--

"rated" means rated for the purposes of investment by an internationally recognised rating agency,
"listed" means admitted to the official list within the meaning given by section 103(1) of the Financial Services and Markets Act 2000 (c. 8) (interpretation), and
"traded" means admitted to trading on a market established under the rules of a recognised investment exchange or on a foreign market.

(3) In sub-paragraph (2)--

"recognised investment exchange" has the meaning given by section 285 of the Financial Services and Markets Act 2000 (recognised investment exchange), and
"foreign market" has the same meaning as "relevant market" in article 67(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (S.I. 2001/1335) (foreign markets).

3 (1) An investment is also a capital market investment for the purposes of section 72B if it consists of a bond or commercial paper issued to one or more of the following--

(a) an investment professional within the meaning of article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001,

(b) a person who is, when the agreement mentioned in section 72B(1) is entered into, a certified high net worth individual in relation to a communication within the meaning of article 48(2) of that order,

(d) a person who is, when the agreement mentioned in section 72B(1) is entered into, a certified sophisticated investor in relation to a communication within the meaning of article 50(1) of that order, and

(e) a person in a State other than the United Kingdom who under the law of that State is not prohibited from investing in bonds or commercial paper.

(2) In sub-paragraph (1)--

"bond" shall be construed in accordance with article 77 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), and
"commercial paper" has the meaning given by article 9(3) of that order.

(3) For the purposes of sub-paragraph (1)--

(a) in applying article 19(5) of the Financial Promotion Order for the purposes of sub-paragraph (1)(a)--

(i) in article 19(5)(b), ignore the words after "exempt person",

(ii) in article 19(5)(c)(i), for the words from "the controlled activity" to the end substitute "a controlled activity", and

(iii) in article 19(5)(e) ignore the words from "where the communication" to the end, and

(b) in applying article 49(2) of that order for the purposes of sub-paragraph (1)(c), ignore article 49(2)(e).

"Agreement"

4 For the purposes of sections 72B and 72E and this Schedule "agreement" includes an agreement or undertaking effected by--

(a) contract,

(b) deed, or

(c) any other instrument intended to have effect in accordance with the law of England and Wales, Scotland or another jurisdiction.

Debt

5 The debt of at least £50 million referred to in section 72B(1)(a) or 72E(2)(a)--

(a) may be incurred at any time during the life of the capital market arrangement or financed project, and

(b) may be expressed wholly or partly in foreign currency (in which case the sterling equivalent shall be calculated as at the time when the arrangement is entered into or the project begins).

Step-in rights

6 (1) For the purposes of sections 72C to 72E a project has "step-in rights" if a person who provides finance in connection with the project has a conditional entitlement under an agreement to--

(a) assume sole or principal responsibility under an agreement for carrying out all or part of the project, or

(b) make arrangements for carrying out all or part of the project.

(2) In sub-paragraph (1) a reference to the provision of finance includes a reference to the provision of an indemnity.

Project company

7 (1) For the purposes of sections 72C to 72E a company is a "project company" of a project if--

(a) it holds property for the purpose of the project,

(b) it has sole or principal responsibility under an agreement for carrying out all or part of the project,

(d) it has the purpose of supplying finance to enable the project to be carried out, or

(e) it is the holding company of a company within any of paragraphs (a) to (d).

(2) But a company is not a "project company" of a project if--

(a) it performs a function within sub-paragraph (1)(a) to (d) or is within sub-paragraph (1)(e), but

(b) it also performs a function which is not--

(i) within sub-paragraph (1)(a) to (d),

(ii )related to a function within sub-paragraph (1)(a) to (d), or

(iii) related to the project.

(3) For the purposes of this paragraph a company carries out all or part of a project whether or not it acts wholly or partly through agents.

"Resources"

8 In section 72C "resources" includes--

(a) funds (including payment for the provision of services or facilities),

(b) assets,

(d) the grant of a concession or franchise, and

(e) any other commercial resource.

"Public body"

9 (1) In section 72C "public body" means--

(a) a body which exercises public functions,

(b) a body specified for the purposes of this paragraph by the Secretary of State, and

(2) A specification under sub-paragraph (1) may be--

(a) general, or

(b) for the purpose of the application of section 72C to a specified case.

Regulated business

10 (1) For the purposes of section 72D a business is regulated if it is carried on--

(a) in reliance on a licence granted to a person under section 7 of the Telecommunications Act 1984 (c. 12) (telecommunications service),

(b) in reliance on a licence under section 7 or 7A of the Gas Act 1986 (c. 44) (transport and supply of gas),

(c) in reliance on a licence granted by virtue of section 41C of that Act (power to prescribe additional licensable activity),

(d) in reliance on a licence under section 6 of the Electricity Act 1989 (c. 29) (supply of electricity),

(e) by a water undertaker,

(f) by a sewerage undertaker,

(g) by a universal service provider within the meaning given by section 4(3) and (4) of the Postal Services Act 2000 (c. 26),

(h) by the Post Office company within the meaning given by section 62 of that Act (transfer of property),

(i) by a relevant subsidiary of the Post Office Company within the meaning given by section 63 of that Act (government holding),

(j) in reliance on a licence under section 8 of the Railways Act 1993 (c. 43) (railway services),

(k) in reliance on a licence exemption under section 7 of that Act (subject to sub-paragraph (2) below),

(l) by the operator of a system of transport which is deemed to be a railway for a purpose of Part I of that Act by virtue of section 81(2) of that Act (tramways, &c.), or

(m) by the operator of a vehicle carried on flanged wheels along a system within paragraph (l).

(2) Sub-paragraph (1)(k) does not apply to the operator of a railway asset on a railway unless on some part of the railway there is a permitted line speed exceeding 40 kilometres per hour.

"Person"

11 A reference to a person in this Schedule includes a reference to a partnership or another unincorporated group of persons. "

Section 256

SCHEDULE 19 Duration of bankruptcy: transitional provisions

Introduction

1 This Schedule applies to an individual who immediately before commencement--

(a) has been adjudged bankrupt, and

(b) has not been discharged from the bankruptcy.

2 In this Schedule--

"commencement" means the date appointed under section 279 for the commencement of section 256, and
"pre-commencement bankrupt" means an individual to whom this Schedule applies.

Neither old law nor new law to apply

3 Section 279 of the Insolvency Act 1986 (c. 45) (bankruptcy: discharge) shall not apply to a pre-commencement bankrupt (whether in its pre-commencement or its post-commencement form).

General rule for discharge from pre-commencement bankruptcy

4 (1) A pre-commencement bankrupt is discharged from bankruptcy at whichever is the earlier of--

(a) the end of the period of one year beginning with commencement, and

(b) the end of the relevant period applicable to the bankrupt under section 279(1)(b) of the Insolvency Act 1986 (duration of bankruptcy) as it had effect immediately before commencement.

(2) An order made under section 279(3) of that Act before commencement--

(a) shall continue to have effect in respect of the pre-commencement bankrupt after commencement, and

(b) may be varied or revoked after commencement by an order under section 279(3) as substituted by section 256 of this Act.

(3) Section 279(3) to (5) of that Act as substituted by section 256 of this Act shall have effect after commencement in relation to the period mentioned in sub-paragraph (1)(a) or (b) above.

Second-time bankruptcy

5 (1) This paragraph applies to a pre-commencement bankrupt who was an undischarged bankrupt at some time during the period of 15 years ending with the day before the date on which the pre-commencement bankruptcy commenced.

(2) The pre-commencement bankrupt shall not be discharged from bankruptcy in accordance with paragraph 4 above.

(3) An order made before commencement under section 280(2)(b) or (c) of the Insolvency Act 1986 (c. 45) (discharge by order of the court) shall continue to have effect after commencement (including any provision made by the court by virtue of section 280(3)).

(4) A pre-commencement bankrupt to whom this paragraph applies (and in respect of whom no order is in force under section 280(2)(b) or (c) on commencement) is discharged--

(a) at the end of the period of five years beginning with commencement, or

(b) at such earlier time as the court may order on an application under section 280 of the Insolvency Act 1986 (discharge by order) heard after commencement.

(5) Section 279(3) to (5) of the Insolvency Act 1986 as substituted by section 256 of this Act shall have effect after commencement in relation to the period mentioned in sub-paragraph (4)(a) above.

(6) A bankruptcy annulled under section 282 shall be ignored for the purpose of sub-paragraph (1).

Criminal bankruptcy

6 A pre-commencement bankrupt who was adjudged bankrupt on a petition under section 264(1)(d) of the Insolvency Act 1986 (criminal bankruptcy)--

(a) shall not be discharged from bankruptcy in accordance with paragraph 4 above, but

(b) may be discharged from bankruptcy by an order of the court under section 280 of that Act.

Income payments order

7 (1) This paragraph applies where--

(a) a pre-commencement bankrupt is discharged by virtue of paragraph 4(1)(a), and

(b) an income payments order is in force in respect of him immediately before his discharge.

(2) If the income payments order specifies a date after which it is not to have effect, it shall continue in force until that date (and then lapse).

(3) But the court may on the application of the pre-commencement bankrupt--

(a) vary the income payments order;

(b) provide for the income payments order to cease to have effect before the date referred to in sub-paragraph (2).

Bankruptcy restrictions order or undertaking

8 A provision of this Schedule which provides for an individual to be discharged from bankruptcy is subject to--

(a) any bankruptcy restrictions order (or interim order) which may be made in relation to that individual, and

(b) any bankruptcy restrictions undertaking entered into by that individual.

Section 257

SCHEDULE 20 Schedule 4A to Insolvency Act 1986

" SCHEDULE 4A Bankruptcy Restrictions Order and Undertaking

Bankruptcy restrictions order

1 (1) A bankruptcy restrictions order may be made by the court.

(2) An order may be made only on the application of--

(a) the Secretary of State, or

(b) the official receiver acting on a direction of the Secretary of State.

Grounds for making order

2 (1) The court shall grant an application for a bankruptcy restrictions order if it thinks it appropriate having regard to the conduct of the bankrupt (whether before or after the making of the bankruptcy order).

(2) The court shall, in particular, take into account any of the following kinds of behaviour on the part of the bankrupt--

(a) failing to keep records which account for a loss of property by the bankrupt, or by a business carried on by him, where the loss occurred in the period beginning 2 years before petition and ending with the date of the application;

(b) failing to produce records of that kind on demand by the official receiver or the trustee;

(d) giving a preference;

(e) making an excessive pension contribution;

(f) a failure to supply goods or services which were wholly or partly paid for which gave rise to a claim provable in the bankruptcy;

(g) trading at a time before commencement of the bankruptcy when the bankrupt knew or ought to have known that he was himself to be unable to pay his debts;

(h) incurring, before commencement of the bankruptcy, a debt which the bankrupt had no reasonable expectation of being able to pay;

(i) failing to account satisfactorily to the court, the official receiver or the trustee for a loss of property or for an insufficiency of property to meet bankruptcy debts;

(j) carrying on any gambling, rash and hazardous speculation or unreasonable extravagance which may have materially contributed to or increased the extent of the bankruptcy or which took place between presentation of the petition and commencement of the bankruptcy;

(k) neglect of business affairs of a kind which may have materially contributed to or increased the extent of the bankruptcy;

(l) fraud or fraudulent breach of trust;

(m) failing to cooperate with the official receiver or the trustee.

(3) The court shall also, in particular, consider whether the bankrupt was an undischarged bankrupt at some time during the period of six years ending with the date of the bankruptcy to which the application relates.

(4) For the purpose of sub-paragraph (2)--

"before petition" shall be construed in accordance with section 351(c),
"excessive pension contribution" shall be construed in accordance with section 342A,
"preference" shall be construed in accordance with section 340, and
"undervalue" shall be construed in accordance with section 339.

Timing of application for order

3 (1) An application for a bankruptcy restrictions order in respect of a bankrupt must be made--

(a) before the end of the period of one year beginning with the date on which the bankruptcy commences, or

(b) with the permission of the court.

(2) The period specified in sub-paragraph (1)(a) shall cease to run in respect of a bankrupt while the period set for his discharge is suspended under section 279(3).

Duration of order

4 (1) A bankruptcy restrictions order--

(a) shall come into force when it is made, and

(b) shall cease to have effect at the end of a date specified in the order.

(2) The date specified in a bankruptcy restrictions order under sub-paragraph (1)(b) must not be--

(a) before the end of the period of two years beginning with the date on which the order is made, or

(b) after the end of the period of 15 years beginning with that date.

Interim bankruptcy restrictions order

5 (1) This paragraph applies at any time between--

(a) the institution of an application for a bankruptcy restrictions order, and

(b) the determination of the application.

(2) The court may make an interim bankruptcy restrictions order if the court thinks that--

(a) there are prima facie grounds to suggest that the application for the bankruptcy restrictions order will be successful, and

(b) it is in the public interest to make an interim order.

(3) An interim order may be made only on the application of--

(a) the Secretary of State, or

(b) the official receiver acting on a direction of the Secretary of State.

(4) An interim order--

(a) shall have the same effect as a bankruptcy restrictions order, and

(b) shall come into force when it is made.

(5) An interim order shall cease to have effect--

(a) on the determination of the application for the bankruptcy restrictions order,

(b) on the acceptance of a bankruptcy restrictions undertaking made by the bankrupt, or

6 (1) This paragraph applies to a case in which both an interim bankruptcy restrictions order and a bankruptcy restrictions order are made.

(2) Paragraph 4(2) shall have effect in relation to the bankruptcy restrictions order as if a reference to the date of that order were a reference to the date of the interim order.

Bankruptcy restrictions undertaking

7 (1) A bankrupt may offer a bankruptcy restrictions undertaking to the Secretary of State.

(2) In determining whether to accept a bankruptcy restrictions undertaking the Secretary of State shall have regard to the matters specified in paragraph 2(2) and (3).

8 A reference in an enactment to a person in respect of whom a bankruptcy restrictions order has effect (or who is "the subject of" a bankruptcy restrictions order) includes a reference to a person in respect of whom a bankruptcy restrictions undertaking has effect.

9 (1) A bankruptcy restrictions undertaking--

(a) shall come into force on being accepted by the Secretary of State, and

(b) shall cease to have effect at the end of a date specified in the undertaking.

(2) The date specified under sub-paragraph (1)(b) must not be--

(a) before the end of the period of two years beginning with the date on which the undertaking is accepted, or

(b) after the end of the period of 15 years beginning with that date.

(3) On an application by the bankrupt the court may--

(a) annul a bankruptcy restrictions undertaking;

(b) provide for a bankruptcy restrictions undertaking to cease to have effect before the date specified under sub-paragraph (1)(b).

Effect of annulment of bankruptcy order

10 Where a bankruptcy order is annulled under section 282(1)(a) or (2)--

(a) any bankruptcy restrictions order, interim order or undertaking which is in force in respect of the bankrupt shall be annulled,

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