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Statutory Instrument 2002 No. 3152 (N.I. 6)The Insolvency (Northern Ireland) Order 2002(The document as of February, 2008) STATUTORY INSTRUMENTS2002 No. 3152 (N.I. 6)NORTHERN IRELANDThe Insolvency (Northern Ireland) Order 2002
Whereas a draft of this Order in Council has been approved by resolution of each House of Parliament: Now, therefore, Her Majesty, in exercise of the powers conferred by paragraph 1(1) of the Schedule to the Northern Ireland Act 2000 (c.1) and of all other powers enabling Her in that behalf, is pleased, by and with the advice of Her Privy Council, to order, and it is hereby ordered, as follows:– Title and commencement 1. - (1) This Order may be cited as the Insolvency (Northern Ireland) Order 2002. (2) This Article and Articles 2(1) and (2), 11 and 12 shall come into operation on the expiration of one month from the day on which this Order is made. (3) The other provisions of this Order shall come into operation on such day or days as the Department may by order appoint. Interpretation 2. - (1) The Interpretation Act (Northern Ireland) 1954 (c. 33) applies to this Order as it applies to an Act of the Assembly. (2) In this Order -
(3) For the purposes of the Financial Services and Markets Act 2000 (c. 8), the functions conferred on the Financial Services Authority by virtue of Schedules 1 and 2 are to be treated as conferred by that Act. Moratorium where directors propose voluntary arrangement 3.Schedule 1 (which -
(b) makes provision about the approval and implementation of such a voluntary arrangement where a moratorium is obtained, and (c) makes consequential amendments), shall have effect.
(b) in consequence of Schedule 1 and those amendments, makes amendments to the Building Societies Act 1986 (c.53)), shall have effect.
(b) for paragraph (2)(c) there shall be substituted -
(c) after paragraph (3) there shall be inserted -
(2) In Article 348 of the Insolvency Order (acting as insolvency practitioner without qualification), after paragraph (1) there shall be inserted -
(3) After that Article there shall be inserted -
348A. - (1) Article 348 does not apply to a person acting, in relation to a voluntary arrangement proposed or approved under Part II or Part VIII, as nominee or supervisor if he is authorised so to act. (2) For the purposes of paragraph (1) and those Parts, an individual to whom paragraph (3) does not apply is authorised to act as nominee or supervisor in relation to such an arrangement if -
(b) there is in force security for the proper performance of his functions and that security meets the prescribed requirements with respect to his so acting in relation to the arrangement. (3) This paragraph applies to a person if -
(b) he is subject to -
(ii) a disqualification order made or a disqualification undertaking accepted under the Company Directors Disqualification (Northern Ireland) Order 2002 or the Company Directors Disqualification Act 1986 (c. 46), or (c) he is a patient within the meaning of Part VIII of the Mental Health (Northern Ireland) Order 1986 (NI 4), Part VII of the Mental Health Act 1983 (c. 20) or section 125(1) of the Mental Health (Scotland) Act 1984 (c. 36). (4) The Department may by order declare a body which appears to it to fall within paragraph (5) to be a recognised body for the purposes of paragraph (2)(a).
(b) meet acceptable requirements as to education and practical training and experience. (6) For the purposes of this Article, a person is a member of a body only if he is subject to its rules when acting as nominee or supervisor (whether or not he is in fact a member of the body). Administration orders 7. - (1) Part III of the Insolvency Order (administration orders) shall be amended as follows. (2) In Article 23 (effect of application), after sub-paragraph (a) of paragraph (1) there shall be inserted -
(3) In Article 24 (effect of order), after sub-paragraph (b) of paragraph (3) there shall be inserted -
Investigation and prosecution of malpractice
(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.". (4) For paragraph (4) there shall be substituted -
(5) In paragraph (5)(b), "to the prosecuting authority" shall be omitted.
(b) in paragraph (3), for "the prosecuting authority" and "that authority" there shall be substituted "the Director of Public Prosecutions for Northern Ireland"; (c) in paragraph (5), for "prosecuting authority" there shall be substituted "Director of Public Prosecutions for Northern Ireland". Restriction on use of answers obtained under compulsion
(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 isasked, 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).". Insolvent estates of deceased persons
365A. - (1) This Article applies where -
(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.
(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 -
(2) In paragraph (1) of Article 365 of the Insolvency Order, after "apply" there shall be inserted "in relation".
(b) modify the application of insolvency law (whether in relation to foreign proceedings or otherwise), and may apply or, as the case may be, modify the application of insolvency law in relation to the Crown.
(b) any transitory, transitional or saving provision, which the Department considers necessary or expedient.
(5) Regulations under this Article may only be made if a draft has been laid before, and approved by a resolution of, the Assembly. Orders 12. - (1) The Department may by order make -
(b) any transitory, transitional or saving provision, which it considers necessary or expedient for the purposes of this Order.
(b) make consequential amendments, repeals and revocations of any such provision. (3) An order made under this Article shall be subject to negative resolution. 1.The Insolvency Order shall be amended as follows. 2.In Article 2(2) (general interpretation), in the definition of "regulations", after "and 375(3)(b)(ii)" insert "and paragraph 16 of Schedule A1". 3.After Article 14 insert -
14A. - (1) Where the directors of an eligible company intend to make a proposal for a voluntary arrangement, they may take steps to obtain a moratorium for the company. (2) The provisions of Schedule A1 have effect with respect to -
(b) the procedure for obtaining such a moratorium, (c) the effects of such a moratorium, and (d) the procedure applicable (in place of Articles 15 to 19 and 20) in relation to the approval and implementation of a voluntary arrangement where such a moratorium is or has been in force.". 4.In Article 15(1) (procedure where nominee is not the liquidator or administrator), at the end add "and the directors do not propose to take steps to obtain a moratorium under Article 14A for the company". 1.In this Schedule -
2. - (1) A company is eligible for a moratorium if it meets the requirements of paragraph 3, unless -
(b) it falls within sub-paragraph (2). (2) A company falls within this sub-paragraph if -
(b) it has permission under Part IV of that Act to accept deposits, (c) it has a liability in respect of a deposit which it accepted in accordance with the Banking Act 1979 or the Banking Act 1987, (d) it is a party to a market contract or any of its property is subject to a market charge or a system-charge, (e) it is a participant (within the meaning of the settlement finality regulations) or any of its property is subject to a collateral security charge (within the meaning of those regulations). (3) Paragraphs (a), (b) and (c) of sub-paragraph (2) must be read with -
(b) any relevant order under that section; and (c) Schedule 2 to that Act. 3. - (1) A company meets the requirements of this paragraph if the qualifying conditions are met -
(b) in the financial year of the company which ended last before that date. (2) For the purposes of sub-paragraph (1) -
(b) a company's financial year is to be determined in accordance with that Order. (3) Paragraphs (4), (5) and (6) of Article 255 of that Order apply for the purposes of this paragraph as they apply for the purposes of that Article.
(b) the company is being wound up, (c) there is an administrative receiver of the company, (d) a voluntary arrangement has effect in relation to the company, (e) there is a provisional liquidator of the company, (f) a moratorium has been in force for the company at any time during the period of 12 months ending with the date of filing and -
(ii) a voluntary arrangement which had effect at any time in that period has come to an end prematurely, or (g) a voluntary arrangement in relation to the company which had effect in pursuance of a proposal under Article 14(3) has come to an end prematurely and, during the period of 12 months ending with the date of filing, an order under Article 18(3)(a) has been made. (2) Sub-paragraph (1)(b) does not apply to a company which, by reason of a winding-up order made after the date of filing, is treated as being wound up on that date. 5.A company is also excluded from being eligible for a moratorium if, on the date of filing, it is a party to an agreement which is or forms part of a capital market arrangement under which -
(b) the arrangement involves the issue of a capital market investment. 6.A company is also excluded from being eligible for a moratorium if, on the date of filing, it is a project company of a project which -
(b) includes step-in rights. 7. - (1) A company is also excluded from being eligible for a moratorium if, on the date of filing, it has incurred a liability under an agreement of £10 million or more.
(b) the reference to "liability" includes a reference to a liability to be paid wholly or partly in foreign currency (in which case the sterling equivalent shall be calculated as at the time when the liability is incurred). 8. - (1) For the purposes of paragraph 5 an arrangement is a capital market arrangement if -
(b) at least one party guarantees the performance of obligations of another party, or (c) at least one party provides security in respect of 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 (options, futures and contracts for differences). (2) For the purposes of sub-paragraph (1) -
(a) 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 (c) a person holds a capital market investment if he has a legal or beneficial interest in it. (3) In paragraph 5, 7, 14 and this paragraph -
(b) deed, or (c) any other instrument intended to have effect in accordance with the law of Northern Ireland or another jurisdiction, and
(b) provides for the raising of finance as part of the arrangement, or (c) is necessary for the purposes of implementing the arrangement. 9. - (1) For the purposes of paragraphs 5 and 8, an investment is a capital market investment if -
(b) it is rated, listed or traded or designed to be rated, listed or traded. (2) In sub-paragraph (1) -
(3) In sub-paragraph (2) -
10. - (1) For the purposes of paragraphs 5 and 8 an investment is also a capital market investment if it consists of a bond or commercial paper issued to one or more of the following -
(b) a person who is, when the agreement mentioned in paragraph 5 is entered into, a certified high net worth individual in relation to a communication within the meaning of Article 48(2) of that Order, (c) a person to whom Article 49(2) of that Order applies (high net worth company, &c.), (d) a person who is, when the agreement mentioned in paragraph 5 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) For the purposes of sub-paragraph (1) -
(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). (3) In sub-paragraph (1) -
11.The debt of at least £10 million referred to in paragraph 5 -
(b) may be expressed wholly or partly in a foreign currency (in which case the sterling equivalent shall be calculated as at the time when the arrangement is entered into). 12. - (1) For the purposes of paragraph 6 a company is a "project company" of a project if -
(b) it has sole or principal responsibility under an agreement for carrying out all or part of the project, (c) it is one of a number of companies which together carry out 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 -
(b) it also performs a function which is not -
(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. 13. - (1) In paragraph 6 "public-private partnership project" means a project -
(b) which is designed wholly or mainly for the purpose of assisting a public body to discharge a function. (2) In sub-paragraph (1) "resources" includes -
(b) assets, (c) professional skill, (d) the grant of a concession or franchise, and (e) any other commercial resource. (3) In sub-paragraph (1) "public body" means -
(b) a body specified for the purposes of this paragraph by the Department, and (c) a body within a class specified for the purposes of this paragraph by the Department. (4) A specification under sub-paragraph (3) may be -
(b) for the purpose of the application of paragraph 6 to a specified case. 14. - (1) For the purposes of paragraph 6 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 -
(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. 15.For the purposes of paragraphs 5 to 14, a reference to a person includes a reference to a partnership or another unincorporated group of persons. 16. - (1) The Department may by regulations modify the qualifications for eligibility of a company for a moratorium. (2) Regulations under this paragraph shall only be made if a draft containing the regulations has been laid before, and approved by a resolution of, the Assembly. 17. - (1) Where the directors of a company wish to obtain a moratorium, they shall submit to the nominee -
(b) a statement of the company's affairs containing -
(ii) such other information as may be prescribed, and (c) any other information necessary to enable the nominee to comply with sub-paragraph (2) which he requests from them. (2) The nominee shall submit to the directors a statement in the prescribed form indicating whether or not, in his opinion -
(b) the company is likely to have sufficient funds available to it during the proposed moratorium to enable it to carry on its business, and (c) meetings of the company and its creditors should be summoned to consider the proposed voluntary arrangement. (3) In forming his opinion on the matters mentioned in sub-paragraph (2), the nominee is entitled to rely on the information submitted to him under sub-paragraph (1) unless he has reason to doubt its accuracy. 18. - (1) To obtain a moratorium the directors of a company must file with the High Court -
(b) a statement of the company's affairs containing -
(ii) such other information as may be prescribed, (c) a statement that the company is eligible for a moratorium,
(ii) the company is likely to have sufficient funds available to it during the proposed moratorium to enable it to carry on its business, and (iii) meetings of the company and its creditors should be summoned to consider the proposed voluntary arrangement. (2) Each of the statements mentioned in sub-paragraph (1)(b) to (e), except so far as it contains the particulars referred to in paragraph (b)(i), must be in the prescribed form. 19. - (1) A moratorium comes into force when the documents for the time being referred to in paragraph 18(1) are filed or lodged with the High Court and references in this Schedule to "the beginning of the moratorium" shall be construed accordingly. (2) A moratorium ends at the end of the day on which the meetings summoned under paragraph 39(1) are first held (or, if the meetings are held on different days, the later of those days), unless it is extended under paragraph 42. (3) If either of those meetings has not first met before the end of the period of 28 days beginning with the day on which the moratorium comes into force, the moratorium ends at the end of the day on which those meetings were to be held (or, if those meetings were summoned to be held on different days, the later of those days), unless it is extended under paragraph 42. (4) If the nominee fails to summon either meeting within the period required by paragraph 39(1), the moratorium ends at the end of the last day of that period. (5) If the moratorium is extended (or further extended) under paragraph 42, it ends at the end of the day to which it is extended (or further extended). (6) Sub-paragraphs (2) to (5) do not apply if the moratorium comes to an end before the time concerned by virtue of -
(b) an order under paragraph 36(3), 37(3) or 50 (challenge of actions of nominee or directors), or (c) a decision of one or both of the meetings summoned under paragraph 39. (7) If the moratorium has not previously come to an end in accordance with sub-paragraphs (2) to (6), it ends at the end of the day on which a decision under paragraph 41 to approve a voluntary arrangement takes effect under paragraph 46. 20. - (1) When a moratorium comes into force, the directors shall notify the nominee of that fact forthwith. (2) If the directors without reasonable excuse fail to comply with sub-paragraph (1), each of them shall be guilty of an offence. 21. - (1) When a moratorium comes into force, the nominee shall, in accordance with the rules -
(b) notify the registrar, the company and any petitioning creditor of the company of whose claim he is aware of that fact. (2) In sub-paragraph (1)(b), "petitioning creditor" means a creditor by whom a winding-up petition has been presented before the beginning of the moratorium, as long as the petition has not been dismissed or withdrawn. 22. - (1) When a moratorium comes to an end, the nominee shall, in accordance with the rules -
(b) notify the High Court, the registrar, the company and any creditor of the company of whose claim he is aware of that fact. (2) If the nominee without reasonable excuse fails to comply with sub-paragraph (1)(a) or (b), he shall be guilty of an offence. 23. - (1) During the period for which a moratorium is in force for a company -
(b) no meeting of the company may be called or requisitioned except with the consent of the nominee or the leave of the High Court and subject (where the Court gives leave) to such terms as the Court may impose, (c) no resolution may be passed or order made for the winding up of the company, (d) no petition for an administration order in relation to the company may be presented, (e) no administrative receiver of the company may be appointed, (f) 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, (g) 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 leave of the High Court and subject to such terms as the Court may impose, and (h) no other proceedings and no execution or other 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 High Court and subject to such terms as the Court may impose. (2) Where a petition, other than an excepted petition, for the winding up of the company has been presented before the beginning of the moratorium, Article 107 shall not apply in relation to any disposition of property, transfer of shares or alteration in status made during the moratorium or at a time mentioned in paragraph 47(5)(a).
(b) section 72 of the Financial Services Act 1986 on the ground mentioned in subsection (1)(b) of that section, (c) section 92 of the Banking Act 1987 on the ground mentioned in subsection (1)(b) of that section, or (d) section 367 of the Financial Services and Markets Act 2000 on the ground mentioned in subsection (3)(b) of that section. 24. - (1) This paragraph applies where there is an uncrystallised floating charge on the property of a company for which a moratorium is in force.
(b) if notice of the event is given to the company by the holder of the charge as soon as is practicable after the moratorium has come to an end, the event is to be treated as if it had occurred when the notice was given. (4) The effect referred to in sub-paragraphs (2) and (3) is -
(b) causing the imposition, by virtue of provision in the instrument creating the charge, of any restriction on the disposal of any property of the company. (5) Application may not be made for leave under paragraph 23(1)(g) or (h) with a view to obtaining -
(b) the imposition, by virtue of provision in the instrument creating the charge, of any restriction on the disposal of any property of the company. 25.Security granted by a company at a time when a moratorium is in force in relation to the company may only be enforced if, at that time, there were reasonable grounds for believing that it would benefit the company. 26. - (1) Paragraphs 27 to 33 apply in relation to a company for which a moratorium is in force. (2) The fact that a company enters into a transaction in contravention of any of paragraphs 27 to 32 does not -
(b) make it to any extent unenforceable against the company. 27. - (1) Every invoice, order for goods or business letter which -
(b) on or in which the company's name appears, shall also contain the nominee's name and a statement that the moratorium is in force for the company. (2) If default is made in complying with sub-paragraph (1), the company and (subject to sub-paragraph (3)) any officer of the company shall be guilty of an offence. 28. - (1) The company may not obtain credit to the extent of £250 or more from a person who has not been informed that a moratorium is in force in relation to the company. (2) The reference to the company obtaining credit includes the following cases -
(b) where the company is paid in advance (whether in money or otherwise) for the supply of goods or services. (3) Where the company obtains credit in contravention of sub-paragraph (1) -
(b) if any officer of the company knowingly and wilfully authorised or permitted the contravention, he shall be guilty of an offence. (4) The money sum specified in sub-paragraph (1) is subject to increase or reduction by order under Article 362. 29. - (1) Subject to sub-paragraph (2), the company may only dispose of any of its property if -
(b) the disposal is approved by the committee established under paragraph 45(1) or, where there is no such committee, by the nominee. (2) Sub-paragraph (1) does not apply to a disposal made in the ordinary way of the company's business.
(b) if any officer of the company authorised or permitted the contravention, without reasonable excuse, he shall be guilty of an offence. 30. - (1) Subject to sub-paragraph (2), the company may only make any payment in respect of any debt or other liability of the company in existence before the beginning of the moratorium if -
(b) the payment is approved by the committee established under paragraph 45(1) or, where there is no such committee, by the nominee. (2) Sub-paragraph (1) does not apply to a payment required by paragraph 31(6).
(b) if any officer of the company authorised or permitted the contravention, without reasonable excuse, he shall be guilty of an offence. 31. - (1) This paragraph applies where -
(b) any goods are in the possession of the company under a hire-purchase agreement. (2) If the holder of the security consents, or the High Court gives leave, the company may dispose of the property as if it were not subject to the security.
(b) any goods in the possession of the company under a hire-purchase agreement. (6) It shall be a condition of any consent or leave under sub-paragraph (2) or (as the case may be) sub-paragraph (3) that -
(b) where those proceeds are less than such amount as may be agreed, or 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.
(b) where paragraph (b) of sub-paragraph (6) applies, the sums mentioned in that paragraph, to be applied towards discharging the sums secured by those securities in the order of their priorities.
(b) without any consent or leave under paragraph 31, disposes of any goods in the possession of the company under a hire-purchase agreement otherwise than in accordance with the terms of the agreement, or (c) fails to comply with any requirement imposed by paragraph 31,it shall be guilty of an offence. (2) If any officer of the company, without reasonable excuse, authorises or permits any such disposal or failure to comply, he shall be guilty of an offence. 33. - (1) If the company enters into any transaction to which this paragraph applies -
(b) if any officer of the company, without reasonable excuse, authorised or permitted the company to enter into the transaction, he shall be guilty of an offence. (2) A company enters into a transaction to which this paragraph applies if it -
(b) gives a transfer order, (c) grants a market charge or a system-charge, or (d) provides any collateral security. (3) The fact that a company enters into a transaction in contravention of this paragraph does not -
(b) make it to any extent unenforceable by or against the company. (4) Where during the moratorium a company enters into a transaction to which this paragraph applies, nothing done by or in pursuance of the transaction is to be treated as done in contravention of paragraphs 23(1)(g), 25 or 27 to 32. 34. - (1) During a moratorium, the nominee shall monitor the company's affairs for the purpose of forming an opinion as to whether -
(b) the company is likely to have sufficient funds available to it during the remainder of the moratorium to enable it to continue to carry on its business. (2) The directors shall submit to the nominee any information necessary to enable him to comply with sub-paragraph (1) which he requests from them. 35. - (1) The nominee may only withdraw his consent to act in the circumstances mentioned in this paragraph. (2) The nominee must withdraw his consent to act if, at any time during a moratorium -
(ii) the company will not have sufficient funds available to it during the remainder of the moratorium to enable it to continue to carry on its business, (b) he becomes aware that, on the date of filing, the company was not eligible for a moratorium, or (3) The reference in sub-paragraph (2)(a)(ii) to the company's business is to that business as the company proposes to carry it on during the remainder of the moratorium. 36. - (1) If any creditor, director or member of the company, or any other person affected by a moratorium, is dissatisfied by any act, omission or decision of the nominee during the moratorium, he may apply to the High Court. (2) An application under sub-paragraph (1) may be made during the moratorium or after it has ended. (3) On an application under sub-paragraph (1) the High Court may -
(b) give him directions, or (c) make such other order as it thinks fit. (4) An order under sub-paragraph (3) may (among other things) bring the moratorium to an end and make such consequential provision as the High Court thinks fit.
(b) the company does not intend to pursue any claim it may have against the nominee, any creditor of the company may apply to the High Court.
(b) (authorise any creditor to pursue such a claim in the name of the company, or (c) make such other order with respect to such a claim as it thinks fit, unless the Court is satisfied that the act, omission or decision of the nominee was in all the circumstances reasonable.
(b) direct the company to assist in the pursuit of a claim, (c) make directions with respect to the distribution of anything received as a result of the pursuit of a claim, (d) bring the moratorium to an end and make such consequential provision as the High Court thinks fit. (5) On an application under sub-paragraph (1) the High Court shall have regard to the interests of the members and creditors of the company generally. 38. - (1) The High Court may -
(b) on an application made by the directors 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 practitioner, or authorised to act as nominee, in relation to the voluntary arrangement. 39. - (1) Where a moratorium is in force, the nominee shall summon meetings of the company and its creditors for such a time, date (within the period for the time being specified in paragraph 19(3)) and place as he thinks fit. (2) The persons to be summoned to a creditors' meeting under this paragraph are every creditor of the company of whose claim the nominee is aware. 40. - (1) Subject to the provisions of paragraphs 41 to 45, the meetings summoned under paragraph 39 shall be conducted in accordance with the rules. (2) A meeting so summoned may resolve that it be adjourned (or further adjourned). (3) 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. 41. - (1) The meetings summoned under paragraph 39 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, or authorised to act as nominee, in relation to the voluntary arrangement. (3) The modifications shall not include one by virtue of which the proposal ceases to be a proposal such as is mentioned in Article 14. (4) A meeting summoned under paragraph 39 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. (5) Subject to sub-paragraph (6), a meeting so summoned shall not approve any proposal or modification under which -
(b) a preferential creditor of the company is to be paid an amount in respect of a preferential debt that§bears to that debt a smaller proportion than is borne to another preferential debt by the amount that is to be paid in respect of that other debt. (6) The meeting may approve such a proposal or modification with the concurrence of the preferential creditor concerned. 42. - (1) Subject to sub-paragraph (2), a meeting summoned under paragraph 39 which resolves that it be adjourned (or further adjourned) may resolve that the moratorium be extended (or further extended), with or without conditions. (2) The moratorium may not be extended (or further extended) to a day later than the end of the period of 2 months which begins -
(b) in any other case, with the day on which the later of those meetings is first held. (3) At any meeting where it is proposed to extend (or further extend) the moratorium, before a decision is taken with respect to that proposal, the nominee shall inform the meeting -
(b) of what he intends to do to continue to comply with that duty if the moratorium is extended (or further extended) and the expected cost of his actions for the company. (4) Where, in accordance with sub-paragraph (3)(b), the nominee informs a meeting of the expected cost of his intended actions, the meeting shall resolve whether or not to approve that expected cost.
(b) paragraphs 42(4) and (5) and 46(1)(e) apply as if the references to the nominee were to that person. 44. - (1) If a decision to extend, or further extend, the moratorium takes effect under paragraph 46, the nominee shall, in accordance with the rules, notify the registrar and the High Court. 45. - (1) A meeting summoned under paragraph 39 which resolves that the moratorium be extended (or further extended) may, with the consent of the nominee, resolve that a committee be established to exercise the functions conferred on it by the meeting. (2) The meeting may not so resolve unless it has approved an estimate of the expenses to be incurred by the committee in the exercise of the proposed functions. (3) Any expenses, not exceeding the amount of the estimate, incurred by the committee in the exercise of its functions shall be reimbursed by the nominee. (4) The committee shall cease to exist when the moratorium comes to an end. 46. - (1) Sub-paragraph (2) applies to references to one of the following decisions having effect, that is, a decision, under paragraph 41, 42 or 45, with respect to -
(b) the extension (or further extension) of a moratorium, (c) the bringing of a moratorium to an end, (d) the establishment of a committee, or (e) the approval of the expected cost of a nominee's intended actions. (2) The decision has effect if, in accordance with the rules -
(b) subject to any order made under sub-paragraph (5)) it has been taken by the creditors' meeting summoned under that paragraph. (3) If a decision taken by the creditors' meeting under any of paragraphs 41, 42 or 45 with respect to any of the matters mentioned in sub-paragraph (1) differs from one so taken by the company meeting with respect to that matter, a member of the company may apply to the High Court.
(b) where the decision of the company meeting was taken on a later day, that day. (5) On an application under sub-paragraph (3), the High Court may -
(b) make such other order as it thinks fit. 47. - (1) This paragraph applies where a decision approving a voluntary arrangement has effect under paragraph 46.
(b) binds every person who in accordance with the rules -
(ii) would have been so entitled if he had had notice of it, as if he were a party to the voluntary arrangement. (3) If -
(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.
(b) at any time when an application under paragraph 48 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. 48. - (1) Subject to the following provisions of this paragraph, any of the persons mentioned in sub-paragraph
(b) that there has been some material irregularity at or in relation to either of those meetings. (2) The persons who may apply under this paragraph are -
(b) 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, and (c) the nominee. (3) An application under this paragraph shall not be made -
(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, but (subject to that) an application made by a person within sub-paragraph (2)(b) on the ground that the arrangement prejudices his interests may be made after the arrangement has ceased to have effect, unless it came to an end prematurely.
(ii) in a case falling within sub-paragraph (1)(b), any decision taken by the meeting in question which has effect under that paragraph, (b) give a direction to any person -
(ii) in a case falling within sub-paragraph (1)(b), for the summoning of a further company or (as the case may be) creditors' meeting to reconsider the original proposal. (5) Where at any time after giving a direction under sub-paragraph (4)(b)(i) the High Court is satisfied that the directors do not intend to submit a revised proposal, the Court shall revoke the direction and revoke or suspend any decision approving the voluntary arrangement which has effect under paragraph 46.
(b) revokes or suspends a decision under sub-paragraph (4)(a) or (5). (8) In such a case, the High Court may give such supplemental directions as it thinks fit and, in particular, directions with respect to -
(b) such things done since that time as could not have been done if a moratorium had been in force in relation to the company when they were done. (9) Except in pursuance of the preceding provisions of this paragraph, a decision taken at a meeting summoned under paragraph 39 is not invalidated by any irregularity at or in relation to the meeting. 49. - (1) This paragraph applies where a voluntary arrangement approved by one or both of the meetings summoned under paragraph 39 has taken effect. (2) The person who is for the time being carrying out in relation to the voluntary arrangement the functions conferred -
(b) by virtue of paragraph 41(2), on a person other than the nominee, shall be known as the supervisor of the voluntary arrangement.
(b) give him directions, or (c) make such other order as it thinks fit. (5) The supervisor -
(b) is included among the persons who may apply to the Court for the winding up of the company or for an administration order to be made in relation to it. (6) The High Court may, whenever -
(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, or authorised to act as supervisor, in relation to the voluntary arrangement, either in substitution for the existing supervisor or to fill a vacancy. 50. - (1) This paragraph applies in relation to acts or omissions of the directors of a company during a moratorium. (2) A creditor or member of the company may apply to the High Court for an order under this paragraph on the ground -
(b) that any actual or proposed act or omission of the directors is or would be so prejudicial. (3) An application for an order under this paragraph may be made during or after the moratorium.
(b) adjourn the hearing conditionally or unconditionally, or (c) make an interim order or any other order that it thinks fit. (5) An order under this paragraph may in particular -
(b) require the directors to refrain from doing or continuing an act complained of by the petitioner, or to do an act which the petitioner has complained they have 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) bring the moratorium to an end and make such consequential provision as the High Court thinks fit. (6) In making an order under this paragraph the High Court shall have regard to the need to safeguard the interests of persons who have dealt with the company in good faith and for value. 51. - (1) This paragraph applies where a moratorium has been obtained for a company. (2) If, within the period of 12 months ending with the day on which the moratorium came into force, a person who was at the time an officer of the company -
(b) was privy to the doing by others of any of the things mentioned in paragraphs (c), (d) and (e) of that sub-paragraph, he is to be treated as having committed an offence at that time.
(b) is privy to the doing by others of any of the things mentioned in paragraphs (c), (d) and (e) of that sub-paragraph, he shall be guilty of an offence.
(b) fraudulently removing any part of the company's property to the value of £500 or more, or (c) concealing, destroying, mutilating or falsifying any book or paper affecting or relating to the company's property or affairs, or (d) making any false entry in any book or paper affecting or relating to the company's property or affairs, or (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). (5) For the purposes of this paragraph, "officer" includes a shadow director.
(b) for a person charged under sub-paragraph (2) or (3) in respect of the things mentioned in paragraph (c) or (d) of sub-paragraph (4) to prove that he had no intent to conceal the state of affairs of the company or to defeat the law. (7) Where a person pawns, pledges or disposes of any property of a company in circumstances which amount to an offence under sub-paragraph (2) or (3), every person who takes in pawn or pledge, or otherwise receives, the property knowing it to be pawned, pledged or disposed of in circumstances which -
(b) amount to an offence under sub-paragraph (3), shall be guilty of an offence.
(b) fraudulently does, or omits to do, anything, he shall be guilty of an offence. 53. - (1) A provision in an instrument creating a floating charge is void if it provides for -
(b) anything done with a view to obtaining a moratorium (including any preliminary decision or investigation), to be an event causing the floating charge to crystallise or causing restrictions which would not otherwise apply to be imposed on the disposal of property by the company or a ground for the appointment of a receiver. 54. - (1) This Schedule has effect in relation to a moratorium for a regulated company with the modifications in sub-paragraphs (2) to (16). (2) Any notice or other document required by virtue of this Schedule to be sent to a creditor of a regulated company must also be sent to the Authority. (3) The Authority is entitled to be heard on any application to the High Court for leave under paragraph 31(2) or 31(3) (disposal of charged property, etc.). (4) Where paragraph 36(1) (challenge of nominee's actions, etc.) applies, the persons who may apply to the High Court include the Authority. (5) If a person other than the Authority applies to the High Court under that paragraph, the Authority is entitled to be heard on the application. (6) Where paragraph 37(1) (challenge of nominee's actions, etc.) applies, the persons who may apply to the High Court include the Authority. (7) If a person other than the Authority applies to the High Court under that paragraph, the Authority is entitled to be heard on the application. (8) The persons to be summoned to a creditors' meeting under paragraph 39 include the Authority. (9) A person appointed for the purpose by the Authority is entitled to attend and participate in (but not to vote at) -
(b) any meeting of a committee established under paragraph 45 (moratorium committee). (10) The Authority is entitled to be heard on any application under paragraph 46(3) (effectiveness of decisions).
(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, within the meaning given by section 22 of that Act, in contravention of the general prohibition within the meaning given by section 19 of that Act. 55. - (1) Regulations made by the Department under this Schedule may make such consequential, incidental, supplemental and transitional provision as appears to the Department necessary or expedient.
8.In Article 104 (application for winding up of company), after paragraph (4) insert -
9. - (1) Article 197 (conditions which may be imposed on supply of water, electricity, etc.) is amended as follows.
(b) in sub-paragraph (c), for the words from "under Part II" to "Article 16" substitute "approved under Part II", and (3) In paragraph (4) -
(b) in sub-paragraph (c), for the words following "arrangement" substitute "took effect". 10.In Article 347 (date which determines existence and amount of preferential debt), after paragraph (2) insert -
11.In Article 362(1) (monetary limits) after sub-paragraph (b) insert -
paragraph 51(4) (minimum value of company property concealed or fraudulently removed, affecting criminal liability of company's officer).". 12.In Schedule 7 (punishment of offences), at the end insert the following entries which relate to offences under Schedule A1 -
1.The Insolvency Order shall be amended as follows. 2.In Article 14(2) (proposal for a voluntary arrangement), for "in relation to the company" substitute "or authorised to act as nominee, in relation to the voluntary arrangement". 3.In Article 15 (procedure where nominee is not the liquidator or administrator) -
(aa) ". (b) for paragraph (4) substitute -
(a) 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 practitioner, or authorised to act as nominee, in relation to the voluntary arrangement.". 4.In Article 17(2) (decisions of meetings), for "in relation to the company" substitute "or authorised to act as nominee, in relation to the voluntary arrangement".
17A. - (1) This Article applies to a decision, under Article 17, with respect to the approval of a proposed voluntary arrangement. (2) The decision has effect if, in accordance with the rules -
(a) (subject to any order made under paragraph (4)) it has been taken by the creditors' meeting summoned under that Article. (3) 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.
(b) where the decision of the company meeting was taken on a later day, that day. (5) Where a member of a regulated company, within the meaning given by paragraph 54 of Schedule A1, applies to the High Court under paragraph (3), the Financial Services Authority is entitled to be heard on the application.
(b) make such other order as it thinks fit.". 6.In Article 18 (effect of approval of voluntary arrangement) -
(c) in paragraph (2), for sub-paragraph (b) substitute -
(ii) would have been so entitled if he had had notice of it, as if he were a party to the voluntary arrangement. (2A) If -
(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.". 7. - (1) Article 19 (challenge of decisions) shall be amended as follows.
(4) In paragraph (3) -
(b) at the end insert
but (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.". (5) In paragraph (4)(a) -
(b) for "approval given by the meeting in question" substitute "decision taken by the meeting in question which has effect under that Article". (6) In paragraph (5), for "approval given at the previous meetings" substitute "decision approving the voluntary arrangement which has effect under Article 17A".
19A. - (1) 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 -
(b) fraudulently does, or omits to do, anything, he shall be guilty of an offence. 9.In Article 20 (implementation of proposal) -
(b) in paragraph (2), for sub-paragraph (a) substitute -
(c) in paragraph (5), for "in relation to the company" substitute "or authorised to act as supervisor, in relation to the voluntary arrangement". 10.After that Article insert -
20A. - (1) This Article applies where a moratorium under Article 14A has been obtained for a company or the approval of a voluntary arrangement in relation to a company has taken effect under Article 17A or paragraph 46 of Schedule A1. (2) If it appears to the nominee or supervisor that any past or present officer of the company has been guilty of any offence in connection with the moratorium or, as the case may be, voluntary arrangement for which he is criminally liable, the nominee or supervisor shall forthwith -
(a) 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 nominee or 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 Article 424 or 425 of the Companies Order to investigate a company's affairs.
(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.
(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. 11.In Article 347(2)(b) (date which determines existence and amount of preferential debt), for the words following "date" substitute "on which the voluntary arrangement takes effect".
13. - (1) The Financial Services Authority may appoint one or more competent persons to investigate and report on any matter reported to the Authority under Article 20A(2) of the Insolvency (Northern Ireland) Order 1989 (NI 19); and section 55 of the Building Societies Act 1986 (c. 53) (inv |