The Insolvent Partnerships (Amendment) Order (Northern Ireland) 2006

Made: 13th December 2006

To be laid before Parliament

Coming into operation: 8th January 2007

The Lord Chancellor, with the concurrence of the Lord Chief Justice and the Department of Enterprise, Trade and Investment[^f00001] makes the following Order in exercise of the powers conferred by Article 364 of the Insolvency (Northern Ireland) Order 1989[^f00002] and Article 24(1) of the Company Directors Disqualification (Northern Ireland) Order 2002[^f00003].

Citation, commencement and interpretation

1

• (1) This Order may be cited as the Insolvent Partnerships (Amendment) Order (Northern Ireland) 2006 and shall come into operation on 8th January 2007 (“the commencement date”).

• (2) In this Order—

• “the Order” means the Insolvency (Northern Ireland) Order 1989, and

• “the 1995 Order” means the Insolvent Partnerships Order (Northern Ireland) 1995[^f00004]

Transitional provisions

2

The amendments to the 1995 Order set out in Articles 4, 7 and 14 do not apply where a petition for an administration order has been presented in relation to an insolvent partnership before the commencement date.

Amendments to the Arrangement of Articles to the 1995 Order

3

In the Arrangement of Articles in the 1995 Order—

• (a) for the Heading “ADMINISTRATION ORDERS” below “PART III” substitute “ADMINISTRATION.”;

• (b) for the words “6. Administration order in relation to insolvent partnership” substitute the words “6. Administration in relation to insolvent partnership.”;

• (c) for the words “Schedule 1 – Modified provisions of Part II of the Order (company voluntary arrangements) as applied by Article 4” substitute the words “Schedule 1 – Modified provisions of Part II of, and Schedule A1 to, the Order (company voluntary arrangements) as applied by Article 4”;

• (d) for the words “Schedule 2 – Provisions of the Order which apply with modifications for the purposes of Article 6 to administration orders in relation to insolvent partnerships” substitute the words “Provisions of the Order which apply with modifications for the purposes of Article 6 to administrations in relation to insolvent partnerships.”

Amendments to Part III of the Insolvent Partnerships Order (Northern Ireland) 1995

4

For Part III of the 1995 Order (administration orders) substitute—

(6) (1) The provisions of Part III of, and Schedule B1 to, the Order shall apply in relation to an insolvent partnership, certain of those provisions being modified in such manner that, after modification, they are as set out in Schedule 2. (2) For the purposes of the provisions of the Order applied by paragraph (1), the provisions of the Order specified in paragraph (3) (including any related Schedule) insofar as they relate to the appointment of an administrator, shall also apply in relation to insolvent partnerships. (3) The provisions referred to in paragraph (2) are— (a) Articles 2 to 7 in Part 1, (b) Part VII, (c) Part XI, (d) Part XII, (e) Articles 359 to 363 in Part XIII, and (f) Part XIV.

Amendment to Article 10 of the Insolvent Partnerships Order (Northern Ireland) 1995

5

For Article 10(6) of the 1995 Order substitute—

(6) Certain of the provisions referred to in paragraphs (2) and (4) are modified in their application in relation to the corporate or individual members of insolvent partnerships in such manner that, after modification, they are as set out in Part II of Schedule 4.

Amendments to Schedule 1 to the Insolvent Partnerships Order (Northern Ireland) 1995

6

• (1) Schedule 1 to the 1995 Order (modified provisions of Part II of, and Schedule A1 to, the Order (company voluntary arrangements) as applied by Article 4) is amended as follows.

• (2) In modified Article 14 (those who may propose an arrangement)—

• (a) in paragraph (1) for “for which an administration order is in force” substitute “which is in administration”;

• (b) in paragraph (3)(a) for “an administration order is in force in relation to the partnership” substitute “the partnership is in administration”;

• (c) omit modified paragraph (4).

• (3) In modified Article 18 (effect of approval)—

• (a) in paragraph (3) for “an administration order” substitute “is in administration”;

• (b) in paragraph (3)(a)(ii) for “discharge the administration order” substitute “provide for the appointment of the administrator to cease to have effect”.

• (4) In modified Article 19 (challenge of decisions) in paragraph (2)(d) for “an administration order or” substitute “is in administration or an”.

• (5) In modified paragraph 3 of Schedule A1—

• (a) in sub-paragraph (3)(a) for “£2.8” substitute “£5.6”; and

• (b) in sub-paragraph (3)(b) for “£1.4” substitute “£2.8”.

• (6) In modified paragraph 4(1)(a) of Schedule A1 for “an administration order is in force in relation to the insolvent partnership” substitute “the partnership is in administration”.

• (7) For modified paragraph 23(1)(d) of Schedule A1 substitute—

(d) no administration application may be made in respect of the partnership, (da) no administrator of the partnership may be appointed under paragraph 23 of Schedule B1,

• (8) For modified paragraph 50(7) of Schedule A1 substitute—

(7) Sub-paragraph (8) applies where— (a) the appointment of an administrator has effect in relation to the insolvent partnership and the appointment took effect before the moratorium came into force, or (b) the insolvent partnership is being wound up as an unregistered company or an order by virtue of Article 11 of the Insolvent Partnerships Order (Northern Ireland) 1995 has been made, in pursuance of a petition presented before the moratorium came into force. (8) No application for an order under this paragraph may be made by a creditor or member of the insolvent partnership; but such an application may be made instead by the administrator (or as the case may be) the liquidator.

Amendment to Schedule 2 to the Insolvent Partnerships Order (Northern Ireland) 1995

7

For Schedule 2 to the 1995 Order (modified provisions of the Order applying for purposes of Article 6) substitute the provisions set out in Schedule 1.

Amendment to Schedule 3 to the Insolvent Partnerships Order (Northern Ireland) 1995

8

• (1) Schedule 3 to the 1995 Order (modified provisions of the Order applying for purposes of Article 7) is amended as follows.

• (2) In paragraph 3 of Part I (Article 185: Winding up of unregistered companies), in modified Article 185(6) after “103” insert “150A,”.

• (3) In paragraph 10 of Part II (modifications to Schedule 2) insert after modified paragraph 3 of modified Schedule 2 (powers of liquidator in a winding up) the following—

(3A) Power to bring legal proceedings under Article 177, 178, 202, 203 or 367

Amendments to Schedule 4 of the Insolvent Partnerships Order (Northern Ireland) 1995

9

• (1) Schedule 4 to the 1995 Order (modified provisions of the Order applying for purposes of Article 8) is amended as follows.

• (2) In paragraph 1(2) after “245” insert “256A” and after “278” insert “286A”.

• (3) In modified Article 185(6) after “132” insert “,150A,”.

• (4) In paragraph 15 of Part II (Article 119: appointment by the High Court following administration or voluntary arrangement), in modified Article 119(2) for “discharge of an administration order in respect of the partnership” substitute “appointment of an administrator in respect of the partnership ceasing to have effect” and for “who has ceased on the discharge of the administration order to be the administrator of the partnership” substitute “whose appointment as administrator has ceased to have effect”.

• (5) After paragraph 27 of Part II (Article 198: getting in the partnership property) insert new paragraph 27A as follows:—

(27A) Article 256A: Individual member’s home ceasing to form part of estate Article 356A is modified so as to read as follows:— (256A) (1) This Article applies where property comprised in the estate of an individual member consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of— (a) the individual member; (b) the individual member’s spouse or civil partner, or (c) a former spouse or former civil partner of the individual member. (2) At the end of the period of 3 years beginning with the date of the bankruptcy the interest mentioned in paragraph (1) shall— (a) cease to be comprised in the individual member’s estate, and (b) vest in the individual member (without conveyance, assignment or transfer). (3) Paragraph (2) shall not apply if during the period mentioned in that paragraph— (a) the trustee realises the interest mentioned in paragraph (1), (b) the trustee applies for an order for sale in respect of the dwelling-house, (c) the trustee applies for an order for possession of the dwelling-house, (d) the trustee applies for an order under Article 286 in Chapter IV in respect of that interest, or (e) the trustee and the individual member agree that the individual member shall incur a specified liability to his estate (with or without the addition of interest from the date of the agreement) in consideration of which the interest mentioned in paragraph (1) shall cease to form part of the estate. (4) Where an application of a kind described in paragraph (3)(b) to (d) is made during the period mentioned in paragraph (2) and is dismissed, unless the High Court orders otherwise the interest to which the application relates shall on the dismissal of the application— (a) cease to be comprised in the individual member’s estate, and (b) vest in the individual member (without conveyance, assignment or transfer). (5) If the individual member does not inform the trustee or the official receiver of his interest in a property before the end of the period of 3 months beginning with the date of the bankruptcy, the period of 3 years mentioned in paragraph (2)— (a) shall not begin with the date of the bankruptcy, but (b) shall begin with the date on which the trustee or official receiver becomes aware of the individual member’s interest. (6) The High Court may substitute for the period of 3 years mentioned in paragraph (2) a longer period— (a) in prescribed circumstances, and (b) in such other circumstances as the Court thinks appropriate. (7) The rules may make provision for this Article to have effect with the substitution of a shorter period for the period of 3 years mentioned in paragraph (2) in specified circumstances (which may be described by reference to action to be taken by a trustee in bankruptcy). (8) The rules may also, in particular, make provision— (a) requiring or enabling the trustee of an individual member’s estate to give notice that this Article applies or does not apply; (b) about the effect of a notice under sub-paragraph (a); (c) requiring the trustee of an individual member’s estate to make an application to the Land Registry or the Registry of Deeds. (9) Rules under paragraph (8)(b) may, in particular— (a) disapply this Article; (b) enable the High Court to disapply this Article; (c) make provision in consequence of a disapplication of this Article; (d) enable the Court to make provision in consequence of a disapplication of this Article; (e) make provision (which may include provision conferring jurisdiction on a court or tribunal) about compensation.

• (6) After paragraph 28 of Part II (Article 257: individual member: restrictions on dispositions of property) insert new paragraph 28A as follows—

(28A) Article 286A: Low value home: application for sale, possession or charge Article 286A is modified so as to read as follows:— (286A) (1) This Article applies where— (a) property comprised in the individual member’s estate consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of— (i) the individual member, (ii) the individual member’s spouse or civil partner, or (iii) a former spouse or former civil partner of the individual member, and (b) the trustee applies for an order for the sale of the property, for an order for possession of the property or for an order under Article 286 in respect of the property. (2) The High Court shall dismiss the application if the value of the interest is below such amount as may for the time being be specified for the purposes of this paragraph by Order under Article 362(1)(b). (3) In determining the value of an interest for the purposes of this Article the High Court shall disregard any matter which it is required to disregard by the order which specifies the amount for the purposes of paragraph (2).

• (7) In paragraph 29 (modification of Schedule 2) insert after modified paragraph 3 of modified Schedule 2 (powers of liquidator in a winding up) the following—

(3A) Power to bring legal proceedings under Article 177, 178, 202, 203 or 367.

Amendment to Schedule 5 to the Insolvent Partnerships Order (Northern Ireland) 1995

10

In Schedule 5 to the 1995 Order (modified provisions of the Order applying for purposes of Article 9) in modified Article 185(6) after “104(2) to (4)” insert “150A,”.

Amendment to Schedule 6 to the Insolvent Partnerships Order (Northern Ireland) 1995

11

In paragraph 3 of Schedule 6 to the 1995 Order (modified provisions of the Order applying for purposes of Article 10) in modified Article 185(6) after “132,” insert “150A,”.

Amendment to Schedule 7 to the Insolvent Partnerships Order (Northern Ireland) 1995

12

• (1) Schedule 7 to the 1995 Order (modified provisions for the purposes of Article 11) is amended as follows.

• (2) In paragraph 1(2) omit “249,”.

• (3) Omit paragraph 7 (Article 249: summary administration).

• (4) After paragraph 6 (Article 246: grounds of joint bankruptcy petition) insert new paragraph 6A as follows—

(6A) Article 256A: Individual member’s home ceasing to form part of estate Article 256A is modified so as to read as follows:— (256A) (1) This Article applies where property comprised in the estate of an individual member consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of— (a) the individual member; (b) the individual member’s spouse or civil partner, or (c) a former spouse or former civil partner of the individual member. (2) At the end of the period of 3 years beginning with the date of the bankruptcy the interest mentioned in paragraph (1) shall— (a) cease to be comprised in the individual member’s estate, and (b) vest in the individual member (without conveyance, assignment or transfer). (3) Paragraph (2) shall not apply if during the period mentioned in that paragraph— (a) the trustee realises the interest mentioned in paragraph (1), (b) the trustee applies for an order for sale in respect of the dwelling-house, (c) the trustee applies for an order for possession of the dwelling-house; (d) the trustee applies for an order under Article 286 in Chapter IV in respect of that interest, or (e) the trustee and the individual member agree that the individual member shall incur a specified liability to his estate (with or without the addition of interest from the date of the agreement) in consideration of which the interest mentioned in paragraph (1) shall cease to form part of the estate. (4) Where an application of a kind described in paragraph (3)(b) to (d) is made during the period mentioned in paragraph (2) and is dismissed, unless the High Court orders otherwise the interest to which the application relates shall on the dismissal of the application— (a) cease to be comprised in the individual member’s estate, and (b) vest in the individual member (without conveyance, assignment or transfer). (5) If the individual member does not inform the trustee or the official receiver of his interest in a property before the end of the period of 3 months beginning with the date of the bankruptcy, the period of 3 years mentioned in paragraph (2)— (a) shall not begin with the date of the bankruptcy, but (b) shall begin with the date on which the trustee or official receiver becomes aware of the individual member’s interest. (6) The High Court may substitute for the period of 3 years mentioned in paragraph (2) a longer period— (a) in prescribed circumstances, and (b) in such other circumstances as the Court thinks appropriate. (7) The rules may make provision for this Article to have effect with the substitution of a shorter period for the period of 3 years mentioned in paragraph (2) in specified circumstances (which may be described by reference to action to be taken by a trustee in bankruptcy). (8) The rules may also, in particular, make provision— (a) requiring or enabling the trustee of an individual member’s estate to give notice that this Article applies or does not apply; (b) about the effect of a notice under sub-paragraph (a); (c) requiring the trustee of an individual member’s estate to make an application to the Land Registry or the Registry of Deeds. (9) Rules under paragraph (8)(b) may, in particular— (a) disapply this Article; (b) enable the High Court to disapply this Article; (c) make provision in consequence of a disapplication of this Article; (d) enable the Court to make provision in consequence of a disapplication of this Article; (e) make provision (which may include provision conferring jurisdiction on a court or tribunal) about compensation.

• (5) After paragraph 20 (Article 285: obligation to surrender control to trustee) insert new paragraph 20A as follows—

(20A) Article 286A: Low value home: application for sale, possession or charge Article 286A is modified so as to read as follows:— (286A) (1) This Article applies where— (a) property comprised in the individual member’s estate consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of— (i) the individual member, (ii) the individual member’s spouse or civil partner, or (iii) a former spouse or former civil partner of the individual member, and (b) the trustee applies for an order for the sale of the property, for an order for possession of the property or for an order under Article 286 in respect of the property. (2) The High Court shall dismiss the application if the value of the interest is below such amount as may for the time being be specified for the purposes of this paragraph by Order under Article 362(1)(b). (3) In determining the value of an interest for the purposes of this Article the High Court shall disregard any matter which it is required to disregard by the order which specifies the amount for the purposes of paragraph (2).

Amendment to Schedule 8 to the Insolvent Partnerships Order (Northern Ireland) 1995

13

• (1) Schedule 8 to the 1995 Order (Provisions of the Company Directors Disqualification (Northern Ireland) Order 2002 which apply with modifications for the purposes of Article 16) is amended as follows.

• (2) In modified Article 9 (duty of High Court to disqualify unfit officers of insolvent partnerships)—

• (a) in paragraph (2)(a)(ii) for “an administration order is made in relation to the partnership” substitute “the partnership enters administration”;

• (b) in paragraph (2)(b)(ii) for “an administration order is made in relation to the company” substitute “the company enters administration”;

• (c) omit paragraph (2)(b)(iii).

• (3) In modified Article 10(4)(b) (disqualification order or undertaking; and reporting provisions) for “in relation to which an administration order is in force” substitute “which is in administration”.

• (4) In modified Schedule 1 (matters for determining unfitness of officers of partnerships) in paragraph 12(a) for “Article 34” substitute “paragraph 49 of Schedule B1”.

Amendment to Schedule 9 to the Insolvent Partnerships Order (Northern Ireland) 1995

14

Schedule 9 to the 1995 Order (forms) is amended as follows—

• (a) in the entry for Form 1 for “Petition for administration order” substitute “Administration application”;

• (b) after the entry for Form 1 insert the following entries—

1A Notice of intention to appoint an administrator by the members of the partnership 1B Notice of an appointment of an administrator by the members of the partnership (where a notice of intention to appoint has not been issued)

• (c) for Forms 1, 4 and 16 substitute the Forms so numbered in Schedule 2 and after Form 1 insert Forms 1A and 1B as set out in Schedule 2.

Amendment to Schedule 10 to the Insolvent Partnerships Order (Northern Ireland) 1995

15

Schedule 10 to the 1995 Order is amended as follows—

• (a) omit “The Insolvency Fees Order (Northern Ireland) 1991” and “The Insolvency (Deposits) Order (Northern Ireland) 1991”;

• (b) for “The Insolvency Practitioners Regulations (Northern Ireland) 1991” substitute “The Insolvency Practitioners Regulations (Northern Ireland) 2006[^f00005]”;

• (c) at the end insert—

The Insolvency Practitioners and Insolvency Account (Fees) Order (Northern Ireland) 2006[^f00006]; The Insolvency (Fees) Order (Northern Ireland) 2006[^f00007]; The Insolvency (Deposits) Order (Northern Ireland) 2006[^f00008]

SCHEDULE 1 — SUBSTITUTED SCHEDULE 2 TO THE INSOLVENT PARTNERSHIPS ORDER (NORTHERN IRELAND) 1995

SCHEDULE 2 — FORMS

Signed

Signed by the authority of the Lord Chancellor

Bridget Prentice — Parliamentary Under Secretary of State, — Department for Constitutional Affairs — Dated 8th December 2006

I concur with the forgoing Order.

Brian Kerr — Lord Chief Justice of Northern Ireland — Dated 13th December 2006

The Department of Enterprise, Trade and Investment hereby concurs with the foregoing Order.

Sealed with the Official Seal of the Department of Enterprise, Trade and Investment on 13th December 2006

M. Bohill — Senior Officer of the — Department of Enterprise, Trade and Investment

Explanatory note

(This note is not part of the Order)

This order amends the Insolvent Partnerships Order (Northern Ireland) 1995 (S.R. 1995 No. 225) (“the 1995 Order”). The following are the main changes made to the 1995 Order.

1 Article 4 substitutes Article 6 of the 1995 Order to take account of the amendment to Part III of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) (“the 1989 Order”) by Article 3 of the Insolvency (Northern Ireland) Order 2005 (S.I. 2005/1455 (N.I. 10)) (“the 2005 Order”). Article 3 of the 2005 Order substituted Part III of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)). The substituted Part III consists only of Article 21 which gives effect to Schedule B1 to the Order, which was set out in Schedule 1 to the 2005 Order. Schedule B1 makes provision for companies to go into administration by court order on an administration application or upon the appointment of an administrator by the company, its directors or the holder of a qualifying floating charge.

2 Article 7 of this Order gives effect to Schedule 1 to this Order which substitutes Schedule 2 of the 1995 Order (modified provisions of the Order applying for purposes of Article 6). The substituted Schedule 2 contains modifications to Schedule B1 to the 1989 Order.

3 Article 5 amends Article 10 of the 1995 Order to remove a reference to summary administration consequent upon the abolition of that procedure by the 2005 Order.

4 Article 6 amends Schedule 1 to the 1995 Order consequent upon the changes to administration in the 2005 Order. Article 6(4) amends the provisions of modified Schedule A1 to take account of changes to the definition of small to medium enterprises in the Companies (1986 Order) (Accounts of Small and Medium-Sized Enterprises and Audit Exemption) (Amendment) Regulations (Northern Ireland) 2004 (S.R. 2004 No. 190).

5 Article 8 amends Schedule 3 to the 1995 Order consequent upon amendments made in the 2005 Order.

6 Article 9 amends Schedule 4 to the 1995 Order to provide for the modified application of Articles 256A and 286A of the 1989 Order which were inserted by the 2005 Order regarding treatment of the matrimonial home in bankruptcy.

7 Articles 10 and 11 amend the application of Article 185 of the Insolvency (Northern Ireland) Order 1989 to ensure that the requirement to set aside a “prescribed part” (Article 150A of the Insolvency (Northern Ireland) Order 1989) does not apply to the winding up of an insolvent partnership.

8 Article 12 amends Schedule 7 to the 1995 Order to remove references to summary administration consequent upon the abolition of that procedure by the 2005 Order, and to make provision for the application of Articles 256A and 286A of the 1989 Order as inserted by the 2005 Order regarding treatment of the matrimonial home in bankruptcy.

9 Article 13 amends Schedule 8 to the 1995 Order (modification of Company Directors Disqualification (Northern Ireland) Order 2002) consequent upon amendments made by the 2005 Order.

10 Article 14 and Schedule 2 provide for modified Forms for the administration of Insolvent Partnerships.

11 Article 15 amends Schedule 10 to the 1995 Order to reflect the revocation and legislative replacement of certain applicable subordinate legislation. No regulatory impact assessment has been prepared for this Order as it will not impose any significant costs on business.

Footnotes

[^f00001]: Formerly the Department of Economic Development, see the Departments (Northern Ireland) Order 1999 (S.I. 1999/283 (N.I. 1))

[^f00002]: S.I. 1989/2405 (N.I. 19) – to which the most recent relevant amendments were made by S.R. 2002 No. 223

[^f00003]: S.I. 2002/3150 (N.I. 4)

[^f00004]: S.R. 1995 No. 225 as amended by S.R. 1996 No. 472, S.R. 2003 No. 144, S.R. 2003 No. 359, S.R. 2003 No. 550 and S.I. 2004 No. 355.

[^f00005]: S.R. 2006 No. 33

[^f00006]: S. R. 2006 No.53

[^f00007]: S.R. 2006 No. 54

[^f00008]: S.R. 2006 No. 55