Legalize / United Kingdom / Scotland / Scottish-Statutory-Instrument

The Insolvency (Scotland) (Receivership and Winding up) Rules 2018

Type Scottish-Statutory-Instrument

Publication 2018-11-13

Last updated 2021-10-01

State In force

Jurisdiction Scotland

Department King's Printer for Scotland

Source legislation.gov.uk

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4.22 1 This rule applies where the liquidator is appointed by the court under section 100(3) or 108. 2 The court must not make the appointment unless and until the person being appointed liquidator has lodged in court a statement to the effect that that person is qualified to act as an insolvency practitioner in relation to the company and consents to act as liquidator. 3 The liquidator’s appointment is effective from the date of the order of appointment. 4 Within 28 days from appointment the liquidator must— a deliver a notice of it to the creditors; or b if the court permits, and in accordance with the directions of the court, advertise the notice (otherwise than in the Gazette). 5 Where the liquidator gives notice under paragraph (4)(a) the liquidator may, in addition, advertise the notice (otherwise than in the Gazette) in such manner as the liquidator thinks fit. 6 Any notice under this rule must state— a that a liquidator has been appointed; and b the date of the appointment.

Liquidator’s resignation and replacement

4.23

(1) A liquidator may resign only—

(a) on grounds of ill health;

(b) because of the intention to cease to practise as an insolvency practitioner;

(i) a conflict of interest, or

(ii) a change of personal circumstances; or

(d) where 2 or more persons are acting as liquidator jointly and it is the opinion of both or all of them that it is no longer expedient that there should continue to be that number of joint liquidators.

(2) Before resigning, the liquidator must deliver a notice to creditors, and invite the creditors by a decision procedure, or by deemed consent procedure, to consider whether a replacement should be appointed, except where the resignation is under sub-paragraph (1)(d).

(3) The notice must—

(a) state the liquidator’s intention to resign;

(b) state that under rule 4.23(7) of these Rules the liquidator will be released 21 days after the date of delivery of the notice of resignation to AiB under section 171(5), unless the court orders otherwise; and

(4) The notice may suggest the name of a replacement liquidator.

(5) The notice must be accompanied by a summary of the liquidator’s receipts and payments.

(6) The decision date must be not more than 5 business days before the date on which the liquidator intends to give notice of resignation to AiB under section 171(5).

(7) The resigning liquidator’s release is effective 21 days after the date on which the notice of resignation under section 171(5) is delivered to AiB, unless the court orders otherwise.

Removal of liquidator by creditors

[Note: in relation to release of the liquidator following removal from office by a decision of the company’s creditors, see: where the company’s creditors have not decided against the liquidator’s release, section 173(2)(a)(ii); and where the company’s creditors have decided against release, section 173(2)(b)(i).]

4.24 1 Where the creditors decide that the liquidator be removed, the convener of the decision procedure or the chair of the meeting (as the case may be) must as soon as reasonably practicable deliver the certificate of the liquidator’s removal to the removed liquidator. 2 The removed liquidator must deliver a notice of the removal to AiB as soon as reasonably practicable.

Removal of liquidator by the court

[Note: in relation to release of the liquidator following removal from office by the court see section 173(2)(b)(ii).]

4.25 1 This rule applies where an application is made to the court for the removal of the liquidator, or for an order directing the liquidator to initiate a decision procedure of creditors for the purpose of removing the liquidator. 2 The court may require the applicant to make a deposit or find caution for the expenses to be incurred by the liquidator on the application. 3 The applicant must, at least 14 days before the hearing, deliver to the liquidator— a a notice of the hearing stating the venue; b a copy of the application; and c a copy of any evidence on which the applicant intends to rely. 4 The expenses of the application are not payable as an expense of the liquidation unless the court orders otherwise. 5 Where the court removes the liquidator the order of removal may include such provision as the court thinks fit with respect to matters arising in connection with the removal. 6 The person removed must as soon as reasonably practicable after receiving a copy of the order of removal deliver a copy of the order of removal to AiB. 7 If the court appoints a new liquidator rule 4.22 applies.

Deceased liquidator

[Note: in relation to release of a deceased liquidator, see section 173(2)(a)(iii)⁵⁸ and paragraph 23 of schedule 8 of the Scotland Act 1998.]

4.26 1 If the liquidator dies a notice of the fact and date of death must be delivered as soon as reasonably practicable— a where there is a liquidation committee, to the members of that committee; and b to AiB. 2 The notice must be delivered by one of the following— a a surviving joint liquidator; b a member of the deceased liquidator’s firm (if the deceased was a member or employee of a firm); c an officer of the deceased liquidator’s company (if the deceased was an officer or employee of a company); or d an executor of the deceased liquidator. 3 If such a notice has not been delivered within the 21 days following the liquidator’s death then any other person may deliver the notice.

Loss of qualification as insolvency practitioner

[Note: in relation to release of the liquidator where the liquidator vacates office on ceasing to be a person qualified to act as an insolvency practitioner in relation to the company (section171(4)), see section 173(2)(b)(iii).]

4.27 1 This rule applies where the liquidator vacates office on ceasing to be qualified to act as an insolvency practitioner in relation to the company. 2 A notice of the fact must be delivered as soon as reasonably practicable to AiB by one of the following— a the liquidator who has vacated office; b a continuing joint liquidator; c the recognised professional body which was the source of the vacating liquidator’s authorisation to act (immediately before the liquidator vacated office). 3 Each notice must be authenticated and dated by the person delivering the notice.

Vacation of office on making of winding-up order

4.28

Where the liquidator vacates office in consequence of the court making a winding-up order against the company, rule 4.29 applies in relation to the application to the Accountant of Court for release of the liquidator.

Application by former liquidator for release (section 173(2)(b) or (e))

4.29

(1) An application by a former liquidator to the Accountant of Court for release under section 173(2)(b) or (e) must contain—

(a) identification details for the insolvency proceedings;

(b) identification and contact details for the former liquidator;

(d) a statement that the former liquidator is applying to the Accountant of Court for a certificate of the former liquidator’s release as liquidator as a result of the circumstances specified in the application.

(2) The application must be authenticated and dated by the former liquidator.

(3) When the Accountant of Court gives a release, the Accountant of Court must deliver—

(a) a certificate of the release to the former liquidator; and

(b) a notice of the release to AiB.

(4) Release is effective from the date of the certificate or such other date as the certificate specifies.

Final account prior to dissolution (section 106)

4.30

(1) The final account which the liquidator is required to make up under section 106(1)⁵⁹ and deliver to members and creditors must comply with the requirements of rule 7.9.

(2) When the account is delivered to the creditors it must be accompanied by a notice which states—

(a) that the company’s affairs are fully wound up;

(b) that a creditor may object to the release of the liquidator by giving notice in writing to the liquidator before the end of the prescribed period;

(d) that the liquidator will vacate office under section 171 on delivering to the registrar of companies and AiB the final account and notice saying whether any creditor has objected to release; and

(e) that the liquidator will be released under section 173⁶⁰ at the same time as vacating office unless any of the company’s creditors objected to the liquidator’s release.

(3) The copy of the account which the liquidator delivers to the registrar of companies and AiB under section 106(3)(a) must be accompanied by a notice containing the statement required by section 106(3)(b) of whether any creditors have objected to the liquidator’s release.

(4) Where a creditor has objected to the liquidator’s release rule 4.29 applies to an application by the liquidator to the Accountant of Court for release.

(5) The liquidator is not obliged to prepare or deliver any progress report which may become due under these Rules in the period between the date to which the final account is made up and the date when the account is delivered to the registrar of companies and AiB under section 106(3)(a).

Liquidator’s duties on vacating office (hand-over of assets etc.)

4.31

(1) This rule applies where a person appointed as liquidator (“the succeeding liquidator”) succeeds a previous liquidator (“the former liquidator”) as the liquidator.

(2) When the succeeding liquidator’s appointment takes effect the former liquidator must as soon as reasonably practicable deliver to the succeeding liquidator—

(a) the assets (after deduction of any expenses properly incurred, and distributions made, by the former liquidator);

(b) the records of the winding up, including correspondence, statements of claim, evidence of debts and other documents relating to the winding up; and

(3) In doing so, the former liquidator must hand over—

(a) such information relating to the affairs of the company and the course of the winding up as the succeeding liquidator considers reasonably required for the effective discharge of the succeeding liquidator’s duties as liquidator; and

(b) all records and documents in the former liquidator’s possession relating to the affairs of the company and its winding up.

Taking possession and realisation of company’s assets

4.32

(1) The liquidator must—

(a) as soon as reasonably practicable after the liquidator’s appointment take possession of—

(i) the whole assets of the company; and

(ii) any property, books, papers or records in the possession or control of the company or to which the company appears to be entitled; and

(b) make up and maintain an inventory and valuation of the assets of the company.

(2) The liquidator is entitled to have access to, and to make copies of, all documents or records relating to the assets, property, business or financial affairs of the company—

(a) sent by or on behalf of the company to a third party; and

(b) in that third party’s hands.

(3) If a person obstructs the liquidator in the liquidator’s exercise, or attempted exercise, of a power conferred by paragraph (2), the court may, on the liquidator’s application, order the person to cease obstructing the liquidator.

(4) The liquidator may require delivery to the liquidator of any title deed or other document of the company, even if a right of lien is claimed over it.

(5) Paragraph (4) is without prejudice to any preference of the holder of the lien.

Realisation of the company’s heritable property

4.33

(1) This rule applies to the sale of any part of the company’s heritable property over which a heritable security is held by a creditor or creditors if the rights of the secured creditor are preferable to those of the liquidator.

(2) The liquidator may sell that part only with the concurrence of every such creditor unless the liquidator obtains a sufficiently high price to discharge every such security.

(3) Subject to paragraph (4), the following acts are precluded—

(a) the taking of steps by a creditor to enforce the creditor’s security over that part after the liquidator has intimated to the creditor an intention to sell it;

(b) the commencement by the liquidator of the procedure for the sale of that part after a creditor has intimated to the liquidator that the creditor intends to commence the procedure for its sale.

(4) Where the liquidator or a creditor has given intimation under paragraph (3) but has unduly delayed in proceeding with the sale, then, if authorised by the court in the case of—

(a) paragraph (3)(a), any creditor to whom intimation has been given may enforce the creditor’s security;

(b) paragraph (3)(b), the liquidator may sell that part.

(5) The validity of the title of any purchaser is not challengeable on the ground that there has been a failure to comply with a requirement of this rule.

Power of court to set aside certain transactions

4.34

(1) If in the course of the liquidation the liquidator enters into any transaction with a person who is an associate of the liquidator, the court may, on the application of any interested person, set the transaction aside and order the liquidator to compensate the company for any loss suffered in consequence of it.

(2) This does not apply if either—

(a) the transaction was entered into with the prior consent of the court; or

(b) it is shown to the court’s satisfaction that the transaction was for value, and that it was entered into by the liquidator without knowing, or having any reason to suppose, that the person concerned was an associate.

(3) Nothing in this rule is to be taken as prejudicing the operation of any rule of law relating to a trustee’s dealings with trust property or the fiduciary obligations of any person.

Rule against improper solicitation

4.35

(1) Where the court is satisfied that any improper solicitation has been used by or on behalf of the liquidator in obtaining proxies or procuring the liquidator’s appointment, it may order that no remuneration be allowed as an expense of the liquidation to any person by whom, or on whose behalf, the solicitation was exercised.

(2) An order of the court under this rule overrides any resolution of the liquidation committee or the creditors, or any other provision of these Rules relating to the liquidator’s remuneration.

Permission for exercise of powers by liquidator

4.36

(1) Where these Rules require permission for the liquidator to exercise a power any permission given must not be a general permission but must relate to a particular proposed exercise of the liquidator’s power.

(2) A person dealing with the liquidator in good faith and for value is not concerned to enquire whether any such permission has been given.

(3) Where the liquidator has done anything without such permission, the court or the liquidation committee may, for the purpose of enabling the liquidator to meet the liquidator’s expenses out of the assets, ratify what the liquidator has done; but neither may do so unless satisfied that the liquidator has acted in a case of urgency and has sought ratification without undue delay.

(4) In this rule “permission” includes “sanction”.

CHAPTER 5 — Special Manager

[Note: a document required by the Act or these Rules must also contain the standard contents required as set out in Part 1.]

Application for and appointment of special manager (section 177)

4.37

(1) An application by the liquidator under section 177 for the appointment of a special manager must be supported by a report setting out the reasons for the application.

(2) The report must include the liquidator’s estimate of the value of the business or property in relation to which the special manager is to be appointed.

(3) The court’s order appointing a special manager must specify the duration of the special manager’s appointment, being one of the following:—

(a) for a fixed period stated in the order;

(b) until the occurrence of a specified event; or

(4) The appointment of the special manager may be renewed by order of the court.

(5) The special manager’s remuneration will be fixed from time to time by the court.

(6) The acts of the special manager are valid notwithstanding any defect in the special manager’s appointment or qualifications.

Caution

4.38

(1) The appointment of the special manager does not take effect until the person appointed has found (or, if the court allows, undertaken to find) caution for the appointment to be given to the liquidator.

(2) A person appointed as special manager may find caution either specifically for a particular winding up, or generally for any winding up in relation to which that person may be appointed as special manager.

(3) The amount of the caution must be not less than the value of the business or property in relation to which the special manager is appointed, as estimated in the applicant’s report under rule 4.37 which accompanied the application for appointment.

(4) When the special manager has found caution for the appointment to be given to the applicant that person must lodge with the court a certificate as to the adequacy of the caution.

(5) The cost of providing the caution must be paid in the first instance by the special manager; but the special manager is entitled to be reimbursed as an expense of the liquidation.

Failure to give or keep up caution

4.39

(1) If the special manager fails to find the required caution within the time allowed for that purpose in the order of appointment, or any extension of that time that may be allowed, the liquidator must report the failure to the court which may discharge the order appointing the special manager.

(2) If the special manager fails to keep up the caution, the liquidator must report the failure to the court, which may remove the special manager, and make such order as to expenses as it thinks just.

(3) If the court discharges the order appointing the special manager, or makes an order removing the special manager, the court must give directions as to whether any, and if so what, steps should be taken for the appointment of another special manager.

Accounting

4.40

(1) The special manager must produce accounts, containing details of the special manager’s receipts and payments, for the approval of the liquidator.

(2) The account must be for—

(a) each 3 month period for the duration of the special manager’s appointment; and

(b) any shorter period ending with the termination of the special manager’s appointment.

(3) When the accounts have been approved, the special manager’s receipts and payments must be added to those of the liquidator.

Termination of appointment

4.41

(1) If the liquidator is of the opinion that the appointment of the special manager is no longer necessary or beneficial for the company, the liquidator must apply to the court for directions, and the court may order the special manager’s appointment to be terminated.

(2) The liquidator must also make such an application if the creditors decide that the appointment should be terminated.

PART 5 — WINDING UP BY THE COURT

CHAPTER 1 — Application of Part

Application of Part 5

5.1

ThisPart applies to winding up by the court.

CHAPTER 2 — The statutory demand (sections 123(1)(a) and 222(1)(a))

Interpretation

5.2

A demand served by a creditor on a company under section 123(1)(a) (registered companies) or 222(1)(a) (unregistered companies) is referred to in this Part as “a statutory demand”.

The statutory demand

5.3

(1) A statutory demand must be headed either “Statutory Demand under section 123(1)(a) of the Insolvency Act 1986” or “Statutory Demand under section 222(1)(a) of the Insolvency Act 1986” (as applicable) and must contain—

(a) identification details for the company;

(b) the registered office of the company (if any);

(d) either a statement that the demand is made under section 123(1)(a) or a statement that it is made under section 222(1)(a);

(e) the amount of the debt and the consideration for it (or, if there is no consideration, the way in which it arises);

(f) if the demand is founded on a decree or order of a court, details of the decree or order;

(g) if the creditor is entitled to the debt by way of assignation, details of the original creditor and any intermediate assignees;

(h) a statement that the company must pay the debt claimed in the demand within 21 days of service of the demand on the company after which the creditor may present a winding up petition unless the company offers security for the debt and the creditor agrees to accept security or the company compounds the debt with the creditor’s agreement;

(i) the name of an individual with whom an officer or representative of the company may communicate with a view to securing or compounding the debt to the creditor’s satisfaction;

(j) the named individual’s address, electronic address and telephone number (if any);

(k) a statement that if the company disputes the demand in whole or in part it should contact the individual mentioned in sub-paragraph (i) immediately.

(2) The following must be separately identified in the demand (if claimed) with the amount or rate of the charge and the grounds on which payment is claimed—

(a) any charge by way of interest of which notice had not previously been delivered to the company as included in its liability; and

(b) any other charge accruing from time to time.

(3) The amount claimed for such charges must be limited to that which has accrued due at the date of the demand.

(4) The demand must be dated, and authenticated either by the creditor, or a person authorised to make the demand on the creditor’s behalf.

(5) A demand which is authenticated by a person other than the creditor must state that the person is authorised to make the demand on the creditor’s behalf and state the person’s relationship to the creditor.

CHAPTER 3 — Provisional liquidator

[Note: a document required by the Act or these Rules must also contain the standard contents required as set out in Part 1.]

Application for appointment of provisional liquidator (section 135)

5.4

(1) An application to the court for the appointment of a provisional liquidator under section 135 may be made by—

(a) the petitioner;

(b) a creditor of the company;

(d) the company;

(e) the directors of the company;

(f) the Secretary of State;

(g) a temporary administrator;

(h) a member State liquidator appointed in main proceedings (including in accordance with Article 37(1) of the EU Regulation); or

(i) any person who under any enactment would be entitled to present a petition for the winding up of the company.

(2) The court must not make the appointment unless and until the person being appointed provisional liquidator has lodged in court a statement to the effect that that person is qualified to act as an insolvency practitioner in relation to the company and consents to act as provisional liquidator.

Order of appointment of provisional liquidator – delivery of copy

5.5

The provisional liquidator must as soon as reasonably practicable after receipt of the copy of the order appointing the provisional liquidator deliver a copy of the order to—

(a) the registrar of companies;

(b) AiB;

(d) any receiver of the whole or any part of the company’s property.

Delivery of copy order of appointment of provisional liquidator – notice

[Note: for notice to accompany delivery of a copy of the order of appointment to (a) the registrar of companies and (b) the Accountant in Bankruptcy see Chapter 7 of Part 1.]

5.6 1 This rule applies where under rule 5.5 the provisional liquidator delivers a copy of the order of appointment to— a the company (or if a liquidator was appointed for the company’s voluntary winding up, the liquidator); b any receiver of the whole or any part of the company’s property. 2 The provisional liquidator must deliver with the copy of the order a notice.

Notice of appointment of provisional liquidator

5.7

(1) The provisional liquidator must as soon as reasonably practicable after receipt of the copy of the order of appointment give notice of appointment unless the court directs otherwise.

(2) The notice—

(a) must be gazetted; and

(b) may be advertised in such other manner as the provisional liquidator thinks fit.

(3) The notice must state—

(a) that a provisional liquidator has been appointed; and

(b) the date of the appointment.

Caution

5.8

(1) The cost of providing the caution required under the Act must be paid in the first instance by the provisional liquidator, however—

(a) if a winding-up order is not made, the person appointed is entitled to be reimbursed out of the property of the company, and the court may make an order on the company accordingly; and

(b) if a winding-up order is made, the person appointed is entitled to be reimbursed as an expense of the liquidation.

(2) If the provisional liquidator fails to give or keep up the required caution, the court may remove the provisional liquidator, and make such order as to expenses as it thinks just.

(3) If an order is made under this rule removing the provisional liquidator, or discharging the order appointing the provisional liquidator, the court must give directions as to whether any, and if so what, steps should be taken for the appointment of another person in the place of the removed or discharged provisional liquidator.

Remuneration

5.9

(1) The remuneration of the provisional liquidator is to be fixed by the court from time to time on the application of the provisional liquidator.

(2) The basis for fixing the amount of the remuneration payable to the provisional liquidator may be a commission calculated by reference to the value of the company’s assets with which the provisional liquidator has had to deal.

(3) But there is in any event to be taken into account—

(a) the work which, having regard to that value, was reasonably undertaken by the provisional liquidator;

(b) the extent of the provisional liquidator’s responsibilities in administering the company’s assets.

(4) Without prejudice to any order the court may make as to expenses, the remuneration of the provisional liquidator must be paid to the provisional liquidator, and the amount of any expenses incurred by the provisional liquidator (including the remuneration and expenses of any special manager appointed under section 177) reimbursed—

(a) if a winding-up order is not made, out of the property of the company; and

(b) if a winding-up order is made, as an expense of the liquidation.

(5) Unless the court otherwise directs, where a winding up order is not made, the provisional liquidator may retain out of the company’s property such sums or property as are or may be required for meeting the remuneration and expenses of the provisional liquidator.

Termination of appointment

5.10

(1) Subject to paragraph (2), the appointment of the provisional liquidator may be terminated by the court on the application of the provisional liquidator, or a person specified in rule 5.4(1).

(2) In relation to a winding-up petition under section 124A (petition by Secretary of State for winding up on grounds of public interest) the appointment of the provisional liquidator may be terminated by the court on the application of the provisional liquidator or the Secretary of State.

(3) If the provisional liquidator’s appointment terminates, in consequence of the dismissal of the winding-up petition or otherwise, the court may give such directions as it thinks just relating to—

(a) the accounts of the provisional liquidator’s administration;

(b) the expenses properly incurred by the provisional liquidator; or

(4) The provisional liquidator must give notice of termination of the appointment as provisional liquidator, unless the termination is on the making of a winding-up order or the court directs otherwise.

(5) The notice referred to in paragraph (4) must be delivered as soon as reasonably practicable to—

(a) the registrar of companies;

(b) AiB;

(d) any receiver of the whole or any part of the company’s property.

(6) The notice under paragraph (4) must state—

(a) that the appointment as provisional liquidator has been terminated;

(b) the date of that termination; and

CHAPTER 4 — Statement of affairs and other information

[Note: a document required by the Act or these Rules must also contain the standard contents required as set out in Part 1.]

Interpretation

5.11

In this Chapter—

“liquidator” includes “provisional liquidator”;

“nominated person” means a relevant person who has been required by the liquidator to make out and deliver to the liquidator a statement of affairs; and

“relevant person” means a person mentioned in section 131(3).

Notice requiring statement of affairs (section 131)

5.12

(1) Where, under section 131, the liquidator requires a nominated person to provide the liquidator with a statement of the affairs of the company, the liquidator must deliver a notice to that person.

(2) The notice must be headed “Notice requiring statement of affairs” and must—

(a) identify the company immediately below the heading;

(b) identify the liquidator;

(d) require the nominated person to prepare and submit to the liquidator a statement of affairs of the company on a date which is specified, being—

(i) the date of the winding-up order, or

(ii) a date directed by the liquidator;

(e) inform the nominated person—

(i) of the names and addresses of any other nominated person to whom such a notice has been delivered, and

(ii) of the date by which the statement must be delivered; and

(f) state the effect of section 131(7) (penalty for non-compliance) and section 235 (duty to co-operate) as it applies to the liquidator.

(3) The liquidator must inform the nominated person that a document for the preparation of the statement of affairs capable of completion in compliance with rule 5.13 can be supplied by the liquidator if requested.

Statement of affairs: contents and delivery

5.13

(1) The statement of affairs must be headed “Statement of affairs” and must contain—

(a) identification details for the company;

(b) a statement that it is a statement of the affairs of the company on a date which is specified, being—

(i) the date of the winding-up order, or

(ii) the date directed by the liquidator;

(i) name and postal address,

(ii) the type of shares held,

(iii) the nominal amount of the shares held,

(iv) the number of shares held,

(v) the amount per share called up, and

(vi) the total amount called up;

(d) the total amount of shares called up held by all shareholders;

(e) a summary of the assets of the company, setting out the book value and estimated realisable value of—

(i) any assets specifically secured,

(ii) any assets subject to a floating charge,

(iii) any assets not secured, and

(iv) the total value of all the assets available for preferential creditors;

(f) a summary of the liabilities of the company, setting out—

(i) the amount of preferential debts,

(ii) an estimate of the deficiency with respect to preferential debts or the surplus available after paying the preferential debts,

(iii) an estimate of the prescribed part, if applicable,

(iv) an estimate of the total assets available to pay debts secured by floating charges,

(v) the amount of debts secured by floating charges;

(vi) an estimate of the deficiency with respect to debts secured by floating charges or the surplus available after paying the debts secured by fixed securities or floating charges;

(vii) the amount of unsecured debts (excluding preferential debts);

(viii) an estimate of the deficiency with respect to unsecured debts or the surplus available after paying unsecured debts;

(ix) any issued and called-up capital, and

(x) an estimate of the deficiency with respect to, or surplus available to, members of the company;

(g) a list of the company’s creditors (as required by section 131(2)) with the following particulars required by paragraph (2) indicating—

(i) any creditors under hire-purchase or conditional sale agreements,

(ii) any creditors who are consumers claiming amounts paid in advance of the supply of goods or services, and

(iii) any creditors claiming retention of title over property in the company’s possession.

(2) The particulars required by this paragraph relating to each creditor are as follows and must be given in this order—

(i) the name and postal address,

(ii) the amount of the debt owed to the creditor,

(iii) details of any security held by the creditor,

(iv) the date the security was given, and

(v) the value of the security.

(3) Paragraph (4) applies where the particulars required by paragraph (2) relate to creditors who are either—

(a) employees or former employees of the company; or

(b) consumers claiming amounts paid in advance for the supply of goods or services.

(4) Where this paragraph applies—

(a) the statement of affairs itself must state separately for each of paragraph (3)(a) and (b) the number of such creditors and the total of the debts owed to them; and

(b) the particulars required by paragraph (2) in respect of those creditors must be set out in separate schedules to the statement of affairs for each of paragraph (3)(a) and (b).

(5) The statutory declaration required by section 131(2A)⁶¹ must be a statutory declaration that the information provided in the statement of affairs is, to the best of the nominated person’s knowledge and belief, accurate and complete.

(6) The nominated person who makes the statutory declaration required by section 131(2A) and paragraph (5) (or one of them, if more than one) must deliver the statement of affairs to the liquidator.

Statement of affairs: statement of concurrence

5.14

(1) The liquidator may require a relevant person to deliver to the liquidator a statement of concurrence.

(2) A statement of concurrence is a statement that the relevant person concurs in the statement of affairs submitted by a nominated person.

(3) The liquidator must inform the nominated person who has been required to submit a statement of affairs that the relevant person has been required to deliver a statement of concurrence.

(4) The nominated person must deliver a copy of the statement of affairs to every relevant person who has been required to submit a statement of concurrence.

(5) A statement of concurrence—

(a) must identify the company; and

(b) may be qualified in relation to matters dealt with in the statement of affairs where the relevant person—

(i) is not in agreement with the statement of affairs;

(ii) considers the statement of affairs to be erroneous or misleading; or

(iii) is without the direct knowledge necessary for concurring in it.

(6) A statement of concurrence must contain a statutory declaration by the relevant person required to submit it that the information provided in the statement of concurrence is, to the best of the relevant person’s knowledge and belief, accurate and complete.

(7) The relevant person must deliver the required statement of concurrence to the liquidator before the end of the period of 5 business days (or such other period as the liquidator may agree) beginning with the day on which the relevant person receives the statement of affairs.

Statement of affairs: expenses

5.15

(1) If a nominated person cannot personally prepare a proper statement of affairs, the liquidator may, as an expense of the liquidation, employ a person or firm to assist in the preparation of the statement.

(2) At the request of a nominated person, made on the grounds that the nominated person cannot personally prepare a proper statement of affairs, the liquidator may authorise an allowance, payable as an expense of the liquidation, of all or part of the expenses to be incurred by the nominated person in employing a person or firm to assist the nominated person in preparing it.

(3) Any such request by the nominated person must be accompanied by an estimate of the expenses involved; and the liquidator must only authorise the employment of a named person or a named firm, approved by the liquidator.

(4) An authorisation given by the liquidator under this rule must be subject to such conditions (if any) as the liquidator thinks fit to impose relating to the manner in which any person may obtain access to relevant documents and other records.

(5) Nothing in this rule relieves a nominated person from any obligation relating to the preparation, verification and submission of the statement of affairs, or to the provision of information to the liquidator.

(6) The liquidator must deliver a notice to the relevant person advising whether the liquidator grants or refuses the relevant person’s request for an allowance under paragraph (2) and where such request is refused the relevant person may appeal to the court not later than 14 days from the date of delivery of the notice to the relevant person.

(7) Paragraphs (2) to (6) of this rule may be applied, on application to the liquidator by any relevant person, in relation to the making of a statement of concurrence.

Limited disclosure

5.16

(1) This rule applies where the liquidator thinks that disclosure of the whole or part of a statement of affairs or a statement of concurrence would be likely to prejudice the conduct of the winding up or might reasonably be expected to lead to violence against any person.

(2) The liquidator may apply to the court for an order of limited disclosure in respect of the whole or any specified part of the—

(a) statement of affairs; or

(b) the statement of concurrence.

(3) The court may order that the whole or any specified part of the statement of affairs or the statement of concurrence must not be entered in the sederunt book.

(4) The court’s order of limited disclosure may include directions regarding the disclosure of information in the statement of affairs or statement of concurrence to other persons.

(5) A creditor who seeks disclosure of the statement of affairs or statement of concurrence or a specified part of it in relation to which an order has been made under this rule may apply to the court for an order that the liquidator disclose that statement of affairs or statement of concurrence or specified part of it.

(6) The court may attach to an order for disclosure any conditions as to confidentiality, duration and scope of the order in any material change of circumstances, and other matters as it sees fit.

(7) If there is a material change in circumstances rendering the limit on disclosure unnecessary, the liquidator must, as soon as reasonably practicable after the change, apply to the court for the order to be discharged or varied.

Delivery of accounts to liquidator

5.17

(1) Any of the persons specified in section 235(3) must, at the request of the liquidator, deliver to the liquidator accounts of the company of such nature, as at such date, and for such period, as the liquidator may specify.

(2) The period specified may begin from a date up to 3 years before the date of the presentation of the winding-up petition, or from an earlier date to which audited accounts of the company were last prepared.

(3) The court may, on the liquidator’s application, require accounts for any earlier period.

(4) Rule 5.15 applies (with the necessary modifications) in relation to accounts to be delivered under this rule as it applies in relation to the statement of affairs.

(5) The accounts must—

(a) if the liquidator so requires, contain a statutory declaration by the person required to deliver them that the accounts are, to the best of the relevant person’s knowledge and belief, accurate and complete; and

(b) (whether or not they contain a statutory declaration) be delivered to the liquidator within 21 days of the request under paragraph (1), or such longer period as the liquidator may allow.

Expenses of assistance in preparing accounts

5.18

(1) Where the liquidator requires a person to deliver accounts under rule 5.17, the liquidator may, with the approval of the liquidation committee (if there is one) and as an expense of the liquidation, employ a person or firm to assist that person in the preparation of the accounts.

(2) The person who is required to deliver accounts may request an allowance of all or part of the expenses to be incurred in employing a person or firm to assist in preparing the accounts.

(3) A request for an allowance must be accompanied by an estimate of the expenses involved.

(4) The liquidator must only authorise the employment of a named person or a named firm approved by the liquidator.

(5) The liquidator may, with the approval of the liquidation committee (if there is one), authorise such an allowance, payable as an expense of the liquidation.

Further disclosure

5.19

(1) The liquidator may at any time require a nominated person to deliver (in writing) further information amplifying, modifying or explaining any matter contained in the statement of affairs, or in accounts delivered under the Act or these Rules.

(2) The information must—

(a) if the liquidator so directs, contain a statutory declaration by the person required to deliver the information that the information is, to the best of the relevant person’s knowledge and belief, accurate and complete; and

(b) (whether or not it contains a statutory declaration) be delivered to the liquidator within 21 days of the requirement under paragraph (1), or such longer period as the liquidator may allow.

CHAPTER 5 — Further information where winding up follows administration

Further information where winding up follows administration

5.20

(1) This rule applies where an administrator is appointed by the court under section 140 as the company’s liquidator and becomes aware of creditors not formerly known to that person as administrator.

(2) The liquidator must deliver to those creditors a copy of any statement previously sent by the administrator to creditors in accordance with paragraph 49(4)⁶² of schedule B1 and rule 3.35 of the CVA and Administration Rules.

CHAPTER 6 — The liquidator

[Note: a document required by the Act or these Rules must also contain the standard contents required as set out in Part 1.]

Appointment of liquidator under section 138(1) (interim liquidator)

5.21

(1) This rule applies to the appointment of a liquidator by the court under section 138(1) (such a liquidator being referred to in section 138, this rule and rules 5.22 (choosing a person to be liquidator) and 8.21 (chair at meetings) as an “interim liquidator”).

(2) The court must not make the appointment unless and until the person being appointed interim liquidator has lodged in court a statement to the effect that that person is qualified to act as an insolvency practitioner in relation to the company and consents to act as liquidator.

(3) The interim liquidator’s appointment is effective from the date of the order of appointment.

(4) The interim liquidator must—

(a) within 7 days beginning with the day the interim liquidator receives the copy order of appointment deliver notice of it to AiB; and

(b) within 28 days beginning with the day the interim liquidator receives the copy order of appointment—

(i) deliver notice of it to the creditors and contributories; or

(ii) if the court permits and in accordance with the directions of the court either—

(aa) gazette the notice; or

(bb) otherwise advertise the notice,

or both gazette the notice and otherwise advertise the notice.

(5) Where the interim liquidator gives notice under paragraph (4)(b)(i) the liquidator may, in addition—

(a) gazette the notice; or

(b) otherwise advertise the notice in such manner as the liquidator thinks fit,

or both gazette the notice and otherwise advertise the notice in such manner as the liquidator thinks fit.

(6) Any notice under this rule must state—

(a) that an interim liquidator has been appointed; and

(b) the date of the appointment.

Choosing a person to be liquidator

5.22

(1) This rule applies where nominations are sought by the interim liquidator from the company’s creditors and contributories under section 138(3) for the purpose of choosing a person to be liquidator of the company in place of the interim liquidator⁶³.

(2) The interim liquidator must deliver to the creditors and contributories a notice inviting proposals for a liquidator.

(3) The notice inviting proposals for a liquidator must explain that the liquidator is not obliged to seek the creditors’ or contributories’ views on any proposals that do not meet the requirements of paragraphs (4) and (5).

(4) A proposal must state the name and contact details of the proposed liquidator, and contain a statement that the proposed liquidator is qualified to act as an insolvency practitioner in relation to the company and has consented to act as liquidator of the company.

(5) A proposal must be received by the interim liquidator within 5 business days of the date of the notice under paragraph (2).

(6) Following the end of the period for inviting proposals under paragraph (2), where any proposals are received the interim liquidator must seek a decision on the proposals for nomination of a liquidator from the creditors (on any proposals received from creditors) and from the contributories (on any proposals received from contributories) by—

(a) a decision procedure; or

(b) the deemed consent procedure.

(7) Where a decision is sought under paragraph (6), the decision date must be not more than 60 days from the date of the winding-up order.

(8) The notice to be issued under rule 8.7 (deemed consent) (where the interim liquidator seeks a decision under paragraph (6) by the deemed consent procedure) or rule 8.8 (notices to creditors of decision procedure) (where the interim liquidator seeks a decision under paragraph (6) by a decision procedure) must also—

(a) identify any liquidator proposed to be nominated by a creditor (in the case of a notice to creditors) or by a contributory (in the case of a notice to contributories) in accordance with this rule; and

(b) contain a statement explaining the effect of section 138(5) (duty of interim liquidator to report to court where no person is appointed or nominated to be liquidator).

(9) The decision date in the notice referred to in paragraph (8) must be no later than 21 days after the date for receiving proposals has passed.

(10) The creditors and contributories must be given at least 14 days’ notice of the decision date.

Appointment of liquidator by creditors or contributories

5.23

(1) This rule applies where a person is appointed as liquidator by the creditors or contributories.

(2) The convener of the decision procedure or deemed consent procedure, or the chair in the case of a meeting, must certify the appointment, but not unless and until the appointee has provided to the convener or the chair a statement to the effect that the appointee is an insolvency practitioner qualified under the Act to be the liquidator and consents to act.

(3) The certificate must be authenticated and dated by the convener or chair and must—

(a) identify the company;

(b) identify and provide contact details for the person appointed as liquidator;

(d) state that the appointee—

(i) has provided a statement of being qualified to act as an insolvency practitioner in relation to the company,

(ii) has consented to act, and

(iii) was appointed as liquidator of the company.

(4) Where 2 or more liquidators are appointed the certificate must also specify (as required by section 231) whether any act required or authorised under any enactment to be done by the liquidator is to be done by all or any one or more of them.

(5) The liquidator’s appointment is effective from the date on which the appointment is certified, that date to be endorsed on the certificate.

(6) The convener or chair must deliver the certificate to the liquidator appointed.

(7) The liquidator must—

(a) within 7 days beginning with the day the liquidator receives the certificate of appointment deliver notice of it to—

(i) the court; and

(ii) AiB; and

(b) within 28 days beginning with the day the liquidator receives the order of appointment—

(i) gazette the notice; or

(ii) otherwise advertise the notice in such manner as the liquidator thinks fit,

or both gazette the notice and otherwise advertise the notice in such manner as the liquidator thinks fit.

(8) Any notice under this rule must state—

(a) that a liquidator has been appointed; and

(b) the date of the appointment.

Decision on nomination

5.24

(1) In the case of a decision on the nomination of a liquidator—

(a) if on any vote there are 2 nominees, the person who obtains the most support is appointed;

(b) if there are 3 or more nominees, and one of them has a clear majority over both or all the others together, that one is appointed; and

(c) in any other case, the convener or chair must continue to take votes (disregarding at each vote any nominee who has withdrawn and, if no nominee has withdrawn, the nominee who obtained the least support last time) until a clear majority is obtained for any one nominee.

(2) The convener or chair may at any time put to the meeting a resolution for the joint nomination of any 2 or more nominees.

Invitation to creditors and contributories to form a liquidation committee

5.25

(1) Where a decision is sought from the company’s creditors and contributories on the appointment of a liquidator, the convener of the decision procedure must at the same time deliver to the creditors and contributories a notice inviting them to decide whether a liquidation committee should be established if sufficient creditors are willing to be members of the committee.

(2) The notice must also invite nominations for membership of the committee, such nominations to be received by a date specified in the notice.

(3) The notice must—

(a) state that nominations must be delivered to the convener by the specified date;

(b) state, in the case of creditors, that nominations can only be accepted if the convener is satisfied as to the creditors’ eligibility under rule 10.4 (eligibility for membership of creditors’ or liquidation committee); and

(c) explain the effect of section 142(2) and (3)⁶⁴ on whether a committee is to be established under Part 10 (creditors and liquidation committees).

Appointment by the court (section 138(5), section 139(4) and section 140)

5.26

(1) This rule applies where the liquidator is appointed by the court under section 138(5) (no person nominated or appointed by creditors and contributories), 139(4) (different persons nominated by creditors and contributories) or section 140⁶⁵ (winding up following administration or CVA).

(2) The court must not make the appointment unless and until the person being appointed liquidator has lodged in court a statement to the effect that that person is qualified to act as an insolvency practitioner in relation to the company and consents to act as liquidator.

(3) The liquidator’s appointment is effective from the date of the order of appointment.

(4) The liquidator must—

(a) within 7 days beginning with the day the liquidator receives the copy order of appointment deliver notice of it to AiB; and

(b) within 28 days beginning with the day the liquidator receives the copy order of appointment—

(i) deliver notice of it to the creditors and contributories; or

(ii) if the court permits and in accordance with the directions of the court either—

(aa) gazette the notice; or

(bb) otherwise advertise the notice,

or both gazette the notice and otherwise advertise the notice.

(5) Where the liquidator gives notice under paragraph (4)(b)(i) the liquidator may, in addition—

(a) gazette the notice; or

(b) otherwise advertise the notice in such manner as the liquidator thinks fit,

or both gazette the notice and otherwise advertise the notice.

(6) Any notice under this rule must—

(a) state that a liquidator has been appointed;

(b) state the date of the appointment;

(c) state whether the liquidator proposes to seek decisions from creditors and contributories for the purpose of establishing a liquidation committee, or proposes only to seek a decision from creditors for that purpose; and

(d) if the liquidator does not propose to seek any such decision, set out the powers of the creditors under the Act to require the liquidator to seek one.

Liquidator's resignation

5.27

(1) A liquidator may resign only—

(a) on grounds of ill health;

(b) because of the intention to cease to practise as an insolvency practitioner;

(i) a conflict of interest; or

(ii) a change of personal circumstances;

(d) where 2 or more persons are acting as liquidator jointly, and it is the opinion of both or all of them that it is no longer expedient that there should continue to be that number of joint liquidators.

(2) Before resigning, the liquidator must deliver a notice to creditors, and invite the creditors by a decision procedure, or by deemed consent procedure, to consider whether a replacement should be appointed, except where the resignation is under sub-paragraph (1)(d).

(3) The notice must—

(a) state the liquidator’s intention to resign;

(b) state that under rule 5.27(8) of these Rules the liquidator will be released 21 days after the date of delivery of the notice of resignation to the court under section 172(6), unless the court orders otherwise; and

(4) The notice may suggest the name of a replacement liquidator.

(5) The notice must be accompanied by a summary of the liquidator’s receipts and payments.

(6) The decision date must be not more than 5 business days before the date on which the liquidator intends to give notice of resignation under section 172(6) (notice of resignation to the court).

(7) The resigning liquidator must deliver a copy of the notice of resignation under section 172(6) to AiB.

(8) The resigning liquidator’s release is effective 21 days after the date on which the notice of resignation under section 172(6) is delivered to the court, unless the court orders otherwise.

Decision of creditors to remove liquidator

[Note: in relation to release of the liquidator following removal from office by a decision of the company’s creditors, see: where the company’s creditors have not decided against the liquidator’s release, section 174(4)(a)(i); and where the company’s creditors have decided against release, section 174(4)(b)(i) ⁶⁶.]

5.28 1 This rule applies where a decision is made, using a decision procedure, to remove the liquidator. 2 The convener of the decision procedure or chair of the meeting (as the case may be) must within 3 business days of the decision to remove the liquidator— a deliver the certificate of the liquidator’s removal to the court; b deliver a copy of that certificate to AiB; and c if the convener or chair is a person other than the liquidator removed, deliver a copy of the certificate to the liquidator removed. 3 If the creditors decided to appoint a new liquidator, the certificate of the new liquidator’s appointment must also be delivered to the new liquidator within that time; and the certificate must comply with the requirements in rule 5.23. 4 The certificate of the liquidator’s removal must— a identify the company; b identify and provide contact details for the removed liquidator; c state that the creditors of the company decided on the date specified in the certificate that the liquidator specified in the certificate be removed from office as liquidator of the company; d state the decision procedure used, and the decision date; e state that the creditors either— i did not decide against the liquidator being released, or ii decided that the liquidator should not be released; and f be authenticated and dated by the convener or chair. 5 The liquidator’s removal is effective from the date of the certificate of removal.

Removal of liquidator by the court (section 172(2))

[Note: in relation to release of the liquidator following removal from office by the court see section 174(4)(b)(ii).]

5.29 1 This rule applies where an application is made to the court under section 172(2)⁶⁷ for the removal of the liquidator, or for an order directing the liquidator to initiate a decision procedure of creditors for the purpose of removing the liquidator. 2 The court may require the applicant to make a deposit or find caution for the expenses to be incurred by the liquidator on the application. 3 The applicant must, at least 14 days before the hearing, deliver to the liquidator— a a notice of the hearing stating the venue; b a copy of the application; and c a copy of any evidence on which the applicant intends to rely. 4 The expenses of the application are not payable as an expense of the liquidation unless the court orders otherwise. 5 Where the court removes the liquidator the order of removal may include such provision as the court thinks fit with respect to matters arising in connection with the removal. 6 The person removed must as soon as reasonably practicable after receiving a copy of the order of removal deliver a copy of the order of removal to AiB. 7 If the court appoints a new liquidator, rule 5.26 applies.

Deceased liquidator

[Note: in relation to release of the liquidator following death see section 174(4)(a)(ii)⁶⁸.]

5.30 1 If the liquidator dies a notice of the fact and date of death must be delivered as soon as reasonably practicable to— a the court; and b AiB. 2 The notice must be delivered by one of the following:— a a surviving joint liquidator; b a member of the deceased liquidator’s firm (if the deceased was a member or employee of a firm); c an officer of the deceased liquidator’s company (if the deceased was an officer or employee of a company); d an executor of the deceased liquidator. 3 If such notice has not been delivered within the 21 days following the liquidator’s death then any other person may deliver the notice.

Loss of qualification as insolvency practitioner

5.31 1 This rule applies where the liquidator vacates office on ceasing to be qualified to act as an insolvency practitioner in relation to the company. 2 A notice of the fact must be delivered as soon as reasonably practicable to— a the court; and b AiB. 3 The notice must be delivered by one of the following— a the liquidator who has vacated office; b a continuing joint liquidator; c the recognised professional body which was the source of the vacating liquidator’s authorisation to act (immediately before the liquidator vacated office). 4 The notice must be authenticated and dated by the person delivering the notice.

Application by liquidator for release (section 174(4)(b) or (d))

5.32

(1) An application by a former liquidator to the Accountant of Court for release under section 174(4)(b) or (d) must contain—

(a) identification details for the insolvency proceedings;

(b) identification and contact details for the former liquidator;

(c) a statement that the former liquidator is applying to the Accountant of Court to grant the former liquidator a certificate of the former liquidator’s release as liquidator as a result of the circumstances specified in the application;

(d) details of the circumstances referred to in sub-paragraph (c) under which the former liquidator has ceased to act as liquidator.

(2) The application must be authenticated and dated by the former liquidator.

(3) When the Accountant of Court gives a release, the Accountant of Court must deliver—

(a) a certificate of the release to the former liquidator; and

(b) a notice of the release to AiB.

(4) Release is effective from the date of the certificate or such other date as the certificate specifies.

Final account prior to dissolution (section 146)

5.33

(1) The final account which the liquidator is required to make up under section 146(2)⁶⁹ and deliver to creditors must comply with the requirements of rule 7.9.

(2) When the account is delivered to the creditors it must be accompanied by a notice which states—

(a) that the company’s affairs are fully wound up;

(b) that a creditor may object to the release of the liquidator by giving notice in writing to the liquidator before the end of the prescribed period;

(d) that the liquidator will vacate office under section 172(8)⁷⁰ as soon as the liquidator has complied with section 146(4) by filing with the court and delivering to the registrar of companies and AiB the final account and notice containing the statement required by section 146(4)(b) of whether any creditors have objected to the liquidator’s release; and

(e) that the liquidator will be released under section 174(4)(d)(ii)⁷¹ at the same time as vacating office unless any of the creditors objected to the release.

(3) The liquidator must deliver a copy of the notice under section 146(4) to the Accountant of Court.

Relief from, or variation of, duty to report

5.34

(1) The court may, on the application of the liquidator, relieve the liquidator of any duty imposed on the liquidator by rule 5.33, or authorise the liquidator to carry out the duty in a way other than required by that rule.

(2) In considering whether to act under this rule, the court must have regard to the cost of carrying out the duty, to the amount of the assets available, and to the extent of the interest of creditors or contributories, or any particular class of them.

Liquidator’s duties on vacating office

5.35

(1) This rule applies where a person appointed as liquidator (“the succeeding liquidator”) succeeds a previous liquidator (“the former liquidator”) as the liquidator.

(2) When the succeeding liquidator’s appointment takes effect the former liquidator must as soon as reasonably practicable deliver to the succeeding liquidator—

(a) the assets (after deduction of any expenses properly incurred, and distributions made, by the former liquidator);

(b) the records of the winding up, including correspondence, statements of claim, evidence of debts and other documents relating to the winding up; and

(3) In doing so, the former liquidator must hand over—

(a) such information relating to the affairs of the company and the course of the winding up as the succeeding liquidator considers reasonably required for the effective discharge of the succeeding liquidator’s duties as liquidator; and

(b) all records and documents in the former liquidator’s possession relating to the affairs of the company and its winding up.

Taking possession and realisation of the company’s assets

5.36

(1) The liquidator must—

(a) as soon as reasonably practicable after the liquidator’s appointment take possession of—

(i) the whole assets of the company; and

(ii) any property, books, papers or records in the possession or control of the company or to which the company appears to be entitled; and

(b) make up and maintain an inventory and valuation of the assets of the company.

(2) The liquidator is entitled to have access to, and to make copies of, all documents or records relating to the assets, property, business or financial affairs of the company—

(a) sent by or on behalf of the company to a third party; and

(b) in that third party’s hands.

(3) If a person obstructs the liquidator in the liquidator’s exercise, or attempted exercise, of a power conferred by paragraph (2), the court may, on the liquidator’s application, order the person to cease obstructing the liquidator.

(4) The liquidator may require delivery to the liquidator of any title deed or other document of the company, even if a right of lien is claimed over it.

(5) Paragraph (4) is without prejudice to any preference of the holder of the lien.

Realisation of the company’s heritable property

5.37

(1) This rule applies to the sale of any part of the company’s heritable property over which a heritable security is held by a creditor or creditors if the rights of the secured creditor are preferable to those of the liquidator.

(2) The liquidator may sell that part only with the concurrence of every such creditor unless the liquidator obtains a sufficiently high price to discharge every such security.

(3) Subject to paragraph (4), the following acts are precluded—

(a) the taking of steps by a creditor to enforce the creditor’s security over that part after the liquidator has intimated to the creditor an intention to sell it;

(b) the commencement by the liquidator of the procedure for the sale of that part after a creditor has intimated to the liquidator that the creditor intends to commence the procedure for its sale.

(4) Where the liquidator or a creditor has given intimation under paragraph (3) but has unduly delayed in proceeding with the sale, then, if authorised by the court in the case of—

(a) paragraph (3)(a), any creditor to whom intimation has been given may enforce the creditor’s security;

(b) paragraph (3)(b), the liquidator may sell that part.

(5) The validity of the title of any purchaser is not challengeable on the ground that there has been a failure to comply with a requirement of this rule.

Power of court to set aside certain transactions

5.38

(1) If in the course of the liquidation the liquidator enters into any transaction with a person who is an associate of the liquidator, the court may, on the application of any interested person, set the transaction aside and order the liquidator to compensate the company for any loss suffered in consequence of it.

(2) This does not apply if either—

(a) the transaction was entered into with the prior consent of the court; or

(b) it is shown to the court’s satisfaction that the transaction was for value, and that it was entered into by the liquidator without knowing, or having any reason to suppose, that the person concerned was an associate.

(3) Nothing in this rule is to be taken as prejudicing the operation of any rule of law relating to a trustee’s dealings with trust property, or the fiduciary obligations of any person.

Rule against improper solicitation

5.39

(1) Where the court is satisfied that any improper solicitation has been used by or on behalf of the liquidator in obtaining proxies or procuring the liquidator’s appointment, it may order that no remuneration be allowed as an expense of the liquidation to any person by whom, or on whose behalf, the solicitation was exercised.

(2) An order of the court under this rule overrides any resolution of the liquidation committee or the creditors, or any other provision of these Rules relating to the liquidator’s remuneration.

CHAPTER 7 — Special manager

[Note: a document required by the Act or these Rules must also contain the standard contents required as set out in Part 1.]

Application of this Chapter and interpretation

5.40

This Chapter applies to applications for the appointment of a special manager by a liquidator and by a provisional liquidator (where one has been appointed), and so references to the liquidator are to be read as including a provisional liquidator.

Appointment and remuneration of special manager (section 177)

5.41

(1) An application by the liquidator under section 177 for the appointment of a special manager must be supported by a report setting out the reasons for the application.

(2) The report must include the liquidator’s estimate of the value of the business or property in relation to which the special manager is to be appointed.

(3) The court’s order appointing the special manager must specify the duration of the special manager’s appointment being one of the following—

(a) for a fixed period stated in the order;

(b) until the occurrence of a specified event; or

(4) The appointment of a special manager may be renewed by order of the court.

(5) The special manager’s remuneration will be fixed from time to time by the court.

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