Insolvency Act 1985

• (4) The power of the court under subsection (3) above to entrust powers to a special manager shall include power to direct that any provision of this Part or of the 1985 Act that has effect in relation to the provisional liquidator or liquidator of a company shall have the like effect in relation to the special manager for the purposes of the carrying out by the special manager of any of the functions of the provisional liquidator or liquidator.

• (5) A special manager appointed under this section shall—

• (a) give such security or, in Scotland, caution as may be prescribed;

• (b) prepare and keep such accounts as may be prescribed; and

• (c) produce those accounts in accordance with the rules to the Secretary of State or to such other persons as may be prescribed.

Power to disclaim onerous property

91

• (1) Subject to the provisions of this section, the liquidator of a company that is being wound up in England and Wales may, by the giving of the prescribed notice, disclaim any onerous property and may do so notwithstanding that he has taken possession of it, endeavoured to sell it or otherwise exercised rights of ownership in relation to it.

• (2) The following is onerous property for the purposes of this section, that is to say—

• (a) any unprofitable contract; and

• (b) any other property of the company which is unsaleable or not readily saleable or is such that it may give rise to a liability to pay money or perform any other onerous act.

• (3) A disclaimer under this section—

• (a) shall operate so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the company in or in respect of the property disclaimed; but

• (b) shall not, except so far as is necessary for the purpose of releasing the company from any liability, affect the rights or liabilities of any other person.

• (4) A notice of disclaimer shall not be given under this section in respect of any property if—

• (a) a person interested in the property has applied in writing to the liquidator or one of his predecessors as liquidator requiring the liquidator or that predecessor to decide whether he will disclaim or not; and

• (b) the period of twenty-eight days beginning with the day on which that application was made, or such longer period as the court may allow, has expired without a notice of disclaimer having been given under this section in respect of that property.

• (5) The disclaimer under this section of any property of a leasehold nature shall not take effect unless a copy of the disclaimer has been served (so far as the liquidator is aware of their addresses) on every person claiming under the company as underlessee or mortgagee and either—

• (a) no application under section 92 below is made with respect to that property before the end of the period of fourteen days beginning with the day on which the last notice served under this subsection was served; or

• (b) where such an application has been made, the court directs that the disclaimer shall take effect.

• (6) Where the court gives a direction under subsection (5) (b) above it may also, instead of or in addition to any order it makes under section 92 below, make such orders with respect to fixtures, tenant's improvements and other matters arising out of the lease as it thinks fit.

• (7) Where, in consequence of the disclaimer under this section of any land subject to a rentcharge, that land vests by operation of law in the Crown or any other person, the Crown or that person and the successors in title of the Crown or that person shall not be subject to any personal liability in respect of any sums becoming due under that rentcharge except sums becoming due after the Crown or that person or some person claiming under or through the Crown or that person has taken possession or control of the land or has entered into occupation of it.

• (8) Any person sustaining loss or damage in consequence of the operation of a disclaimer under this section shall be deemed to be a creditor of the company to the extent of the loss or damage and accordingly may prove for the loss or damage in the winding up.

Powers of court in respect of disclaimed property

92

• (1) This section applies where the liquidator of a company has disclaimed any property under section 91 above.

• (2) An application may be made to the court under this section by—

• (a) any person who claims an interest in the disclaimed property; or

• (b) any person who is under any liability in respect of the disclaimed property, not being a liability discharged by the disclaimer.

• (3) Subject to subsections (4) and (5) below, the court may, on an application under this section, make an order on such terms as it thinks fit for the vesting of the disclaimed property in, or for its delivery to—

• (a) a person entitled to it or a trustee for such a person ; or

• (b) a person subject to such a liability as is mentioned in subsection (2)(b) above or a trustee for such a person.

• (4) The court shall not make an order by virtue of paragraph (b) of subsection (3) above except where it appears to the court that it would be just to do so for the purpose of compensating the person subject to the liability in respect of the disclaimer.

• (5) The court shall not make an order under this section vesting property of a leasehold nature in any person claiming under the company as underlessee or mortgagee except on terms making that person—

• (a) subject to the same liabilities and obligations as the company was subject to under the lease at the commencement of the winding up ; or

• (b) if the court thinks fit, subject to the same liabilities and obligations as that person would be subject to if the lease had been assigned to him at the commencement of the winding up.

• (6) For the purposes of an order under this section relating to only part of any property comprised in a lease, the requirements of subsection (5) above shall apply as if the lease comprised only the property to which the order relates.

• (7) Where subsection (5) above applies and no person claiming under the company as underlessee or mortgagee is willing to accept an order under this section on the terms required by virtue of that subsection, the court may, by order under this section, vest the company's estate or interest in the property in any person who is liable (whether personally or in a representative capacity and whether alone or jointly with the company) to perform the lessee's covenants in the lease; and the court may vest that estate and interest in such a person freed and discharged from all estates, incumbrances and interests created by the company.

• (8) Where subsection (5) above applies and a person claiming under the company as underlessee or mortgagee declines to accept any order under this section, that person shall be excluded from all interest in the property.

• (9) The effect of any order under this section shall be taken into account in assessing for the purpose of section 91(8) above the extent of any loss or damage sustained by any person in consequence of the disclaimer

• (10) An order under this section vesting any property in any person shall not need to be completed by any conveyance, assignment or transfer.

Interest on debts

93

• (1) In a winding up interest shall be payable in accordance with this section on any debt proved in the winding up, including so much of any such debt as represents interest on the remainder.

• (2) Any surplus remaining after the payment of the debts proved in a winding up shall, before being applied for any other purpose, be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the company went into liquidation.

• (3) All interest under this section shall rank equally, whether or not the debts on which it is payable rank equally.

• (4) The rate of interest payable under this section in respect of any debt shall be whichever is the greater of—

• (a) the rate specified in section 17 of the Judgments Act 1838 on the day on which the company went into liquidation; and

• (b) the rate applicable to that debt apart from the winding up.

• (5) In the application of this section to Scotland—

• (a) references to a debt proved in a winding up have effect as references to a claim accepted in a winding up ; and

• (b) the reference to section 17 of the Judgments Act 1838 shall have effect as a reference to the rules.

Style and title of liquidators

94

The liquidator of a company shall be described—

• (a) where a person other than the official receiver is liquidator, by the style of " the liquidator " of the particular company; or

• (b) where the official receiver is liquidator, by the style of " the official receiver and liquidator"' of the particular company;

and in neither case shall he be described by an individual name.

CHAPTER VII — General

Preliminary

Preliminary

95

• (1) The following provisions of this Chapter shall apply—

• (a) where a company goes into liquidation;

• (b) where an administration order is made in relation to a company; and

• (c) except in the case of sections 101 to 105, where an administrative receiver of a company is appointed;

and in those provisions " the office holder " means the liquidator, the administrator or the administrative receiver, as the case may be.

• (2) Sections 96 to 100 and 105 below shall apply where a provisional liquidator is appointed as they apply where a company goes into liquidation, and references in those sections to the office holder shall be construed accordingly.

• (3) Section 97 below shall apply where a composition or scheme approved by meetings summoned under section 22 above has taken effect as it applies where a company goes into liquidation as if references in that section to the office holder were references to the supervisor of the composition or scheme.

Provisions applying generally

General provisions as to office holders

96

• (1) Without prejudice to any enactment under which the official receiver is to be, or may be, liquidator of a company, the office holder must be a person who is qualified to act as an insolvency practitioner in relation to the company.

• (2) If an appointment or nomination of any person to the office relates to more than one person or has the effect that the office is to be held by more than one person, the appointment or nomination shall declare whether any act required or authorised under any enactment to be done by the office holder is to be done by all or any one or more of the persons for the time being holding the office.

• (3) The acts of an individual as the office holder shall be valid notwithstanding any defect in his appointment, nomination or qualifications.

Supplies by utilities

97

• (1) If a request is made by or with the concurrence of the office holder for the giving after the relevant date of any of the supplies mentioned in subsection (2) below, the supplier—

• (a) may make it a condition of the giving of the supply that the office holder personally guarantees the payment of any charges in respect of the supply; but

• (b) shall not make it a condition of the giving of the supply, or do anything which has the effect of making it a condition of the giving of the supply, that any outstanding charges in respect of a supply given to the company before the relevant date are paid.

• (2) The supplies referred to in subsection (1) above are—

• (a) a supply of gas by the British Gas Corporation;

• (b) a supply of electricity by an Electricity Board (within the meaning of the Energy Act 1983);

• (c) a supply of water by statutory water undertakers or, in Scotland, a water authority within the meaning of the Water (Scotland) Act 1980;

• (d) a supply of telecommunication services (within the meaning of the Telecommunications Act 1984) by a public telecommunications operator (within the meaning Of that Act).

• (3) In subsection (2) above the reference to telecommunication services does not include a reference to services consisting in the conveyance of cable programmes, that is to say programmes included in cable programme services (within the meaning of the Cable and Broadcasting Act 1984).

• (4) For the purposes of this section "the relevant date" is whichever is applicable of the following dates, namely—

• (a) the date on which the company went into liquidation;

• (b) the date on which the administration order was made;

• (c) the date on which the administrative receiver was appointed or if he was appointed in succession to another administrative receiver, the date on which the first of his predecessors was appointed;

• (d) the date on which the provisional liquidator was appointed ; and

• (e) the date on which the composition or scheme was approved by the meetings summoned under section 22 above.

Delivery and seizure of property

98

• (1) Where any person has in his possession or control any property, books, papers or records to which the company appears to be entitled, the court may require that person forthwith (or within such period as the court may direct) to pay, deliver, convey, surrender or transfer the property, books, papers or records to the office holder.

• (2) Where

• (a) the office holder seizes or disposes of any property which is not property of the company ; and

• (b) at the time of seizure or disposal the office holder believes, and has reasonable grounds for believing, that he is entitled (whether in pursuance of an order of the court or otherwise) to seize or dispose of that property,

the office holder shall not be liable to any person in respect of any loss or damage resulting from the seizure or disposal except in so far as that loss or damage is caused by the negligence of the office holder and shall have a hen on the property, or the proceeds of its sale, for such expenses as were incurred in connection with the seizure or disposal.

Duty to co-operate with office holder

99

• (1) Each of the persons mentioned in subsection (2) below shall—

• (a) give to the office holder such information concerning the company and its promotion, formation, business, dealings, affairs or property as the office holder may at any time after the relevant date reasonably require; and

• (b) attend on the office holder at such times as the office holder may reasonably require.

• (2) The persons referred to in subsection (1) above are—

• (a) those who are or have at any time been officers of the company;

• (b) those who have taken part in the formation of the company at any time within one year before the relevant date;

• (c) those who are in the employment of the company, or have been in its employment within that year, and are in the office holder's opinion capable of giving information which he requires; and

• (d) those who are, or have within that year been, officers of, or in the employment of, another company which is, or within that year was, an officer of the company in question.

• (3) For the purposes of subsection (2) above " the relevant date " is whichever is applicable of the following dates, namely—

• (a) the date on which the company went into liquidation ;

• (b) the date on which the administration order was made ;

• (c) the date on which the administrative receiver was appointed or, if he was appointed in succession to another administrative receiver, the date on which the first of his predecessors was appointed; and

• (d) the date on which the provisional liquidator was appointed;

and in that subsection " employment" includes employment under a contract for services.

• (4) This section shall apply in the case of a company that is being wound up by the court—

• (a) as if the persons referred to in subsection (2) above included any person who has acted as liquidator, administrator or administrative receiver of the company; and

• (b) where the court is in England and Wales, as if references to the office holder included references to the official receiver, whether or not he is the liquidator of the company.

• (5) If a person without reasonable excuse fails to comply with any obligation imposed by this section, he shall be liable—

• (a) on summary conviction, to a fine not exceeding the statutory maximum and, for continued contravention, to a daily default fine not exceeding one-tenth of the statutory maximum;

• (b) on conviction on indictment, to a fine.

Inquiry into company's dealings etc.

100

• (1) The court may, on the application of the office holder, summon to appear before it—

• (a) any officer of the company ;

• (b) any person known or suspected to have in his possession any property of the company or supposed to be indebted to the company ; or

• (c) any person whom the court thinks capable of giving in formation concerning the promotion, formation, business, dealings, affairs or property of the company;

and the court may require any such person as is mentioned in paragraphs (a) to (c) above to submit an affidavit to the court containing an account of his dealings with the company or to produce any books, papers or other records in his possession or under his control relating to the company or the matters mentioned in paragraph (c) above.

• (2) In a case where a person without reasonable excuse fails to appear before the court when he is summoned to do so under this section or there are reasonable grounds for believing that a person has absconded, or is about to abscond, with a view to avoiding his appearance before the court under this section, the court may, for the purpose of bringing that person and anything in his possession before the court, cause a warrant to be issued to a constable or prescribed officer of the court-—

• (a) for the arrest of that person; and

• (b) for the seizure of any books, papers, records, money or goods in that person's possession ;

and may authorise a person arrested under such a warrant to be kept in custody, and anything seized under such a warrant to be held, in accordance with the rules, until that person is brought before the court under the warrant or until such other time as the court may order.

• (3) Any person who appears or is brought before the court under this section may be examined on oath, either orally or (except in Scotland) by interrogatories, concerning the company or the matters mentioned in subsection (1)(c) above.

• (4) If it appears to the court, on consideration of any evidence obtained under this section, that any person has in his possession any property of the company, the court may, on the application of the office holder, order that person to deliver the whole or any part of the property to the office holder at such time, in such manner and on such terms as the court thinks fit.

• (5) If it appears to the court, on consideration of any evidence obtained under this section, that any person is indebted to the company, the court may, on the application of the office holder, order that person to pay to the office holder, at such time and in such manner as the court may direct, the whole or any part of the amount due, whether in full discharge of the debt or otherwise, as the court thinks fit.

• (6) This section shall apply in the case of a company in respect of which a winding-up order has been made by the court in England and Wales as if references to the office holder included references to the official receiver whether or not he is the liquidator of the company.

• (7) The court may, if it thinks fit, order that any person who if within the jurisdiction of the court would be liable to be summoned to appear before it under this section shall be examined in any part of the United Kingdom where he may for the time being be, or in a place outside the United Kingdom.

Provisions applying to liquidations and administrations

Transactions at an undervalue and preferences (England and Wales)

101

• (1) Subject to the following provisions of this section and to section 102 below, where a company has at a relevant time entered into a transaction with any person at an undervalue or given a preference to any person—

• (a) the office holder may apply to the court for an order under this section; and

• (b) the court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if the company had not entered into that transaction or, as the case may be, had not given that preference.

• (2) For the purposes of this section and section 102 below a company enters into a transaction with a person at an undervalue if—

• (a) the company makes a gift to that person or otherwise enters into a transaction with that person on terms that provide for the company to receive no consideration; or

• (b) the company enters into a transaction with that person for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by the company.

• (3) The court Shall not make an order under this section in respect of a transaction at an undervalue if it is satisfied—

• (a) that the company which entered into the transaction did so in good faith and for the purpose of carrying on its business; and

• (b) that at the time it did so there were reasonable grounds for believing that the transaction would benefit the company.

• (4) For the purposes of this section and section 102 below a company gives a preference to a person if—

• (a) that person is one of the company's creditors or a surety or guarantor for any of the company's debts or other liabilities; and

• (b) the company does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which, in the event of the company going into insolvent liquidation, will be better than the position he would have been in if that thing had not been done.

• (5) The court shall not make an order under this section in respect of a preference given to any person unless the company which gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (4)(b) above.

• (6) A company which has given a preference to a person connected with the company at the time the preference was given shall be presumed, unless the contrary is shown, to have been influenced in deciding to give it by such a desire as is mentioned in subsection (5) above.

• (7) The fact that something has been done in pursuance of the order of a court shall not, without more, prevent the doing or suffering of that thing from constituting the giving of a preference.

• (8) Subject to subsection (9) below, the time at which a company enters into a transaction at an undervalue or gives a preference is a relevant time for the purposes of this section if the transaction is entered into or the preference is given—

• (a) in the case of a transaction at an undervalue or of a preference which is given to a person who is connected with the company, at a time in the period of two years ending with the commencement date; or

• (b) in the case of a preference which is not such a transaction and is not so given, at a time in the period of six months ending with that date; or

• (c) in either case, at a time between the presentation of a petition for the making of an administration order in relation to the company and the making of such an order on that petition.

• (9) Where a company enters into a transaction at an undervalue or gives a preference at a time mentioned in subsection (8)(a) or (b) above, that time shall not be a relevant time for the purposes of this section unless the company—

• (a) is unable to pay its debts within the meaning of section 518 of the 1985 Act at that time; or

• (b) becomes unable to pay its debts within the meaning of that section in consequence of the transaction or preference ;

but the requirements of this subsection shall be presumed to be satisfied, unless the contrary is shown, in relation to any transaction at an undervalue which is entered into by a company with a person who is connected with the company.

• (10) For the purposes of subsection (8) above the commencement date is—

• (a) in a case where this section applies by reason of the making of an administration order or of a company's going into liquidation immediately upon the discharge of an administration order, the date of the presentation of the petition on which the administration order was made; and

• (b) in a case where this section applies by reason of a company's going into liquidation at another time, the date of the commencement of the winding up.

• (11) For the purposes of this section a person who is connected with a company by reason only of being its employee shall be deemed not to be connected with the company.

Orders under s. 101

102

• (1) Without prejudice to the generality of subsection (1)(b) of section 101 above, an order under that section with respect to a transaction or preference entered into or given by a company may (subject to subsection (2) below)—

• (a) require any property transferred as part of the transaction, or in connection with the giving of the preference, to be vested in the company;

• (b) require any property to be so vested if it represents in any person's hands the application either of the proceeds of sale of property so transferred or of money so transferred;

• (c) release or discharge (in whole or in part) any security given by the company;

• (d) require any person to pay, in respect of benefits received by him from the company, such sums to the office holder as the court may direct;

• (e) provide for any surety or guarantor whose obligations to any person were released or discharged (in whole or in part) under the transaction, or by the giving of the preference, to be under such new or revived obligations to that person as the court thinks appropriate;

• (f) provide for security to be provided for the discharge of any obligation imposed by or arising under the order, for such an obligation to be charged on any property and for such security or charge to have the same priority as a security or charge released or discharged (in whole or in part) under the transaction or by the giving of the preference ; and

• (g) provide for the extent to which any person whose property is vested by the order in the company, or on whom obligations are imposed by the order, is to be able to prove in the winding up of the company for debts or other liabilities which arose from, or were released or discharged (in whole or in part) under or by, the transaction or the giving of the preference.

• (2) An order under section 101 above may affect the property of, or impose any obligation on, any person whether or not he is the person with whom the company in question entered into the transaction or, as the case may be, the person to whom the preference was given ; but such an order—

• (a) shall not prejudice any interest in property which was acquired from a person other than the company and was acquired in good faith, for value and without notice of the relevant circumstances, or prejudice any interest deriving from such an interest; and

• (b) shall not require a person who received a benefit from the transaction or preference in good faith, for value and without notice of the relevant circumstances to pay a sum to the office holder, except where that person was a party to the transaction or the payment is to be in respect of a preference given to that person at a time when he was a creditor of the company.

• (3) For the purposes of this section the relevant circumstances, in relation to a transaction or preference, are—

• (a) the circumstances by virtue of which an order under section 101 above could be made in respect of the transaction or preference if the company were to go into liquidation, or an administration order were made in relation to the company, within a particular period after the transaction is entered into or the preference given; and

• (b) if that period has expired, the fact that the company has gone into liquidation or that such an order has been made.

• (4) The provisions of section 101 above and this section shall apply without prejudice to the availability of any other remedy, even in relation to a transaction or preference which the company had no power to enter into or give.

Extortionate credit transactions

103

• (1) This section applies where the company is, or has been a party to a transaction for, or involving, the provision of credit to the company.

• (2) The court may, on the application of the office holder, make an order with respect to the transaction if the transaction is or was extortionate and was entered into in the period of three years ending with the day on which the company went into liquidation or, as the case may be, the administration order was made.

• (3) For the purposes of this section a transaction is extortionate if, having regard to the risk accepted by the person providing the credit—

• (a) the terms of it are or were such as to require grossly exorbitant payments to be made (whether unconditionally or in certain contingencies) in respect of the provision of the credit; or

• (b) it otherwise grossly contravened ordinary principles of fair dealing;

and it shall be presumed, unless the contrary is proved, that a transaction with respect to which an application is made under this section is or, as the case may be, was extortionate.

• (4) An order under this section with respect to any transaction may contain such one or more of the following as the court thinks fit, that is to say—

• (a) provision setting aside the whole or part of any obligation created by the transaction;

• (b) provision otherwise varying the terms of the transaction or varying the terms on which any security for the purposes of the transaction is held ;

• (c) provision requiring any person who is or was a party to the transaction to pay to the office holder any sums paid to that person, by virtue of the transaction, by the company;

• (d) provision requiring any person to surrender to the office holder any property held by him as security for the purposes of the transaction;

• (e) provision directing accounts to be taken between any persons.

• (5) The powers conferred by this section shall be exercisable in relation to any transaction concurrently with any powers exercisable in relation to that transaction as a transaction at an undervalue or under section 615A of the 1985 Act (gratuitous alienations in Scotland).

Avoidance of certain floating charges

104

• (1) Subject to the provisions of this section, a floating charge on the company's undertaking or property created at a relevant time is invalid except to the extent of the aggregate of—

• (a) the value of so much of the consideration for the creation of the charge as consists of money paid, or goods or services supplied, to the company at the same time as, or after, the creation of the charge;

• (b) the value of so much of that consideration as consists of the discharge or reduction, at the same time as, or after, the creation of the charge, of any debt of the company; and

• (c) the amount of such interest (if any) as is payable on the amount falling within paragraph (a) or (b) above in pursuance of any agreement under which the money was so paid, the goods or services were so supplied or the debt was so discharged or reduced.

• (2) Subject to subsection (3) below, the time at which a floating charge is created by a company is a relevant time for the purposes of this section if the charge is created—

• (a) in the case of a charge which is created in favour of a person who is connected with the company, at a time in the period of two years ending with the commencement date;

• (b) in the case of a charge which is created in favour of any other person, at a time in the period of twelve months ending with that date ; or

• (c) in either case, at a time between the presentation of a petition for the making of an administration order in relation to the company and the making of such an order on that petition.

• (3) Where a company creates a floating charge at a time mentioned in subsection (2)(b) above and the person in favour of whom the charge is created is not connected with the company, that time shall not be a relevant time for the purposes of this section unless the company—

• (a) is unable to pay its debts within the meaning of section 518 of the 1985 Act at that time; or

• (b) becomes unable to pay its debts within the meaning of that section in consequence of the transaction under which the charge is created.

• (4) For the purposes of subsection (2) above the commencement date is—

• (a) in a case where this section applies by reason of the making of an administration order, the date of the presentation of the petition on which the order was made; and

• (b) in a case where this section applies by reason of a company's going into liquidation, the date of the commencement of the winding up.

• (5) For the purposes of subsection (1)(a) above the value of any goods or services supplied by way of consideration for a floating charge shall be the amount in money which at the time they were supplied could reasonably have been expected to be obtained for supplying the goods or services in the ordinary course of business and on the same terms (apart from the consideration) as those on which they were supplied to the company.

Unenforceability of liens on books etc.

105

• (1) Subject to subsection (2) below, a lien or other right to retain possession of any of the books, papers or other records of the company shall be unenforceable to the extent that its enforcement would deny possession of any books, papers or other records to the office holder.

• (2) Subsection (1) above does not apply to a lien on documents which give a title to property and are held as such.

CHAPTER VIII — Supplemental

Company insolvency rules

106

• (1) Rules may be made—

• (a) in relation to England and Wales, by the Lord Chancellor with the concurrence of the Secretary of State; or

• (b) in relation to Scotland, by the Secretary of State,

for the purpose of giving effect to this Part and the 1985 Act so far as relating to, and to matters connected with or arising out of, the insolvency or winding up of companies.

• (2) Without prejudice to the generality of subsection (1) above or to any provision of this Part or of the 1985 Act by virtue of which rules under this section may be made with respect to any matter, rules under this section may contain—

• (a) any such provision as is specified in Schedule 5 to this Act or corresponds to provision contained immediately before the coming into force of this section in rules made, or having effect as if made, under section 663(1) or (2) of the 1985 Act; and

• (b) such incidental, supplemental and transitional provisions as may appear to the Lord Chancellor or, as the case may be, the Secretary of State necessary or expedient;

and in Schedule 5 to this Act" liquidator " includes a provisional liquidator.

• (3) Rules under this section shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

• (4) Regulations made by the Secretary of State under a power conferred by rules under this section shall be made by statutory instrument and, after being made, shall be laid before each House of Parliament.

• (5) Nothing in this section or section 107 below shall be taken as prejudicing any power to make rules of court.

Fees orders

107

• (1) There shall be paid in respect of—

• (a) proceedings under this Part or the 1985 Act so far as relating to, and to matters connected with or arising out of, the insolvency or winding up of companies ; and

• (b) the performance by the official receiver or the Secretary of State of functions under this Part or that Act so far as so relating, such fees as the Lord Chancellor in relation to England and Wales, or the Secretary of State in relation to Scotland, may with the sanction of the Treasury by order direct; and the Treasury may by order direct by whom and in what manner the fees are to be collected and accounted for.

• (2) The Lord Chancellor may, with the sanction of the Treasury, by order provide for sums to be deposited, by such persons, in such manner and in such circumstances as may be specified in the order, by way of security for fees payable by virtue of this section.

• (3) An order under this section may contain such incidental, supplemental and transitional provisions as may appear to the Lord Chancellor, the Secretary of State or, as the case may be, the Treasury necessary or expedient.

• (4) An order under this section shall be made by statutory instrument and, after being made, shall be laid before each House of Parliament.

• (5) Fees payable by virtue of this section shall be paid into the Consolidated Fund.

• (6) The application of this section to Scotland shall be without prejudice to the provisions of section 2 of the Courts of Law Fees (Scotland) Act 1895.

Construction of Part II

108

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Minor and consequential amendments of 1985 Act

109

Part III

CHAPTER I — Voluntary Arrangements

Preliminary

Application of Chapter I

110

Procedure pending consideration of proposal

Application for interim order

111

• (1) An application to the court for an order under section 112 below (in this Chapter referred to as an "interim order ") may be made—

• (a) if the debtor is an undischarged bankrupt, by the debtor, the trustee of his estate or the official receiver ; and

• (b) in any other case, by the debtor.

• (2) An application for an interim order shall not be made under subsection (1)(a) above unless the debtor has given notice of his proposal to the official receiver and, if there is one, to the trustee of his estate.

• (3) An application for an interim order shall not be made while a bankruptcy petition presented by the debtor is pending if the court has made an appointment under subsection (2) of section 123 below; and if the court has made such an appointment, it may make an interim order under subsection (5) of that section without an application being made under this section.

• (4) At any time when an application under this section for an interim order is pending the court may stay any action, execution or other legal process against the property or person of the debtor.

• (5) Any court in which proceedings are pending against an individual may, on proof that an application under this section has been made in respect of that individual, either stay the proceedings or allow them to continue on such terms as it thinks fit.

Interim orders

112

• (1) On an application under section 111 above or in a case falling within section 123(5) below, the court may make an interim order if it thinks that it would be appropriate to do so for the purpose of facilitating the consideration and implementation of the debtor's proposals.

• (2) The court shall not make an interim order on an application under section 111 above unless it is satisfied—

• (a) that the debtor intends to make such a proposal as is mentioned in section 110 above ;

• (b) that on the day of the making of the application the debtor was an undischarged bankrupt or was able to petition for his own bankruptcy ;

• (c) that no previous application has been made by the debtor for an interim order in the period of twelve months ending with that day ; and

• (d) that the nominee is a person who is for the time being qualified to act as an insolvency practitioner in relation to the debtor and is willing to act in relation to the debtor's proposal.

• (3) An interim order shall have the effect that during the period for which it is in force—

• (a) no bankruptcy petition relating to the debtor may be presented or proceeded with ; and

• (b) no other proceedings and no execution or other legal process may be commenced or continued against the debtor or his property except with the leave of the court.

• (4) Where the debtor is an undischarged bankrupt an interim order may contain provision as to the conduct of the bankruptcy, and the administration of the bankrupt's estate, during the period for which the order is in force.

• (5) Subject to subsection (6) below, the provision contained in an interim order by virtue of subsection (4) above may include provision staying proceedings in the bankruptcy or modifying the provisions of this Part and the rules in their application to the debtor's bankruptcy.

• (6) An interim order shall not, in relation to a bankrupt, make provision relaxing or removing any of the requirements of this Part or of the rules unless the court is satisfied that the provision is unlikely to result in any significant diminution in, or in the value of, the debtor's estate for the purposes of the bankruptcy.

• (7) Subject to the following provisions of this Chapter, an interim order shall cease to have effect—

• (a) if made on an application under section 111 above, at the end of the period of fourteen days beginning with the day after the making of the order ;

• (b) if made in pursuance of section 123(5) below, at the end of such period as the court may specify for the purpose of enabling the debtor's proposal to be considered by his creditors in accordance with the following provisions of this Chapter.

Report by nominee

113

• (1) This section applies where an interim order has been made on an application under section 111 above.

• (2) The nominee shall, before the order ceases to have effect, submit a report to the court stating—

• (a) whether, in his opinion, a meeting of the debtor's creditors should be summoned to consider the debtor's proposal; and

• (b) if in his opinion such a meeting should be summoned, the date on which, and time and place at which, he proposes the meeting should be held.

• (3) For the purpose of enabling the nominee to prepare his report the debtor shall submit to the nominee—

• (a) a document setting out the terms of the composition or scheme which the debtor is proposing ; and

• (b) a statement of his affairs containing—

• (i) such particulars of his creditors and of his debts and other liabilities and of his assets as may be prescribed; and

• (ii) such other information as may be prescribed.

• (4) The court may, on an application made by the debtor in a case where the nominee has failed to submit the report required by this section, do one or both of the following, namely—

• (a) direct that the nominee shall be replaced as such by another person qualified to act as an insolvency practitioner in relation to the debtor ;

• (b) direct that the order mentioned in subsection (1) above shall continue, or (if it has ceased to have effect) shall be renewed, for such further period as the court may specify in the direction.

• (5) The court may, on the application of the nominee, extend the period for which the order mentioned in subsection (1) above has effect so as to enable the nominee to have more time to prepare the report required by this section.

• (6) If the court is satisfied on receiving the report required by this section that a meeting of the debtor's creditors should be summoned to consider the debtor's proposal, the court shall direct that the period for which the order mentioned in subsection (1) above has effect shall be extended, for such further period as it may specify in the direction, for the purpose of enabling the debtor's proposal to be considered by his creditors in accordance with the following provisions of this Chapter.

• (7) The court may discharge the order mentioned in subsection (1) above if it is satisfied, on the application of the nominee—

• (a) that the debtor has failed to comply with his obligations under subsection (3) above ; or

• (b) that for any other reason it would be inappropriate for a meeting of the debtor's creditors to be summoned to consider the debtor's proposal.

Summoning of creditors' meeting

114

• (1) Where the court has made an interim order and after the making of the order or, as the case may be, with a view to its being made a person has reported to the court under section 113 above or section 123(3) below that a meeting of the debtor's creditors should be summoned, that person shall, unless the court otherwise directs, summon that meeting for the time, date and place proposed in his report.

• (2) The persons who shall be summoned to a meeting of creditors under this section shall be every creditor of the debtor of whose claim and address the person summoning the meeting is aware.

• (3) For the purposes of a meeting under this section the creditors of a debtor who is an undischarged bankrupt shall include every person who is a creditor of the bankrupt in respect of a bankruptcy debt and every person who would be such a creditor if the bankruptcy had commenced on the day on which notice of the meeting is given.

Consideration and implementation of proposal

Decision of creditors' meeting

115

• (1) A meeting summoned under section 114 above shall decide whether to approve the composition or scheme proposed by the debtor.

• (2) Such a meeting may approve the proposed composition or scheme with modifications but shall not do so unless the debtor consents to each modification.

• (3) The modifications subject to which the proposed composition or scheme may be approved may include one conferring the functions proposed to be conferred on the nominee on another person qualified to act as an insolvency practitioner in relation to the debtor but shall not include any modification by virtue of which the proposal ceases to be a proposal such as is mentioned in section 110 above.

• (4) Except with the concurrence of the secured creditor concerned, a meeting summoned under section 114 above shall not approve any proposal or modification which affects the right of a secured creditor of the debtor to enforce his security.

• (5) Except with the concurrence of the preferential creditor concerned, a meeting summoned under section 114 above shall not approve any proposal or modification under which—

• (a) any preferential debt of the debtor is to be paid otherwise than in priority to such of his debts as are not preferential debts; or

• (b) a preferential creditor of the debtor is to be paid an amount in respect of a preferential debt that bears to that debt a smaller proportion than is borne to another preferential debt by the amount that is to be paid in respect of that other debt.

• (6) Subject to subsections (1) to (5) above, a meeting summoned under section 114 above shall be conducted in accordance with the rules.

• (7) After the conclusion in accordance with the rules of a meeting summoned under section 114 above, the chairman of the meeting shall report the result of the meeting to the court and, immediately after reporting to the court, shall give notice of the result of the meeting to such persons as may be prescribed.

• (8) If a report is given to the court under subsection (7) above that the meeting has declined (with or without modifications) to approve the debtor's proposal the court may discharge any interim order which is in force in relation to the debtor.

• (9) In this section " preferential debt" means any of the debts which in the distribution of a bankrupt's estate are, under section 166 below and Schedule 4 to this Act (read with Schedule 3 to the Social Security Pensions Act 1975), to be paid in priority to all other debts, and " preferential creditor " shall be construed accordingly.

• (10) For the purposes of this section Schedule 4 to this Act and Schedule 3 to the said Act of 1975 shall each have effect, in relation to a debtor who is not an undischarged bankrupt, as if—

• (a) references to the relevant date were references to the date of the interim order made with respect to his proposal; and

• (b) references to the debtor being adjudged bankrupt were references to the making of that order.

Effect of approval

116

• (1) This section has effect where a meeting summoned under section 114 above approves a proposed composition or scheme (with or without modifications).

• (2) The approved composition or scheme shall take effect as if made by the debtor at the meeting and shall bind every person who in accordance with the rules had notice of, and was entitled to vote at, the meeting (whether or not he was present or represented at the meeting) as if he were a party to the composition or scheme.

• (3) The Deeds of Arrangement Act 1914 shall not apply to the approved composition or scheme.

• (4) Subject to subsection (5) below, if the debtor is an undischarged bankrupt the court may do one or both of the following, namely—

• (a) annul the bankruptcy order by which he was adjudged bankrupt;

• (b) give such directions with respect to the conduct of the bankruptcy and the administration of the bankrupt's estate as it thinks appropriate for facilitating the implementation of the approved composition or scheme.

• (5) The court shall not annul a bankruptcy order under subsection (4) above—

• (a) at any time before the end of the period of twenty-eight days beginning with the day on which the report with respect to the meeting was made to the court under section 115(7) above ; or

• (b) at any time when an application under section 117 below or an appeal in respect of such an application is pending or at any time in the period within which such an appeal may be brought.

• (6) Except to such extent as the court may direct for the purposes of any application under section 117 below, any interim order in force in relation to the debtor immediately before the end of the period of twenty-eight days beginning with the day on which the report with respect to the meeting was made to the court under section 115(7) above shall cease to have effect at the end of that period.

• (7) Where proceedings on a bankruptcy petition have been stayed by an interim order which ceases to have effect under subsection (6) above, that petition shall be deemed, unless the court otherwise orders, to have been dismissed.

Challenge of meeting's decision

117

• (1) Subject to the provisions of this section, an application to the court may be made, by any of the persons specified in subsection (2) below, on one or both of the following grounds, namely—

• (a) that a composition or scheme approved at a meeting summoned under section 114 above unfairly prejudices the interests of a creditor of the debtor ;

• (b) that there has been some material irregularity at or in relation to such a meeting.

• (2) The persons who shall be entitled to make an application under this section shall be—

• (a) the debtor;

• (b) a person entitled, in accordance with the rules, to vote at the meeting in question ;

• (c) the nominee or any person who has replaced him under section 113(4)(a) or 115(3) above ; and

• (d) if the debtor is an undischarged bankrupt, the trustee of his estate or the official receiver.

• (3) An application under this section shall not be made after the end of the period of twenty-eight days beginning with the day on which the report with respect to the meeting in question was made to the court under section 115(7) above.

• (4) Where on an application under this section the court is satisfied as to either of the grounds mentioned in subsection (1) above, it may do one or both of the following, namely—

• (a) revoke or suspend any approval given by the meeting in question;

• (b) give a direction to any person for the summoning of a further meeting of the debtor's creditors to consider any revised proposal he may make or, in a case falling within subsection (1)(b) above, to reconsider his original proposal.

• (5) Where at any time after giving a direction under subsection (4)(b) above for the summoning of a meeting to consider a revised proposal the court is satisfied that the debtor does not intend to submit such a proposal, the court shall revoke the direction and revoke or suspend any approval given at the previous meeting.

• (6) Where the court gives a direction under subsection (4)(b) above, it may also give a direction continuing or, as the case may require, renewing, for such period as may be specified in the direction, the effect in relation to the debtor of any interim order.

• (7) In any case where the court, on an application made under this section with respect to any meeting, gives a direction under subsection (4)(b) above or revokes or suspends an approval under subsection (4)(a) or (5) above, the court may give such supplemental directions as it thinks fit and, in particular, directions with respect to—

• (a) things done since the meeting under any composition or scheme approved by the meeting ; and

• (b) such things done since the meeting as could not have been done if an interim order had been in force in relation to the debtor when they were done.

• (8) Except in pursuance of the preceding provisions of this section, an approval given at a meeting summoned under section 114 above shall not be invalidated by any irregularity at or in relation to the meeting.

Implementation and supervision of approved composition or scheme

118

• (1) This section applies where a composition or scheme approved by a meeting summoned under section 114 above has taken effect.

• (2) The person who is for the time being carrying out in relation to the composition or scheme the functions conferred by virtue of the approval on the nominee, or by virtue of section 113(4)(a) or 115(3) above on a person other than the nominee, shall be known as the supervisor of the composition or scheme.

• (3) If the debtor, any of his creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the court; and on such an application the court may confirm, reverse or modify any act or decision of the supervisor, may give him directions or may make such other order as it thinks fit.

• (4) The supervisor may apply to the court for directions in relation to any particular matter arising under the composition or scheme.

• (5) Without prejudice to section 41(2) of the Trustee Act 1925 (power of court to appoint trustees of deeds of arrangement), the court may, whenever—

• (a) it is expedient to appoint a person to carry out the functions of the supervisor ; and

• (b) it is inexpedient, difficult or impracticable for an appointment to be made without the assistance of the court,

make an order appointing a person who is qualified to act as an insolvency practitioner in relation to the debtor, either in substitution for the existing supervisor or to fill a vacancy.

• (6) The power conferred by subsection (5) above shall be exercisable so as to increase the number of persons exercising the functions of the supervisor or, where there is more than one person exercising those functions, so as to replace one or more of those persons.

CHAPTER II — Bankruptcy Orders

Preliminary

Preliminary

119

• (1) A petition for a bankruptcy order to be made against an individual may be presented to the court in accordance with the following provisions of this Part—

• (a) by one of the individual's creditors or jointly by more than one of them ;

• (b) by the individual himself ;

• (c) by the supervisor of, or any person (other than the individual) who is for the time being bound by, a composition or scheme proposed by the individual and approved under Chapter I of this Part; or

• (d) where a criminal bankruptcy order has been made against the individual, by the Official Petitioner or by any person specified in the order in pursuance of section 39(3)(b) of the Powers of Criminal Courts Act 1973 ;

and, subject to those provisions, the court may make a bankruptcy order on any such petition.

• (2) A bankruptcy petition shall not be presented to the court under subsection (1)(a) or (b) above unless the debtor—

• (a) is domiciled in England and Wales ;

• (b) is personally present in England and Wales on the day on which the petition is presented ; or

• (c) at any time in the period of three years ending with that day—

• (i) has been ordinarily resident, or has had a place of residence, in England and Wales ; or

• (ii) has carried on business in England and Wales.

• (3) The reference in subsection (2)(c) above to an individual's carrying on business includes a reference to the carrying on of business by a firm or partnership of which the individual is a member and a reference to the carrying on of business by an agent or manager for the individual or for such a firm or partnership.

• (4) Where a bankruptcy petition relating to an individual is presented by a person who is entitled to present a petition under two or more paragraphs of subsection (1) above, the petition shall be treated for the purposes of this Part as a petition under such one of those paragraphs as may be specified in the petition.

• (5) A bankruptcy petition shall not be withdrawn without the leave of the court.

• (6) The court shall have a general power, if it appears to it appropriate to do so on the grounds that there has been a contravention of the rules or for any other reason, to dismiss a bankruptcy petition or to stay proceedings on such a petition; and, where it stays proceedings on a bankruptcy petition, it may do so on such terms and conditions as it thinks fit.

• (7) Without prejudice to subsection (6) above, where a petition under paragraph (a), (b) or (c) of subsection (1) above in respect of an individual is pending at a time when a criminal bankruptcy order is made against him, or is presented after such an order has been so made, the court may on the application of the Official Petitioner dismiss the petition if it appears to it appropriate to do so.

Creditor's petition

Creditor's petition

120

• (1) A creditor's petition must be in respect of one or more debts owed by the debtor, and the petitioning creditor or each of the petitioning creditors must be a person to whom the debt or, as the case may be, at least one of the debts is owed.

• (2) Subject to subsections (3) to (6) below, a creditor's petition may be presented to the court in respect of a debt or debts only if, at the time the petition is presented—

• (a) the amount of the debt, or the aggregate amount of the debts, is equal to or exceeds the bankruptcy level;

• (b) the debt, or each of the debts, is for a liquidated sum payable to the petitioning creditor, or one or more of the petitioning creditors, either immediately or at some certain, future time and is unsecured ;

• (c) the debt, or each of the debts, is a debt which the debtor appears either to be unable to pay or to have no reasonable prospect of being able to pay ; and

• (d) there is no outstanding application to set aside a demand served for the purposes of subsection (3)(a) or (4) below in respect of the debt or any of the debts.

• (3) For the purposes of subsection (2)(c) above the debtor appears to be unable to pay a debt if, but only if, the debt is payable immediately and either—

• (a) the petitioning creditor to whom the debt is owed has served on the debtor a demand in the prescribed form requiring him to pay the debt or to secure or compound for it to the satisfaction of the creditor, at least three weeks have elapsed since the demand was served and the demand has been neither complied with nor set aside in accordance with the rules; or

• (b) execution or other process issued in respect of the debt on a judgment or order of any court in favour of the petitioning creditor, or one or more of the petitioning creditors to whom the debt is owed, has been returned unsatisfied in whole or in part.

• (4) For the purposes of subsection (2)(c) above the debtor appears to have no reasonable prospect of being able to pay a debt if, but only if, the debt is not immediately payable and—

• (a) the petitioning creditor to whom it is owed has served on the debtor a demand in the prescribed form requiring him to establish to the satisfaction of the creditor that there is a reasonable prospect that the debtor will be able to pay the debt when it falls due ;

• (b) at least three weeks have elapsed since the demand was served; and

• (c) the demand has been neither complied with nor set aside in accordance with the rules.

• (5) A debt which is the debt, or one of the debts, in respect of which a creditor's petition is presented need not be unsecured if either-—

• (a) the petition contains a statement by the person having the right to enforce the security that he is willing, in the event of a bankruptcy order being made, to give up his security for the benefit of all the bankrupt's creditors; or

• (b) the petition is expressed not to be made in respect of the secured part of the debt and contains a statement by that person of the estimated value at the date of the petition of the security for the secured part of the debt;

and in a case falling within paragraph (b) above the secured and unsecured parts of the debt shall be treated for the purposes of this section as separate debts.

• (6) In the case of a creditor's petition presented wholly or partly in respect of a debt which is the subject of such a demand as is mentioned in subsection (3) (a) or (4) above, the petition may be presented before the end of the three week period so mentioned if there is a serious possibility that the debtor's property or the value of any of his property will be significantly diminished during that period and the petition contains a statement to that effect,

• (7) A debt shall not be regarded for the purposes of this section as a debt for a liquidated sum by reason only that the amount of the debt is specified in a criminal bankruptcy order.

• (8) In this section " the bankruptcy level" means £750; but the Secretary of State may by order made by statutory instrument substitute any amount specified in the order for that amount or, as the case may be, for the amount which by virtue of such an order is for the time being the amount of the bankruptcy level.

• (9) An order shall not be made under subsection (8) above unless a draft of it has been laid before, and approved by a resolution of, each House of Parliament.

Proceedings on creditor's petition

121

• (1) The court shall not make a bankruptcy order on a creditor's petition unless it is satisfied that the debt, or one of the debts, in respect of which the petition was presented is either—

• (a) a debt which, having been payable at the date of the petition or having since become payable, has been neither paid nor secured or compounded for ; or

• (b) a debt which the debtor has no reasonable prospect of being able to pay when it falls due.

• (2) In a case in which a creditor's petition contains such a statement as is required by section 120(6) above, the court shall not make a bankruptcy order until at least three weeks have elapsed since the service of any demand required by virtue of section 120(3)(a) or (4) above.

• (3) The court may dismiss a creditor's petition if it is satisfied that the debtor is able to pay all his debts or is satisfied—

• (a) that the debtor has made an offer to secure or compound for a debt in respect of which the petition is presented ;

• (b) that the acceptance of that offer would have required the dismissal of the petition ; and

• (c) that the offer has been unreasonably refused ;

and, in determining for the purposes of this subsection whether the debtor is able to pay all his debts, the court shall take into account his contingent and prospective liabilities.

• (4) In determining for the purposes of this section what constitutes a reasonable prospect that a debtor will be able to pay a debt when it falls due, it shall be assumed that the prospect given by the facts and other matters known to the creditor at the time he entered into the transaction resulting in the debt was a reasonable prospect.

• (5) Nothing in this section or section 120 above shall prejudice the power of the court, in accordance with the rules, to authorise a creditor's petition to be amended by the omission of any creditor or debt and to be proceeded with as if things done for the purposes of this section or that section had been done only by or in relation to the remaining creditors or debts.

Debtor's petition

Debtor's petition

122

• (1) A debtor's petition may be presented to the court only on the grounds that the debtor is unable to pay his debts.

• (2) A debtor's petition shall be accompanied by a statement of the debtor's affairs containing—

• (a) such particulars of the debtor's creditors and of his debts and other liabilities and of his assets as may be prescribed; and

• (b) such other information as may be prescribed.

Proceedings on debtor's petition

123

• (1) Subject to subsection (5) below, on the hearing of a debtor's petition the court shall not make a bankruptcy order if it appears to the court—

• (a) that if a bankruptcy order were made the aggregate amount of the bankruptcy debts so far as unsecured would be less than the small bankruptcies level;

• (b) that if a bankruptcy order were made the value of the bankrupt's estate would be equal to or more than the minimum amount;

• (c) that within the period of five years ending with the presentation of the petition the debtor has neither been adjudged bankrupt nor made a composition with his creditors in satisfaction of his debts or a scheme of arrangement of his affairs; and

• (d) that it would be appropriate to appoint a person to prepare a report under subsection (3) below.

• (2) Where, on the hearing of a debtor's petition, it appears to the court as mentioned in subsection (1)(a) to (d) above, the court shall appoint a person who is qualified to act as an insolvency practitioner in relation to the debtor to prepare a report under subsection (3) below and, subject to section 115(3) above, to act in relation to any composition or scheme to which the report relates either as trustee or otherwise for the purpose of supervising its implementation.

• (3) A person appointed under subsection (2) above shall inquire into the debtor's affairs and, within such period as the court may direct, shall submit a report to the court stating whether the debtor is willing, for the purposes of Chapter I of this Part, to make a proposal for a composition in satisfaction of his debts or for a scheme of arrangement of his affairs.

• (4) A report under subsection (3) above which states that the debtor is willing to make a proposal for the purposes of Chapter I of this Part shall also state—

• (a) whether, in the opinion of the person making the report, a meeting of the debtor's creditors should be summoned to consider the debtor's proposal; and

• (b) if in that person's opinion such a meeting should be summoned, the date on which, and time and place at which, he proposes the meeting should be held.

• (5) On considering a report under subsection (3) above the court may—

• (a) make an order under section 112 above ; or

• (b) if it thinks it would be inappropriate to make an order under that section, make a bankruptcy order.

• (6) Where—

• (a) the court makes a bankruptcy order in a case in which it appears to the court as mentioned in paragraphs (a) and (c) of subsection (1) above (whether it makes the order because it does not appear to the court as mentioned in paragraph (b) or

• (a) of that subsection or it makes it under subsection (5) (b) above); and

• (b) it appears to the court appropriate to do so,

the court shall issue a certificate for the summary administration of the bankrupt's estate.

• (7) The court may at any time revoke a certificate issued under subsection (6) above if it appears to the court that, on any grounds existing at the time the certificate was issued, the certificate ought not to have been issued.

• (8) In this section " the minimum amount" and " the small bankruptcies level" mean such amounts as may for the time being be prescribed for the purposes of this section.

Petition for default in connection with voluntary arrangement

Petition for default in connection with voluntary .arrangement

124

• (1) The court shall not make a bankruptcy order on a petition under section 119(1)(c) above unless it is satisfied—

• (a) that the debtor has failed to comply with his obligations under the composition or scheme in question ;

• (b) that information which was false or misleading in any material particular or which contained material omissions—

• (i) was contained in any statement of affairs or other document supplied by the debtor under Chapter I of this Part to any person ; or

• (ii) was otherwise made available by the debtor to his creditors at or in connection with a meeting summoned under that Chapter ; or

• (c) that the debtor has failed to do all such things as may for the purposes of the composition or scheme have been reasonably required of him by the supervisor of the composition or scheme.

• (2) Where a bankruptcy order is made on a petition under section 119(1)(c) above, any expenses properly incurred as expenses of the administration of the composition or scheme in question shall be a first charge on the bankrupt's estate.

Petition based on criminal bankruptcy order

Petition based on criminal bankruptcy order

125

• (1) Subject to subsection (6) of section 119 above, the court shall make a bankruptcy order on a petition under subsection (1)(d) of that section on production of a copy of the criminal bankruptcy order on which the petition is based, unless it appears to the court that the criminal bankruptcy order has been rescinded in consequence of an appeal.

• (2) Subject to the provisions of this Part, the fact that an appeal is pending against any conviction by virtue of which a criminal bankruptcy order was made shall not affect any proceedings on a petition under section 119(1)(d) above based on that order.