Insolvency Act 1986

• (2) The reference in subsection (1) to anything done with a view to obtaining a moratorium includes any preliminary decision or investigation.

• (3) In subsection (1) “receiver” includes a manager and a person who is appointed both receiver and manager.

• (4) Subsection (1) does not apply to a provision in an instrument creating a floating charge that is—

• (a) a collateral security (as defined by section A27);

• (b) a market charge (as defined by section A27);

• (c) a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));

• (d) a system-charge (as defined by section A27).

Interpretation of this Part

Meaning of “pre-moratorium debt” and “moratorium debt”

A53

• (1) In this Part “pre-moratorium debt”, in relation to a company for which a moratorium is or has been in force, means—

• (a) any debt or other liability to which the company becomes subject before the moratorium comes into force, or

• (b) any debt or other liability to which the company has become or may become subject during the moratorium by reason of any obligation incurred before the moratorium comes into force,

but this is subject to subsection (3).

• (2) In this Part “moratorium debt”, in relation to a company for which a moratorium is or has been in force, means—

• (a) any debt or other liability to which the company becomes subject during the moratorium, other than by reason of an obligation incurred before the moratorium came into force, or

• (b) any debt or other liability to which the company has become or may become subject after the end of the moratorium by reason of an obligation incurred during the moratorium,

but this is subject to subsection (3).

• (3) For the purposes of this Part—

• (a) a liability in tort or delict is a “pre-moratorium debt” if either—

• (i) the cause of action has accrued before the moratorium comes into force, or

• (ii) all the elements necessary to establish the cause of action exist before the moratorium comes into force except for actionable damage;

• (b) a liability in tort or delict is a “moratorium debt” if it does not fall within paragraph (a) and either—

• (i) the cause of action has accrued during the moratorium, or

• (ii) all the elements necessary to establish the cause of action exist before the moratorium comes to an end except for actionable damage.

• (4) The Secretary of State may by regulations amend this section for the purposes of changing the definition of “pre-moratorium debt” or “moratorium debt” in this Part.

• (5) Regulations under subsection (4) are subject to the affirmative resolution procedure.

Interpretation of this Part: general

A54

• (1) In this Part—

• “company” means—a company registered under the Companies Act 2006 in England and Wales or Scotland, oran unregistered company that may be wound up under Part 5 of this Act;

• “the court” means such court as is prescribed;

• “eligible”, in relation to a company, has the meaning given by Schedule ZA1;

• “employer”, in relation to a pension scheme—in sections A8(2)(c), A17(8)(c) and A39(8)(c), means an employer within the meaning of section 318(1) of the Pensions Act 2004;elsewhere in this Part, has the same meaning that it has for the purposes of Part 2 of the Pensions Act 2004 (see section 318(1) and (4) of that Act);

• “enactment” includes an Act of the Scottish Parliament and an instrument made under such an Act;

• “hire-purchase agreement” includes a conditional sale agreement, a chattel leasing agreement and a retention of title agreement;

• “liability” means (subject to subsection (2)) a liability to pay money or money’s worth, including any liability under an enactment, a liability for breach of trust, any liability in contract, tort, delict or bailment, and any liability arising out of an obligation to make restitution;

• “money purchase scheme” has the meaning given by section 181(1) of the Pension Schemes Act 1993;

• “the monitor”, in relation to a moratorium, means the person who has the functions of the monitor in relation to the moratorium (see also section A40 for cases where two or more persons act as the monitor);

• “moratorium” means a moratorium under this Part;

• “moratorium debt” has the meaning given by section A53;

• “occupational pension scheme” has the meaning given by section 1 of the Pension Schemes Act 1993;

• “pension scheme” has the meaning given by section 1 of the Pension Schemes Act 1993;

• “pre-moratorium debt” has the meaning given by section A53;

• “qualified person” means a person qualified to act as an insolvency practitioner;

• “unable to pay its debts”—in relation to a registered company, has the same meaning as in Part 4 (see section 123);in relation to an unregistered company, has the same meaning as in Part 5 (see sections 222 to 224).

• (2) For the purposes of references in any provision of this Part to a debt or liability it is immaterial whether the debt or liability is present or future, whether it is certain or contingent, or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion.

• (3) In this Part references to filing a document with the court are, in relation to a court in Scotland, references to lodging it in court.

• (4) The Secretary of State may by regulations amend this section for the purposes of changing the definition of “qualified person” in subsection (1).

• (5) Regulations under subsection (4) are subject to the affirmative resolution procedure.

Regulations

Regulations

A55

• (1) Regulations under this Part may make—

• (a) different provision for different purposes;

• (b) consequential, supplementary, incidental or transitional provision or savings.

• (2) Regulations under this Part are to be made by statutory instrument, unless they are made by the Scottish Ministers.

• (3) Where regulations of the Secretary of State under this Part are subject to “the affirmative resolution procedure”, they may not be made unless a draft of the statutory instrument containing them has been laid before Parliament and approved by a resolution of each House of Parliament.

Part I — Company Voluntary Arrangements

The Proposal

Those who may propose an arrangement.

1

• (1) The directors of a company (other than one which is in administration or being wound up) may make a proposal under this Part to the company and to its creditors for a composition in satisfaction of its debts or a scheme of arrangement of its affairs (from here on referred to, in either case, as a “voluntary arrangement”).

• (2) A proposal under this Part is one which provides for some person (“the nominee”) to act in relation to the voluntary arrangement either as trustee or otherwise for the purpose of supervising its implementation; and the nominee must be a person who is qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement.

• (3) Such a proposal may also be made—

• (a) where the company is in administration, by the administrator,

• (b) where the company is being wound up, by the liquidator.

• (4) In this Part “company” means—

• (a) a company registered under the Companies Act 2006 in England and Wales or Scotland;

• (b) a company incorporated in an EEA State ...; or

• (c) a company not incorporated in an EEA State but having its centre of main interests in a member State (other than Denmark) or in the United Kingdom.

• (5) In subsection (4), in relation to a company, “centre of main interests” has the same meaning as in the Article 3 of the EU Regulation.

• (6) If a company incorporated outside the United Kingdom has a principal place of business in Northern Ireland, no proposal under this Part shall be made in relation to it unless it also has a principal place of business in England and Wales or Scotland (or both in England and Wales or Scotland).

Moratorium.

1A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Procedure where nominee is not the liquidator or administrator.

2

• (1) This section applies where the nominee under section 1 is not the liquidator or administrator of the company ....

• (2) The nominee shall, within 28 days (or such longer period as the court may allow) after he is given notice of the proposal for a voluntary arrangement, submit a report to the court stating—

• (a) whether, in his opinion, the proposed voluntary arrangement has a reasonable prospect of being approved and implemented,

• (b) whether, in his opinion, the proposal should be considered by a meeting of the company and by the company's creditors, and

• (c) if in his opinion it should, the date on which, and time and place at which, he proposes a meeting of the company should be held.

• (3) For the purposes of enabling the nominee to prepare his report, the person intending to make the proposal shall submit to the nominee—

• (a) a document setting out the terms of the proposed voluntary arrangement, and

• (b) a statement of the company’s affairs containing—

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

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

• (4) The court may—

• (a) on an application made by the person intending to make the proposal, in a case where the nominee has failed to submit the report required by this section or has died, or

• (b) on an application made by that person or the nominee, in a case where it is impracticable or inappropriate for the nominee to continue to act as such,

direct that the nominee be replaced as such by another person qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement.

Consideration of proposal.

3

• (1) Where the nominee under section 1 is not the liquidator or administrator, and it has been report to the court under section 2(2) that the proposal should be considered by a meeting of the company and by the company's creditors, the person making the report shall (unless the court otherwise directs)—

• (a) summon a meeting of the company to consider the proposal for the time, date and place proposed in the report, and

• (b) seek a decision from the company's creditors as to whether they approve the proposal.

• (2) Where the nominee is the liquidator or administrator, he shall—

• (a) summon a meeting of the company to consider the proposal for such time, date and place as he thinks fit, and

• (b) seek a decision from the company's creditors as to whether they approve the proposal.

• (3) A decision of the company's creditors as to whether they approve the proposal is to be made by a qualifying decision procedure.

• (4) Notice of the qualifying decision procedure must be given to every creditor of the company of whose claim and address the person seeking the decision is aware.

Consideration and implementation of proposal

Decisions of the company and its creditors.

4

• (1) This section applies where, under section 3—

• (a) a meeting of the company is summoned to consider the proposed voluntary arrangement, and

• (b) the company's creditors are asked to decide whether to approve the proposed voluntary arrangement.

• (1A) The company and its creditors may approve the proposed voluntary arrangement with or without modifications.

• (2) The modifications may include one conferring the functions proposed to be conferred on the nominee on another person qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement.

But they shall not include any modification by virtue of which the proposal ceases to be a proposal such as is mentioned in section 1.

• (3) Neither the company nor its creditors may approve any proposal or modification which affects the right of a secured creditor of the company to enforce his security, except with the concurrence of the creditor concerned.

• (4) Subject as follows, neither the company nor its creditors may approve any proposal or modification under which—

• (a) any preferential debt of the company is to be paid otherwise than in priority to such of its debts as are not preferential debts, ...

• (aa) any ordinary preferential debt of the company is to be paid otherwise than in priority to any secondary preferential debts that it may have,

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

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

• (d) in the case of a company which is a relevant financial institution (see section 387A), any non-preferential debt is to be paid otherwise than in accordance with the rules in section 176AZA(2) or (3).

However, ... such a proposal or modification may be approved with the concurrence of the ... creditor concerned.

• (4A) Subject to subsection (4B), where the nominee’s report under section 2(2) is submitted to the court before the end of the period of 12 weeks beginning with the day after the end of any moratorium for the company under Part A1, neither the company nor its creditors may approve any proposal or modification under which the following are to be paid otherwise than in full—

• (a) moratorium debts (within the meaning given by section 174A);

• (b) priority pre-moratorium debts (within the meaning given by section 174A).

• (4B) Subsection (4A) does not prevent the approval of such a proposal or modification with the concurrence of the creditor concerned.

• (5) Subject as above, the meeting of the company and the qualifying decision procedure shall be conducted in accordance with the rules.

• (6) After the conclusion of the company meeting in accordance with the rules, 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.

• (6A) After the company's creditors have decided whether to approve the proposed voluntary arrangement the person who sought the decision must—

• (a) report the creditors' decision to the court, and

• (b) immediately after reporting to the court, give notice of the creditors' decision to such persons as may be prescribed.

• (7) References in this section to preferential debts , ordinary preferential debts, secondary preferential debts and preferential creditors are to be read in accordance with section 386 in Part XII of this Act.

Approval of arrangement.

4A

• (1) This section applies to a decision, under section 4, with respect to the approval of a proposed voluntary arrangement.

• (2) The decision has effect if, in accordance with the rules—

• (a) it has been taken by the meeting of the company summoned under section 3 and by the company's creditors pursuant to that section, or

• (b) (subject to any order made under subsection (6)) it has been taken by the company's creditors pursuant to that section.

• (3) If the decision taken by the company's creditors differs from that taken by the company meeting, a member of the company may apply to the court.

• (4) An application under subsection (3) shall not be made after the end of the period of 28 days beginning with—

• (a) the day on which the decision was taken by the company's creditors, or

• (b) where the decision of the company meeting was taken on a later day, that day.

• (5) Where a member of a regulated company, as defined by section A49(13), applies to the court under subsection (3), the appropriate regulator is entitled to be heard on the application.

• (5A) The appropriate regulator” means—

• (a) where the regulated company is a PRA-regulated company as defined by section A49(13), the Financial Conduct Authority and the Prudential Regulation Authority, and

• (b) in any other case, the Financial Conduct Authority.

• (6) On an application under subsection (3), the court may—

• (a) order the decision of the company meeting to have effect instead of the decision of the company's creditors, or

• (b) make such other order as it thinks fit.

Effect of approval.

5

• (1) This section applies where a decision approving a voluntary arrangement has effect under section 4A.

• (2) The ... voluntary arrangement—

• (a) takes effect as if made by the company at the time the creditors decided to approve the voluntary arrangement, and

• (b) binds every person who in accordance with the rules—

• (i) was entitled to vote in the qualifying decision procedure by which the creditors' decision to approve the voluntary arrangement was made, or

• (ii) would have been so entitled if he had had notice of it,

as if he were a party to the voluntary arrangement.

• (2A) If—

• (a) when the arrangement ceases to have effect any amount payable under the arrangement to a person bound by virtue of subsection (2)(b)(ii) has not been paid, and

• (b) the arrangement did not come to an end prematurely,

the company shall at that time become liable to pay to that person the amount payable under the arrangement.

• (3) Subject as follows, if the company is being wound up or is in administration, the court may do one or both of the following, namely—

• (a) by order stay or sist all proceedings in the winding up or provide for the appointment of the administrator to cease to have effect;

• (b) give such directions with respect to the conduct of the winding up or the administration as it thinks appropriate for facilitating the implementation of the ... voluntary arrangement.

• (3A) Where immediately before the voluntary arrangement took effect a moratorium for the company was in force under Part A1 and a petition for the winding up of the company, other than an excepted petition within the meaning of section A20, was presented before the beginning of the moratorium, the court must dismiss the petition.

• (4) The court shall not make an order under subsection (3)(a) or dismiss a petition under subsection (3A)—

• (a) at any time before the end of the period of 28 days beginning with the first day on which each of the reports required by section 4(6) and (6A) has been made to the court, or

• (b) at any time when an application under the next section 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.

• (5) Where the company is in energy administration, the court shall not make an order or give a direction under subsection (3) unless—

• (a) the court has given the Secretary of State or the Gas and Electricity Markets Authority a reasonable opportunity of making representations to it about the proposed order or direction; and

• (b) the order or direction is consistent with the objective of the energy administration.

• (6) In subsection (5) “in energy administration” and “objective of the energy administration” are to be construed in accordance with Schedule B1 to this Act, as applied by Part 1 of Schedule 20 to the Energy Act 2004.

Challenge of decisions.

6

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

• (a) that a voluntary arrangement which has effect under section 4A unfairly prejudices the interests of a creditor, member or contributory of the company;

• (b) that there has been some material irregularity at or in relation to the meeting of the company, or in relation to the relevant qualifying decision procedure.

• (1A) In this section—

• (a) the “relevant qualifying decision procedure” means the qualifying decision procedure in which the company's creditors decide whether to approve a voluntary arrangement;

• (b) references to a decision made in the relevant qualifying decision procedure include any other decision made in that qualifying decision procedure.

• (2) The persons who may apply under subsection (1) are—

• (a) a person entitled, in accordance with the rules, to vote at the meeting of the company or in the relevant qualifying decision procedure;

• (aa) a person who would have been entitled, in accordance with the rules, to vote in the relevant qualifying decision procedure if he had had notice of it;

• (b) the nominee or any person who has replaced him under section 2(4) or 4(2); and

• (c) if the company is being wound up or is in administration, the liquidator or administrator.

• (2A) Subject to this section, where a voluntary arrangement in relation to a company in energy administration is approved at the meetings summoned under section 3, an application to the court may be made—

• (a) by the Secretary of State, or

• (b) with the consent of the Secretary of State, by the Gas and Electricity Markets Authority,

on the ground that the voluntary arrangement is not consistent with the achievement of the objective of the energy administration.

• (3) An application under this section shall not be made

• (a) after the end of the period of 28 days beginning with the first day on which each of the reports required by section 4(6) and (6A) has been made to the court or

• (b) in the case of a person who was not given notice of the relevant qualifying decision procedure, after the end of the period of 28 days beginning with the day on which he became aware that the relevant qualifying decision procedure had taken place,

but (subject to that) an application made by a person within subsection (2)(aa) on the ground that the voluntary arrangement prejudices his interests may be made after the arrangement has ceased to have effect, unless it came to an end prematurely.

• (4) Where on such an application the court is satisfied as to either of the grounds mentioned in subsection (1) or, in the case of an application under subsection (2A), as to the ground mentioned in that subsection, it may do any of the following, namely—

• (a) revoke or suspend any decision approving the voluntary arrangement which has effect under section 4A or, in a case falling within subsection (1)(b), any decision taken by the meeting of the company, or in the relevant qualifying decision procedure, which has effect under that section;

• (b) give a direction to any person for the summoning of a further company meeting to consider any revised proposal the person who made the original proposal may make or, in the case falling within subsection (1)(b), and relating to the company meeting, a further company meeting to reconsider the original proposal;

• (c) direct any person—

• (i) to seek a decision from the company's creditors (using a qualifying decision procedure) as to whether they approve any revised proposal the person who made the original proposal may make, or

• (ii) in a case falling within subsection (1)(b) and relating to the relevant qualifying decision procedure, to seek a decision from the company's creditors (using a qualifying decision procedure) as to whether they approve the original proposal.

• (5) Where at any time after giving a direction under subsection (4)(b) or (c) in relation to a revised proposal the court is satisfied that the person who made the original proposal does not intend to submit a revised proposal, the court shall revoke the direction and revoke or suspend any decision approving the voluntary arrangement which has effect under section 4A.

• (6) In a case where the court, on an application under this section with respect to any meeting or relevant qualifying decision procedure —

• (a) gives a direction under subsection (4)(b) or (c), or

• (b) revokes or suspends an approval under subsection (4)(a) or (5),

the court may give such supplemental directions as it thinks fit and, in particular, directions with respect to things done under the voluntary arrangement since it took effect.

• (7) Except in pursuance of the preceding provisions of this section,

• (a) a decision taken at a company meeting summoned under section 3 is not invalidated by any irregularity at or in relation to the meeting , and

• (b) a decision of the company's creditors made in the relevant qualifying decision procedure is not invalidated by any irregularity in relation to the relevant qualifying decision procedure.

• (8) In this section “in energy administration” and “objective of the energy administration” are to be construed in accordance with Schedule B1 to this Act, as applied by Part 1 of Schedule 20 to the Energy Act 2004.

False representations, etc.

6A

• (1) If, for the purpose of obtaining the approval of the members or creditors of a company to a proposal for a voluntary arrangement, a person who is an officer of the company—

• (a) makes any false representation, or

• (b) fraudulently does, or omits to do, anything,

he commits an offence.

• (2) Subsection (1) applies even if the proposal is not approved.

• (3) For purposes of this section “officer” includes a shadow director.

• (4) A person guilty of an offence under this section is liable to imprisonment or a fine, or both.

Implementation of proposal.

7

• (1) This section applies where a voluntary arrangement has effect under section 4A.

• (2) The person who is for the time being carrying out in relation to the voluntary arrangement the functions conferred—

• (a) on the nominee by virtue of the approval of the voluntary arrangement by the company or its creditors (or both) pursuant to section 3,

• (b) by virtue of section 2(4) or 4(2) on a person other than the nominee,

shall be known as the supervisor of the voluntary arrangement.

• (3) If any of the company’s creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the court; and on the application the court may—

• (a) confirm, reverse or modify any act or decision of the supervisor,

• (b) give him directions, or

• (c) make such other order as it thinks fit.

• (4) The supervisor—

• (a) may apply to the court for directions in relation to any particular matter arising under the voluntary arrangement, and

• (b) is included among the persons who may apply to the court for the winding up of the company or for an administration order to be made in relation to it.

• (5) 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 voluntary arrangement, either in substitution for the existing supervisor or to fill a vacancy.

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

Prosecution of delinquent officers of company.

7A

• (1) This section applies where the approval of a voluntary arrangement in relation to a company has taken effect under section 4A.

• (2) If it appears to the supervisor that any past or present officer of the company has committed an offence in connection with the voluntary arrangement, the supervisor must forthwith

• (a) report the matter to the appropriate authority, and

• (b) provide the appropriate authority with such information and give the authority such access to and facilities for inspecting and taking copies of documents (being information or documents in the possession or under the control of the ... supervisor and relating to the matter in question) as the authority requires.

• In this subsection, “the appropriate authority” means—in the case of a company registered in England and Wales, the Secretary of State, andin the case of a company registered in Scotland, the Lord Advocate.

• (3) Where a report is made to the Secretary of State under subsection (2), he may, for the purpose of investigating the matter reported to him and such other matters relating to the affairs of the company as appear to him to require investigation, exercise any of the powers which are exercisable by inspectors appointed under section 431 or 432 of the the Companies Act 1985 to investigate a company’s affairs.

• (4) For the purpose of such an investigation any obligation imposed on a person by any provision of the the Companies Acts to produce documents or give information to, or otherwise to assist, inspectors so appointed is to be regarded as an obligation similarly to assist the Secretary of State in his investigation.

• (5) An answer given by a person to a question put to him in exercise of the powers conferred by subsection (3) may be used in evidence against him.

• (6) However, in criminal proceedings in which that person is charged with an offence to which this subsection applies—

• (a) no evidence relating to the answer may be adduced, and

• (b) no question relating to it may be asked,

by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.

• (7) Subsection (6) applies to any offence other than—

• (a) an offence under section 2 or 5 of the Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath), or

• (b) an offence under section 44(1) or (2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath).

• (8) Where a prosecuting authority institutes criminal proceedings following any report under subsection (2), the ... supervisor, and every officer and agent of the company past and present (other than the defendant or defender), shall give the authority all assistance in connection with the prosecution which he is reasonably able to give.

• (9) The court may, on the application of the prosecuting authority, direct any person referred to in subsection (8) to comply with that subsection if he has failed to do so.

Arrangements coming to an end prematurely.

7B

For the purposes of this Part, a voluntary arrangement the approval of which has taken effect under section 4A ... comes to an end prematurely if, when it ceases to have effect, it has not been fully implemented in respect of all persons bound by the arrangement by virtue of section 5(2)(b)(i) ....

Part II — Administration

Administration

8

Schedule B1 to this Act (which makes provision about the administration of companies) shall have effect.

Part II — Administration Orders

Making etc. of administration order

Application for order.

9

• (1) An application to the court for an administration order shall be by petition presented either by the company or the directors, or by a creditor or creditors (including any contingent or prospective creditor or creditors), or by the clerk of a magistrates’ court in the exercise of the power conferred by section 87A of the Magistrates’ Courts Act 1980 (enforcement of fines imposed on companies) or by all or any of those parties, together or separately.

• (2) Where a petition is presented to the court—

• (a) notice of the petition shall be given forthwith to any person who has appointed, or is or may be entitled to appoint, an administrative receiver of the company, and to such other persons as may be prescribed, and

• (b) the petition shall not be withdrawn except with the leave of the court.

• (3) Where the court is satisfied that there is an administrative receiver of the company, the court shall dismiss the petition unless it is also satisfied either—

• (a) that the person by whom or on whose behalf the receiver was appointed has consented to the making of the order, or

• (b) that, if an administration order were made, any security by virtue of which the receiver was appointed would—

• (i) be void against the administrator to any extent by virtue of the provisions of Part XII of the Companies Act 1985 (registration of company charges),

• (i) be liable to be released or discharged under sections 238 to 240 in Part VI (transactions at an undervalue and preferences),

• (ii) be avoided under section 245 in that Part (avoidance of floating charges), or

• (iii) be challengeable under section 242 (gratuitous alienations) or 243 (unfair preferences) in that Part, or under any rule of law in Scotland.

• (4) Subject to subsection (3), on hearing a petition the court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order that it thinks fit.

• (5) Without prejudice to the generality of subsection (4), an interim order under that subsection may restrict the exercise of any powers of the directors or of the company (whether by reference to the consent of the court or of a person qualified to act as an insolvency practitioner in relation to the company, or otherwise).

Effect of application.

10

• (1) During the period beginning with the presentation of a petition for an administration order and ending with the making of such an order or the dismissal of the petition—

• (a) no resolution may be passed or order made for the winding up of the company;

• (aa) no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the leave of the court and subject to such terms as the court may impose

• (b) no steps may be taken to enforce any security over the company’s property, or to repossess goods in the company’s possession under any hire-purchase agreement, except with the leave of the court and subject to such terms as the court may impose; and

• (c) no other proceedings and no execution or other legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the leave of the court and subject to such terms as aforesaid.

• (2) Nothing in subsection (1) requires the leave of the court—

• (a) for the presentation of a petition for the winding up of the company,

• (b) for the appointment of an administrative receiver of the company, or

• (c) for the carrying out by such a receiver (whenever appointed) of any of his functions.

• (3) Where—

• (a) a petition for an administration order is presented at a time when there is an administrative receiver of the company, and

• (b) the person by or on whose behalf the receiver was appointed has not consented to the making of the order,

the period mentioned in subsection (1) is deemed not begin unless and until that person so consents.

• (4) References in this section and the next to hire-purchase agreements include conditional sale agreements, chattel leasing agreements and retention of title agreements.

• (5) In the application of this section and the next to Scotland, references to execution being commenced or continued include references to diligence being carried out or continued, and references to distress being levied shall be omitted.

Effect of order.

11

• (1) On the making of an administration order—

• (a) any petition for the winding up of the company shall be dismissed, and

• (b) any administrative receiver of the company shall vacate office.

• (2) Where an administration order has been made, any receiver of part of the company’s property shall vacate office on being required to do so by the administrator.

• (3) During the period for which an administration order is in force—

• (a) no resolution may be passed or order made for the winding up of the company;

• (b) no administrative receiver of the company may be appointed;

• (ba) no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose

• (c) no other steps may be taken to enforce any security over the company’s property, or to repossess goods in the company’s possession under any hire-purchase agreement, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose; and

• (d) no other proceedings and no execution or other legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as aforesaid.

• (4) Where at any time an administrative receiver of the company has vacated office under subsection (1)(b), or a receiver of part of the company’s property has vacated office under subsection (2)—

• (a) his remuneration and any expenses properly incurred by him, and

• (b) any indemnity to which he is entitled out of the assets of the company.

shall be charged on and (subject to subsection (3) above) paid out of any property of the company which was in his custody or under his control at that time in priority to any security held by the person by or on whose behalf he was appointed.

• (5) Neither an administrative receiver who vacates office under subsection (1)(b) nor a receiver who vacates office under subsection (2) is required on or after so vacating office to take any steps for the purpose of complying with any duty imposed on him by section 40 or 59 of this Act (duty to pay preferential creditors).

Notification of order.

12

• (1) Every invoice, order for goods or business letter which, at a time when an administration order is in force in relation to a company, is issued by or on behalf of the company or the administrator, being a document on or in which the company’s name appears, shall also contain the administrator’s name and a statement that the affairs, business and property of the company are being managed by the administrator.

• (2) If default is made in complying with this section, the company and any of the following persons who without reasonable excuse authorises or permits the default, namely, the administrator and any officer of the company, is liable to a fine.

Administrators

Appointment of administrator.

13

• (1) The administrator of a company shall be appointed either by the administration order or by an order under the next subsection.

• (2) If a vacancy occurs by death, resignation or otherwise in the office of the administrator, the court may by order fill the vacancy.

• (3) An application for an order under subsection (2) may be made—

• (a) by any continuing administrator of the company; or

• (b) where there is no such administrator, by a creditors’ committee established under section 26 below; or

• (c) where there is no such administrator and no such committee, by the company or the directors or by any creditor or creditors of the company.

General powers.

14

• (1) The administrator of a company—

• (a) may do all such things as may be necessary for the management of the affairs, business and property of the company, and

• (b) without prejudice to the generality of paragraph (a), has the powers specified in Schedule 1 to this Act;

and in the application of that Schedule to the administrator of a company the words “he” and “him” refer to the administrator.

• (2) The administrator also has power—

• (a) to remove any director of the company and to appoint any person to be a director of it, whether to fill a vacancy or otherwise, and

• (b) to call any meeting of the members or creditors of the company.

• (3) The administrator may apply to the court for directions in relation to any particular matter arising in connection with the carrying out of his functions.

• (4) Any power conferred on the company or its officers, whether by this Act or the Companies Act or by the memorandum or articles of association, which could be exercised in such a way as to interfere with the exercise by the administrator of his powers is not exercisable except with the consent of the administrator, which may be given either generally or in relation to particular cases.

• (5) In exercising his powers the administrator is deemed to act as the company’s agent.

• (6) A person dealing with the administrator in good faith and for value is not concerned to inquire whether the administrator is acting within his powers.

Power to deal with charged property, etc.

15

• (1) The administrator of a company may dispose of or otherwise exercise his powers in relation to any property of the company which is subject to a security to which this subsection applies as if the property were not subject to the security.

• (2) Where, on an application by the administrator, the court is satisifed that the disposal (with or without other assets) of—

• (a) any property of the company subject to a security to which this subsection applies, or

• (b) any goods in the possession of the company under a hire-purchase agreement,

would be likely to promote the purpose or one or more of the purposes specified in the administration order, the court may by order authorise the administrator to dispose of the property as if it were not subject to the security or to dispose of the goods as if all rights of the owner under the hire-purchase agreement were vested in the company.

• (3) Subsection (1) applies to any security which, as created, was a floating charge; and subsection (2) applies to any other security.

• (4) Where property is disposed of under subsection (1), the holder of the security has the same priority in respect of any property of the company directly or indirectly representing the property disposed of as he would have had in respect of the property subject to the security.

• (5) It shall be a condition of an order under subsection (2) that—

• (a) the net proceeds of the disposal, and

• (b) where those proceeds are less than such amount as may be determined by the court to be the net amount which would be realised on a sale of the property or goods in the open market by a willing vendor, such sums as may be required to make good the deficiency,

shall be applied towards discharging the sums secured by the security or payable under the hire-purchase agreement.

• (6) Where a condition imposed in pursuance of subsection (5) relates to two or more securities, that condition requires the net proceeds of the disposal and, where paragraph (b) of that subsection applies, the sums mentioned in that paragraph to be applied towards discharging the sums secured by those securities in the order of their priorities.

• (7) An office copy of an order under subsection (2) shall, within 14 days after the making of the order, be sent by the administrator to the registrar of companies.

• (8) If the administrator without reasonable excuse fails to comply with subsection (7), he is liable to a fine and, for continued contravention, to a daily default fine.

• (9) References in this section to hire-purchase agreements include conditional sale agreements, chattel leasing agreements and retention of title agreements.

Operation of s. 15 in Scotland.

16

• (1) Where property is disposed of under section 15 in its application to Scotland, the administrator shall grant to the disponee an appropriate document of transfer or conveyance of the property, and—

• (a) that document, or

• (b) where any recording, intimation or registration of the document is a legal requirement for completion of title to the property, that recording, intimation or registration,

has the effect of disencumbering the property of or, as the case may be, freeing the property from the security.

• (2) Where goods in the possession of the company under a hire-purchase agreement, conditional sale agreement, chattel leasing agreement or retention of title agreement are disposed of under section 15 in its application to Scotland, the disposal has the effect of extinguishing, as against the disponee, all rights of the owner of the goods under the agreement.

General duties.

17

• (1) The administrator of a company shall, on his appointment, take into his custody or under his control all the property to which the company is or appears to be entitled.

• (2) The administrator shall manage the affairs, business and property of the company—

• (a) at any time before proposals have been approved (with or without modifications) under section 24 below, in accordance with any directions given by the court, and

• (b) at any time after proposals have been so approved, in accordance with those proposals as from time to time revised, whether by him or a predecessor of his.

• (3) The administrator shall summon a meeting of the company’s creditors if—

• (a) he is requested, in accordance with the rules, to do so by one-tenth, in value, of the company’s creditors, or

• (b) he is directed to do so by the court.

Discharge or variation of administration order.

18

• (1) The administrator of a company may at any time apply to the court for the administration order to be discharged, or to be varied so as to specify an additional purpose.

• (2) The administrator shall make an application under this section if—

• (a) it appears to him that the purpose or each of the purposes specified in the order either has been achieved or is incapable of achievement, or

• (b) he is required to do so by a meeting of the company’s creditors summoned for the purpose in accordance with the rules.

• (3) On the hearing of an application under this section, the court may by order discharge or vary the administration order and make such consequential provision as it thinks fit, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order it thinks fit.

• (4) Where the administration order is discharged or varied the administrator shall, within 14 days after the making of the order effecting the discharge or variation, send an office copy of that order to the registrar of companies.

• (5) If the administrator without reasonable excuse fails to comply with subsection (4), he is liable to a fine and, for continued contravention, to a daily default fine.

Vacation of office.

19

• (1) The administrator of a company may at any time be removed from office by order of the court and may, in the prescribed circumstances, resign his office by giving notice of his resignation to the court.

• (2) The administrator shall vacate office if—

• (a) he ceases to be qualified to act as an insolvency practitioner in relation to the company, or

• (b) the administration order is discharged.

• (3) Where at any time a person ceases to be administrator, the following subsections apply.

• (4) His remuneration and any expenses properly incurred by him shall be charged on and paid out of any property of the company which is in his custody or under his control at that time in priority to any security to which section 15(1) then applies.

• (5) Any sums payable in respect of debts or liabilities incurred, while he was administrator, under contracts entered into . . . by him or a predecessor of his in the carrying out of his or the predecessor’s functions shall be charged on and paid out of any such property as is mentioned in subsection (4) in priority to any charge arising under that subsection.

• (6) Any sums payable in respect of liabilities incurred, while he was administrator, under contracts of employment adopted by him or a predecessor of his in the carrying out of his or the predecessor’s functions shall, to the extent that the liabilities are qualifying liabilities, be charged on and paid out of any such property as is mentioned in subsection (4) and enjoy the same priority as any sums to which subsection (5) applies.

• (7) For the purposes of subsection (6), a liability under a contract of employment is a qualifying liability if—

• (a) it is a liability to pay a sum by way of wages or salary or contribution to an occupational pension scheme, and

• (b) it is in respect of services rendered wholly or partly after the adoption of the contract.

• (8) There shall be disregarded for the purposes of subsection (6) so much of any qualifying liability as represents payment in respect of services rendered before the adoption of the contract.

• (9) For the purposes of subsections (7) and (8)—

• (a) wages or salary payable in respect of a period of holiday or absence from work through sickness or other good cause are deemed to be wages or (as the case may be) salary in respect of services rendered in that period, and

• (b) a sum payable in lieu of holiday is deemed to be wages or (as the case may be) salary in respect of services rendered in the period by reference to which the holiday entitlement arose.

• (10) In subsection (9)(a), the reference to wages or salary payable in respect of a period of holiday includes any sums which, if they had been paid, would have been treated for the purposes of the enactments relating to social security as earnings in respect of that period.

Release of administrator.

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• (1) A person who has ceased to be the administrator of a company has his release with effect from the following time, that is to say—

• (a) in the case of a person who has died, the time at which notice is given to the court in accordance with the rules that he has ceased to hold office;

• (b) in any other case, such time as the court may determine.

• (2) Where a person has his release under this section, he is, with effect from the time specified above, discharged from all liability both in respect of acts or omissions of his in the administration and otherwise in relation to his conduct as administrator.

• (3) However, nothing in this section prevents the exercise, in relation to a person who has had his release as above, of the court’s powers under section 212 in Chapter X of Part IV (summary remedy against delinquent directors, liquidators, etc.).

Ascertainment and investigation of company’s affairs

Information to be given by administrator.

21

• (1) Where an administration order has been made, the administrator shall—

• (a) forthwith send to the company and publish in the prescribed manner a notice of the order, and

• (b) within 28 days after the making of the order, unless the court otherwise directs, send such a notice to all creditors of the company (so far as he is aware of their addresses).

• (2) Where an administration order has been made, the administrator shall also, within 14 days after the making of the order, send an office copy of the order to the registrar of companies and to such other persons as may be prescribed.

• (3) If the administrator without reasonable excuse fails to comply with this section, he is liable to a fine and, for continued contravention, to a daily default fine.

Statement of affairs to be submitted to administrator.

22

• (1) Where an administration order has been made, the administrator shall forthwith require some or all of the persons mentioned below to make out and submit to him a statement in the prescribed form as to the affairs of the company.

• (2) The statement shall be verified by affidavit by the persons required to submit it and shall show—

• (a) particulars of the company’s assets, debts and liabilities;

• (b) the names and addresses of its creditors;

• (c) the securities held by them respectively;

• (d) the dates when the securities were respectively given; and

• (e) such further or other information as may be prescribed.

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

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

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

• (c) those who are in the company’s employment or have been in its employment within that year, and are in the administrator’s opinion capable of giving the information required;

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

In this subsection “employment” includes employment under a contract for services.

• (4) Where any persons are required under this section to submit a statement of affairs to the administrator, they shall do so (subject to the next subsection) before the end of the period of 21 days beginning with the day after that on which the prescribed notice of the requirement is given to them by the administrator.

• (5) The administrator, if he thinks fit, may—

• (a) at any time release a person from an obligation imposed on him under subsection (1) or (2), or

• (b) either when giving notice under subsection (4) or subsequently, extend the period so mentioned;

and where the administrator has refused to exercise a power conferred by this subsection, the court, if it thinks fit, may exercise it.

• (6) If a person without reasonable excuse fails to comply with any obligation imposed under this section, he is liable to a fine and, for continued contravention, to a daily default fine.

Administrator’s proposals

Statement of proposals.

23

• (1) Where an administration order has been made, the administrator shall, within 3 months (or such longer period as the court may allow) after the making of the order—

• (a) send to the registrar of companies and (so far as he is aware of their addresses) to all creditors a statement of his proposals for achieving the purpose or purposes specified in the order, and

• (b) lay a copy of the statement before a meeting of the company’s creditors summoned for the purpose on not less than 14 days’ notice.

• (2) The administrator shall also, within 3 months (or such longer period as the court may allow) after the making of the order, either—

• (a) send a copy of the statement (so far as he is aware of their addresses) to all members of the company, or

• (b) publish in the prescribed manner a notice stating an address to which members of the company should write for copies of the statement to be sent to them free of charge.

• (3) If the administrator without reasonable excuse fails to comply with this section, he is liable to a fine and, for continued contravention, to a daily default fine.

Consideration of proposals by creditors’ meeting.

24

• (1) A meeting of creditors summoned under section 23 shall decide whether to approve the administrator’s proposals.

• (2) The meeting may approve the proposals with modifications, but shall not do so unless the administrator consents to each modification.

• (3) Subject as above, the meeting shall be conducted in accordance with the rules.

• (4) After the conclusion of the meeting in accordance with the rules, the administrator shall report the result of the meeting to the court and shall give notice of that result to the registrar of companies and to such persons as may be prescribed.

• (5) If a report is given to the court under subsection (4) that the meeting has declined to approve the administrator’s proposals (with or without modifications), the court may by order discharge the administration order and make such consequential provision as it thinks fit, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order that it thinks fit.

• (6) Where the administration order is discharged, the administrator shall, within 14 days after the making of the order effecting the discharge, send an office copy of that order to the registrar of companies.

• (7) If the administrator without reasonable excuse fails to comply with subsection (6), he is liable to a fine and, for continued contravention, to a daily default fine.

Approval of substantial revisions.

25

• (1) This section applies where—

• (a) proposals have been approved (with or without modifications) under section 24, and

• (b) the administrator proposes to make revisions of those proposals which appear to him substantial.

• (2) The administrator shall—

• (a) send to all creditors of the company (so far as he is aware of their addresses) a statement in the prescribed form of his proposed revisions, and

• (b) lay a copy of the statement before a meeting of the company’s creditors summoned for the purpose on not less than 14 days’ notice;

and he shall not make the proposed revisions unless they are approved by the meeting.

• (3) The administrator shall also either—

• (a) send a copy of the statement (so far as he is aware of their addresses) to all members of the company, or

• (b) publish in the prescribed manner a notice stating an address to which members of the company should write for copies of the statement to be sent to them free of charge.

• (4) The meeting of creditors may approve the proposed revisions with modifications, but shall not do so unless the administrator consents to each modification.

• (5) Subject as above, the meeting shall be conducted in accordance with the rules.

• (6) After the conclusion of the meeting in accordance with the rules, the administrator shall give notice of the result of the meeting to the registrar of companies and to such persons as may be prescribed.

Miscellaneous

Creditors’ committee.

26

• (1) Where a meeting of creditors summoned under section 23 has approved the administrator’s proposals (with or without modifications), the meeting may, if it thinks fit, establish a committee (“the creditors’ committee”) to exercise the functions conferred on it by or under this Act.

• (2) If such a committee is established, the committee may, on giving not less than 7 days’ notice, require the administrator to attend before it at any reasonable time and furnish it with such information relating to the carrying out of his functions as it may reasonably require.

Protection of interests of creditors and members.

27

• (1) At any time when an administration order is in force, a creditor or member of the company may apply to the court by petition for an order under this section on the ground—

• (a) that the company’s affairs, business and property are being or have been managed by the administrator in a manner which is unfairly prejudicial to the interests of its creditors or members generally, or of some part of its creditors or members (including at least himself), or

• (b) that any actual or proposed act or omission of the administrator is or would be so prejudicial.

• (2) On an application for an order under this section the court may, subject as follows, make such order as it thinks fit for giving relief in respect of the matters complained of, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order that it thinks fit.

• (3) An order under this section shall not prejudice or prevent—

• (a) the implementation of a voluntary arrangement approved under . . . Part I, or any compromise or arrangement sanctioned under section 425 of the Companies Act; or

• (b) where the application for the order was made more than 28 days after the approval of any proposals or revised proposals under section 24 or 25, the implementation of those proposals or revised proposals

• (4) Subject as above, an order under this section may in particular—

• (a) regulate the future management by the administrator of the company’s affairs, business and property;

• (b) require the administrator to refrain from doing or continuing an act complained of by the petitioner, or to do an act which the petitioner has complained he has omitted to do.

• (c) require the summoning of a meeting of creditors or members for the purpose of considering such matters as the court may direct;

• (d) discharge the administration order and make such consequential provision as the court thinks fit.

• (5) Nothing in section 15 or 16 is to be taken as prejudicing applications to the court under this section.

• (6) Where the administration order is discharged, the administrator shall, within 14 days after the making of the order effecting the discharge, send an office copy of that order to the registrar of companies; and if without reasonable excuse he fails to comply with this subsection, he is liable to a fine and, for continued contravention, to a daily default fine.

Part III — Receivership

Chapter I — Receivers and Managers (England and Wales)

Preliminary and general provisions

Extent of this Chapter.

28

• (1) In this Chapter “company” means a company registered under the Companies Act 2006 in England and Wales or Scotland.

• (2) This Chapter does not apply to receivers appointed under Chapter 2 of this Part (Scotland).

Definitions.

29

• (1) It is hereby declared that, except where the context otherwise requires—

• (a) any reference in . . . this Act to a receiver or manager of the property of a company, or to a receiver of it, includes a receiver or manager, or (as the case may be) a receiver of part only of that property and a receiver only of the income arising from the property or from part of it; and

• (b) any reference in . . . this Act to the appointment of a receiver or manager under powers contained in an instrument includes an appointment made under powers which, by virtue of any enactment, are implied in and have effect as if contained in an instrument.

• (2) In this Chapter “administrative receiver” means—

• (a) a receiver or manager of the whole (or substantially the whole) of a company’s property appointed by or on behalf of the holders of any debentures of the company secured by a charge which, as created, was a floating charge, or by such a charge and one or more other securities; or

• (b) a person who would be such a receiver or manager but for the appointment of some other person as the receiver of part of the company’s property.

Disqualification of body corporate from acting as receiver.

30

A body corporate is not qualified for appointment as receiver of the property of a company, and any body corporate which acts as such a receiver is liable to a fine.

Disqualification of bankrupt or person in respect of whom a debt relief order is made

31

• (1) A person commits an offence if he acts as receiver or manager of the property of a company on behalf of debenture holders while—

• (a) he is an undischarged bankrupt,

• (aa) a moratorium period under a debt relief order applies in relation to him, or

• (b) a bankruptcy restrictions order or a debt relief restrictions order is in force in respect of him.

• (2) A person guilty of an offence under subsection (1) shall be liable to imprisonment, a fine or both.

• (3) This section does not apply to a receiver or manager acting under an appointment made by the court.

Power for court to appoint official receiver.

32

Where application is made to the court to appoint a receiver on behalf of the debenture holders or other creditors of a company which is being wound up by the court, the official receiver may be appointed.

Receivers and managers appointed out of court

Time from which appointment is effective.

33

• (1) The appointment of a person as a receiver or manager of a company’s property under powers contained in an instrument—

• (a) is of no effect unless it is accepted by that person before the end of the business day next following that on which the instrument of appointment is received by him or on his behalf, and

• (b) subject to this, is deemed to be made at the time at which the instrument of appointment is so received.

• (2) This section applies to the appointment of two or more persons as joint receivers or managers of a company’s property under powers contained in an instrument, subject to such modifications as may be prescribed by the rules.

Liability for invalid appointment.

34

Where the appointment of a person as the receiver or manager of a company’s property under powers contained in an instrument is discovered to be invalid (whether by virtue of the invalidity of the instrument or otherwise), the court may order the person by whom or on whose behalf the appointment was made to indemnify the person appointed against any liability which arises solely by reason of the invalidity of the appointment.

Application to court for directions.

35

• (1) A receiver or manager of the property of a company appointed under powers contained in an instrument, or the persons by whom or on whose behalf a receiver or manager has been so appointed, may apply to the court for directions in relation to any particular matter arising in connection with the performance of the functions of the receiver or manager.

• (2) On such an application, the court may give such directions, or may make such order declaring the rights of persons before the court or otherwise, as it thinks just.

Court’s power to fix remuneration.

36

• (1) The court may, on an application made by the liquidator of a company, by order fix the amount to be paid by way of remuneration to a person who, under powers contained in an instrument, has been appointed receiver or manager of the company’s property.

• (2) The court’s power under subsection (1), where no previous order has been made with respect thereto under the subsection—

• (a) extends to fixing the remuneration for any period before the making of the order or the application for it,

• (b) is exercisable notwithstanding that the receiver or manager has died or ceased to act before the making of the order or the application, and

• (c) where the receiver or manager has been paid or has retained for his remuneration for any period before the making of the order any amount in excess of that so fixed for that period, extends to requiring him or his personal representatives to account for the excess or such part of it as may be specified in the order.

But the power conferred by pararaph (c) shall not be exercised as respects any period before the making of the application for the order under this section, unless in the court’s opinion there are special circumstances making it proper for the power to be exercised.

• (3) The court may from time to time on an application made either by the liquidator or by the receiver or manager, vary or amend an order made under subsection (1).

Liability for contracts, etc.

37

• (1) A receiver or manager appointed under powers contained in an instrument (other than an administrative receiver) is, to the same extent as if he had been appointed by order of the court—

• (a) personally liable on any contract entered into by him in the performance of his functions (except in so far as the contract otherwise provides) and on any contract of employment adopted by him in the performance of those functions, and

• (b) entitled in respect of that liability to indemnity out of the assets.

• (2) For the purposes of subsection (1)(a), the receiver or manager is not to be taken to have adopted a contract of employment by reason of anything done or omitted to be done with 14 days after his appointment.

• (3) Subsection (1) does not limit any right to indemnity which the receiver or manager would have apart from it, nor limit his liability on contracts entered into without authority, nor confer any right to indemnity in respect of that liability.

• (4) Where at any time the receiver or manager so appointed vacates office—

• (a) his remuneration and any expenses properly incurred by him, and

• (b) any indemnity to which he is entitled out of the assets of the company,

shall be charged on and paid out of any property of the company which is in his custody or under his control at that time in priority to any charge or other security held by the person by or on whose behalf he was appointed.

Receivership accounts to be delivered to registrar.

38

• (1) Except in the case of an adminstrative receiver, every receiver or manager of a company’s property who has been appointed under powers contained in an instrument shall deliver to the registrar of companies for registration the requisite accounts of his receipts and payments.

• (2) The accounts shall be delivered within one month (or such longer period as the registrar may allow) after the expiration of 12 months from the date of his appointment and of every subsequent period of 6 months, and also within one month after he ceases to act as receiver or manager.

• (3) The requisite accounts shall be an abstract in the prescribed form showing—

• (a) receipts and payments during the relevant period of 12 or 6 months, or

• (b) where the receiver or manager ceases to act, receipts and payments during the period from the end of the period of 12 or 6 months to which the last preceding abstract related (or, if no preceding abstract has been delivered under this section, from the date of his appointment) up to the date of his so ceasing, and the aggregate amount of receipts and payments during all preceding periods since his appointment.

• (4) In this section “prescribed” means prescribed by regulations made by statutory instrument by the Secretary of State.

• (5) A receiver or manager who makes default in complying with this section is liable to a fine and, for continued contravention, to a daily default fine.

Provisions applicable to every receivership

Notification that receiver or manager appointed.

39

• (1) Where a receiver or manager of the property of a company has been appointed—

• (a) every invoice, order for goods or services, business letter or order form (whether in hard copy, electronic or any other form) issued by or on behalf of the company or the receiver or manager or the liquidator of the company; and

• (b) all the company's websites,

must contain a statement that a receiver or manager has been appointed.