The Insolvency Rules 1986

Made: 10th November 1986

Laid before Parliament: 1st December 1986

Coming into force: 29th December 1986

The Lord Chancellor, in the exercise of his powers under sections 411 and 412 of the Insolvency Act 1986, with the concurrence of the Secretary of State, and after consulting the committee existing for that purpose under section 413 of that Act, hereby makes the following Rules:—

INTRODUCTORY PROVISIONS

Citation and commencement

0.1

These Rules may be cited as the Insolvency Rules 1986 and shall come into force on 29th December 1986.

Construction and interpretation

0.2

• (1) In these Rules–

• “the Act” means the Insolvency Act 1986 (any reference to a numbered section being to a section of that Act);

• “the Companies Act” means the Companies Act 1985;

• “CPR” means the Civil Procedure Rules 1998 and “CPR” followed by a Part or rule by number means the Part or rule with that number in those Rules;

• “RSC” followed by an Order by number means the Order with that number set out in Schedule 1 to the CPR; and

• “the Rules” means the Insolvency Rules 1986.

• (2) References in the Rules to ex parte hearings shall be construed as references to hearings without notice being served on any other party; references to applications made ex parte as references to applications made without notice being served on any other party and other references which include the expression “ex parte” shall be similarly construed.

• (3) Subject to paragraphs (1) and (2), Part 13 of the Rules has effect for their interpretation and application.

Extent

0.3

• (1) Parts 1, 2 and 4 of the Rules, and Parts 7 to 13 as they relate to company insolvency, apply in relation to companies which the courts in England and Wales have jurisdiction to wind up.

• (2) Rule 3.1 applies to all receivers to whom Part III of the Act applies, Rule 3.39 and 3.40 apply to all receivers who are not administrative receivers, and the remainder of Part 3 of the Rules applies to administrative receivers appointed otherwise than under section 51 (Scottish Receivership).

• (3) Parts 5 and 6 of the Rules, and Parts 7 to 13 as they relate to individual insolvency, extend to England and Wales only.

THE FIRST GROUP OF PARTS

PART 1 — COMPANY VOLUNTARY ARRANGEMENTS

CHAPTER 1 — PRELIMINARY

Scope of this Part; interpretation

1.1

• (1) The Rules in this Part apply where, pursuant to Part I of the Act, it is intended to make, and there is made, a proposal to a company and its creditors for a voluntary arrangement, that is to say, a composition in satisfaction of its debts or a scheme of arrangement of its affairs.

• (2) In this Part—

• (a) Chapter 2 applies where the proposal for the voluntary arrangement is made by the directors of the company and

• (i) the company is neither in liquidation nor is the company in administration; and

• (ii) no steps have been taken to obtain a moratorium under Schedule A1 to the Act in connection with the proposal;

• (b) Chapter 3 applies where the company is in liquidation or the company is in administration, and the proposal is made by the liquidator or (as the case may be) the administrator, he in either case being the nominee for the purposes of the proposal;

• (c) Chapter 4 applies in the same case as Chapter 3, but where the nominee is not the liquidator or administrator;

• (d) Chapter 5 applies in all the three cases mentioned in sub-paragraphs (a) to (c) above;

• (e) Chapters 7 and 8 apply to all voluntary arrangements with or without a moratorium; and

• (f) Chapter 9 applies where the proposal is made by the directors of an eligible company with a view to obtaining a moratorium.

• (3) In Chapters 3, 4 and 5, the liquidator or the administrator is referred to as “the responsible insolvency practitioner”.

• (4) In this Part, a reference to an “eligible company” is to a company that is eligible for a moratorium in accordance with paragraph 2 of Schedule A1 to the Act.

CHAPTER 2 — PROPOSAL BY DIRECTORS

Preparation of proposal

1.2

The directors shall prepare for the intended nominee a proposal on which (with or without amendments to be made under Rule 1.3 below) to make his report to the court under section 2.

Contents of proposal

1.3

• (1) The directors' proposal shall provide a short explanation why, in their opinion, a voluntary arrangement under Part I of the Act is desirable, and give reasons why the company's creditors may be expected to concur with such an arrangement.

• (2) The following matters shall be stated, or otherwise dealt with, in the directors' proposal—

• (a) the following matters, so far as within the directors' immediate knowledge—

• (i) the company's assets, with an estimate of their respective values,

• (ii) the extent (if any) to which the assets are charged in favour of creditors,

• (iii) the extent (if any) to which particular assets are to be excluded from the voluntary arrangement;

• (b) particulars of any property, other than assets of the company itself, which is proposed to be included in the arrangement, the source of such property and the terms on which it is to be made available for inclusion;

• (c) the nature and amount of the company's liabilities (so far as within the directors' immediate knowledge), the manner in which they are proposed to be met, modified, postponed or otherwise dealt with by means of the arrangement, and (in particular)—

• (i) how it is proposed to deal with preferential creditors (defined in section 4(7)) and creditors who are, or claim to be, secured,

• (ii) how persons connected with the company (being creditors) are proposed to be treated under the arrangement, and

• (iii) whether there are, to the directors' knowledge, any circumstances giving rise to the possibility, in the event that the company should go into liquidation, of claims under—

• section 238 (transactions at an undervalue),

• section 239 (preferences),

• section 244 (extortionate credit transactions), or

• section 245 (floating charges invalid);

and, where any such circumstances are present, whether, and if so how, it is proposed under the voluntary arrangement to make provision for wholly or partly indemnifying the company in respect of such claims;

• (ca) an estimate (to the best of the directors' knowledge and belief and subject to paragraph (4)) of—

• (i) the value of the prescribed part, should the company go into liquidation if the proposal for the voluntary arrangement is not accepted, whether or not section 176A is to be disapplied; and

• (ii) the value of the company’s net property on the date that the estimate is made;

• (d) whether any, and if so what, guarantees have been given of the company's debts by other persons, specifying which (if any) of the guarantors are persons connected with the company;

• (e) the proposed duration of the voluntary arrangement;

• (f) the proposed dates of distributions to creditors, with estimates of their amounts;

• (fa) How it is proposed to deal with the claim of any person who is bound by the arrangement by virtue of section 5(2)(b)(ii)(1);

• (g) the amount proposed to be paid to the nominee (as such) by way of remuneration and expenses;

• (h) the manner in which it is proposed that the supervisor of the arrangement should be remunerated, and his expenses defrayed;

• (j) whether, for the purposes of the arrangement, any guarantees are to be offered by directors, or other persons, and whether (if so) any security is to be given or sought;

• (k) the manner in which funds held for the purposes of the arrangement are to be banked, invested or otherwise dealt with pending distribution to creditors;

• (l) the manner in which funds held for the purpose of payment to creditors, and not so paid on the termination of the arrangement, are to be dealt with;

• (m) the manner in which the business of the company is proposed to be conducted during the course of the arrangement;

• (n) details of any further credit facilities which it is intended to arrange for the company, and how the debts so arising are to be paid;

• (o) the functions which are to be undertaken by the supervisor of the arrangement; ...

• (p) the name, address and qualification of the person proposed as supervisor of the voluntary arrangement, and confirmation that he is either qualified to act as an insolvency practitioner in relation to the company or is an authorised person in relation to the company; and

• (q) whether the EC Regulation will apply and, if so, whether the proceedings will be main proceedings, secondary proceedings or territorial proceedings.

• (3) With the agreement in writing of the nominee, the directors' proposal may be amended at any time up to delivery of the former's report to the court under section 2(2).

• (4) Nothing in paragraph (2)(ca) is to be taken as requiring the estimate referred to in that paragraph to include any information, the disclosure of which could seriously prejudice the commercial interests of the company. If such information is excluded from the calculation the estimate shall be accompanied by a statement to that effect.

Notice to intended nominee

1.4

• (1) The directors shall give to the intended nominee written notice of their proposal.

• (2) The notice, accompanied by a copy of the proposal, shall be delivered either to the nominee himself, or to a person authorised to take delivery of documents on his behalf.

• (3) If the intended nominee agrees to act, he shall cause a copy of the notice to be endorsed to the effect that it has been received by him on a specified date; and the period of 28 days referred to in section 2(2) then runs from that date.

• (4) The copy of the notice so endorsed shall be returned by the nominee forthwith to the directors at an address specified by them in the notice for that purpose.

Statement of affairs

1.5

• (1) The directors shall, within 7 days after their proposal is delivered to the nominee, or within such longer time as he may allow, deliver to him a statement of the company's affairs.

• (2) The statement shall comprise the following particulars (supplementing or amplifying, so far as is necessary for clarifying the state of the company's affairs, those already given in the directors' proposal)—

• (a) a list of the company's assets, divided into such categories as are appropriate for easy identification, with estimated values assigned to each category;

• (b) in the case of any property on which a claim against the company is wholly or partly secured, particulars of the claim and its amount, and of how and when the security was created;

• (c) the names and addresses of the company's preferential creditors (defined in section 4(7)), with the amounts of their respective claims;

• (d) the names and addresses of the company's unsecured creditors, with the amounts of their respective claims;

• (e) particulars of any debts owed by or to the company to or by persons connected with it;

• (f) the names and addresses of the company's members, with details of their respective shareholdings;

• (g) such other particulars (if any) as the nominee may in writing require to be furnished for the purposes of making his report to the court on the directors' proposal.

• (3) The statement of affairs shall be made up to a date not earlier than 2 weeks before the date of the notice to the nominee under Rule 1.4.

However, the nominee may allow an extension of that period to the nearest practicable date (not earlier than 2 months before the date of the notice under Rule 1.4); and if he does so, he shall give his reasons in his report to the court on the directors' proposal.

• (4) The statement shall be certified as correct, to the best of their knowledge and belief, by two or more directors of the company, or by the company secretary and at least one director (other than the secretary himself).

Additional disclosure for assistance of nominee

1.6

• (1) If it appears to the nominee that he cannot properly prepare his report on the basis of information in the directors' proposal and statement of affairs, he may call on the directors to provide him with—

• (a) further and better particulars as to the circumstances in which, and the reasons why, the company is insolvent or (as the case may be) threatened with insolvency;

• (b) particulars of any previous proposals which have been made in respect of the company under Part I of the Act;

• (c) any further information with respect to the company's affairs which the nominee thinks necessary for the purposes of his report.

• (2) The nominee may call on the directors to inform him, with respect to any person who is, or at any time in the 2 years preceding the notice under Rule 1.4 has been, a director or officer of the company, whether and in what circumstances (in those 2 years or previously) that person—

• (a) has been concerned in the affairs of any other company (whether or not incorporated in England and Wales) which has become insolvent, or

• (b) has himself been adjudged bankrupt or entered into an arrangement with his creditors.

• (3) For the purpose of enabling the nominee to consider their proposal and prepare his report on it, the directors must give him access to the company's accounts and records.

Nominee's report on the proposal

1.7

• (1) With his report to the court under section 2 the nominee shall deliver—

• (a) a copy of the directors' proposal (with amendments, if any, authorised under Rule 1.3(3)); and

• (b) a copy or summary of the company's statement of affairs.

• (2) If the nominee makes known his opinion that the directors' proposal has a reasonable prospect of being approved and implemented and that meetings of the company and its creditors should be summoned under section 3, his report shall have annexed to it his comments on the proposal.

If his opinion is otherwise, he shall give his reasons for that opinion.

• (3) The court shall cause the nominee's report to be endorsed with the date on which it is filed in court. Any director, member or creditor of the company is entitled, at all reasonable times on any business day, to inspect the file.

• (4) The nominee shall send a copy of his report, and of his comments (if any), to the company.

Replacement of nominee

1.8

• (1) Where a person other than the nominee intends to apply to the court under section 2(4) for the nominee to be replaced, (except in any case where the nominee has died) he shall give to the nominee at least 7 days' notice of his application.

• (2) Where the nominee intends to apply to the court under section 2(4) of the Act to be replaced, he shall give at least 7 days' notice of his application to the person intending to make the proposal.

• (3) No appointment of a replacement nominee shall be made by the court unless there is filed in court a statement by the replacement nominee—

• (a) indicating his consent to act, and

• (b) that he is qualified to act as an insolvency practitioner in relation to the company or is an authorised person in relation to the company.

Summoning of meetings under s. 3

1.9

• (1) If in his report the nominee states that in his opinion meetings of the company and its creditors should be summoned to consider the directors' proposal, the date on which the meetings are to be held shall be not less than 14, nor more than 28, days from that on which the nominee's report is filed in court under Rule 1.7.

• (2) Notices calling the meetings shall be sent by the nominee, at least 14 days before the day fixed for them to be held—

• (a) in the case of the creditors' meeting, to all the creditors specified in the statement of affairs, and any other creditors of the company of whom he is otherwise aware; and

• (b) in the case of the meeting of members of the company, to all persons who are, to the best of the nominee's belief, members of it.

• (3) Each notice sent under this Rule shall specify the court to which the nominee's report under section 2 has been delivered and shall state the effect of Rule 1.19(1), (3) and (4) (requisite majorities (creditors)); and with each notice there shall be sent—

• (a) a copy of the directors' proposal;

• (b) a copy of the statement of affairs or, if the nominee thinks fit, a summary of it (the summary to include a list of creditors and the amount of their debts); and

• (c) the nominee's comments on the proposal.

CHAPTER 3 — PROPOSAL BY ADMINISTRATOR OR LIQUIDATOR (HIMSELF THE NOMINEE)

Preparation of proposal

1.10

• (1) The responsible insolvency practitioner's proposal shall specify—

• (a) all such matters as under Rule 1.3 (subject to paragraph (3) below) in Chapter 2 the directors of the company would be required to include in a proposal by them , with the addition, where the company is in administration, of the names and addresses of the company’s preferential creditors (defined in section 4(7)), with the amounts of their respective claims, and

• (b) such other matters (if any) as the insolvency practitioner considers appropriate for ensuring that members and creditors of the company are enabled to reach an informed decision on the proposal.

• (2) Where the company is being wound up by the court, the insolvency practitioner shall give notice of the proposal to the official receiver.

• (3) The administrator or liquidator shall include, in place of the estimate required by Rule 1.3(2)(ca), a statement which contains—

• (a) to the best of the administrator or liquidator’s knowledge and belief—

• (i) an estimate of the value of the prescribed part (whether or not he proposes to make an application to court under section 176A(5) or section 176A(3) applies), and

• (ii) an estimate of the value of the company’s net property, and

• (b) whether, and, if so, why, the administrator or liquidator proposes to make an application to court under section 176A(5).

• (4) Nothing in this Rule is to be taken as requiring any such estimate to include any information, the disclosure of which could seriously prejudice the commercial interests of the company. If such information is excluded from the calculation the estimate shall be accompanied by a statement to that effect.

Summoning of meetings under s. 3

1.11

• (1) The responsible insolvency practitioner shall fix a venue for the creditors' meeting and the company meeting, and give at least 14 days' notice of the meetings—

• (a) in the case of the creditors' meeting, to all the creditors specified in the company's statement of affairs, and to any other creditors of whom the insolvency practitioner is aware; and

• (b) in the case of the company meeting, to all persons who are, to the best of his belief, members of the company.

• (2) Each notice sent out under this Rule shall state the effect of Rule 1.19(1), (3) and (4) (requisite majorities (creditors)); and with it there shall be sent—

• (a) a copy of the responsible insolvency practitioner's proposal, and

• (b) a copy of the statement of affairs or, if he thinks fit, a summary of it (the summary to include a list of creditors and the amounts of their debts).

CHAPTER 4 — PROPOSAL BY ADMINISTRATOR OR LIQUIDATOR (ANOTHER INSOLVENCY PRACTITIONER THE NOMINEE)

Preparation of proposal and notice to nominee

1.12

• (1) The responsible insolvency practitioner shall give notice to the intended nominee, and prepare his proposal for a voluntary arrangement, in the same manner as is required of the directors, in the case of a proposal by them, under Chapter 2.

• (2) Rule 1.2 applies to the responsible insolvency practitioner as it applies to the directors; and Rule 1.4 applies as regards the action to be taken by the nominee.

• (3) The content of the proposal shall be as required by Rule 1.3 (and, where relevant, Rule 1.10), reading references to the directors as referring to the responsible insolvency practitioner.

• (4) Rule 1.6 applies in respect of the information to be furnished to the nominee, reading references to the directors as referring to the responsible insolvency practitioner.

• (5) With the proposal the responsible insolvency practitioner shall provide a copy of the company's statement of affairs.

• (6) Where the company is being wound up by the court, the responsible insolvency practitioner shall send a copy of the proposal to the official receiver, accompanied by the name and address of the insolvency practitioner or authorised person who has agreed to act as nominee.

• (7) Rules 1.7 to 1.9 apply as regards a proposal under this Chapter as they apply to a proposal under Chapter 2.

CHAPTER 5 — PROCEEDINGS ON A PROPOSAL MADE BY THE DIRECTORS, OR BY THE ADMINISTRATOR, OR BY THE LIQUIDATOR

SECTION A: MEETINGS OF COMPANY'S CREDITORS AND MEMBERS

Summoning of meetings

1.13

• (1) Subject as follows, in fixing the venue for the creditors' meeting and the company meeting, the person summoning the meeting (“the convener”) shall have regard primarily to the convenience of the creditors.

• (2) ) Meetings shall in each case be summoned for commencement between 10.00 and 16.00 hours on a business day.

• (3) The meetings may be held on the same day or on different days. If held on the same day, the meetings shall be held in the same place, but in either case the creditors' meeting shall be fixed for a time in advance of the company meeting.

• (4) Where the meetings are not held on the same day, they shall be held within 7 days of each other.

• (5) With every notice summoning either meeting there shall be sent out forms of proxy.

The chairman at meetings

1.14

• (1) Subject as follows, at both the creditors' meeting and the company meeting, and at any combined meeting, the convener shall be chairman.

• (2) If for any reason he is unable to attend, he may nominate another person to act as chairman in his place; but a person so nominated must be ...—

• (a) a person qualified to act as an insolvency practitioner in relation to the company;

• (b) an authorised person in relation to the company; or

• (c) an employee of the convenor or his firm who is experienced in insolvency matters.

The chairman as proxy-holder

1.15

The chairman shall not by virtue of any proxy held by him vote to increase or reduce the amount of the remuneration or expenses of the nominee or the supervisor of the proposed arrangement, unless the proxy specifically directs him to vote in that way.

Attendance by company officers

1.16

• (1) At least 14 days' notice to attend the meetings shall be given by the convener—

• (a) to all directors of the company, and

• (b) to any persons in whose case the convener thinks that their presence is required as being officers of the company, or as having been directors or officers of it at any time in the 2 years immediately preceding the date of the notice.

• (2) The chairman may, if he thinks fit, exclude any present or former director or officer from attendance at a meeting, either completely or for any part of it; and this applies whether or not a notice under this Rule has been sent to the person excluded.

SECTION B: VOTING RIGHTS AND MAJORITIES

Entitlement to vote (creditors)

1.17

• (1) Subject as follows, every creditor who has notice of the creditors' meeting is entitled to vote at the meeting or any adjournment of it.

• (2) Votes are calculated according to the amount of the creditor’s debt as at the date of the meeting or, where the company is being wound up or is in administration, the date of its going into liquidation or (as the case may be) of the when the company entered administration.

• (3) A creditor may vote in respect of a debt for an unliquidated amount or any debt whose value is not ascertained and for the purposes of voting (but not otherwise) his debt shall be valued at £1 unless the chairman agrees to put a higher value on it.

Procedure for admission of creditors' claims for voting purposes

1.17A

• (1) Subject as follows, at any creditors' meeting the chairman shall ascertain the entitlement of persons wishing to vote and shall admit or reject their claims accordingly.

• (2) The chairman may admit or reject a claim in whole or in part.

• (3) The chairman’s decision on any matter under this Rule or under paragraph (3) of Rule 1.17 is subject to appeal to the court by any creditor or member of the company.

• (4) If the chairman is in doubt whether a claim should be admitted or rejected, he shall mark it as objected to and allow votes to be cast in respect of it, subject to such votes being subsequently declared invalid if the objection to the claim is sustained.

• (5) If on an appeal the chairman’s decision is reversed or varied, or votes are declared invalid, the court may order another meeting to be summoned, or make such order as it thinks just.

Voting rights (members)

1.18

• (1) Subject as follows, members of the company at their meeting vote according to the rights attaching to their shares respectively in accordance with the articles.

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

• (3) References in this Rule to a person's shares include any other interest which he may have as a member of the company.

Requisite majorities (creditors)

1.19

• (1) Subject as follows, at the creditors' meeting for any resolution to pass approving any proposal or modification there must be a majority in excess of three-quarters in value of the creditors present in person or by proxy and voting on the resolution.

• (2) The same applies in respect of any other resolution proposed at the meeting, but substituting one-half for three-quarters.

• (3) In the following cases there is to be left out of account a creditor's vote in respect of any claim or part of a claim—

• (a) where written notice of the claim was not given, either at the meeting or before it, to the chairman or convener of the meeting;

• (b) where the claim or part is secured;

• (c) where the claim is in respect of a debt wholly or partly on, or secured by, a current bill of exchange or promissory note, unless the creditor is willing—

• (i) to treat the liability to him on the bill or note of every person who is liable on it antecedently to the company, and against whom a bankruptcy order has not been made (or in the case of a company, which has not gone into liquidation), as a security in his hands, and

• (ii) to estimate the value of the security and (for the purpose of entitlement to vote, but not of any distribution under the arrangement) to deduct it from his claim.

• (4) Any resolution is invalid if those voting against it include more than half in value of the creditors, counting in these latter only those—

• (a) to whom notice of the meeting was sent;

• (b) whose votes are not to be left out of account under paragraph (3); and

• (c) who are not, to the best of the chairman's belief, persons connected with the company.

• (5) It is for the chairman of the meeting to decide whether under this Rule—

• (a) a vote is to be left out of account in accordance with paragraph (3), or

• (b) a person is a connected person for the purposes of paragraph (4)(c);

and in relation to the second of these two cases the chairman is entitled to rely on the information provided by the company's statement of affairs or otherwise in accordance with this Part of the Rules.

• (6) If the chairman uses a proxy contrary to Rule 1.15, his vote with that proxy does not count towards any majority under this Rule.

• (7) The chairman’s decision on any matter under this Rule is subject to appeal to the court by any creditor or member and paragraphs (5) to (7) of Rule 1.17A apply as regards such an appeal.

Requisite majorities (members)

1.20

• (1) Subject as follows, and to any express provision made in the articles, at a company meeting any resolution is to be regarded as passed if voted for by more than one-half in value of the members present in person or by proxy and voting on the resolution.

The value of members is determined by reference to the number of votes conferred on each member by the company’s articles.

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

• (3) If the chairman uses a proxy contrary to Rule 1.15, his vote with that proxy does not count towards any majority under this Rule.

Proceedings to obtain agreement on the proposal

1.21

• (1) If the chairman thinks fit, the creditors' meeting and the company meeting may be held together

• (2) The chairman may, and shall if it is so resolved at the meeting in question, adjourn that meeting for not more than 14 days.

• (3) If there are subsequently further adjournments, the final adjournment shall not be to a day later than 14 days after the date on which the meeting in question was originally held.

• (4) In the case of a proposal by the directors, if the meetings are adjourned under paragraph (2), notice of the fact shall be given by the nominee forthwith to the court.

• (5) If following the final adjournment of the creditors' meeting the proposal (with or without modifications) has not been approved by the creditors, it is deemed rejected.

SECTION C: IMPLEMENTATION OF THE ARRANGEMENT

Resolutions to follow approval

1.22

• (1) If the voluntary arrangement is approved (with or without modifications) by the creditors' meeting, a resolution may be taken by the creditors, where two or more supervisors are appointed, on the question whether acts to be done in connection with the arrangement may be done by any one or more of them, or must be done by all of them.

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

• (3) If at either meeting a resolution is moved for the appointment of some person other than the nominee to be supervisor of the arrangement, there must be produced to the chairman, at or before the meeting—

• (a) that person's written consent to act (unless he is present and then and there signifies his consent), and

• (b) his written confirmation that he is qualified to act as an insolvency practitioner in relation to the company or is an authorised person in relation to the company.

Notice of order made under section 4A(6)

1.22A

• (1) This Rule applies where the court makes an order under section 4A(6).

• (2) The member of the company who applied for the order shall serve sealed copies of it on—

• (a) the supervisor of the voluntary arrangement; and

• (b) the directors of the company.

• (3) Service on the directors may be effected by service of a single copy on the company at its registered office.

• (4) The directors or (as the case may be) the supervisor shall forthwith after receiving a copy of the court’s order, give notice of it to all persons who were sent notice of the creditors' or company meetings or who, not having been sent such notice, are affected by the order.

• (5) The person on whose application the order of the court was made shall, within 7 days of the order, deliver an office copy to the registrar of companies.

Hand-over of property etc. to supervisor

1.23

• (1) Where the decision approving the voluntary arrangement has effect under section 4A—

• (a) the directors, or

• (b) where the company is in liquidation or is in administration, and a person other than the responsible insolvency practitioner is appointed as supervisor of the voluntary arrangement, the insolvency practitioner,

shall forthwith do all that is required for putting the supervisor into possession of the assets included in the arrangement.

• (2) Where the company is in liquidation or is in administration, the supervisor shall on taking possession of the assets discharge any balance due to the insolvency practitioner by way of remuneration or on account of—

• (a) fees, costs, charges and expenses properly incurred and payable under the Act or the Rules, and

• (b) any advances made in respect of the company, together with interest on such advances at the rate specified in section 17 of the Judgments Act 1838 at the date on which the company went into liquidation or (as the case may be) entered administration.

• (3) Alternatively, the supervisor must, before taking possession, give the responsible insolvency practitioner a written undertaking to discharge any such balance out of the first realisation of assets.

• (4) The insolvency practitioner has a charge on the assets included in the voluntary arrangement in respect of any sums due as above until they have been discharged, subject only to the deduction from realisations by the supervisor of the proper costs and expenses of such realisations.

• (5) The supervisor shall from time to time out of the realisation of assets discharge all guarantees properly given by the responsible insolvency practitioner for the benefit of the company, and shall pay all the insolvency practitioner's expenses.

• (6) References in this Rule to the responsible insolvency practitioner include, where a company is being wound up by the court, the official receiver, whether or not in his capacity as liquidator; and any sums due to the official receiver take priority over those due to a liquidator.

Report of meetings

1.24

• (1) A report of the meetings shall be prepared by the person who was chairman of them.

• (2) The report shall—

• (a) state whether the proposal for a voluntary arrangement was approved by the creditors of the company alone or by both the creditors and members of the company and in either case whether such approval was with any modifications;

• (b) set out the resolutions which were taken at each meeting, and the decision on each one;

• (c) list the creditors and members of the company (with their respective values) who were present or represented at the meetings, and how they voted on each resolution; ...

• (ca) state whether, in the opinion of the supervisor, (i) the EC Regulation applies to the voluntary arrangement and (ii) if so, whether the proceedings are main proceedings, secondary proceedings or territorial proceedings; and

• (d) include such further information (if any) as the chairman thinks it appropriate to make known to the court.

• (3) A copy of the chairman's report shall, within 4 days of the meetings being held, be filed in court; and the court shall cause that copy to be endorsed with the date of filing.

• (4) In respect of each of the meetings, the persons to whom notice of its result is to be sent by the chairman under section 4(6) are all those who were sent notice of the meeting under this Part of the Rules.

The notice shall be sent immediately after a copy of the chairman's report is filed in court under paragraph (3).

• (5) If the decision approving the voluntary arrangement has effect under section 4A (whether or not in the form proposed), the supervisor shall forthwith send a copy of the chairman's report to the registrar of companies.

Revocation or suspension of the arrangement

1.25

• (1) This Rule applies where the court makes an order of revocation or suspension under section 6.

• (2) The person who applied for the order shall serve sealed copies of it—

• (a) on the supervisor of the voluntary arrangement, and

• (b) on the directors of the company or the administrator or liquidator (according to who made the proposal for the arrangement).

Service on the directors may be effected by service of a single copy of the order on the company at its registered office.

• (3) If the order includes a direction by the court under section 6(4)(b) for any further meetings to be summoned, notice shall also be given (by the person who applied for the order) to whoever is, in accordance with the direction, required to summon the meetings.

• (4) The directors or (as the case may be) the administrator or liquidator shall—

• (a) forthwith after receiving a copy of the court's order, give notice of it to all persons who were sent notice of the creditors' and company meetings or who, not having been sent that notice, appear to be affected by the order;

• (b) within 7 days of their receiving a copy of the order (or within such longer period as the court may allow), give notice to the court whether it is intended to make a revised proposal to the company and its creditors, or to invite re-consideration of the original proposal.

• (5) The person on whose application the order of revocation or suspension was made shall, within 7 days after the making of the order, deliver a copy of the order to the registrar of companies.

Supervisor's accounts and reports

1.26

• (1) Where the voluntary arrangement authorises or requires the supervisor—

• (a) to carry on the business of the company or trade on its behalf or in its name, or

• (b) to realise assets of the company, or

• (c) otherwise to administer or dispose of any of its funds,

he shall keep accounts and records of his acts and dealings in and in connection with the arrangement, including in particular records of all receipts and payments of money.

• (2) The supervisor shall, not less often than once in every 12 months beginning with the date of his appointment, prepare an abstract of such receipts and payments, and send copies of it, accompanied by his comments on the progress and efficacy of the arrangement, to—

• (a) the court,

• (b) the registrar of companies,

• (c) the company,

• (d) all those of the company's creditors who are bound by the arrangement,

• (e) subject to paragraph (5) below, the members of the company who are so bound, and

• (f) if the company is not in liquidation, the company's auditors for the time being.

If in any period of 12 months he has made no payments and had no receipts, he shall at the end of that period send a statement to that effect to all those specified in sub-paragraphs (a) to (f) above.

• (3) An abstract provided under paragraph (2) shall relate to a period beginning with the date of the supervisor's appointment or (as the case may be) the day following the end of the last period for which an abstract was prepared under this Rule; and copies of the abstract shall be sent out, as required by paragraph (2), within the 2 months following the end of the period to which the abstract relates.

• (4) If the supervisor is not authorised as mentioned in paragraph (1), he shall, not less often than once in every 12 months beginning with the date of his appointment, send to all those specified in paragraph (2)(a) to (f) a report on the progress and efficacy of the voluntary arrangement.

• (5) The court may, on application by the supervisor—

• (a) dispense with the sending under this Rule of abstracts or reports to members of the company, either altogether or on the basis that the availability of the abstract or report to members is to be advertised by the supervisor in a specified manner;

• (b) vary the dates on which the obligation to send abstracts or reports arises.

Production of accounts and records to Secretary of State

1.27

• (1) The Secretary of State may at any time during the course of the voluntary arrangement or after its completion or termination require the supervisor to produce for inspection—

• (a) his records and accounts in respect of the arrangement, and

• (b) copies of abstracts and reports prepared in compliance with Rule 1.26.

• (2) The Secretary of State may require production either at the premises of the supervisor or elsewhere; and it is the duty of the supervisor to comply with any requirement imposed on him under this Rule.

• (3) The Secretary of State may cause any accounts and records produced to him under this Rule to be audited; and the supervisor shall give to the Secretary of State such further information and assistance as he needs for the purposes of his audit.

Fees, costs, charges and expenses

1.28

• (1) The fees, costs, charges and expenses that may be incurred for any of the purposes of the voluntary arrangement are—

• (a) any disbursements made by the nominee prior to the decision approving the arrangement taking effect under section 4A, and any remuneration for his services as such agreed between himself and the company (or, as the case may be, the administrator or liquidator);

• (b) any fees, costs, charges or expenses which—

• (i) are sanctioned by the terms of the arrangement, or

• (ii) would be payable, or correspond to those which would be payable, in an administration or winding up.

Completion or termination of the arrangement

1.29

• (1) Not more than 28 days after the final completion or termination of the voluntary arrangement, the supervisor shall send to creditors and members of the company who are bound by it a notice that the voluntary arrangement has been fully implemented or (as the case may be) has terminated.

• (2) With the notice there shall be sent to each creditor and member a copy of a report by the supervisor summarising all receipts and payments made by him in pursuance of the arrangement, and explaining in relation to implementation of the arrangement any departure from the proposals as they originally took effect, or (in the case of termination of the arrangement) explaining the reasons why the arrangement has terminated.

• (3) The supervisor shall, within the 28 days mentioned above, send to the registrar of companies and to the court a copy of the notice to creditors and members under paragraph (1), together with a copy of the report under paragraph (2), and the supervisor shall not vacate office until after such copies have been sent.

• (4) In the report under paragraph (2), the supervisor shall include a statement as to the amount paid, if any, to unsecured creditors by virtue of the application of section 176A (prescribed part).

CHAPTER 6 — GENERAL

False representations, etc

1.30

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

CHAPTER 7 — EC Regulation—Conversion of Voluntary Arrangement into Winding up

Application for conversion into winding up

1.31

• (1) Where a member State liquidator proposes to apply to the court for the conversion under Article 37 of the EC Regulation (conversion of earlier proceedings) of a voluntary arrangement into a winding up, an affidavit complying with Rule 1.32 must be prepared and sworn, and filed in court in support of the application.

• (2) An application under this Rule shall be by originating application.

• (3) The application and the affidavit required under this Rule shall be served upon—

• (a) the company; and

• (b) the supervisor.

Contents of affidavit

1.32

• (1) The affidavit shall state—

• (a) that main proceedings have been opened in relation to the company in a member State other than the United Kingdom;

• (b) the deponent’s belief that the conversion of the voluntary arrangement into a winding up would prove to be in the interests of the creditors in the main proceedings;

• (c) the deponent’s opinion as to whether the company ought to enter voluntary winding up or be wound up by the court; and

• (d) all other matters that, in the opinion of the member State liquidator, would assist the court—

• (i) in deciding whether to make such an order, and

• (ii) if the court were to do so, in considering the need for any consequential provision that would be necessary or desirable.

• (2) An affidavit under this Rule shall be sworn by, or on behalf of, the member State liquidator.

Power of court

1.33

• (1) On hearing the application for conversion into winding up the court may make such order as it thinks fit.

• (2) If the court makes an order for conversion into winding up the order may contain all such consequential provisions as the court deems necessary or desirable.

• (3) Without prejudice to the generality of paragraph (1), an order under that paragraph may provide that the company be wound up as if a resolution for voluntary winding up under section 84 were passed on the day on which the order is made.

• (4) Where the court makes an order for conversion into winding up under paragraph (1), any expenses properly incurred as expenses of the administration of the voluntary arrangement in question shall be a first charge on the company’s assets.

CHAPTER 8 — EC Regulation—Member State Liquidator

Interpretation of creditor and notice to member State liquidator

1.34

• (1) This Rule applies where a member State liquidator has been appointed in relation to the company.

• (2) Where the supervisor is obliged to give notice to, or provide a copy of a document (including an order of court) to, the court, the registrar of companies or the official receiver, the supervisor shall give notice or provide copies, as appropriate, to the member State liquidator.

• (3) Paragraph (2) is without prejudice to the generality of the obligations imposed by Article 31 of the EC Regulation (duty to cooperate and communicate information)

CHAPTER 9 — OBTAINING A MORATORIUM

PROCEEDINGS DURING A MORATORIUM

Preparation of proposal by directors and submission to nominee

1.35

• (1) The document containing the proposal referred to in paragraph 6(1)(a) of Schedule A1 to the Act shall—

• (a) be prepared by the directors;

• (b) comply with the requirements of paragraphs (1) and (2) of Rule 1.3 (save that the reference to preferential creditors shall be to preferential creditors within the meaning of paragraph 31(8) of Schedule A1 to the Act); and

• (c) state the address to which notice of the consent of the nominee to act and the documents referred to in Rule 1.38 shall be sent.

• (2) With the agreement in writing of the nominee, the directors may amend the proposal at any time before submission to them by the nominee of the statement required by paragraph 6(2) of Schedule A1 to the Act.

Delivery of documents to the intended nominee etc.

1.36

• (1) The documents required to be delivered to the nominee pursuant to paragraph 6(1) of Schedule A1 to the Act shall be delivered to the nominee himself or to a person authorised to take delivery of documents on his behalf.

• (2) On receipt of the documents, the nominee shall forthwith issue an acknowledgement of receipt of the documents to the directors which shall indicate the date on which the documents were received.

Statement of affairs

1.37

• (1) The statement of the company’s affairs required to be delivered to the nominee pursuant to paragraph 6(1)(b) of Schedule A1 to the Act shall be delivered to the nominee no later than 7 days after the delivery to him of the document setting out the terms of the proposed voluntary arrangement or such longer time as he may allow.

• (2) The statement of affairs shall comprise the same particulars as required by Rule 1.5(2) (supplementing or amplifying, so far as is necessary for clarifying the state of the company’s affairs, those already given in the directors' proposal).

• (3) The statement of affairs shall be made up to a date not earlier than 2 weeks before the date of the delivery of the document containing the proposal for the voluntary arrangement to the nominee under Rule 1.36(1).

• However, the nominee may allow an extension of that period to the nearest practicable date (not earlier than 2 months before the date of delivery of the documents referred to in Rule 1.36(1)) and if he does so, he shall give a statement of his reasons in writing to the directors.

• (4) The statement of affairs shall be certified as correct, to the best of their knowledge and belief, by two or more directors of the company, or by the company secretary and at least one director (other than the secretary himself).

The nominee’s statement

1.38

• (1) The nominee shall submit to the directors the statement required by paragraph 6(2) of Schedule A1 to the Act within 28 days of the submission to him of the document setting out the terms of the proposed voluntary arrangement.

• (2) The statement shall have annexed to it—

• (a) the nominee’s comments on the proposal, unless the statement contains an opinion in the negative on any of the matters referred to in paragraph 6(2)(a) and (b) of Schedule A1 to the Act, in which case he shall instead give his reasons for that opinion, and

• (b) where he is willing to act in relation to the proposed arrangement, a statement of his consent to act.

Documents submitted to the court to obtain moratorium

1.39

• (1) Where pursuant to paragraph 7 of Schedule A1 to the Act the directors file the document and statements referred to in that paragraph in court, those documents shall be delivered together with 4 copies of a schedule listing them within 3 working days of the date of the submission to them of the nominee’s statement under paragraph 6(2) of Schedule A1 to the Act.

• (2) When the directors file the document and statements referred to in paragraph (1), they shall also file—

• (a) a copy of any statement of reasons made by the nominee pursuant to Rule 1.37(3); and

• (b) a copy of the nominee’s comments on the proposal submitted to them pursuant to Rule 1.38(2).

• (3) The copies of the schedule shall be endorsed by the court with the date on which the documents were filed in court and 3 copies of the schedule sealed by the court shall be returned by the court to the person who filed the documents in court.

• (4) The statement of affairs required to be filed under paragraph 7(1)(b) of Schedule A1 to the Act shall comprise the same particulars as required by Rule 1.5(2).

Notice and advertisement of beginning of a moratorium

1.40

• (1) After receiving the copies of the schedule endorsed by the court under Rule 1.39(3), the directors shall forthwith serve 2 of them on the nominee and one on the company.

• (2) Forthwith after receiving the copies of the schedule pursuant to paragraph (1) the nominee shall advertise the coming into force of the moratorium once in the Gazette, and once in such newspaper as he thinks most appropriate for ensuring that its coming into force comes to the notice of the company’s creditors.

• (3) The nominee shall forthwith notify the registrar of companies, the company and any petitioning creditor of the company of whose claim he is aware of the coming into force of the moratorium and such notification shall specify the date on which the moratorium came into force.

• (4) The nominee shall give notice of the coming into force of the moratorium specifying the date on which it came into force to—

• (a) any enforcement officer or other officer who, to his knowledge, is charged with an execution or other legal process against the company or its property; and

• (b) any person who, to his knowledge, has distrained against the company or its property.

Notice of extension of moratorium

1.41

• (1) The nominee shall forthwith notify the registrar of companies and the court of a decision taking effect pursuant to paragraph 36 of Schedule A1 to the Act to extend or further extend the moratorium and such notice shall specify the new expiry date of the moratorium.

• (2) Where an order is made by the court extending or further extending or renewing or continuing a moratorium, the nominee shall forthwith after receiving a copy of the same give notice to the registrar of companies and with the notice shall send an office copy of the order.

Notice and advertisement of end of moratorium

1.42

• (1) After the moratorium comes to an end, the nominee shall forthwith advertise its coming to an end once in the Gazette, and once in such newspaper as he thinks most appropriate for ensuring that its coming to an end comes to the notice of the company’s creditors, and such notice shall specify the date on which the moratorium came to an end.

• (2) The nominee shall forthwith give notice of the ending of the moratorium to the registrar of companies, the court, the company and any creditor of the company of whose claim he is aware and such notice shall specify the date on which the moratorium came to an end.

SECTION B: PROCEEDINGS DURING A MORATORIUM

Disposal of charged property etc. during a moratorium

1.43

• (1) This Rule applies in any case where the company makes an application to the court under paragraph 20 of Schedule A1 to the Act for leave to dispose of property of the company which is subject to a security, or goods in possession of the company under an agreement to which that paragraph relates.

• (2) The court shall fix a venue for the hearing of the application and the company shall forthwith give notice of the venue to the person who is the holder of the security or, as the case may be, the owner under the agreement.

• (3) If an order is made, the company shall forthwith give notice of it to that person or owner.

• (4) The court shall send 2 sealed copies of the order to the company, who shall send one of them to that person or owner.

SECTION C: NOMINEES

Withdrawal of nominee’s consent to act

1.44

Where the nominee withdraws his consent to act he shall, pursuant to paragraph 25(5) of Schedule A1 to the Act, forthwith give notice of his withdrawal and the reason for withdrawing his consent to act to—

• (a) the registrar of companies;

• (b) the court;

• (c) the company; and

• (d) any creditor of the company of whose claim he is aware.

Replacement of nominee by the court

1.45

• (1) Where the directors intend to make an application to the court under paragraph 28 of Schedule A1 to the Act for the nominee to be replaced, they shall give to the nominee at least 7 days' notice of their application.

• (2) Where the nominee intends to make an application to the court under that paragraph to be replaced, he shall give to the directors at least 7 days' notice of his application.

• (3) No appointment of a replacement nominee shall be made by the court unless there is filed in court a statement by the replacement nominee indicating his consent to act.

Notification of appointment of a replacement nominee

1.46

Where a person is appointed as a replacement nominee, he shall forthwith give notice of his appointment to—

• (a) the registrar of companies;

• (b) the court (in any case where he was not appointed by the court); and

• (c) the person whom he has replaced as nominee.

Applications to court under paragraphs 26 or 27 of Schedule A1 to the Act

1.47

Where any person intends to make an application to the court pursuant to paragraph 26 or 27 of Schedule A1 to the Act, he shall give to the nominee at least 7 days' notice of his application.

SECTION D: CONSIDERATION OF PROPOSALS WHERE MORATORIUM OBTAINED

Summoning of meetings; procedure at meetings etc.

1.48

• (1) Where the nominee summons meetings of creditors and the company pursuant to paragraph 29(1) of Schedule A1 to the Act, each of those meetings shall be summoned for a date that is not more than 28 days from the date on which the moratorium came into force.

• (2) Notices calling the creditors' meetings shall be sent by the nominee to all creditors specified in the statement of affairs and any other creditors of the company of whose address he is aware at least 14 days before the day fixed for the meeting.

• (3) Notices calling the company meeting shall be sent by the nominee to all persons who are, to the best of the nominee’s belief, members of the company at least 14 days before the day fixed for the meeting.

• (4) Each notice sent under this Rule shall specify the court in which the documents relating to the obtaining of the moratorium were filed and state the effect of paragraphs (1), (3) and (4) of Rule 1.52 (requisite majorities (creditors)) and with each notice there shall be sent—

• (a) a copy of the directors' proposal;

• (b) a copy of the statement of the company’s affairs or, if the nominee thinks fit, a summary of it (the summary to include a list of creditors and the amount of their debts); and

• (c) the nominee’s comments on the proposal.

• (5) The provisions of Rules 1.13 to 1.16 shall apply.

Entitlement to vote (creditors)

1.49

• (1) Subject as follows, every creditor who has notice of the creditors' meeting is entitled to vote at the meeting or any adjournment of it.

• (2) Votes are calculated according to the amount of the creditor’s debt as at the beginning of the moratorium, after deducting any amounts paid in respect of that debt after that date.

• (3) A creditor may vote in respect of a debt for an unliquidated amount or any debt whose value is not ascertained and for the purposes of voting (but not otherwise) his debt shall be valued at £1 unless the chairman agrees to put a higher value on it.

Procedure for admission of creditors' claims for voting purposes

1.50

• (1) Subject as follows, at any creditors' meeting the chairman shall ascertain the entitlement of persons wishing to vote and shall admit or reject their claims accordingly.

• (2) The chairman may admit or reject a claim in whole or in part.

• (3) The chairman’s decision on any matter under this Rule or under paragraph (3) of Rule 1.49 is subject to appeal to the court by any creditor or member of the company.

• (4) If the chairman is in doubt whether a claim should be admitted or rejected, he shall mark it as objected to and allow votes to be cast in respect of it, subject to such votes being subsequently declared invalid if the objection to the claim is sustained.

• (5) If on an appeal the chairman’s decision is reversed or varied, or votes are declared invalid, the court may order another meeting to be summoned, or make such order as it thinks just.

• The court’s power to make an order under this paragraph is exercisable only if it considers that the circumstances giving rise to the appeal are such as give rise to unfair prejudice or material irregularity.

• (6) An application to the court by way of appeal against the chairman’s decision shall not be made after the end of the period of 28 days beginning with the first day on which the report required by paragraph 30(3) of Schedule A1 to the Act has been made to the court.

• (7) The chairman is not personally liable for any costs incurred by any person in respect of an appeal under this Rule.

Voting rights (members)

1.51

Rule 1.18 shall apply.

Requisite majorities (creditors)

1.52

• (1) Subject as follows, at the creditors' meeting for any resolution to pass approving any proposal or modification there must be a majority in excess of three-quarters in value of the creditors present in person or by proxy and voting on the resolution.

• (2) The same applies in respect of any other resolution proposed at the meeting, but substituting one-half for three-quarters.

• (3) At a meeting of the creditors for any resolution to pass extending (or further extending) a moratorium, or to bring a moratorium to an end before the end of the period of any extension, there must be a majority in excess of three quarters in value of the creditors present in person or by proxy and voting on the resolution. For this purpose paragraph (4)(b) below shall not apply and a secured creditor is entitled to vote in respect of the amount of his claim without deducting the value of his security.

• (4) In the following cases there is to be left out of account a creditor’s vote in respect of any claim or part of a claim—

• (a) where written notice of the claim was not given, either at the meeting or before it, to the chairman or convenor of the meeting;

• (b) where the claim or part is secured;

• (c) where the claim is in respect of a debt wholly or partly on, or secured by, a current bill of exchange or promissory note, unless the creditor is willing—

• (i) to treat the liability to him on the bill or note of every person who is liable on it antecedently to the company, and against whom a bankruptcy order has not been made (or, in the case of a company, which has not gone into liquidation), as a security in his hands, and

• (ii) to estimate the value of the security and (for the purpose of entitlement to vote, but not of any distribution under the arrangement) to deduct it from his claim.

• (5) Any resolution is invalid if those voting against it include more than half in value of the creditors, counting in these latter only those—

• (a) who have notice of the meeting;

• (b) whose votes are not to be left out of account under paragraph (4); and

• (c) who are not, to the best of the chairman’s belief, persons connected with the company.

• (6) It is for the chairman of the meeting to decide whether under this Rule—

• (a) a vote is to be left out of account in accordance with paragraph (4), or

• (b) a person is a connected person for the purposes of paragraph (5)(c);

and in relation to the second of these two cases the chairman is entitled to rely on the information provided by the statement of the company’s affairs or otherwise in accordance with this Part of the Rules.

• (7) If the chairman uses a proxy contrary to Rule 1.15 as it applies by virtue of Rule 1.48(5), his vote with that proxy does not count towards any majority under this Rule.

• (8) The chairman’s decision on any matter under this Rule is subject to appeal to the court by any creditor or member and paragraphs (5) to (7) of Rule 1.50 apply as regards such an appeal.

Requisite majorities (members) and proceedings to obtain agreement on the proposal

1.53

• (1) Rule 1.20 shall apply.

• (2) If the chairman thinks fit, the creditors' meeting and the company meeting may be held together.

• (3) The chairman may, and shall if it is so resolved at the meeting in question, adjourn that meeting, but any adjournment shall not be to a day which is more than 14 days after the date on which the moratorium (including any extension) ends.

• (4) If the meetings are adjourned under paragraph (3), notice of the fact shall be given by the nominee forthwith to the court.

• (5) If following the final adjournment of the creditors' meeting the proposal (with or without modifications) has not been approved by the creditors, it is deemed rejected.

Implementation of the arrangement

1.54

• (1) Where a decision approving the arrangement has effect under paragraph 36 of Schedule A1 to the Act, the directors shall forthwith do all that is required for putting the supervisor into possession of the assets included in the arrangement.

• (2) Subject to paragraph (3), Rules 1.22, 1.22A and 1.24 to 1.29 apply.

• (3) The provisions referred to in paragraph (2) are modified as follows—

• (a) in paragraph (1) of Rule 1.22A the reference to section 4A(6) is to be read as a reference to paragraph 36(5) of Schedule A1 to the Act;

• (b) in paragraph (4) of Rule 1.24 the reference to section 4(6) is to be read as a reference to paragraph 30(3) of Schedule A1 to the Act;

• (c) in paragraph (5) of Rule 1.24 the reference to section 4A is to be read as a reference to paragraph 36 of Schedule A1 to the Act;

• (d) in paragraph (1) of Rule 1.25 the reference to section 6 is to be read as a reference to paragraph 38 of Schedule A1 to the Act and the references in paragraphs (2) and (4) to the administrator or liquidator shall be ignored;

• (e) in paragraph (3) of Rule 1.25 the reference to section 6(4)(b) is to be read as a reference to paragraph 38 (4)(b) of Schedule A1 to the Act; and

• (f) in sub-paragraph (a) of paragraph (1) of Rule 1.28 the reference to section 4A is to be read as a reference to paragraph 36 of Schedule A1 to the Act.

PART 2 — ADMINISTRATION PROCEDURE

CHAPTER 1 — PRELIMINARY

Introductory and interpretation

2.1

• (1) In this Part—

• (a) Chapter 2 applies in relation to the appointment of an administrator by the court;

• (b) Chapter 3 applies in relation to the appointment of an administrator by the holder of a qualifying floating charge under paragraph 14;

• (c) Chapter 4 applies in relation to the appointment of an administrator by the company or the directors under paragraph 22;

• (d) The following Chapters apply in all the cases mentioned in sub-paragraphs (a)-(c) above:

• Chapter 5: Process of administration;

• Chapter 6: Meetings and reports;

• Chapter 7: The creditors' committee;

• Chapter 8: Disposal of charged property;

• Chapter 9: Expenses of the administration;

• Chapter 10: Distributions to creditors;

• Chapter 11: The administrator;

• Chapter 12: Ending administration;

• Chapter 13: Replacing administrator;

• Chapter 14: EC Regulation—conversion of administration into winding up;

• Chapter 15: EC Regulation—member State liquidator.

• (2) In this Part of these Rules a reference to a numbered paragraph shall, unless otherwise stated, be to the paragraph so numbered in Schedule B1 to the Act.

CHAPTER 2 — APPOINTMENT OF ADMINISTRATOR BY COURT

Affidavit in support of administration application

2.2

• (1) Where it is proposed to apply to the court for an administration order to be made in relation to a company, the administration application shall be in Form 2.1B and an affidavit complying with Rule 2.4 must be prepared and sworn, with a view to its being filed with the court in support of the application.

• (2) If the administration application is to be made by the company or by the directors, the affidavit shall be made by one of the directors, or the secretary of the company, stating himself to make it on behalf of the company or, as the case may be, on behalf of the directors.

• (3) If the application is to be made by creditors, the affidavit shall be made by a person acting under the authority of them all, whether or not himself one of their number. In any case there must be stated in the affidavit the nature of his authority and the means of his knowledge of the matters to which the affidavit relates.

• (4) If the application is to be made by the supervisor of a voluntary arrangement under Part I of the Act, it is to be treated as if it were an application by the company.

Form of application

2.3

• (1) If made by the company or by the directors, the application shall state the name of the company and its address for service, which (in the absence of special reasons to the contrary) is that of the company’s registered office.

• (2) If the application is made by the directors, it shall state that it is so made under paragraph 12(1)(b); but from and after making it is to be treated for all purposes as the application of the company.

• (3) If made by a single creditor, the application shall state his name and address for service.

• (4) If the application is made by two or more creditors, it shall state that it is so made (naming them); but from and after making it is to be treated for all purposes as the application of only one of them, named in the application as applying on behalf of himself and other creditors. An address for service for that one shall be specified.

• (5) There shall be attached to the application a written statement which shall be in Form 2.2B by each of the persons proposed to be administrator stating—

• (a) that he consents to accept appointment;

• (b) details of any prior professional relationship(s) that he has had with the company to which he is to be appointed as administrator; and

• (c) his opinion that it is reasonably likely that the purpose of administration will be achieved.

Contents of application and affidavit in support

2.4

• (1) The administration application shall contain a statement of the applicant’s belief that the company is, or is likely to become, unable to pay its debts, except where the applicant is the holder of a qualifying floating charge and is making the application in reliance on paragraph 35.

• (2) There shall be attached to the application an affidavit in support which shall contain—

• (a) a statement of the company’s financial position, specifying (to the best of the applicant’s knowledge and belief) the company’s assets and liabilities, including contingent and prospective liabilities;

• (b) details of any security known or believed to be held by creditors of the company, and whether in any case the security is such as to confer power on the holder to appoint an administrative receiver or to appoint an administrator under paragraph 14. If an administrative receiver has been appointed, that fact shall be stated;

• (c) details of any insolvency proceedings in relation to the company including any petition that has been presented for the winding up of the company so far as within the immediate knowledge of the applicant;

• (d) where it is intended to appoint a number of persons as administrators, details of the matters set out in paragraph 100(2) regarding the exercise of the function of the administrators; and

• (e) any other matters which, in the opinion of those intending to make the application for an administration order, will assist the court in deciding whether to make such an order, so far as lying within the knowledge or belief of the applicant.

• (3) Where the application is made by the holder of a qualifying floating charge in reliance on paragraph 35, he shall give sufficient details in the affidavit in support to satisfy the court that he is entitled to appoint an administrator under paragraph 14.

• (4) The affidavit shall state whether, in the opinion of the person making the application, (i) the EC Regulation will apply and (ii) if so, whether the proceedings will be main proceedings or territorial proceedings.

Filing of application

2.5

• (1) The application (and all supporting documents) shall be filed with the court, with a sufficient number of copies for service and use as provided by Rule 2.6.

• (2) Each of the copies filed shall have applied to it the seal of the court and be issued to the applicant; and on each copy there shall be endorsed the date and time of filing.

• (3) The court shall fix a venue for the hearing of the application and this also shall be endorsed on each copy of the application issued under paragraph (2).

• (4) After the application is filed, it is the duty of the applicant to notify the court in writing of the existence of any insolvency proceedings, and any insolvency proceedings under the EC Regulation, in relation to the company, as soon as he becomes aware of them.

Service of application

2.6

• (1) In the following paragraphs of this Rule, references to the application are to a copy of the application issued by the court under Rule 2.5(2) together with the affidavit in support of it and the documents attached to the application.