The Insolvency Rules 1986

• (c) disputed proofs and claims.

• (2) A creditor who has not proved his debt before the declaration of any dividend is not entitled to disturb, by reason that he has not participated in it, the distribution of that dividend or any other dividend declared before his debt was proved, but—

• (a) when he has proved that debt he is entitled to be paid, out of any money for the time being available for the payment of any further dividend, any dividend or dividends which he has failed to receive; and

• (b) any dividends payable under sub-paragraph (a) shall be paid before the money is applied to the payment of any such further dividend.

• (3) No action lies against the administrator for a dividend; but if he refuses to pay a dividend the court may, if it thinks fit, order him to pay it and also to pay, out of his own money—

• (a) interest on the dividend, at the rate for the time being specified in section 17 of the Judgments Act 1838, from the time when it was withheld; and

• (b) the costs of the proceedings in which the order to pay is made.

Division of unsold assets

2.71

The administrator may, with the permission of the creditors' committee, or if there is no creditors' committee, the creditors, divide in its existing form amongst the company’s creditors, according to its estimated value, any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold.

SECTION B: MACHINERY OF PROVING A DEBT

Proving a debt

2.72

• (1) A person claiming to be a creditor of the company and wishing to recover his debt in whole or in part must (subject to any order of the court to the contrary) submit his claim in writing to the administrator.

• (2) A creditor who claims is referred to as “proving” for his debt and a document by which he seeks to establish his claim is his “proof”.

• (3) Subject to the next paragraph, a proof must—

• (a) be made out by, or under the direction of, the creditor and signed by him or a person authorised in that behalf; and

• (b) state the following matters—

• (i) the creditor’s name and address;

• (ii) the total amount of his claim as at the date on which the company entered administration, less any payments that have been made to him after that date in respect of his claim and any adjustment by way of set-off in accordance with Rule 2.85;

• (iii) whether or not the claim includes outstanding uncapitalised interest;

• (iv) whether or not the claim includes value added tax;

• (v) whether the whole or any part of the debt falls within any, and if so, which categories of preferential debts under section 386;

• (vi) particulars of how and when the debt was incurred by the company;

• (vii) particulars of any security held, the date on which it was given and the value which the creditor puts on it;

• (viii) details of any reservation of title in respect of goods to which the debt refers; and

• (ix) the name, address and authority of the person signing the proof (if other than the creditor himself).

• (4) There shall be specified in the proof details of any documents by reference to which the debt can be substantiated; but (subject as follows) it is not essential that such document be attached to the proof or submitted with it.

• (5) The administrator may call for any document or other evidence to be produced to him, where he thinks it necessary for the purpose of substantiating the whole or any part of the claim made in the proof.

Claim established by affidavit

2.73

• (1) The administrator may, if he thinks it necessary, require a claim of debt to be verified by means of an affidavit in Form 2.29B.

• (2) An affidavit may be required notwithstanding that a proof of debt has already been lodged.

Costs of proving

2.74

Unless the court otherwise orders—

• (a) every creditor bears the cost of proving his own debt, including costs incurred in providing documents or evidence under Rule 2.72(5); and

• (b) costs incurred by the administrator in estimating the quantum of a debt under Rule 2.81 are payable out of the assets as an expense of the administration.

Administrator to allow inspection of proofs

2.75

The administrator shall, so long as proofs lodged with him are in his hands, allow them to be inspected, at all reasonable times on any business day, by any of the following persons—

• (a) any creditor who has submitted a proof of debt (unless his proof has been wholly rejected for purposes of dividend or otherwise);

• (b) any contributory of the company; and

• (c) any person acting on behalf of either of the above.

New administrator appointed

2.76

• (1) If a new administrator is appointed in place of another, the former administrator shall transmit to him all proofs which he has received, together with an itemised list of them.

• (2) The new administrator shall sign the list by way of receipt for the proofs, and return it to his predecessor.

Admission and rejection of proofs for dividend

2.77

• (1) A proof may be admitted for dividend either for the whole amount claimed by the creditor, or for part of that amount.

• (2) If the administrator rejects a proof in whole or in part, he shall prepare a written statement of his reasons for doing so, and send it as soon as reasonably practicable to the creditor.

Appeal against decision on proof

2.78

• (1) If a creditor is dissatisfied with the administrator’s decision with respect to his proof (including any decision on the question of preference), he may apply to the court for the decision to be reversed or varied. The application must be made within 21 days of his receiving the statement sent under Rule 2.77(2).

• (2) Any other creditor may, if dissatisfied with the administrator’s decision admitting or rejecting the whole or any part of a proof, make such an application within 21 days of becoming aware of the administrator’s decision.

• (3) Where application is made to the court under this Rule, the court shall fix a venue for the application to be heard, notice of which shall be sent by the applicant to the creditor who lodged the proof in question (if it is not himself) and the administrator.

• (4) The administrator shall, on receipt of the notice, file with the court the relevant proof, together (if appropriate) with a copy of the statement sent under Rule 2.77(2).

• (5) After the application has been heard and determined, the proof shall, unless it has been wholly disallowed, be returned by the court to the administrator.

• (6) The administrator is not personally liable for costs incurred by any person in respect of an application under this Rule unless the court otherwise orders.

Withdrawal or variation of proof

2.79

A creditor’s proof may at any time, by agreement between himself and the administrator, be withdrawn or varied as to the amount claimed.

Expunging of proof by the court

2.80

• (1) The court may expunge a proof or reduce the amount claimed—

• (a) on the administrator’s application, where he thinks that the proof has been improperly admitted, or ought to be reduced; or

• (b) on the application of a creditor, if the administrator declines to interfere in the matter.

• (2) Where application is made to the court under this Rule, the court shall fix a venue for the application to be heard, notice of which shall be sent by the applicant—

• (a) in the case of an application by the administrator, to the creditor who made the proof; and

• (b) in the case of an application by a creditor, to the administrator and to the creditor who made the proof (if not himself).

SECTION C: QUANTIFICATION OF CLAIMS

Estimate of quantum

2.81

• (1) The administrator shall estimate the value of any debt which, by reason of its being subject to any contingency or for any other reason, does not bear a certain value; and he may revise any estimate previously made, if he thinks fit by reference to any change of circumstances or to information becoming available to him. He shall inform the creditor as to his estimate and any revision of it.

• (2) Where the value of a debt is estimated under this Rule, the amount provable in the administration in the case of that debt is that of the estimate for the time being.

Negotiable instruments, etc

2.82

Unless the administrator allows, a proof in respect of money owed on a bill of exchange, promissory note, cheque or other negotiable instrument or security cannot be admitted unless there is produced the instrument or security itself or a copy of it, certified by the creditor or his authorised representative to be a true copy.

Secured creditors

2.83

• (1) If a secured creditor realises his security, he may prove for the balance of his debt, after deducting the amount realised.

• (2) If a secured creditor voluntarily surrenders his security for the general benefit of creditors, he may prove for his whole debt, as if it were unsecured.

Discounts

2.84

There shall in every case be deducted from the claim all trade and other discounts which would have been available to the company but for its administration except any discount for immediate, early or cash settlement.

Mutual credit and set-off

2.85

• (1) This Rule applies where the administrator, being authorised to make the distribution in question, has, pursuant to Rule 2.95 given notice that he proposes to make it.

• (2) In this Rule “mutual dealings” means mutual credits, mutual debts or other mutual dealings between the company and any creditor of the company proving or claiming to prove for a debt in the administration but does not include any of the following—

• (a) any debt arising out of an obligation incurred after the company entered administration;

• (b) any debt arising out of an obligation incurred at a time when the creditor had notice that—

• (i) an application for an administration order was pending; or

• (ii) any person had given notice of intention to appoint an administrator;

• (c) any debt arising out of an obligation where—

• (i) the administration was immediately preceded by a winding up; and

• (ii) at the time the obligation was incurred the creditor had notice that a meeting of creditors had been summoned under section 98 or a petition for the winding up of the company was pending;

• (d) any debt arising out of an obligation incurred during a winding up which immediately preceded the administration; or

• (e) any debt which has been acquired by a creditor by assignment or otherwise, pursuant to an agreement between the creditor and any other party where that agreement was entered into—

• (i) after the company entered administration;

• (ii) at a time when the creditor had notice that an application for an administration order was pending;

• (iii) at a time when the creditor had notice that any person had given notice of intention to appoint an administrator;

• (iv) where the administration was immediately preceded by a winding up, at a time when the creditor had notice that a meeting of creditors had been summoned under section 98 or that a winding up petition was pending; or

• (v) during a winding up which immediately preceded the administration.

• (3) An account shall be taken as at the date of the notice referred to in paragraph (1) of what is due from each party to the other in respect of the mutual dealings and the sums due from one party shall be set off against the sums due from the other.

• (4) A sum shall be regarded as being due to or from the company for the purposes of paragraph (3) whether—

• (a) it is payable at present or in the future;

• (b) the obligation by virtue of which it is payable is certain or contingent; or

• (c) its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion.

• (5) Rule 2.81 shall apply for the purposes of this Rule to any obligation to or from the company which, by reason of its being subject to any contingency or for any other reason, does not bear a certain value;

• (6) Rules 2.86 to 2.88 shall apply for the purposes of this Rule in relation to any sums due to the company which—

• (a) are payable in a currency other than sterling;

• (b) are of a periodical nature; or

• (c) bear interest.

• (7) Rule 2.105 shall apply for the purposes of this Rule to any sum due to or from the company which is payable in the future.

• (8) Only the balance (if any) of the account owed to the creditor is provable in the administration. Alternatively the balance (if any) owed to the company shall be paid to the administrator as part of the assets except where all or part of the balance results from a contingent or prospective debt owed by the creditor and in such a case the balance (or that part of it which results from the contingent or prospective debt) shall be paid if and when that debt becomes due and payable.

• (9) In this Rule “obligation” means an obligation however arising, whether by virtue of an agreement, rule of law or otherwise.

Debt in foreign currency

2.86

• (1) For the purpose of proving a debt incurred or payable in a currency other than sterling, the amount of the debt shall be converted into sterling at the official exchange rate prevailing on the date when the company entered administration or, if the administration was immediately preceded by a winding up, on the date that the company went into liquidation.

• (2) “The official exchange rate” is the middle exchange rate on the London Foreign Exchange Market at the close of business, as published for the date in question. In the absence of any such published rate, it is such rate as the court determines.

Payments of a periodical nature

2.87

• (1) In the case of rent and other payments of a periodical nature, the creditor may prove for any amounts due and unpaid up to the date when the company entered administration or, if the administration was immediately preceded by a winding up, up to the date that the company went into liquidation.

• (2) Where at that date any payment was accruing due, the creditor may prove for so much as would have fallen due at that date, if accruing from day to day.

Interest

2.88

• (1) Where a debt proved in the administration bears interest, that interest is provable as part of the debt except in so far as it is payable in respect of any period after the company entered administration or, if the administration was immediately preceded by a winding up, any period after the date that the company went into liquidation.

• (2) In the following circumstances the creditor’s claim may include interest on the debt for periods before the company entered administration, although not previously reserved or agreed.

• (3) If the debt is due by virtue of a written instrument, and payable at a certain time, interest may be claimed for the period from that time to the date when the company entered administration.

• (4) If the debt is due otherwise, interest may only be claimed if, before that date, a demand for payment of the debt was made in writing by or on behalf of the creditor, and notice given that interest would be payable from the date of the demand to the date of payment.

• (5) Interest under paragraph (4) may only be claimed for the period from the date of the demand to that of the company’s entering administration and for all the purposes of the Act and the Rules shall be chargeable at a rate not exceeding that mentioned in paragraph (6).

• (6) The rate of interest to be claimed under paragraphs (3) and (4) is the rate specified in section 17 of the Judgments Act 1838 on the date when the company entered administration.

• (7) ... Any surplus remaining after payment of the debts proved shall, before being applied for any purpose, be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the company entered administration.

• (8) All interest payable under paragraph (7) ranks equally whether or not the debts on which it is payable rank equally.

• (9) The rate of interest payable under paragraph (7) is whichever is the greater of the rate specified under paragraph (6) or the rate applicable to the debt apart from the administration.

Debt payable at future time

2.89

A creditor may prove for a debt of which payment was not yet due on the date when the company entered administration, or, if the administration was immediately preceded by a winding up, up to the date that the company went into liquidation subject to Rule 2.105 (adjustment of dividend where payment made before time).

Value of security

2.90

• (1) A secured creditor may, with the agreement of the administrator or the leave of the court, at any time alter the value which he has, in his proof of debt, put upon his security.

• (2) However, if a secured creditor—

• (a) being the applicant for an administration order or the appointor of the administrator, has in the application or the notice of appointment put a value on his security; or

• (b) has voted in respect of the unsecured balance of his debt,

he may re-value his security only with permission of the court.

Surrender for non-disclosure

2.91

• (1) If a secured creditor omits to disclose his security in his proof of debt, he shall surrender his security for the general benefit of creditors, unless the court, on application by him, relieves him from the effect of this Rule on the ground that the omission was inadvertent or the result of honest mistake.

• (2) If the court grants that relief, it may require or allow the creditor’s proof of debt to be amended, on such terms as may be just.

• (3) Nothing in this Rule or the following two Rules may affect the rights in rem of creditors or third parties protected under Article 5 of the EC Regulation (third parties' rights in rem).

Redemption by administrator

2.92

• (1) The administrator may at any time give notice to a creditor whose debt is secured that he proposes, at the expiration of 28 days from the date of the notice, to redeem the security at the value put upon it in the creditor’s proof.

• (2) The creditor then has 21 days (or such longer period as the administrator may allow) in which, if he so wishes, to exercise his right to revalue his security (with the permission of the court, where Rule 2.90(2) applies).

If the creditor re-values his security, the administrator may only redeem at the new value.

• (3) If the administrator redeems the security, the cost of transferring it is payable out of the assets.

• (4) A secured creditor may at any time, by a notice in writing, call on the administrator to elect whether he will or will not exercise his power to redeem the security at the value then placed on it; and the administrator then has 3 months in which to exercise the power or determine not to exercise it.

Test of security’s value

2.93

• (1) Subject as follows, the administrator, if he is dissatisfied with the value which a secured creditor puts on his security (whether in his proof or by way of re-valuation under Rule 2.90), may require any property comprised in the security to be offered for sale.

• (2) The terms of sale shall be such as may be agreed, or as the court may direct; and if the sale is by auction, the administrator on behalf of the company, and the creditor on his own behalf, may appear and bid.

Realisation of security by creditor

2.94

If a creditor who has valued his security subsequently realises it (whether or not at the instance of the administrator)—

• (a) the net amount realised shall be substituted for the value previously put by the creditor on the security; and

• (b) that amount shall be treated in all respects as an amended valuation made by him.

Notice of proposed distribution

2.95

• (1) Where an administrator is proposing to make a distribution to creditors he shall give 28 days' notice of that fact.

• (2) The notice given pursuant to paragraph (1) shall—

• (a) be sent to—

• (i) all creditors whose addresses are known to the administrator; and

• (ii) where a member State liquidator has been appointed in relation to the company, to the member State liquidator;

• (b) state whether the distribution is to preferential creditors or preferential creditors and unsecured creditors; and

• (c) where the administrator proposes to make a distribution to unsecured creditors, state the value of the prescribed part, except where the court has made an order under section 176A(5).

• (3) Subject to paragraph (5), the administrator shall not declare a dividend unless he has by public advertisement invited creditors to prove their debts.

• (4) A notice pursuant to paragraphs (1) or (3) shall—

• (a) state that it is the intention of the administrator to make a distribution to creditors within the period of 2 months from the last date for proving;

• (b) specify whether the proposed dividend is interim or final;

• (c) specify a date up to which proofs may be lodged being a date which—

• (i) is the same date for all creditors; and

• (ii) is not less than 21 days from that of the notice.

• (5) A notice pursuant to paragraph (1) where a dividend is to be declared for preferential creditors, need only be given to those creditors in whose case he has reason to believe that their debts are preferential and public advertisement of the intended dividend need only be given if the administrator thinks fit.

Admission or rejection of proofs

2.96

• (1) Unless he has already dealt with them, within 7 days of the last date for proving, the administrator shall—

• (a) admit or reject proofs submitted to him; or

• (b) make such provision in respect of them as he thinks fit.

• (2) The administrator is not obliged to deal with proofs lodged after the last date for proving, but he may do so, if he thinks fit.

• (3) In the declaration of a dividend no payment shall be made more than once by virtue of the same debt.

• (4) Subject to Rule 2.104, where—

• (a) a creditor has proved; and

• (b) a member State liquidator has proved in relation to the same debt,

payment shall only be made to the creditor.

Declaration of dividend

2.97

• (1) Subject to paragraph (2), within the 2 month period referred to in Rule 2.95(4)(a) the administrator shall proceed to declare the dividend to one or more classes of creditor of which he gave notice.

• (2) Except with the permission of the court, the administrator shall not declare a dividend so long as there is pending any application to the court to reverse or vary a decision of his on a proof, or to expunge a proof or to reduce the amount claimed.

Notice of declaration of a dividend

2.98

• (1) Where the administrator declares a dividend he shall give notice of that fact to all creditors who have proved their debts and, where a member State liquidator has been appointed in relation to the company, to the member State liquidator.

• (2) The notice shall include the following particulars relating to the administration—

• (a) amounts raised from the sale of assets, indicating (so far as practicable) amounts raised by the sale of particular assets;

• (b) payments made by the administrator when acting as such;

• (c) where the administrator proposed to make a distribution to unsecured creditors, the value of the prescribed part, except where the court has made an order under section 176A(5);

• (d) provision (if any) made for unsettled claims, and funds (if any) retained for particular purposes;

• (e) the total amount of dividend and the rate of dividend;

• (f) how he proposes to distribute the dividend; and

• (g) whether, and if so when, any further dividend is expected to be declared.

Payments of dividends and related matters

2.99

• (1) The dividend may be distributed simultaneously with the notice declaring it.

• (2) Payment of dividend may be made by post, or arrangements may be made with any creditor for it to be paid to him in another way, or held for his collection.

• (3) Where a dividend is paid on a bill of exchange or other negotiable instrument, the amount of the dividend shall be endorsed on the instrument, or on a certified copy of it, if required to be produced by the holder for that purpose.

Notice of no dividend, or no further dividend

2.100

If the administrator gives notice to creditors that he is unable to declare any dividend or (as the case may be) any further dividend, the notice shall contain a statement to the effect either—

• (a) that no funds have been realised; or

• (b) that the funds realised have already been distributed or used or allocated for defraying the expenses of administration.

Proof altered after payment of dividend

2.101

• (1) If after payment of dividend the amount claimed by a creditor in his proof is increased, the creditor is not entitled to disturb the distribution of the dividend; but he is entitled to be paid, out of any money for the time being available for the payment of any further dividend, any dividend or dividends which he has failed to receive.

• (2) Any dividend or dividends payable under paragraph (1) shall be paid before the money there referred to is applied to the payment of any such further dividend.

• (3) If, after a creditor’s proof has been admitted, the proof is withdrawn or expunged, or the amount is reduced, the creditor is liable to repay to the administrator any amount overpaid by way of dividend.

Secured creditors

2.102

• (1) The following applies where a creditor re-values his security at a time when a dividend has been declared.

• (2) If the revaluation results in a reduction of his unsecured claim ranking for dividend, the creditor shall forthwith repay to the administrator, for the credit of the administration, any amount received by him as dividend in excess of that to which he would be entitled having regard to the revaluation of the security.

• (3) If the revaluation results in an increase of his unsecured claim, the creditor is entitled to receive from the administrator, out of any money for the time being available for the payment of a further dividend, before any such further dividend is paid, any dividend or dividends which he has failed to receive, having regard to the revaluation of the security.

However, the creditor is not entitled to disturb any dividend declared (whether or not distributed) before the date of the revaluation.

Disqualification from dividend

2.103

If a creditor contravenes any provision of the Act or the Rules relating to the valuation of securities, the court may, on the application of the administrator, order that the creditor be wholly or partly disqualified from participation in any dividend.

Assignment of right to dividend

2.104

• (1) If a person entitled to a dividend gives notice to the administrator that he wishes the dividend to be paid to another person, or that he has assigned his entitlement to another person, the administrator shall pay the dividend to that other accordingly.

• (2) A notice given under this Rule must specify the name and address of the person to whom payment is to be made.

Debt payable at future time

2.105

• (1) Where a creditor has proved for a debt of which payment is not due at the date of the declaration of dividend, he is entitled to dividend equally with other creditors, but subject as follows.

• (2) For the purpose of dividend (and no other purpose) the amount of the creditor’s admitted proof (or, if a distribution has previously been made to him, the amount remaining outstanding in respect of his admitted proof) shall be reduced by applying the following formula—

$$X1.05n$where—a“X” is the value of the admitted proof; andb“n” is the period beginning with the relevant date and ending with the date on which the payment of the creditor’s debt would otherwise be due expressed in years and months in a decimalised form.$

• (3) In paragraph (2) “relevant date” means—

• (a) in the case of an administration which was not immediately preceded by a winding up, the date that the company entered administration;

• (b) in the case of an administration which was immediately preceded by a winding up, the date that the company went into liquidation.

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

CHAPTER 11 — THE ADMINISTRATOR

Fixing of remuneration

2.106

• (1) The administrator is entitled to receive remuneration for his services as such.

• (2) The remuneration shall be fixed either—

• (a) as a percentage of the value of the property with which he has to deal; or

• (b) by reference to the time properly given by the insolvency practitioner (as administrator) and his staff in attending to matters arising in the administration.

• (3) It is for the creditors' committee (if there is one) to determine whether the remuneration is to be fixed under paragraph (2)(a) or (b) and, if under paragraph (2)(a), to determine any percentage to be applied as there mentioned.

• (4) In arriving at that determination, the committee shall have regard to the following matters—

• (a) the complexity (or otherwise) of the case;

• (b) any respects in which, in connection with the company’s affairs, there falls on the administrator any responsibility of an exceptional kind or degree;

• (c) the effectiveness with which the administrator appears to be carrying out, or to have carried out, his duties as such; and

• (d) the value and nature of the property with which he has to deal.

• (5) If there is no creditors' committee, or the committee does not make the requisite determination, the administrator’s remuneration may be fixed (in accordance with paragraph (2)) by a resolution of a meeting of creditors; and paragraph (4) applies to them as it does to the creditors' committee.

• (5A) In a case where the administrator has made a statement under paragraph 52(1)(b), if there is no creditors' committee, or the committee does not make the requisite determination, the administrator’s remuneration may be fixed (in accordance with paragraph (2)) by the approval of—

• (a) each secured creditor of the company: or

• (b) if the administrator has made or intends to make a distribution to preferential creditors—

• (i) each secured creditor of the company; and

• (ii) preferential creditors whose debts amount to more than 50% of the preferential debts of the company, disregarding debts of any creditor who does not respond to an invitation to give or withhold approval;

and paragraph (4) applies to them as it does to the creditors' committee.

• (6) If not fixed as above, the administrator’s remuneration shall, on his application, be fixed by the court.

• (7) Where there are joint administrators, it is for them to agree between themselves as to how the remuneration payable should be apportioned. Any dispute arising between them may be referred—

• (a) to the court, for settlement by order; or

• (b) to the creditors' committee or a meeting of creditors, for settlement by resolution.

• (8) If the administrator is a solicitor and employs his own firm, or any partner in it, to act on behalf of the company, profit costs shall not be paid unless this is authorised by the creditors' committee, the creditors or the court.

• (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recourse to meeting of creditors

2.107

• (1) If the administrator’s remuneration has been fixed by the creditors' committee, and he considers the rate or amount to be insufficient, he may request that it be increased by resolution of the creditors.

• (2) In a case where the administrator has made a statement under paragraph 52(1)(b), if the administrator’s remuneration has been fixed by the creditors' committee, and he considers the rate or amount to be insufficient, he may request that it be increased by the approval of—

• (a) each secured creditor of the company: or

• (b) if the administrator has made or intends to make a distribution to preferential creditors—

• (i) each secured creditor of the company; and

• (ii) preferential creditors whose debts amount to more than 50% of the preferential debts of the company, disregarding debts of any creditor who does not respond to an invitation to give or withhold approval.

Recourse to the court

2.108

• (1) If the administrator considers that the remuneration fixed for him by the creditors' committee, or by resolution of the creditors, is insufficient, he may apply to the court for an order increasing its amount or rate.

• (1A) In a case where the administrator has made a statement under paragraph 52(1)(b), if the administrator considers that the remuneration fixed by the approval of the creditors in accordance with Rule 2.107(2) is insufficient, he may apply to the court for an order increasing its amount or rate.

• (2) The administrator shall give at least 14 days' notice of his application to the members of the creditors' committee; and the committee may nominate one or more members to appear, or be represented, and to be heard on the application.

• (3) If there is no creditors' committee, the administrator’s notice of his application shall be sent to such one or more of the company’s creditors as the court may direct, which creditors may nominate one or more of their number to appear or be represented.

• (4) The court may, if it appears to be a proper case, order the costs of the administrator’s application, including the costs of any member of the creditors' committee appearing or being represented on it, or any creditor so appearing or being represented, to be paid as an expense of the administration.

Creditors' claim that remuneration is excessive

2.109

• (1) Any creditor of the company may, with the concurrence of at least 25 per cent in value of the creditors (including himself), apply to the court for an order that the administrator’s remuneration be reduced, on the grounds that it is, in all the circumstances, excessive.

• (2) The court may, if it thinks that no sufficient cause is shown for a reduction, dismiss it without a hearing but it shall not do so without giving the applicant at least 7 days' notice, upon receipt of which the applicant may require the court to list the application for a without notice hearing. If the application is not dismissed, the court shall fix a venue for it to be heard, and give notice to the applicant accordingly.

• (3) The applicant shall, at least 14 days before the hearing, send to the administrator a notice stating the venue and accompanied by a copy of the application, and of any evidence which the applicant intends to adduce in support of it.

• (4) If the court considers the application to be well-founded, it shall make an order fixing the remuneration at a reduced amount or rate.

• (5) Unless the court orders otherwise, the costs of the application shall be paid by the applicant, and are not payable as an expense of the administration.

CHAPTER 12 — ENDING ADMINISTRATION

Final progress reports

2.110

• (1) In this Chapter reference to a progress report is to a report in the form specified in Rule 2.47.

• (2) The final progress report means a progress report which includes a summary of—

• (a) the administrator’s proposals;

• (b) any major amendments to, or deviations from, those proposals;

• (c) the steps taken during the administration; and

• (d) the outcome.

Notice of automatic end of administration

2.111

• (1) Where the appointment of an administrator has ceased to have effect, and the administrator is not required by any other Rule to give notice of that fact, he shall, as soon as reasonably practicable, and in any event within 5 business days of the date when the appointment has ceased, file a notice of automatic end of administration in Form 2.30B with the court. The notice shall be accompanied by a final progress report.

• (2) A copy of the notice and accompanying document shall be sent as soon as reasonably practicable to the registrar of companies, and to all persons who received a copy of the administrator’s proposals.

• (3) If the administrator makes default in complying with this Rule, he is liable to a fine and, for continued contravention, to a daily default fine.

Applications for extension of administration

2.112

• (1) An application to court for an extension of administration shall be accompanied by a progress report for the period since the last progress report (if any) or the date the company entered administration.

• (2) When the administrator requests an extension of the period of the administration by consent of creditors, his request shall be accompanied by a progress report for the period since the last progress report (if any) or the date the company entered administration.

• (3) The administrator shall use the notice of extension of period of administration in Form 2.31B in all circumstances where he is required to give such notice.

Notice of end of administration

2.113

• (1) Where an administrator who was appointed under paragraph 14 or 22 gives notice that the purpose of administration has been sufficiently achieved he shall use Form 2.32B. The notice shall be accompanied by a final progress report.

• (2) The administrator shall send a copy of the notice to the registrar of companies.

• (3) Two copies of the notice shall be filed with the court and shall contain a statement that a copy of the notice has been sent to the registrar of companies. The court shall endorse each copy with the date and time of filing. The appointment shall cease to have effect from that date and time.

• (4) The court shall give a sealed copy of the notice to the administrator.

• (5) The administrator shall, as soon as reasonably practicable, and within 5 business days, send a copy of the notice of end of administration (and the accompanying report) to every creditor of the company of whose claim and address he is aware, to all those persons who were notified of his appointment and to the company.

• (6) The administrator shall be taken to have complied with the requirements of paragraph 80(5) if, within 5 business days of filing the notice of end of administration with the court, he publishes once in the same newspaper as he published his notice of appointment, and in the Gazette, a notice undertaking to provide a copy of the notice of end of administration to any creditor of the company.

• (7) The notice must—

• (a) state the full name of the company;

• (b) state the name and address of the administrator;

• (c) state the date that the administration ended; and

• (d) specify an address to which the creditors can write for a copy of the notice of end of administration.

Application to court by administrator

2.114

• (1) An application to court under paragraph 79 for an order ending an administration shall have attached to it a progress report for the period since the last progress report (if any) or the date the company entered administration and a statement indicating what the administrator thinks should be the next steps for the company (if applicable).

• (2) Where the administrator applies to the court because the creditors' meeting has required him to, he shall also attach a statement to the application in which he shall indicate (giving reasons) whether or not he agrees with the creditors' requirement to him to make the application.

• (3) When the administrator applies other than at the request of a creditors' meeting, he shall—

• (a) give notice in writing to the applicant for the administration order under which he was appointed, or the person by whom he was appointed and the creditors of his intention to apply to court at least 7 days before the date that he intends to makes his application; and

• (b) attach to his application to court a statement that he has notified the creditors, and copies of any response from creditors to that notification.

• (4) Where the administrator applies to court under paragraph 79 in conjunction with a petition under section 124 for an order to wind up the company, he shall, in addition to the requirements of paragraph (3), notify the creditors whether he intends to seek appointment as liquidator.

Application to court by creditor

2.115

• (1) Where a creditor applies to the court to end the administration a copy of the application shall be served on the administrator and the person who either made the application for the administration order or made the appointment. Where the appointment was made under paragraph 14, a copy of the application shall be served on the holder of the floating charge by virtue of which the appointment was made.

• (2) Service shall be effected not less than 5 business days before the date fixed for the hearing. The administrator, applicant or appointor, or holder of the floating charge by virtue of which the appointment was made may appear at the hearing of the application.

• (3) Where the court makes an order to end the administration, the court shall send a copy of the order to the administrator.

Notification by administrator of court order

2.116

Where the court makes an order to end the administration, the administrator shall notify the registrar of companies in Form 2.33B, attaching a copy of the court order and a copy of his final progress report.

Moving from administration to creditors' voluntary liquidation

2.117

• (1) Where for the purposes of paragraph 83(3) the administrator sends a notice of moving from administration to creditors' voluntary liquidation to the registrar of companies, he shall do so in Form 2.34B and shall attach to that notice a final progress report which must include details of the assets to be dealt with in the liquidation.

• (2) As soon as reasonably practicable the administrator shall send a copy of the notice and attached document to all those who received notice of the administrator’s appointment.

• (3) For the purposes of paragraph 83(7) a person shall be nominated as liquidator in accordance with the provisions of Rule 2.33(2)(m) or Rule 2.45(2)(g) and his appointment takes effect by the creditors' approval, with or without modification, of the administrator’s proposals or revised proposals.

Moving from administration to dissolution

2.118

• (1) Where, for the purposes of paragraph 84(1), the administrator sends a notice of moving from administration to dissolution to the registrar of companies, he shall do so in Form 2.35B and shall attach to that notice a final progress report.

• (2) As soon as reasonably practicable a copy of the notice and the attached document shall be sent to all those who received notice of the administrator’s appointment.

• (3) Where a court makes an order under paragraph 84(7) it shall, where the applicant is not the administrator, give a copy of the order to the administrator.

• (4) The administrator shall use Form 2.36B to notify the registrar of companies in accordance with paragraph 84(8) of any order made by the court under paragraph 84(7).

CHAPTER 13 — REPLACING ADMINISTRATOR

Grounds for resignation

2.119

• (1) The administrator may give notice of his resignation on grounds of ill health or because—

• (a) he intends ceasing to be in practice as an insolvency practitioner; or

• (b) there is some conflict of interest, or change of personal circumstances, which precludes or makes impracticable the further discharge by him of the duties of administrator.

• (2) The administrator may, with the permission of the court, give notice of his resignation on grounds other than those specified in paragraph (1).

Notice of intention to resign

2.120

• (1) The administrator shall in all cases give at least 7 days' notice in Form 2.37B of his intention to resign, or to apply for the court’s permission to do so, to the following persons—

• (a) if there is a continuing administrator of the company, to him; and

• (b) if there is a creditors' committee to it; but

• (c) if there is no such administrator and no creditors' committee, to the company and its creditors.

• (2) Where the administrator gives notice under paragraph (1), he shall also give notice to a member State liquidator, if such a person has been appointed in relation to the company.

• (3) Where the administrator was appointed by the holder of a qualifying floating charge under paragraph 14, the notice of intention to resign shall also be sent to all holders of prior qualifying floating charges, and to the person who appointed the administrator. A copy of the notice shall also be sent to the holder of the floating charge by virtue of which the appointment was made.

• (4) Where the administrator was appointed by the company or the directors of the company under paragraph 22, a copy of the notice of intention to resign shall also be sent to the appointor and all holders of a qualifying floating charge.

Notice of resignation

2.121

• (1) The notice of resignation shall be in Form 2.38B.

• (2) Where the administrator was appointed under an administration order, the notice shall be filed with the court, and a copy sent to the registrar of companies. A copy of the notice of resignation shall be sent not more than 5 business days after it has been filed with the court to all those to whom notice of intention to resign was sent.

• (3) Where the administrator was appointed by the holder of a qualifying floating charge under paragraph 14, a copy of the notice of resignation shall be filed with the court and sent to the registrar of companies, and anyone else who received a copy of the notice of intention to resign, within 5 business days of the notice of resignation being sent to the holder of the floating charge by virtue of which the appointment was made.

• (4) Where the administrator was appointed by the company or the directors under paragraph 22, a copy of the notice of resignation shall be filed with the court and sent to the registrar of companies and to anyone else who received notice of intention to resign within 5 business days of the notice of resignation being sent to either the company or the directors that made the appointment.

Application to court to remove administrator from office

2.122

• (1) Any application under paragraph 88 shall state the grounds on which it is requested that the administrator should be removed from office.

• (2) Service of the notice of the application shall be effected on the administrator, the person who made the application for the administration order or the person who appointed the administrator, the creditors' committee (if any), the joint administrator (if any), and where there is neither a creditors' committee or joint administrator, to the company and all the creditors, including any floating charge holders not less than 5 business days before the date fixed for the application to be heard. Where the appointment was made under paragraph 14, the notice shall be served on the holder of the floating charge by virtue of which the appointment was made.

• (3) Where a court makes an order removing the administrator it shall give a copy of the order to the applicant who as soon as reasonably practicable shall send a copy to the administrator.

• (4) The applicant shall also within 5 business days of the order being made send a copy of the order to all those to whom notice of the application was sent.

• (5) A copy of the order shall also be sent to the registrar of companies in Form 2.39B within the same time period.

Notice of vacation of office when administrator ceases to be qualified to act

2.123

Where the administrator who has ceased to be qualified to act as an insolvency practitioner in relation to the company gives notice in accordance with paragraph 89, he shall also give notice to the registrar of companies in Form 2.39B.

Administrator deceased

2.124

• (1) Subject as follows, where the administrator has died, it is the duty of his personal representatives to give notice of the fact to the court, specifying the date of the death. This does not apply if notice has been given under either paragraph (2) or (3) of this Rule.

• (2) If the deceased administrator was a partner in a firm, notice may be given by a partner in the firm who is qualified to act as an insolvency practitioner, or is a member of any body recognised by the Secretary of State for the authorisation of insolvency practitioners.

• (3) Notice of the death may be given by any person producing to the court the relevant death certificate or a copy of it.

• (4) Where a person gives notice to the court under this Rule, he shall also give notice to the registrar of companies in Form 2.39B.

Application to replace

2.125

• (1) Where an application is made to court under paragraphs 91(1) or 95 to appoint a replacement administrator, the application shall be accompanied by a written statement in Form 2.2B by the person proposed to be the replacement administrator.

• (2) Where the original administrator was appointed under an administration order, a copy of the application shall be served, in addition to those persons listed in paragraph 12(2) and Rule 2.6(3), on the person who made the application for the administration order.

• (3) Where the application to court is made under paragraph 95, the application shall be accompanied by an affidavit setting out the applicant’s belief as to the matters set out in that paragraph.

• (4) Rule 2.8 shall apply to the service of an application under paragraphs 91(1) and 95 as it applies to service in accordance with Rule 2.6.

• (5) Rules 2.9, 2.10, 2.12 and 2.14(1) and (2) apply to an application under paragraphs 91(1) and 95.

Notification and advertisement of appointment of replacement administrator

2.126

Where a replacement administrator is appointed, the same provisions apply in respect of giving notice of, and advertising, the replacement appointment as in the case of the appointment (subject to Rule 2.128), and all statements, consents etc as are required shall also be required in the case of the appointment of a replacement. All forms and notices shall clearly identify that the appointment is of a replacement administrator.

Notification and advertisement of appointment of joint administrator

2.127

Where, after an initial appointment has been made, an additional person or persons are to be appointed as joint administrator the same Rules shall apply in respect of giving notice of and advertising the appointment as in the case of the initial appointment, subject to Rule 2.128.

2.128

The replacement or additional administrator shall send notice of the appointment in Form 2.40B to the registrar of companies.

Administrator’s duties on vacating office

2.129

• (1) Where the administrator ceases to be in office as such, in consequence of removal, resignation or cesser of qualification as an insolvency practitioner, he is under obligation as soon as reasonably practicable to deliver up to the person succeeding him as administrator the assets (after deduction of any expenses properly incurred and distributions made by him) and further to deliver up to that person—

• (a) the records of the administration, including correspondence, proofs and other related papers appertaining to the administration while it was within his responsibility; and

• (b) the company’s books, papers and other records.

• (2) If the administrator makes default in complying with this Rule, he is liable to a fine and, for continued contravention, to a daily default fine.

CHAPTER 14 — EC REGULATION: CONVERSION OF ADMINISTRATION INTO WINDING UP

Application for conversion into winding up

2.130

• (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 an administration into a winding up, an affidavit complying with Rule 2.131 must be prepared and sworn, and filed with the 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 administrator.

Contents of affidavit

2.131

• (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 administration 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

2.132

• (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.

CHAPTER 15 — EC REGULATION: MEMBER STATE LIQUIDATOR

Interpretation of creditor and notice to member State liquidator

2.133

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

• (2) For the purposes of the Rules referred to in paragraph (3) the member State liquidator is deemed to be a creditor.

• (3) The Rules referred to in paragraph (2) are Rules 2.34 (notice of creditors' meeting), 2.35(4) (creditors' meeting), 2.37 (requisitioning of creditors' meeting), 2.38 (entitlement to vote), 2.39 (admission and rejection of claims), 2.40 (secured creditors), 2.41 (holders of negotiable instruments), 2.42 (hire-purchase, conditional sale and chattel leasing agreements), 2.46 (notice to creditors), 2.47 (reports to creditors), 2.48 (correspondence instead of creditors' meeting), 2.50(2) (creditors' committee), 2.57(1)(b) and (c) (termination of membership of creditors' committee), 2.59(3) (vacancies in creditors' committee), 2.108(3) (administrator’s remuneration—recourse to court) and 2.109 (challenge to administrator’s remuneration).

• (4) Paragraphs (2) and (3) are without prejudice to the generality of the right to participate referred to in paragraph 3 of Article 32 of the EC Regulation (exercise of creditor’s rights).

• (5) Where the administrator 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 administrator shall give notice or provide copies, as the case may be, to the member State liquidator.

• (6) Paragraph (5) is without prejudice to the generality of the obligations imposed by Article 31 of the EC Regulation (duty to co-operate and communicate information).

PART 3 — ADMINISTRATIVE RECEIVERSHIP

CHAPTER 1 — APPOINTMENT OF ADMINISTRATIVE RECEIVER

Acceptance and confirmation of acceptance of appointment

3.1

• (1) Where two or more persons are appointed as joint receivers or managers of a company’s property under powers contained in an instrument, the acceptance of such an appointment shall be made by each of them in accordance with section 33 as if that person were a sole appointee, but the joint appointment takes effect only when all such persons have so accepted and is then deemed to have been made at the time at which the instrument of appointment was received by or on behalf of all such persons.

• (2) Subject to the next paragraph, where a person is appointed as the sole or joint receiver of a company’s property under powers contained in an instrument, the appointee shall, if he accepts the appointment, within 7 days confirm his acceptance in writing to the person appointing him.

• (3) Paragraph (2) does not apply where an appointment is accepted in writing.

• (4) Any acceptance or confirmation of acceptance of appointment as a receiver or manager of a company’s property, whether under the Act or the Rules, may be given by any person (including, in the case of a joint appointment, any joint appointee) duly authorised for that purpose on behalf of the receiver or manager.

• (5) In confirming acceptance the appointee or person authorised for that purpose shall state—

• (a) the time and date of receipt of the instrument of appointment, and

• (b) the time and date of acceptance.

Notice and advertisement of appointment

3.2

• (1) This Rule relates to the notice which a person is required by section 46(1) to send and publish, when appointed as administrative receiver.

• (2) The following matters shall be stated in the notices sent to the company and the creditors—

• (a) the registered name of the company, as at the date of the appointment, and its registered number;

• (b) any other name with which the company has been registered in the 12 months preceding that date;

• (c) any name under which the company has traded at any time in those 12 months, if substantially different from its then registered name;

• (d) the name and address of the administrative receiver, and the date of his appointment;

• (e) the name of the person by whom the appointment was made;

• (f) the date of the instrument conferring the power under which the appointment was made, and a brief description of the instrument;

• (g) a brief description of the assets of the company (if any) in respect of which the person appointed is not made the receiver.

• (3) The administrative receiver shall cause notice of his appointment to be advertised once in the Gazette, and once in such newspaper as he thinks most appropriate for ensuring that it comes to the notice of the company's creditors.

• (4) The advertisement shall state all the matters specified in subparagraphs (a) to (e) of paragraph (2) above.

CHAPTER 2 — STATEMENT OF AFFAIRS AND REPORT TO CREDITORS

Notice requiring statement of affairs

3.3

• (1) Where the administrative receiver determines to require a statement of the company's affairs to be made out and submitted to him in accordance with section 47, he shall send notice to each of the persons whom he considers should be made responsible under that section, requiring them to prepare and submit the statement.

• (2) The persons to whom the notice is sent are referred to in this Chapter as “the deponents”.

• (3) The notice shall inform each of the deponents—

• (a) of the names and addresses of all others (if any) to whom the same notice has been sent;

• (b) of the time within which the statement must be delivered;

• (c) of the effect of section 47(6) (penalty for non-compliance); and

• (d) of the application to him, and to each of the other deponents, of section 235 (duty to provide information, and to attend on the administrative receiver if required).

• (4) The administrative receiver shall, on request, furnish each deponent with the forms required for the preparation of the statement of affairs.

Verification and filing

3.4

• (1) The statement of affairs shall be in Form 3.2, shall contain all the particulars required by that form and shall be verified by affidavit by the deponents (using the same form).

• (2) The administrative receiver may require any of the persons mentioned in section 47(3) to submit an affidavit of concurrence, stating that he concurs in the statement of affairs.

• (3) An affidavit of concurrence may be qualified in respect of matters dealt with in the statement of affairs, where the maker of the affidavit is not in agreement with the deponents, or he considers the statement to be erroneous or misleading, or he is without the direct knowledge necessary for concurring with it.

• (4) The statement of affairs shall be delivered to the receiver by the deponent making the affidavit of verification (or by one of them, if more than one), together with a copy of the verified statement.

• (5) Every affidavit of concurrence shall be delivered by the person who makes it, together with a copy.

• (6) The administrative receiver shall retain the verified copy of the statement and the affidavits of concurrence (if any) as part of the records of the receivership.

Limited disclosure

3.5

• (1) Where the administrative receiver thinks that it would prejudice the conduct of the receivership for the whole or part of the statement of affairs to be disclosed, he may apply to the court for an order of limited disclosure in respect of the statement or a specified part of it.

• (2) The court may on the application order that the statement, or, as the case may be, the specified part of it, be not open to inspection otherwise than with leave of the court.

• (3) The court's order may include directions as to the delivery of documents to the registrar of companies and the disclosure of relevant information to other persons.

Release from duty to submit statement of affairs; extension of time

3.6

• (1) The power of the administrative receiver under section 47(5) to give a release from the obligation imposed by that section, or to grant an extension of time, may be exercised at the receiver's own discretion, or at the request of any deponent.

• (2) A deponent may, if he requests a release or extension of time and it is refused by the receiver, apply to the court for it.

• (3) The court may, if it thinks that no sufficient cause is shown for the application, dismiss it; but it shall not do so unless the applicant has had an opportunity to attend the court for an ex parte hearing, of which he has been given at least 7 days' notice.

If the application is not dismissed under this paragraph, the court shall fix a venue for it to be heard, and give notice to the deponent accordingly.

• (4) The deponent shall, at least 14 days before the hearing, send to the receiver a notice stating the venue and accompanied by a copy of the application, and of any evidence which he (the deponent) intends to adduce in support of it.

• (5) The receiver may appear and be heard on the application; and, whether or not he appears he may file a written report of any matters which he considers ought to be drawn to the court's attention.

If such a report is filed, a copy of it shall be sent by the receiver to the deponent, not later than 5 days before the hearing.

• (6) Sealed copies of any order made on the application shall be sent by the court to the deponent and the receiver.

• (7) On any application under this Rule the applicant's costs shall be paid in any event by him and, unless the court otherwise orders, no allowance towards them shall be made out of the assets under the administrative receiver's control.

Expenses of statement of affairs

3.7

• (1) A deponent making the statement of affairs and affidavit shall be allowed, and paid by the administrative receiver out of his receipts, any expenses incurred by the deponent in so doing which the receiver thinks reasonable.

• (2) Any decision by the receiver under this Rule is subject to appeal to the court.

• (3) Nothing in this Rule relieves a deponent from any obligation with respect to the preparation, verification and submission of the statement of affairs, or to the provision of information to the receiver.

Report to creditors

3.8

• (1) If under section 48(2) the administrative receiver determines not to send a copy of his report to creditors, but to publish notice under paragraph (b) of that subsection, the notice shall be published in the newspaper in which the receiver's appointment was advertised.

• (2) If he proposes to apply to the court to dispense with the holding of the meeting of unsecured creditors (otherwise required by section 48(2)), he shall in his report to creditors or (as the case may be) in the notice published as above, state the venue fixed by the court for the hearing of the application.

• (3) Subject to any order of the court under Rule 3.5, the copy of the receiver's report which under section 48(1) is to be sent to the registrar of companies shall have attached to it a copy of any statement of affairs under section 47, and copies of any affidavits of concurrence.

• (4) If the statement of affairs or affidavits of concurrence, if any, have not been submitted to the receiver by the time he sends a copy of his report to the registrar of companies, he shall send a copy of the statement and any affidavits of concurrence as soon thereafter as he receives them.

• (5) The receiver’s report under section 48(1) shall state, to the best of his knowledge and belief—

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

• (b) an estimate of the value of the company’s net property.

• (6) 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.

• (7) The report shall also state whether, and if so why, the receiver proposes to make an application to court under section 176A(5).

CHAPTER 3 — CREDITORS' MEETING

Procedure for summoning meeting under s.48(2)

3.9

• (1) In fixing the venue for a meeting of creditors summoned under section 48(2), the administrative receiver shall have regard to the convenience of the persons who are invited to attend.

• (2) The meeting shall be summoned for commencement between 10.00 and 16.00 hours on a business day, unless the court otherwise directs.

• (3) At least 14 days' notice of the venue shall be given to all creditors of the company who are identified in the statement of affairs, or are known to the receiver and had claims against the company at the date of his appointment.

• (4) With the notice summoning the meeting there shall be sent out forms of proxy.

• (5) The notice shall include a statement to the effect that creditors whose claims are wholly secured are not entitled to attend or be represented at the meeting.

• (6) Notice of the venue shall also be published in the newspaper in which the receiver's appointment was advertised.

• (7) The notice to creditors and the newspaper advertisement shall contain a statement of the effect of Rule 3.11(1) below (voting rights).

The chairman at the meeting

3.10

• (1) The chairman at the creditors' meeting shall be the receiver, or a person nominated by him in writing to act in his place.

• (2) A person so nominated must be either—

• (a) one who is qualified to act as an insolvency practitioner in relation to the company, or

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

Voting rights

3.11

• (1) Subject as follows, at the creditors' meeting a person is entitled to vote only if—

• (a) he has given to the receiver, not later than 12.00 hours on the business day before the day fixed for the meeting, details in writing of the debt that he claims to be due to him from the company, and the claim has been duly admitted under the following provisions of this Rule, and

• (b) there has been lodged with the administrative receiver any proxy which the creditor intends to be used on his behalf.

• (2) The chairman of the meeting may allow a creditor to vote, notwithstanding that he has failed to comply with paragraph (1)(a), if satisfied that the failure was due to circumstances beyond the creditor's control.

• (3) The receiver or (if other) the chairman of the meeting may call for any document or other evidence to be produced to him where he thinks it necessary for the purpose of substantiating the whole or any part of the claim.

• (4) Votes are calculated according to the amount of a creditor's debt as at the date of the appointment of the receiver, after deducting any amounts paid in respect of that debt after that date.

• (5) A creditor shall not vote in respect of a debt for an unliquidated amount, or any debt whose value is not ascertained, except where the chairman agrees to put upon the debt an estimated minimum value for the purpose of entitlement to vote and admits the claim for that purpose.

• (6) A secured creditor is entitled to vote only in respect of the balance (if any) of his debt after deducting the value of his security as estimated by him.

• (7) A creditor shall not vote in respect of a debt on, or secured by, a current bill of exchange or promissory note, unless he is willing—

• (a) 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

• (b) to estimate the value of the security and, for the purpose of his entitlement to vote, to deduct it from his claim.

Admission and rejection of claim

3.12

• (1) At the creditors' meeting the chairman has power to admit or reject a creditor's claim for the purpose of his entitlement to vote; and the power is exercisable with respect to the whole or any part of the claim.

• (2) The chairman's decision under this Rule, or in respect of any matter arising under Rule 3.11, is subject to appeal to the court by any creditor.

• (3) If the chairman is in doubt whether a claim should be admitted or rejected, he shall mark it as objected to and allow the creditor to vote, subject to his vote being subsequently declared invalid if the objection to the claim is sustained.

• (4) If on an appeal the chairman's decision is reversed or varied, or a creditor's vote is declared invalid, the court may order that another meeting be summoned, or make such other order as it thinks just.