Legalize / United Kingdom / Statutory-Instrument

The Insolvency Rules 1986

Type Statutory-Instrument

Publication 1986-11-10

Last updated 2008-03-06

State In force

Department Westlaw

Source legislation.gov.uk

PDF Download

articles Not indexed

These Rules set out the detailed procedure for the conduct of all company and individual insolvency proceedings in England and Wales under the Insolvency Act 1986 and otherwise give effect to that Act. The insolvency proceedings concerned are—company voluntary arrangements (Part 1 of the Rules),administration (Part 2),administrative receivership (Part 3),companies winding up (Part 4),individual voluntary arrangements (Part 5), andbankruptcy (Part 6).

Reform history JSON API

(2) The notice shall be signed by the liquidator and filed in court, with a copy. The court shall secure that both the notice and the copy are sealed and endorsed with the date of filing.

(3) The copy notice, so sealed and endorsed, shall be returned by the court to the liquidator as follows—

(a) if the notice has been delivered at the offices of the court by the liquidator in person, it shall be handed to him,

(b) if it has been delivered by some person acting on the liquidator's behalf, it shall be handed to that person, for immediate transmission to the liquidator, and

The court shall cause to be endorsed on the original notice, or otherwise recorded on the file, the manner in which the copy notice was returned to the liquidator.

(4) For the purposes of section 178, the date of the prescribed notice is that which is endorsed on it, and on the copy, in accordance with this Rule.

Communication of disclaimer to persons interested

4.188

(1) Within 7 days after the day on which the copy of the notice of disclaimer is returned to him under Rule 4.187, the liquidator shall send or give copies of the notice (showing the date endorsed as required by that Rule) to the persons mentioned in paragraphs (2) to (4) below.

(2) Where the property disclaimed is of a leasehold nature, he shall send or give a copy to every person who (to his knowledge) claims under the company as underlessee or mortgagee.

(3) He shall in any case send or give a copy of the notice to every person who (to his knowledge)—

(a) claims an interest in the disclaimed property, or

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

(4) If the disclaimer is of an unprofitable contract, he shall send or give copies of the notice to all such persons as, to his knowledge, are parties to the contract or have interests under it.

(5) If subsequently it comes to the liquidator's knowledge, in the case of any person, that he has such an interest in the disclaimed property as would have entitled him to receive a copy of the notice of disclaimer in pursuance of paragraphs (2) to (4), the liquidator shall then forthwith send or give to that person a copy of the notice.

But compliance with this paragraph is not required if—

(a) the liquidator is satisfied that the person has already been made aware of the disclaimer and its date, or

(b) the court, on the liquidator's application, orders that compliance is not required in that particular case.

Additional notices

4.189

The liquidator disclaiming property may, without prejudice to his obligations under sections 178 to 180 and Rules 4.187 and 4.188, at any time give notice of the disclaimer to any persons who in his opinion ought, in the public interest or otherwise, to be informed of it.

Duty to keep court informed

4.190

The liquidator shall notify the court from time to time as to the persons to whom he has sent or given copies of the notice of disclaimer under the two preceding Rules, giving their names and addresses, and the nature of their respective interests.

Application by interested party under s.178(5)

4.191

Where, in the case of any property, application is made to the liquidator by an interested party under section 178(5) (request for decision whether the property is to be disclaimed or not), the application—

(a) shall be delivered to the liquidator personally or by registered post, and

(b) shall be made in the form known as “notice to elect”, or a substantially similar form.

Interest in property to be declared on request

4.192

(1) If, in the case of property which the liquidator has the right to disclaim, it appears to him that there is some person who claims, or may claim, to have an interest in the property, he may give notice to that person calling on him to declare within 14 days whether he claims any such interest and, if so, the nature and extent of it.

(2) Failing compliance with the notice, the liquidator is entitled to assume that the person concerned has no such interest in the property as will prevent or impede its disclaimer.

Disclaimer presumed valid and effective

4.193

Any disclaimer of property by the liquidator is presumed valid and effective, unless it is proved that he has been in breach of his duty with respect to the giving of notice of disclaimer, or otherwise under sections 178 to 180, or under this Chapter of the Rules.

Application for exercise of court's powers under s. 181

4.194

(1) This Rule applies with respect to an application by any person under section 181 for an order of the court to vest or deliver disclaimed property.

(2) The application must be made within 3 months of the applicant becoming aware of the disclaimer, or of his receiving a copy of the liquidator's notice of disclaimer sent under Rule 4.188, whichever is the earlier.

(3) The applicant shall with his application file in court an affidavit—

(a) stating whether he applies under paragraph (a) of section 181(2) (claim of interest in the property) or under paragraph (b) (liability not discharged);

(b) specifying the date on which he received a copy of the liquidator's notice of disclaimer, or otherwise became aware of the disclaimer; and

(4) The court shall fix a venue for the hearing of the application; and the applicant shall, not later than 7 days before the date fixed, give to the liquidator notice of the venue, accompanied by copies of the application and the affidavit under paragraph (3).

(5) On the hearing of the application, the court may give directions as to other persons (if any) who should be sent or given notice of the application and the grounds on which it is made.

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

(7) In a case where the property disclaimed is of a leasehold nature, and section 179 applies to suspend the effect of the disclaimer, there shall be included in the court's order a direction giving effect to the disclaimer.

This paragraph does not apply if, at the time when the order is issued, other applications under section 181 are pending in respect of the same property.

CHAPTER 16 — SETTLEMENT OF LIST OF CONTRIBUTORIES (NO CVL APPLICATION)

Preliminary

4.195

The duties of the court with regard to the settling of the list of contributories are, by virtue of the Rules, delegated to the liquidator.

Duty of liquidator to settle list

4.196

(1) Subject as follows, the liquidator shall, as soon as may be after his appointment, exercise the court's power to settle a list of the company's contributories for the purposes of section 148 and, with the court's approval, rectify the register of members.

(2) The liquidator's duties under this Rule are performed by him as an officer of the court subject to the court's control.

Form of list

4.197

(1) The list shall identify—

(a) the several classes of the company's shares (if more than one), and

(b) the several classes of contributories, distinguishing between those who are contributories in their own right and those who are so as representatives of, or liable for the debts of, others.

(2) In the case of each contributory there shall in the list be stated—

(a) his address,

(b) the number and class of shares, or the extent of any other interest to be attributed to him, and

(c) if the shares are not fully paid up, the amounts which have been called up and paid in respect of them (and the equivalent, if any, where his interest is other than shares).

Procedure for settling list

4.198

(1) Having settled the list, the liquidator shall forthwith give notice, to every person included in the list, that he has done so.

(2) The notice given to each person shall state—

(a) in what character, and for what number of shares or what interest, he is included in the list,

(b) what amounts have been called up and paid up in respect of the shares or interest, and

(c) that in relation to any shares or interest not fully paid up, his inclusion in the list may result in the unpaid capital being called.

(3) The notice shall inform any person to whom it is given that, if he objects to any entry in, or omission from, the list, he should so inform the liquidator in writing within 21 days from the date of the notice.

(4) On receipt of any such objection, the liquidator shall within 14 days give notice to the objector either—

(a) that he has amended the list (specifying the amendment), or

(b) that he considers the objection to be not well-founded and declines to amend the list.

The notice shall in either case inform the objector of the effect of Rule 4.199.

Application to court for variation of the list

4.199

(1) If a person objects to any entry in, or exclusion from, the list of contributories as settled by the liquidator and, notwithstanding notice by the liquidator declining to amend the list, maintains his objection, he may apply to the court for an order removing the entry to which he objects or (as the case may be) otherwise amending the list.

(2) The application must be made within 21 days of the service on the applicant of the liquidator's notice under Rule 4.198(4).

Variation of, or addition to, the list

4.200

The liquidator may from time to time vary or add to the list of contributories as previously settled by him, but subject in all respects to the preceding Rules in this Chapter.

Costs not to fall on official receiver

4.201

The official receiver is not personally liable for any costs incurred by a person in respect of an application to set aside or vary his act or decision in settling the list of contributories, or varying or adding to the list; and the liquidator (if other than the official receiver) is not so liable unless the court makes an order to that effect.

CHAPTER 17 — CALLS (NO CVL APPLICATION)

Calls by liquidator

4.202

Subject as follows, the powers conferred by the Act with respect to the making of calls on contributories are exercisable by the liquidator as an officer of the court subject to the court's control.

Control by liquidation committee

4.203

(1) Where the liquidator proposes to make a call, and there is a liquidation committee, he may summon a meeting of the committee for the purpose of obtaining its sanction.

(2) At least 7 days' notice of the meeting shall be given by the liquidator to each member of the committee.

(3) The notice shall contain a statement of the proposed amount of the call, and the purpose for which it is intended to be made.

Application to court for leave to make a call

4.204

(1) For the purpose of obtaining the leave of the court for the making of a call on any contributories of the company, the liquidator shall apply ex parte, supporting his application by affidavit.

(2) There shall in the application be stated the amount of the proposed call, and the contributories on whom it is to be made.

(3) The court may direct that notice of the order be given to the contributories concerned, or to other contributories, or may direct that the notice be publicly advertised.

Making and enforcement of the call

4.205

(1) Notice of the call shall be given to each of the contributories concerned, and shall specify—

(a) the amount or balance due from him in respect of it, and

(b) whether the call is made with the sanction of the court or the liquidation committee.

(2) Payment of the amount due from any contributory may be enforced by order of the court.

CHAPTER 18 — SPECIAL MANAGER

Appointment and remuneration

4.206

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

The report shall include the applicant's estimate of the value of the assets in respect of which the special manager is to be appointed.

(2) This Chapter applies also with respect to an application by the provisional liquidator, where one has been appointed, and references to the liquidator are to be read accordingly as including the provisional liquidator. (NO CVL APPLICATION)

(3) The court's order appointing the special manager shall specify the duration of his appointment, which may be for a period of time, or until the occurrence of a specified event. Alternatively, the order may specify that the duration of the appointment is to be subject to a further order of the court.

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

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

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

Security

4.207

(1) The appointment of the special manager does not take effect until the person appointed has given (or, being allowed by the court to do so, undertaken to give) security to the person who applies for him to be appointed.

(2) It is not necessary that security shall be given for each separate company liquidation; but it may be given either specially for a particular liquidation, or generally for any liquidation in relation to which the special manager may be employed as such.

(3) The amount of the security shall be not less than the value of the assets in respect of which he is appointed, as estimated by the applicant in his report under Rule 4.206.

(4) When the special manager has given security to the person applying for his appointment, that person shall file in court a certificate as to the adequacy of the security.

(5) The cost of providing the security shall be paid in the first instance by the special manager; but—

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

(b) where a winding-up order is made, he is entitled to be reimbursed out of the assets in the prescribed order of priority.

(NO CVL APPLICATION)

(6-CVL) The cost of providing the security shall be paid in the first instance by the special manager; but he is entitled to be reimbursed out of the assets, in the prescribed order of priority.

Failure to give or keep up security

4.208

(1) If the special manager fails to give the required security within the time stated for that purpose by the order appointing him, or any extension of that time that may be allowed, the liquidator shall report the failure to the court, which may thereupon discharge the order appointing the special manager.

(2) If the special manager fails to keep up his security, the liquidator shall report his failure to the court, which may thereupon remove the special manager, and make such order as it thinks fit as to costs.

(3) If an order is made under this Rule removing the special manager, or discharging the order appointing him, the court shall give directions as to whether any, and if so what, steps should be taken for the appointment of another special manager in his place.

Accounting

4.209

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

(2) The accounts shall be in respect of 3-month periods for the duration of the special manager's appointment (or for a lesser period, if his appointment terminates less than 3 months from its date, or from the date to which the last accounts were made up).

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

Termination of appointment

4.210

(1) The special manager's appointment terminates if the winding-up petition is dismissed or if, a provisional liquidator having been appointed, the latter is discharged without a winding-up order having been made. (NO CVL APPLICATION)

(2) If the liquidator is of opinion that the employment of the special manager is no longer necessary or profitable for the company, he shall apply to the court for directions, and the court may order the special manager's appointment to be terminated.

(3) The liquidator shall make the same application if a resolution of the creditors is passed, requesting that the appointment be terminated.

CHAPTER 19 — PUBLIC EXAMINATION OF COMPANY OFFICERS AND OTHERS

Order for public examination

4.211

(1) If the official receiver applies to the court under section 133 for the public examination of any person, a copy of the court's order shall, forthwith after its making, be served on that person.

(2) Where the application relates to a person falling within section 133(1)(c) (promoters, past managers, etc.), it shall be accompanied by a report by the official receiver indicating—

(a) the grounds on which the person is supposed to fall within that paragraph, and

(b) whether, in the official receiver's opinion, it is likely that service of the order on the person can be effected by post at a known address.

(3) If in his report the official receiver gives it as his opinion that, in a case to which paragraph (2) applies, there is no reasonable certainty that service by post will be effective, the court may direct that the order be served by some means other than, or in addition to, post.

(4) In a case to which paragraphs (2) and (3) apply, the court shall rescind the order if satisfied by the person to whom it is directed that he does not fall within section 133(1)(c).

Notice of hearing

4.212

(1) The court's order shall appoint a venue for the examination of the person to whom it is directed (“the examinee”), and direct his attendance thereat.

(2) The official receiver shall give at least 14 days' notice of the hearing—

(a) if a liquidator has been nominated or appointed, to him;

(b) if a special manager has been appointed, to him; and

(c) subject to any contrary direction of the court, to every creditor and contributory of the company who is known to the official receiver or is identified in the company's statement of affairs.

(3) The official receiver may, if he thinks fit, cause notice of the order to be given, by advertisement in one or more newspapers, at least 14 days before the date fixed for the hearing; but, unless the court otherwise directs, there shall be no such advertisement before at least 7 days have elapsed since the examinee was served with the order.

Order on request by creditors or contributories

4.213

(1) A request to the official receiver by creditors or contributories under section 133(2) shall be made in writing and be accompanied by—

(a) a list of the creditors concurring with the request and the amounts of their respective claims in the liquidation or (as the case may be) of the contributories so concurring, with their respective values, and

(b) from each creditor or contributory concurring, written confirmation of his concurrence.

This paragraph does not apply if the requisitioning creditor's debt or, as the case may be, requisitioning contributory's shareholding is alone sufficient, without the concurrence of others.

(2) The request must specify the name of the proposed examinee, the relationship which he has, or has had, to the company and the reasons why his examination is requested.

(3) Before an application to the court is made on the request, the requisitionists shall deposit with the official receiver such sum as the latter may determine to be appropriate by way of security for the expenses of the hearing of a public examination, if ordered.

(4) Subject as follows, the official receiver shall, within 28 days of receiving the request, make the application to the court required by section 133(2).

(5) If the official receiver is of opinion that the request is an unreasonable one in the circumstances, he may apply to the court for an order relieving him from the obligation to make the application otherwise required by that subsection.

(6) If the court so orders, and the application for the order was made ex parte, notice of the order shall be given forthwith by the official receiver to the requisitionists. If the application for an order is dismissed, the official receiver's application under section 133(2) shall be made forthwith on conclusion of the hearing of the application first mentioned.

Witness unfit for examination

4.214

(1) Where the examinee is a person who lacks capacity within the meaning of the Mental Capacity Act 2005 (c.9) or is suffering from any ... physical affliction or disability rendering him unfit to undergo or attend for public examination, the court may, on application in that behalf, either stay the order for his public examination or direct that it shall be conducted in such manner and at such place as it thinks fit.

(2) Application under this Rule shall be made—

(a) by a person who has been appointed by a court in the United Kingdom or elsewhere to manage the affairs of, or to represent, the examinee, or

(b) by a relative or friend of the examinee whom the court considers to be a proper person to make the application, or

(3) Where the application is made by a person other than the official receiver, then—

(a) it shall, unless the examinee is a person who lacks capacity within the meaning of the Mental Capacity Act 2005, be supported by the affidavit of a registered medical practitioner as to the examinee's mental and physical condition;

(b) at least 7 days' notice of the application shall be given to the official receiver and the liquidator (if other than the official receiver); and

(c) before any order is made on the application, the applicant shall deposit with the official receiver such sum as the latter certifies to be necessary for the additional expenses of any examination that may be ordered on the application.

An order made on the application may provide that the expenses of the examination are to be payable, as to a specified proportion, out of the deposit under sub-paragraph (c), instead of out of the assets.

(4) Where the application is made by the official receiver it may be made ex parte, and may be supported by evidence in the form of a report by the official receiver to the court.

Procedure at hearing

4.215

(1) The examinee shall at the hearing be examined on oath; and he shall answer all such questions as the court may put, or allow to be put, to him.

(2) Any of the persons allowed by section 133(4) to question the examinee may, with the approval of the court (made known either at the hearing or in advance of it), appear by solicitor or counsel; or he may in writing authorise another person to question the examinee on his behalf.

(3) The examinee may at his own expense employ a solicitor with or without counsel, who may put to him such questions as the court may allow for the purpose of enabling him to explain or qualify any answers given by him, and may make representations on his behalf.

(4) There shall be made in writing such record of the examination as the court thinks proper. The record shall be read over either to or by the examinee, signed by him, and verified by affidavit at a venue fixed by the court.

(5) The written record may, in any proceedings (whether under the Act or otherwise) be used as evidence against the examinee of any statement made by him in the course of his public examination.

(6) If criminal proceedings have been instituted against the examinee, and the court is of opinion that the continuance of the hearing would be calculated to prejudice a fair trial of those proceedings, the hearing may be adjourned.

Adjournment

4.216

(1) The public examination may be adjourned by the court from time to time, either to a fixed date or generally.

(2) Where the examination has been adjourned generally, the court may at any time on the application of the official receiver or of the examinee—

(a) fix a venue for the resumption of the examination, and

(b) give directions as to the manner in which, and the time within which, notice of the resumed public examination is to be given to persons entitled to take part in it.

(3) Where application under paragraph (2) is made by the examinee, the court may grant it on terms that the expenses of giving the notices required by that paragraph shall be paid by him and that, before a venue for the resumed public examination is fixed, he shall deposit with the official receiver such sum as the latter considers necessary to cover those expenses.

Expenses of examination

4.217

(1) Where a public examination of the examinee has been ordered by the court on a creditors' or contributories' requisition under Rule 4.213, the court may order that the expenses of the examination are to be paid, as to be specified proportion, out of the deposit under Rule 4.213(3), instead of out of the assets.

(2) In no case do the costs and expenses of a public examination fall on the official receiver personally.

CHAPTER 20 — ORDER OF PAYMENT OF COSTS, ETC., OUT OF ASSETS

General rule as to priority

4.218

(1) The expenses of the liquidation are payable out of the assets in the following order of priority—

(a) expenses or costs which—

(i) are properly chargeable or incurred by the official receiver or the liquidator in preserving, realising or getting in any of the assets of the company or otherwise relating to the conduct of any legal proceedings which he has power to bring or defend whether in his own name or the name of the company;

(ii) relate to the employment of a shorthand writer, if appointed by an order of the court made at the instance of the official receiver in connection with an examination; or

(iii) are incurred in holding an examination under Rule 4.214 (examinee unfit) where the application for it was made by the official receiver:

(b) any other expenses incurred or disbursements made by the official receiver or under his authority, including those incurred or made in carrying on the business of the company;

(c) the fees payable under any order made under section 414 or section 415A, including those payable to the official receiver (other than the fee referred to in sub-paragraph (d)(i) below), and any remuneration payable to him under general regulations;

(i) the fee payable under any order made under section 414 for the performance by the official receiver of his general duties as official receiver;

(ii) any repayable deposit lodged under any such order as security for the fee mentioned in sub-paragraph (i);

(e) the cost of any security provided by a provisional liquidator, liquidator or special manager in accordance with the Act or the Rules;

(f) the remuneration of the provisional liquidator (if any);

(g) any deposit lodged on an application for the appointment of a provisional liquidator;

(h) the costs of the petitioner, and of any person appearing on the petition whose costs are allowed by the court;

(j) the remuneration of the special manager (if any);

(k) any amount payable to a person employed or authorised, under Chapter 6 of this Part of the Rules, to assist in the preparation of a statement of affairs or of accounts;

(l) any allowance made, by order of the court, towards costs on an application for release from the obligation to submit a statement of affairs, or for an extension of time for submitting such a statement;

(la) the costs of employing a shorthand writer in any case other than one appointed by an order of the court at the instance of the official receiver in connection with an examination;

(m) any necessary disbursements by the liquidator in the course of his administration (including any expenses incurred by members of the liquidation committee or their representatives and allowed by the liquidator under Rule 4.169, but not including any payment of corporation tax in circumstances referred to in sub-paragraph (p) below);

(n) the remuneration or emoluments of any person who has been employed by the liquidator to perform any services for the company, as required or authorised by or under the Act or the Rules;

(o) the remuneration of the liquidator, up to any amount not exceeding that which is payable under Schedule 6;

(p) the amount of any corporation tax on chargeable gains accruing on the realisation of any asset of the company (without regard to whether the realisation is effected by the liquidator, a secured creditor, or a receiver or manager appointed to deal with a security);

(q) the balance, after payment of any sums due under sub-paragraph (o) above, of any remuneration due to the liquidator;

(r) any other expenses properly chargeable by the liquidator in carrying out his functions in the liquidation.

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

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

Winding up commencing as voluntary

4.219

In a winding up by the court which follows immediately on a voluntary winding up (whether members' voluntary or creditors' voluntry), such remuneration of the voluntary liquidator and costs and expenses of the voluntary liquidation as the court may allow are to rank in priority with the expenses specified in Rule 4.218(1)(a).

Saving for powers of the court

4.220

(1) In a winding up by the court, the priorities laid down by Rules 4.218 and 4.219 are subject to the power of the court to make orders under section 156, where the assets are insufficient to satisfy the liabilities.

(2) Nothing in those Rules applies to or affects the power of any court, in proceedings by or against the company, to order costs to be paid by the company, or the liquidator; nor do they affect the rights of any person to whom such costs are ordered to be paid.

CHAPTER 21 — MISCELLANEOUS RULES

SECTION A: RETURN OF CAPITAL (NO CVL APPLICATION)

Application to court for order authorising return

4.221

(1) This Rule applies where the liquidator intends to apply to the court for an order authorising a return of capital.

(2) The application shall be accompanied by a list of the persons to whom the return is to be made.

(3) The list shall include the same details of those persons as appears in the settled list of contributories, with any necessary alterations to take account of matters after settlement of the list, and the amount to be paid to each person.

(4) Where the court makes an order authorising the return, it shall send a sealed copy of the order to the liquidator.

Procedure for return

4.222

(1) The liquidator shall inform each person to whom a return is made of the rate of return per share, and whether it is expected that any further return will be made.

(2) Any payments made by the liquidator by way of the return may be sent by post, unless for any reason another method of making the payment has been agreed with the payee.

SECTION B: CONCLUSION OF WINDING UP

Statements to registrar of companies under s.192

4.223-CVL

(1) Subject to paragraphs (3) and (3A), the statement which section 192 requires the liquidator to send to the registrar of companies, if the winding up is not concluded within one year from its commencement, shall be sent not more than 30 days after the expiration of that year, and thereafter 6-monthly until the winding up is concluded.

(2) For this purpose the winding up is concluded at the date of the dissolution of the company, except that if at that date any assets or funds of the company remain unclaimed or undistributed in the hands or under the control of the liquidator or any former liquidator, the winding up is not concluded until those assets or funds have either been distributed or paid into the Insolvency Services Account.

(3) Subject as above, the liquidator's final statement shall be sent forthwith after the conclusion of the winding up.

(3A) No statement shall be required to be delivered under this Rule where the return of the final meeting in respect of the company under sections 94 or 106 is delivered before the date at which the statement is to be delivered and that return shows that no assets or funds of the company remain unclaimed or undistributed in the hands or under the control of the liquidator or any former liquidator; but where this paragraph applies, the liquidator shall deliver a copy of that return to the Secretary of State.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION C: DISSOLUTION AFTER WINDING UP

Secretary of State's directions under ss.203, 205

4.224

(1) Where the Secretary of State gives a direction under—

(a) section 203 (where official receiver applies to registrar of companies for a company's early dissolution), or

(b) section 205 (application by interested person for postponement of dissolution),

he shall send two copies of the direction to the applicant for it.

(2) Of those copies one shall be sent by the applicant to the registrar of companies, to comply with section 203(5) or, as the case may be, 205(6).

Procedure following appeal under s.203(4) or 205(4)

4.225

Following an appeal under section 203(4) or 205(4) (against a decision of the Secretary of State under the applicable section) the court shall send two sealed copies of its order to the person in whose favour the appeal was determined; and that party shall send one of the copies to the registrar of companies to comply with section 203(5) or, as the case may be, 205(6).

CHAPTER 22 — LEAVE TO ACT AS DIRECTOR, ETC., OF COMPANY WITH PROHIBITED NAME (SECTION 216 OF THE ACT)

Preliminary

4.226

The Rules in this Chapter—

(a) relate to the leave required under section 216 (restriction on reuse of name of company in insolvent liquidation) for a person to act as mentioned in section 216(3) in relation to a company with a prohibited name, ...

(b) prescribe the cases excepted from that provision, that is to say, those in which a person to whom the section applies may so act without that leave , and

(c) apply to all windings up to which section 216 applies, whether or not the winding up commenced before the coming into force of the Rules.

Application for leave under s.216(3)

4.227

When considering an application for leave under section 216, the court may call on the liquidator, or any former liquidator, of the liquidating company for a report of the circumstances in which that company became insolvent, and the extent (if any) of the applicant's apparent responsibility for its doing so.

First excepted case

4.228

(1) This Rule applies where—

(a) a person (“the person”) was within the period mentioned in section 216(1) a director, or shadow director, of an insolvent company that has gone into insolvent liquidation

(b) the person acts in all or any of the ways specified in section 216(3) in connection with, or for the purposes of, the carrying on (or proposed carrying on) of the whole or substantially the whole of the business of the insolvent company where that business (or substantially the whole of it) is (or is to be) acquired from the insolvent company under arrangements—

(i) made by its liquidator; or

(ii) made before the insolvent company entered into insolvent liquidation by an office-holder acting in relation to it as administrator, administrative receiver or supervisor of a voluntary arrangement under Part 1 of the Act.

(2) The person, will not be taken to have contravened section 216 if prior to his acting in the circumstances set out in paragraph (1) a notice is, in accordance with the requirements of paragraph (3),—

(a) given by the person, to every creditor of the insolvent company whose name and address—

(i) is known by him; or

(ii) is ascertainable by him on the making of such enquiries as are reasonable in the circumstances; and

(b) published in the Gazette.

(3) The notice referred to in paragraph (2)—

(a) may, subject to compliance with sub-paragraph (a), be given and published before the completion of the arrangements referred to in paragraph (1)(b) but must be given and published no later than 28 days after that completion;

(b) must state—

(i) the name and registered number of the insolvent company;

(ii) the name of the person;

(iii) that it is his intention to act (or, where the insolvent company has not entered insolvent liquidation, to act or continue to act) in all or any of the ways specified in section 216(3) in connection with, or for the purposes of, the carrying on of the whole or substantially the whole of the business of the insolvent company; and

(iv) the prohibited name or, where the company has not entered insolvent liquidation, the name under which the business is being, or is to be, carried on which would be a prohibited name in respect of the person in the event of the insolvent company entering insolvent liquidation; and

(4) Notice may in particular be given under this Rule—

(a) prior to the insolvent company entering insolvent liquidation where the business (or substantially the whole of the business) is, or is to be, acquired by another company under arrangements made by an office-holder acting in relation to the insolvent company as administrator, administrative receiver or supervisor of a voluntary arrangement (whether or not at the time of the giving of the notice the director is a director of that other company); or

(b) at a time where the person is a director of another company where—

(i) the other company has acquired, or is to acquire, the whole, or substantially the whole, of the business of the insolvent company under arrangements made by its liquidator; and

(ii) it is proposed that after the giving of the notice a prohibited name should be adopted by the other company.

Second excepted case

4.229

(1) Where a person to whom section 216 applies as having been a director or shadow director of the liquidating company applies for leave of the court under that section not later than 7 days from the date on which the company went into liquidation, he may, during the period specified in paragraph (2) below, act in any of the ways mentioned in section 216(3), notwithstanding that he has not the leave of the court under that section.

(2) The period referred to in paragraph (1) begins with the day on which the company goes into liquidation and ends either on the day falling six weeks after that date or on the day on which the court disposes of the application for leave under section 216, whichever of those days occurs first.

Third excepted case

4.230

The court's leave under section 216(3) is not required where the company there referred to, though known by a prohibited name within the meaning of the section—

(a) has been known by that name for the whole of the period of 12 months ending with the day before the liquidating company went into liquidation, and

(b) has not at any time in those 12 months been dormant within the meaning of section 252(5) of the Companies Act.

CHAPTER 23 — EC Regulation—Member State Liquidator

Interpretation of creditor and notice to member State liquidator

4.231

(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 4.43(1) (official receiver’s report), 4.45(1) (report on statement of affairs), 4.46(2) (report where no statement of affairs), 4.47(2) (general rule on reporting), 4.48(2) (winding up stayed), 4.49 (information to creditors), 4.50(2) (notice of meetings), 4.51(2) (notice of creditors' meeting—CVL), 4.54 (power to call meetings), 4.57(1) (requisitioned meetings), 4.57(3), 4.67 (entitlement to vote (creditors)), 4.68 (chairman’s discretion to allow vote—CVL), 4.70 (admission and rejection of proof (creditors' meeting)), 4.73 (meaning of “prove”), 4.74 (supply of forms), 4.75 (contents of proof), 4.76 (particulars of creditor’s claim), 4.77 (claim established by affidavit), 4.78 (cost of proving), 4.79 (inspection of proofs), 4.82 (admission and rejection of proofs for dividend), 4.83(1) (appeal against decision in relation to proof), 4.83(2), 4.84 (withdrawal or variation of proof), 4.85(1) (expunging of proof), 4.86 (estimate of quantum), 4.87 (negotiable instruments, etc.), 4.88 (secured creditors), 4.89 (discounts), 4.90 (mutual credit and set-off), 4.91 (debt in foreign currency), 4.92 (payment of a periodical nature), 4.93 (interest), 4.94 (debt payable at future time), 4.101A (power to fill vacancy in office of liquidator), 4.102(5) (appointment by court), 4.103(4) (appointment by court), 4.113(1) (meeting of creditors to remove liquidator), 4.114(1) (meeting of creditors to remove liquidator), 4.115 (regulation of meetings), 4.124(1) (release of official receiver), 4.125(1) (final meeting), 4.125A(2) (rule on reporting), 4.126(1) (final meeting), 4.131(1) (challenge to liquidator’s remuneration), 4.152(1) (liquidation committee), 4.152(3) (eligibility for liquidation committee), 4.163(3) (vacancy on liquidation committee), 4.175(1) (liquidation committee), 4.180 (notice of dividend) and 4.212(2) (notice of public examination hearing).

(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 liquidator 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 liquidator 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 cooperate and communicate information).

THE SECOND GROUP OF PARTS

PART 5 — INDIVIDUAL VOLUNTARY ARRANGEMENTS

CHAPTER 1 — PRELIMINARY

Introductory

5.1

(1) The Rules in this Part apply in relation to a voluntary arrangement under Part VIII of the Act , except in relation to voluntary arrangements under section 263A, in relation to which only Chapters 7, 10, 11 and 12 of this Part shall apply,.

(2) In this Part, in respect of voluntary arrangements other than voluntary arrangements under section 263A—

(a) Chapter 2 applies in all cases;

(b) Chapter 3 applies in cases where an application for an interim order is made;

(d) except where otherwise stated, Chapters 5 and 6 apply in all cases;

(e) Chapter 8 applies where a bankrupt makes an application under section 261(2)(a); and

(f) Chapter 9 applies where the official receiver makes an application under section 261(2)(b).

(3) In this Part, in respect of voluntary arrangements under section 263A—

(a) Chapter 7 applies in all cases; and

(b) Chapter 10 applies where the official receiver makes an application under section 263D(3).

(4) In this Part, Chapters 11 and 12 apply in all cases.

CHAPTER 2 — PREPARATION OF THE DEBTOR'S PROPOSAL

Preparation of proposal

5.2

The debtor shall prepare for the intended nominee a proposal on which (with or without amendments to be made under Rule 5.3(3) below) to make his report to the court under section 256 or section 256A.

Contents of proposal

5.3

(1) The debtor’s proposal shall provide a short explanation why, in his opinion, a voluntary arrangement under Part VIII is desirable, and give reasons why his creditors may be expected to concur with such an arrangement.

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

(a) the following matters, so far as within the debtor’s immediate knowledge—

(i) his 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 debtor himself, 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 debtor’s liabilities (so far as within his 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 258(7)) and creditors who are, or claim to be, secured,

(ii) how associates of the debtor (being creditors of his) are proposed to be treated under the arrangement, and

(iii) in any case where the debtor is an undischarged bankrupt, whether, to the debtor’s knowledge, claims have been made under section 339 (transactions at an undervalue), section 340 (preferences) or section 343 (extortionate credit transactions), or where the debtor is not an undischarged bankrupt, whether there are circumstances which would give rise to the possibility of such claims in the event that he should be adjudged bankrupt,

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 insolvent estate in respect of such claims;

(d) whether any, and if so what, guarantees have been given of the debtor’s debts by other persons, specifying which (if any) of the guarantors are associates of his;

(e) the proposed duration of the voluntary arrangement;

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

(g) how it is proposed to deal with the claims of any person who is bound by the arrangement by virtue of section 260(2)(b)(ii);

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

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

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

(l) 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;

(m) 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;

(n) if the debtor has any business, the manner in which it is proposed to be conducted during the course of the arrangement;

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

(p) the functions which are to be undertaken by the supervisor of the arrangement;

(q) the name, address and qualification of the person proposed as supervisor of the voluntary arrangement, and confirmation that he is, so far as the debtor is aware, qualified to act as an insolvency practitioner in relation to him or is an authorised person in relation to him; and

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

(3) With the agreement in writing of the nominee, the debtor’s proposal may be amended at any time up to the delivery of the former’s report to the court under section 256 or section 256A.

Notice to the intended nominee

5.4

(1) The debtor shall give to the intended nominee written notice of his 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.

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

(5) Where the debtor is an undischarged bankrupt and he gives notice of his proposal to the official receiver and (if any) the trustee, the notice must contain the name and address of the insolvency practitioner or (as the case may be) authorised person who has agreed to act as nominee.

Statement of Affairs

5.5

(1) Subject to paragraph (2), the debtor shall, within 7 days after his proposal is delivered to the nominee, or such longer time as the latter may allow, deliver to the nominee a statement of his (the debtor's) affairs.

(2) Paragraph (1) shall not apply where the debtor is an undischarged bankrupt and he has already delivered a statement of affairs under section 272 (debtor’s petition) or 288 (creditor’s petition) but the nominee may require the debtor to submit a further statement supplementing or amplifying the statement of affairs already submitted.

(3) The statement of affairs shall comprise the following particulars (supplementing or amplifying, so far as is necessary for clarifying the state of the debtor’s affairs, those already given in his proposal)—

(a) a list of his 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 debtor 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 debtor’s preferential creditors (defined in section 258(7)), with the amounts of their respective claims;

(d) the names and addresses of the debtor’s unsecured creditors, with the amounts of their respective claims;

(e) particulars of any debts owed by or to the debtor to or by persons who are associates of his;

(f) 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 debtor’s proposal.

(4) 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 5.4.

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 5.4); and if he does so, he shall give his reasons in his report to the court on the debtor’s proposal.

(5) The statement shall be certified by the debtor as correct, to the best of his knowledge and belief.

Additional disclosure for assistance of nominee

5.6

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

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

(b) particulars of any previous proposals which have been made by him under Part VIII of the Act;

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

(2) The nominee may call on the debtor to inform him whether and in what circumstances he has at any time—

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

(b) been adjudged bankrupt, or entered into an arrangement with his creditors.

(3) For the purpose of enabling the nominee to consider the debtor’s proposal and prepare his report on it, the latter must give him access to his accounts and records.

CHAPTER 3 — CASES IN WHICH AN APPLICATION FOR AN INTERIM ORDER IS MADE

Application for interim order

5.7

(1) An application to the court for an interim order under Part VIII of the Act shall be accompanied by an affidavit of the following matters—

(a) the reasons for making the application;

(b) particulars of any execution or other legal process or levying of any distress which, to the debtor’s knowledge, has been commenced against him;

(d) that no previous application for an interim order has been made by or in respect of the debtor in the period of 12 months ending with the date of the affidavit; ...

(e) that the nominee under the proposal (naming him) is willing to act in relation to the proposal and is a person who is either qualified to act as an insolvency practitioner in relation to the debtor or is authorised to act as nominee in relation to him; and

(f) that the debtor has not submitted to the official receiver either the document referred to at section 263B(1)(a) or the statement referred to at section 263B(1)(b).

(2) A copy of the notice to the intended nominee under Rule 5.4, endorsed to the effect that he agrees so to act, and a copy of the debtor’s proposal given to the nominee under that Rule, shall be exhibited to the affidavit.

(3) On receiving the application and affidavit, the court shall fix a venue for the hearing of the application.

(4) The applicant shall give at least 2 days' notice of the hearing—

(a) where the debtor is an undischarged bankrupt, to the bankrupt, the official receiver and the trustee (whichever of those three is not himself the applicant),

(b) where the debtor is not an undischarged bankrupt, to any creditor who (to the debtor’s knowledge) has presented a bankruptcy petition against him, and

Court in which application to be made

5.8

(1) Except in the case of an undischarged bankrupt, an application to the court under Part VIII of the Act shall be made to a court in which the debtor would be entitled to present his own petition in bankruptcy under Rule 6.40.

(2) The application shall contain sufficient information to establish that it is brought in the appropriate court.

(3) In the case of an undischarged bankrupt, such an application shall be made to the court having the conduct of his bankruptcy and shall be filed with the bankruptcy proceedings.

Hearing of the application

5.9

(1) Any of the persons who have been given notice under Rule 5.7(4) may appear or be represented at the hearing of the application.

(2) The court, in deciding whether to make an interim order on the application, shall take into account any representations made by or on behalf of any of those persons (in particular, whether an order should be made containing such provision as is referred to in section 255(3) and (4)).

(3) If the court makes an interim order, it shall fix a venue for consideration of the nominee’s report. Subject to the following paragraph, the date for that consideration shall be not later than that on which the interim order ceases to have effect under section 255(6).

(4) If under section 256(4) an extension of time is granted for filing the nominee’s report, the court shall, unless there appear to be good reasons against it, correspondingly extend the period for which the interim order has effect.

Action to follow making of order

5.10

(1) Where an interim order is made, at least 2 sealed copies of the order shall be sent by the court to the person who applied for it; and that person shall serve one of the copies on the nominee under the debtor’s proposal.

(2) The applicant shall also forthwith give notice of the making of the order to any person who was given notice of the hearing pursuant to Rule 5.7(4) and was not present or represented at it.

Nominee’s report on the proposal

5.11

(1) Where the nominee makes his report to the court under section 256, he shall deliver 2 copies of it to the court not less than 2 days before the interim order ceases to have effect.

(2) With his report the nominee shall deliver—

(a) a copy of the debtor’s proposal (with amendments, if any, authorised under Rule 5.3(3)); and

(b) a copy or summary of any statement of affairs provided by the debtor.

(3) If the nominee makes known his opinion that the debtor’s proposal has a reasonable prospect of being approved and implemented, and that a meeting of the debtor’s creditors should be summoned under section 257, his report shall have annexed to it his comments on the debtor’s proposal.

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

(4) The court shall upon receipt of the report cause one copy of the report to be endorsed with the date of its filing in court and returned to the nominee.

(5) Any creditor of the debtor is entitled, at all reasonable times on any business day, to inspect the file.

(6) Where the debtor is an undischarged bankrupt, the nominee shall send to the official receiver and (if any) the trustee—

(a) a copy of the debtor’s proposal,

(b) a copy of his (the nominee's) report and his comments accompanying it (if any), and

(7) Where the debtor is not an undischarged bankrupt, the nominee shall send a copy of each of the documents referred to in paragraph (6) to any person who has presented a bankruptcy petition against the debtor.

Replacement of nominee

5.12

(1) Where the debtor intends to apply to the court under section 256(3) for the nominee to be replaced, he shall give to the nominee at least 7 days' notice of his application.

(2) 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.

Consideration of nominee’s report

5.13

(1) At the hearing by the court to consider the nominee’s report, any of the persons who have been given notice under Rule 5.7(4) may appear or be represented.

(2) Rule 5.10 applies to any order made by the court at the hearing.

CHAPTER 4 — CASES WHERE NO INTERIM ORDER IS TO BE OBTAINED

Nominee’s report to the court

5.14

(1) The nominee shall deliver 2 copies of his report to the court (as defined in Rule 5.15) under section 256A within 14 days (or such longer period as the court may allow) after receiving from the debtor the document and statement mentioned in section 256A(2) but the court shall not consider the report unless an application is made under the Act or these Rules in relation to the debtor’s proposal.

(2) With his report the nominee shall deliver—

(a) a copy of the debtor’s proposal (with amendments, if any, authorised under Rule 5.3(3));

(b) a copy or summary of any statement of affairs provided by the debtor; and

together with 2 copies of Form 5.5 listing the documents referred to in (a) to (c) above and containing a statement that no application for an interim order under section 252 is to be made.

(3) If the nominee makes known his opinion that the debtor’s proposal has a reasonable prospect of being approved and implemented, and that a meeting of the debtor’s creditors should be summoned under section 257, his report shall have annexed to it his comments on the debtor’s proposal.

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

(4) The court shall upon receipt of the report and Form 5.5 cause one copy of the form to be endorsed with the date of its filing in court and returned to the nominee.

(5) Any creditor of the debtor is entitled, at all reasonable times on any business day, to inspect the file.

(6) Where the debtor is an undischarged bankrupt, the nominee shall send to the official receiver and (if any) the trustee—

(a) a copy of the debtor’s proposal,

(b) a copy of his (the nominee's) report and his comments accompanying it (if any), and

(7) Where the debtor is not an undischarged bankrupt, the nominee shall send a copy of each of the documents referred to in paragraph (6) to any person who has presented a bankruptcy petition against the debtor.

(8) The filing in court of the report under section 256A shall constitute an insolvency proceeding for the purpose of Rule 7.27 and Rule 7.30.

Filing of reports made under section 256A—appropriate court

5.15

(1) Except where the debtor is an undischarged bankrupt, the court in which the nominee’s report under section 256A is to be filed is the court in which the debtor would be entitled to present his own petition in bankruptcy under Rule 6.40.

(2) The report shall contain sufficient information to establish that it is filed in the appropriate court.

(3) Where the debtor is an undischarged bankrupt, such report shall be filed in the court having the conduct of his bankruptcy and shall be filed with the bankruptcy proceedings.

Applications to the court

5.16

(1) Any application to court in relation to any matter relating to a voluntary arrangement or a proposal for a voluntary arrangement shall be made in the court in which the nominee’s report was filed.

(2) Where the debtor intends to apply to the court under section 256A(4)(a) or (b) for the nominee to be replaced, he shall give to the nominee at least 7 days' notice of the application.

(3) Where the nominee intends to apply to the court under section 256A(4)(b) for his replacement as nominee, he shall give to the debtor at least 7 days' notice of the application.

(4) 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.

CHAPTER 5 — CREDITORS' MEETINGS

Summoning of creditors' meeting

5.17

(1) If in his report the nominee states that in his opinion a meeting of creditors should be summoned to consider the debtor’s proposal, the date on which the meeting is to be held shall be—

(a) in a case where an interim order has not been obtained, not less than 14 days and not more than 28 days from that on which the nominee’s report is filed in court under Rule 5.14; and

(b) in a case where an interim order is in force, not less than 14 days from the date on which the nominee’s report is filed in court nor more than 28 days from that on which the report is considered by the court.

(2) Notices calling the meeting shall be sent by the nominee, at least 14 days before the day fixed for it to be held, to all the creditors specified in the debtor’s statement of affairs, and any other creditors of whom the nominee is otherwise aware.

(3) Each notice sent under this Rule shall specify the court to which the nominee’s report on the debtor’s proposal has been delivered and shall state the effect of Rule 5.23(1), (3) and (4) (requisite majorities); and with it there shall be sent—

(a) a copy of the 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 the creditors and the amounts of their debts), and

Creditors' meeting: supplementary

5.18

(1) Subject as follows, in fixing the venue for the creditors' meeting, the nominee shall have regard to the convenience of creditors.

(2) The meeting shall be summoned for commencement between 10.00 and 16.00 hours on a business day.

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

The chairman at the meeting

5.19

(1) Subject as follows, the nominee shall be chairman of the creditors' meeting.

(2) If for any reason the nominee 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 debtor;

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

The chairman as proxy-holder

5.20

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.

Entitlement to vote

5.21

(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) A creditor’s entitlement to vote is calculated as follows—

(a) where the debtor is not an undischarged bankrupt and an interim order is in force, by reference to the amount of the debt owed to him as at the date of the interim order;

(b) where the debtor is not an undischarged bankrupt and an interim order is not in force, by reference to the amount of the debt owed to him at the date of the meeting; and

(c) where the debtor is an undischarged bankrupt, by reference to the amount of the debt owed to him as at the date of the bankruptcy order.

(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

5.22

(1) Subject as follows, at the 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 5.21 is subject to appeal to the court by any creditor or by the debtor.

(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 section 259 is 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.

Requisite majorities

5.23

(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 the nominee;

(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 debtor, 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) who have notice of the meeting;

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

(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 the paragraph (3), or

(b) a person is an associate of the debtor for the purposes of paragraph (4)(c);

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

(6) If the chairman uses a proxy contrary to Rule 5.20, 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 by the debtor and paragraphs (5) to (7) of Rule 5.22 apply as regards such an appeal.

Proceedings to obtain agreement on the proposal

5.24

(1) On the day on which the creditors' meeting is held, it may from time to time be adjourned.

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.