The Insolvent Partnerships Order 1994

(23) (1) This paragraph applies where an administrator of a partnership is appointed— (a) under paragraph 22, or (b) on an administration application made by the members of the partnership. (2) An administrator of the partnership may not be appointed under paragraph 22 during the period of 12 months beginning with the date on which the appointment referred to in sub-paragraph (1) ceases to have effect.

11

Paragraph 26 is modified so as to read as follows—

(26) (1) A person who proposes to make an appointment under paragraph 22 shall give at least five business days' written notice to— (a) any person who is or may be entitled to appoint an agricultural receiver of the partnership, and (b) any person who is or may be entitled to appoint an administrator of the partnership under paragraph 14. (2) A person who proposes to make an appointment under paragraph 22 shall also give such notice as may be prescribed to such other persons as may be prescribed. (3) A notice under this paragraph must— (a) identify the proposed administrator, and (b) be in Form 1A in Schedule 9 to the Insolvent Partnerships Order 1994.

12

Paragraph 27 is modified so as to read as follows—

(27) (1) A person who gives notice of intention to appoint under paragraph 26 shall file with the court as soon as is reasonably practicable a copy of— (a) the notice, and (b) any document accompanying it. (2) The copy filed under sub-paragraph (1) must be accompanied by a statutory declaration made by or on behalf of the person who proposes to make the appointment— (a) that the partnership is unable to pay its debts, (b) that the partnership is not in liquidation, and (c) that, so far as the person making the statement is able to ascertain, the appointment is not prevented by paragraphs 23 to 25, and (d) to such additional effect, and giving such information, as may be prescribed. (3) A statutory declaration under sub-paragraph (2) must— (a) be in the prescribed form, and (b) be made during the prescribed period. (4) A person commits an offence if in a statutory declaration under sub-paragraph (2) he makes a statement— (a) which is false, and (b) which he does not reasonably believe to be true.

13

Paragraph 29 is modified so as to read as follows—

(29) (1) A person who appoints an administrator of a partnership under paragraph 22 shall file with the court— (a) a notice of appointment, and (b) such other documents as may be prescribed. (2) The notice of appointment must include a statutory declaration by or on behalf of the person who makes the appointment—- (a) that the person is entitled to make an appointment under paragraph 22, (b) that the appointment is in accordance with this Schedule, and (c) that, so far as the person making the statement is able to ascertain, the statements made, and information given in the statutory declaration filed with the notice of intention to appoint remain accurate. (3) The notice of appointment must identify the administrator and must be accompanied by a statement by the administrator— (a) that he consents to the appointment, (b) that in his opinion the purpose of administration is reasonably likely to be achieved, and (c) giving such other information and opinions as may be prescribed. (4) For the purpose of a statement under sub-paragraph (3) an administrator may rely on information supplied by members of the partnership (unless he has reason to doubt its accuracy). (5) The notice of appointment must be in Form 1B in Schedule 9 to the Insolvent Partnerships Order 1994 and any document accompanying it must be in the prescribed form. (6) A statutory declaration under sub-paragraph (2) must be made during the prescribed period. (7) A person commits an offence if in a statutory declaration under sub-paragraph (2) he makes a statement— (a) which is false, and (b) which he does not reasonably believe to be true.

14

Paragraph 35 is modified so as to read as follows—

(35) (1) This paragraph applies where an administration application in respect of a partnership— (a) is made by the holder of a qualifying agricultural floating charge in respect of the partnership property, and (b) includes a statement that the application is made in reliance on this paragraph. (2) The court may make an administration order— (a) whether or not satisfied that the partnership is unable to pay its debts; but (b) only if satisfied that the applicant could appoint an administrator under paragraph 14.

15

Paragraph 39 is modified so as to read as follows—

(39) (1) Where there is an agricultural receiver of a partnership the court must dismiss an administration application in respect of the partnership unless— (a) the person by or on behalf of whom the agricultural receiver was appointed consents to the making of the administration order, (b) the court thinks that the security by virtue of which the agricultural receiver was appointed would be liable to be released or discharged under sections 238 to 240 (transaction at undervalue and preference) if an administration order were made, or (c) the court thinks that the security by virtue of which the agricultural receiver was appointed would be avoided under section 245 (avoidance of floating charge) if an administration order were made. (2) Sub-paragraph (1) applies whether the agricultural receiver is appointed before or after the making of the administration application.

16

Paragraph 41 is modified so as to read as follows—

(41) (1) When an administration order takes effect in respect of a partnership any agricultural receiver of the partnership shall vacate office. (2) Where a partnership is in administration, any receiver of part of the partnership property shall vacate office if the administrator requires him to. (3) Where an agricultural receiver vacates office under sub-paragraph (1) or (2), his remuneration shall be charged on and paid out of any partnership property which was in his custody or under his control immediately before he vacated office. (4) In the application of sub-paragraph (3)— (a) “remuneration” includes expenses properly incurred and any indemnity to which the agricultural receiver is entitled out of the partnership property, (b) the charge imposed takes priority over security held by the person by whom or on whose behalf the agricultural receiver was appointed, and (c) the provision for payment is subject to paragraph 43.

17

Paragraph 42 is modified so as to read as follows—

(42) (1) This paragraph applies to a partnership in administration. (2) No order may be made for the winding up of the partnership. (3) No order may be made by virtue of Article 11 of the Insolvent Partnerships Order 1994 in respect of the partnership. (4) No order may be made under section 35 of the Partnership Act 1890 in respect of the partnership. (5) Sub-paragraph (2) does not apply to an order made on a petition presented under— (a) section 124A(public interest); or (b) section 367 of the Financial Services and Markets Act 2000 (c. 8) (winding-up petitions). (6) If a petition presented under a provision referred to in sub-paragraph (5) comes to the attention of the administrator, he shall apply to the court for directions under paragraph 63.

18

Paragraph 43 is modified so as to read as follows—

(43) (1) This paragraph applies to a partnership in administration. (2) No step may be taken to enforce security over the partnership property except— (a) with the consent of the administrator, or (b) with the permission of the court. (3) No step may be taken to repossess goods in the partnership’s possession under a hire-purchase agreement except— (a) with the consent of the administrator, or (b) with the permission of the court. (4) A landlord may not exercise a right of forfeiture by peaceable re-entry in relation to premises forming part of the partnership property or let to one or more officers of the partnership in their capacity as such except— (a) with the consent of the administrator, or (b) with the permission of the court. (5) No legal process (including legal proceedings, execution, distress and diligence) may be instituted or continued against the partnership or partnership property except— (a) with the consent of the administrator, or (b) with the permission of the court. (6) An agricultural receiver of the partnership may not be appointed. (7) Where the court gives permission for a transaction under this paragraph it may impose a condition on or a requirement in connection with the transaction. (8) In this paragraph “landlord” includes a person to whom rent is payable.

19

Paragraph 47 is modified so as to read as follows—

(47) (1) As soon as is reasonably practicable after appointment the administrator of a partnership shall by notice in the prescribed form require one or more relevant persons to provide the administrator with a statement of the affairs of the partnership. (2) The statement must— (a) be verified by a statement of truth in accordance with Civil Procedure Rules, (b) be in the prescribed form, (c) give particulars of the partnership property, debts and liabilities, (d) give the names and addresses of the creditors of the partnership, (e) specify the security held by each creditor, (f) give the date on which each security was granted, and (g) contain such other information as may be prescribed. (3) In sub-paragraph (1) “relevant person” means— (a) a person who is or has been an officer of the partnership, (b) a person who took part in the formation of the partnership during the period of one year ending with the date on which the partnership enters administration, (c) a person employed by the partnership during that period, and (d) a person who is or has been during that period an officer or employee of a partnership which is or has been during that year an officer of the partnership. (4) For the purpose of sub-paragraph (3) a reference to employment is a reference to employment through a contract of employment or a contract for services.

20

Paragraph 49 is modified so as to read as follows—

(49) (1) The administrator of a partnership shall make a statement setting out proposals for achieving the purpose of administration. (2) A statement under sub-paragraph (1) must, in particular— (a) deal with such matters as may be prescribed, and (b) where applicable, explain why the administrator thinks that the objective mentioned in paragraph 3(1)(a) or (b) cannot be achieved. (3) Proposals under this paragraph may include a proposal for a voluntary arrangement under Part I of this Act (although this paragraph is without prejudice to section 4(3)). (4) The administrator shall send a copy of the statement of his proposals— (a) to the court, (b) to every creditor of the partnership of whose claim and address he is aware, and (c) to every member of the partnership of whose address he is aware. (5) The administrator shall comply with sub-paragraph (4)— (a) as soon as is reasonably practicable after the partnership enters administration, and (b) in any event, before the end of the period of eight weeks beginning with the day on which the partnership enters administration. (6) The administrator shall be taken to comply with sub-paragraph (4)(c) if he publishes in the prescribed manner a notice undertaking to provide a copy of the statement of proposals free of charge to any member of the partnership who applies in writing to a specified address. (7) An administrator commits an offence if he fails without reasonable excuse to comply with sub-paragraph (5). (8) A period specified in this paragraph may be varied in accordance with paragraph 107.

21

Paragraph 52 is modified so as to read as follows—

(52) (1) Paragraph 51(1) shall not apply where the statement of proposals states that the administrator thinks— (a) that the partnership has sufficient property to enable each creditor of the partnership to be paid in full, (b) that the partnership has insufficient property to enable a distribution to be made to unsecured creditors, or (c) that neither of the objectives specified in paragraph 3(1)(a) and (b) can be achieved. (2) But the administrator shall summon an initial creditors' meeting if it is requested— (a) by creditors of the partnership whose debts amount to at least 10 per cent of the total debts of the partnership, (b) in the prescribed manner, and (c) in the prescribed period. (3) A meeting requested under sub-paragraph (2) must be summoned for a date in the prescribed period. (4) The period prescribed under sub-paragraph (3) may be varied in accordance with paragraph 107.

22

Paragraph 61 is modified so as to read as follows—

(61) The administrator of a partnership— (a) may prevent any person from taking part in the management of the partnership business, and (b) may appoint any person to be a manager of that business.

23

Paragraph 65 is modified so as to read as follows—

(65) (1) The administrator of a partnership may make a distribution to a creditor of the partnership. (2) Section 175(1) and (2)(a) shall apply in relation to a distribution under this paragraph as it applies in relation to a winding up. (3) A payment may not be made by way of distribution under this paragraph to a creditor of the partnership who is neither secured nor preferential unless the court gives permission.

24

Paragraph 69 is modified so as to read as follows:—

(69) (1) Subject to sub-paragraph (2) below, in exercising his function under this Schedule the administrator of a partnership acts as the agent of the members of the partnership in their capacity as such. (2) An officer of the partnership shall not, unless he otherwise consents, be personally liable for the debts and obligations of the partnership incurred during the period when the partnership is in administration.

25

Paragraph 73 is modified so as to read as follows—

(73) (1) An administrator’s statement of proposals under paragraph 49 may not include any action which— (a) affects the right of a secured creditor of the partnership to enforce his security, (b) would result in a preferential debt of the partnership being paid otherwise than in priority to its non-preferential debts, ... (bb) would result in an ordinary preferential debt of the partnership being paid otherwise than in priority to any secondary preferential debts that it may have, (c) would result in one preferential creditor of the partnership being paid a smaller proportion of an ordinary preferential debt than another or (d) would result in one preferential creditor of the partnership being paid a smaller proportion of a secondary preferential debt than another. (2) Sub-paragraph (1) does not apply to— (a) action to which the relevant creditor consents, or (b) a proposal for a voluntary arrangement under Part I of this Act (although this sub-paragraph is without prejudice to section 4(3)). (3) The reference to a statement of proposals in sub-paragraph (1) includes a reference to a statement as revised or modified.

26

Paragraph 74 is modified so as to read as follows—

(74) (1) A creditor or member of a partnership in administration may apply to the court claiming that— (a) the administrator is acting or has acted so as unfairly to harm the interests of the applicant (whether alone or in common with some or all other members or creditors), or (b) the administrator proposes to act in a way which would unfairly harm the interests of the applicant (whether alone or in common with some or all other members or creditors). (2) A creditor or member of a partnership in administration may apply to the court claiming that the administrator is not performing his functions as quickly or as efficiently as is reasonably practicable. (3) The court may— (a) grant relief; (b) dismiss the application; (c) adjourn the hearing conditionally or unconditionally; (d) make an interim order; (e) make any other order it thinks appropriate. (4) In particular, an order under this paragraph may— (a) regulate the administrator’s exercise of his functions; (b) require the administrator to do or not do a specified thing; (c) require a creditors' meeting to be held for a specified purpose; (d) provide for the appointment of an administrator to cease to have effect; (e) make consequential provision. (5) An order may be made on a claim under sub-paragraph (1) whether or not the action complained of— (a) is within the administrator’s powers under that Schedule; (b) was taken in reliance on an order under paragraph 71 or 72. (6) An order may not be made under this paragraph if it would impede or prevent the implementation of— (a) a voluntary arrangement approved under Part I, or (b) proposals or a revision approved under paragraph 53 or 54 more than 28 days before the day on which the application for the order under this paragraph is made.

27

Omit paragraph 83.

28

Paragraph 84 is modified so as to read as follows—

(84) (1) If the administrator of a partnership thinks that the partnership has no property which might permit a distribution to its creditors, he shall file a notice to that effect with the court. (2) The court may on the application of the administrator of a partnership disapply sub-paragraph (1) in respect of the partnership. (3) On the filing of a notice in respect of a partnership under sub-paragraph (1) the appointment of an administrator of the partnership shall cease to have effect. (4) If an administrator files a notice under sub-paragraph (1) he shall as soon as is reasonably practicable send a copy of the notice to each creditor of whose claim and address he is aware. (5) At the end of the period of three months beginning with the date of filing of a notice in respect of a partnership under sub-paragraph (1) the partnership is deemed to be dissolved. (6) On an application in respect of a partnership by the administrator or another interested person the court may— (a) extend the period specified in sub-paragraph (5); (b) suspend that period; or (c) disapply sub-paragraph (5). (7) An administrator commits an offence if he fails without reasonable excuse to comply with sub-paragraph (4).

29

Paragraph 87 is modified to read as follows—

(87) (1) An administrator may resign only in prescribed circumstances. (2) Where an administrator may resign he may do so only— (a) in the case of an administrator appointed by administration order, by notice in writing to the court, (b) in the case of an administrator appointed under paragraph 14, by notice in writing to the holder of the agricultural floating charge by virtue of which the appointment was made, or (c) in the case of an administrator appointed under paragraph 22, by notice in writing to the members of the insolvent partnership.

30

Paragraph 89 is modified so as to read as follows—

(89) (1) The administrator of a partnership shall vacate office if he ceases to be qualified to act as an insolvency practitioner in relation to the partnership. (2) Where an administrator vacates office by virtue of sub-paragraph (1) he shall give notice in writing— (a) in the case of an administrator appointed by administration order, to the court, (b) in the case of an administrator appointed under paragraph 14, to the holder of the agricultural floating charge by virtue of which the appointment was made, or (c) in the case of an administrator appointed under paragraph 22, to the members of the insolvent partnership. (3) An administrator who fails without reasonable excuse to comply with sub-paragraph (2) commits an offence.

31

Paragraph 90 is modified so as to read as follows—

(90) Paragraphs 91 to 93 and 95 apply where an administrator— (a) dies (b) resigns (c) is removed from office under paragraph 88, or (d) vacates office under paragraph 89.

32

Paragraph 91 is modified so as to read as follows—

(91) (1) Where the administrator was appointed by administration order, the court may replace the administrator on an application under this sub-paragraph made by— (a) a creditors' committee of the partnership, (b) the members of the partnership, (c) one or more creditors of the partnership, or (d) where more than one person was appointed to act jointly or concurrently as the administrator, any of those persons who remains in office. (2) But an application may be made in reliance on sub-paragraph (1)(b) and (c) only where— (a) there is no creditors' committee of the partnership, (b) the court is satisfied that the creditors' committee or a remaining administrator is not taking reasonable steps to make a replacement, or (c) the court is satisfied that for another reason it is right for the application to be made.

33

Paragraph 93 is modified so as to read as follows—

(93) (1) Where the administrator was appointed under paragraph 22 by the members of the partnership they may replace the administrator. (2) A replacement under this paragraph may be made only— (a) with the consent of each person who is the holder of a qualifying agricultural floating charge in respect of the partnership property, or (b) where consent is withheld, with the permission of the court.

34

Omit paragraph 94.

35

Paragraph 95 is modified so as to read as follows—

(95) The court may replace an administrator on the application of a person listed in paragraph 91(1) if the court— (a) is satisfied that a person who is entitled to replace the administrator under any of paragraphs 92 and 93 is not taking reasonable steps to make a replacement, or (b) that for another reason it is right for the court to make the replacement.

36

Paragraph 96 is modified so as to read as follows—

(96) (1) This paragraph applies where an administrator of a partnership is appointed under paragraph 14 by the holder of a qualifying agricultural floating charge in respect of the partnership property. (2) The holder of a prior qualifying agricultural floating charge in respect of the partnership property may apply to the court for the administrator to be replaced by an administrator nominated by the holder of the prior agricultural floating charge. (3) One agricultural floating charge is prior to another for the purposes of this paragraph if— (a) it was created first, or (b) it is to be treated as having priority in accordance with an agreement to which the holder of each agricultural floating charge was party.

37

Paragraph 97 is modified so as to read as follows—

(97) (1) This paragraph applies where— (a) an administrator of a partnership is appointed by the members of the partnership under paragraph 22, and (b) there is no holder of a qualifying agricultural floating charge in respect of the partnership property. (2) A creditor’s meeting may replace the administrator. (3) A creditors' meeting may act under sub-paragraph (2) only if the new administrator’s written consent to act is presented to the meeting before the replacement is made.

38

Paragraph 103 is modified so as to read as follows—

(103) (1) Where a partnership is in administration, a person may be appointed to act as administrator jointly or concurrently with the person or persons acting as the administrator of the partnership. (2) Where a partnership entered administration by administration order, an appointment under sub-paragraph (1) must be made by the court on the application of— (a) a person or group listed in paragraph 12(1)(a) to (c), or (b) the person or persons acting as the administrator of the partnership. (3) Where a partnership entered administration by virtue of an appointment under paragraph 14, an appointment under sub-paragraph (1) must be made by— (a) the holder of the agricultural floating charge by virtue of which the appointment was made, or (b) the court on the application of the person or persons acting as the administrator of the partnership. (4) Where a partnership entered administration by virtue of an appointment under paragraph 22, an appointment under sub-paragraph (1) above must be made either by the court on the application of the person or persons acting as the administrator of the partnership or— (a) by the members of the partnership, and (b) with the consent of each person who is the holder of a qualifying agricultural floating charge in respect of the partnership property or, where consent is withheld, with the permission of the court. (5) An appointment under sub-paragraph (1) may be made only with the consent of the person or persons acting as the administrator of the partnership.

39

Omit paragraph 105.

40

Paragraph 106 is modified so as to read as follows—

(106) (1) A person who is guilty of an offence under this Schedule is liable to a fine (in accordance with section 430 and Schedule 10). (2) A person who is guilty of an offence under any of the following paragraphs of this Schedule is liable to a daily default fine (in accordance with section 430 and Schedule 10)— (a) paragraph 20, (b) paragraph 32, (c) paragraph 46, (d) paragraph 48, (e) paragraph 49, (f) paragraph 51, (g) paragraph 53, (h) paragraph 54, (i) paragraph 56, (j) paragraph 78, (k) paragraph 80, (l) paragraph 84, and (m) paragraph 89.

41

Paragraph 111 is modified so as to read as follows—

(111) (1) In this Schedule— - “administrator” has the meaning given by paragraph 1 and, where the context requires, includes a reference to a former administrator, - “agricultural floating charge” means a charge which is an agricultural floating charge on its creation, - “correspondence” includes correspondence by telephonic or other electronic means, - “creditors' meeting” has the meaning given by paragraph 50, - “enters administration” has the meaning given by paragraph 1, - “in administration” has the meaning given by paragraph 1, - “hire-purchase agreement” includes a conditional sale agreement, a chattel leasing agreement and a retention of title agreement, - “holder of a qualifying agricultural floating charge” in respect of partnership property has the meaning given by paragraph 14, - “market value” means the amount which would be realised on a sale of property in the open market by a willing vendor, - “the purpose of administration” means an objective specified in paragraph 3, and - “unable to pay its debts” has the meaning given by sections 222, 223, and 224. (2) A reference in this Schedule to a thing in writing includes a reference to a thing in electronic form. (3) In this Schedule a reference to action includes a reference to inaction.

42

Omit paragraphs 112–116.

43

Schedule 1 is modified to read as follows:—

SCHEDULE 1 (1) Power to take possession of, collect and get in the partnership property and, for that purpose, to take such proceedings as may seem to him expedient. (2) Power to sell or otherwise dispose of the partnership property by public auction or private auction or private contract or, in Scotland, to sell, feu, hire out or otherwise dispose of the partnership property by public roup or private bargain. (3) Power to raise or borrow money and grant security therefor over the partnership property. (4) Power to appoint a solicitor or accountant or other professionally qualified person to assist him in the performance of his functions. (5) Power to bring or defend any action or other legal proceedings in the name and on behalf of any member of the partnership in his capacity as such or of the partnership. (6) Power to refer to arbitration any question affecting the partnership. (7) Power to effect and maintain insurances in respect of the partnership business and property. (8) Power to do all acts and execute, in the name and on behalf of the partnership or of any member of the partnership in his capacity as such, any deed, receipt or other document. (9) Power to draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of any member of the partnership in his capacity as such or of the partnership. (10) Power to appoint any agent to do any business which he is unable to do himself or which can more conveniently be done by an agent and power to employ and dismiss employees. (11) Power to do all such things (including the carrying out of works) as may be necessary for the realisation of the partnership property. (12) Power to make any payment which is necessary or incidental to the performance of his functions. (13) Power to carry on the business of the partnership. (14) Power to establish subsidiary undertakings of the partnership. (15) Power to transfer to subsidiary undertakings of the partnership the whole or any part of the business of the partnership or of the partnership property. (16) Power to grant or accept a surrender of a lease or tenancy of any of the partnership property, and to take a lease or tenancy of any property required or convenient for the business of the partnership. (17) Power to make any arrangement or compromise on behalf of the partnership or of its members in their capacity as such. (18) Power to rank and claim in the bankruptcy, insolvency, sequestration or liquidation of any person indebted to the partnership and to receive dividends, and to accede to trust deeds for the creditors of any such person. (19) Power to present or defend a petition for the winding up of the partnership under the Insolvent Partnerships Order 1994. (20) Power to do all other things incidental to the exercise of the foregoing powers.

SCHEDULE 3 — PROVISIONS OF THE ACT WHICH APPLY WITH MODIFICATIONS FOR THE PURPOSES OF ARTICLE 7 TO WINDING UP OF INSOLVENT PARTNERSHIP ON PETITION OF CREDITOR ETC. WHERE NO CONCURRENT PETITION PRESENTED AGAINST MEMBER

PART I — MODIFIED PROVISIONS OF PART V OF THE ACT

1

Sections 220 to 223 of the Act are set out as modified in Part I of this Schedule, and sections 117, 131, 133, 234 and Schedule 4 are set out as modified in Part II.

Section 220: Meaning of “unregistered company”

2

Section 220 is modified so as to read as follows:—

(220) For the purposes of this Part, the expression “unregistered company” includes any insolvent partnership.

Section 221: Winding up of unregistered companies

3

Section 221 is modified so as to read as follows:—

(221) (1) Subject to subsections (2) and (3) below and to the provisions of this Part, any insolvent partnership may be wound up under this Act if it has, or at any time had, in England and Wales either— (a) a principal place of business, or (b) a place of business at which business is or has been carried on in the course of which the debt (or part of the debt) arose which forms the basis of the petition for winding up the partnership. (2) Subject to subsection (3) below, an insolvent partnership shall not be wound up under this Act if the business of the partnership has not been carried on in England and Wales at any time in the period of 3 years ending with the day on which the winding-up petition is presented. (3) If an insolvent partnership has a principal place of business situated in Scotland or in Northern Ireland, the court shall not have jurisdiction to wind up the partnership unless it had a principal place of business in England and Wales— (a) in the case of a partnership with a principal place of business in Scotland, at any time in the period of 1 year, or (b) in the case of a partnership with a principal place of business in Northern Ireland, at any time in the period of 3 years, ending with the day on which the winding-up petition is presented. (3A) The preceding subsections are subject to Article 3 of the EC Regulation (jurisdiction under the EC Regulation). (4) No insolvent partnership shall be wound up under this Act voluntarily. (5) To the extent that they are applicable to the winding up of a company by the court in England and Wales on the petition of a creditor or of the Secretary of State, all the provisions of this Act and the Companies Act about winding up apply to the winding up of an insolvent partnership as an unregistered company— (a) with the exceptions and additions mentioned in the following subsections of this section and in section 221A, and (b) with the modifications specified in Part II of Schedule 3 to the Insolvent Partnerships Order 1994. (6) Sections 73(1), 74(2)(a) to (d) and (3), 75 to 78, 83, 122, 123, 176A, 202, 203, 205 and 250 shall not apply. (7) The circumstances in which an insolvent partnership may be wound up as an unregistered company are as follows— (a) if the partnership is dissolved, or has ceased to carry on business, or is carrying on business only for the purpose of winding up its affairs; (b) if the partnership is unable to pay its debts; (c) if the court is of the opinion that it is just and equitable that the partnership should be wound up. (d) at the time at which a moratorium for the insolvent partnership under section 1A comes to an end, no voluntary arrangement approved under Part I of this Act has effect in relation to the insolvent partnership. (7A) A winding-up petition on the ground set out in section 221(7)(d) may only be presented by one or more creditors. (8) Every petition for the winding up of an insolvent partnership under Part V of this Act shall be verified by affidavit in Form 2 in Schedule 9 to the Insolvent Partnerships Order 1994. (221A) (1) A petition in Form 3 in Schedule 9 to the Insolvent Partnerships Order 1994 for winding up an insolvent partnership may be presented by— (a) the liquidator or administrator of a corporate member or of a former corporate member, or (b) the administrator of the partnership, or (c) the trustee of an individual member's, or of a former individual member's, estate, or (d) the supervisor of a voluntary arrangement approved under Part I of this Act in relation to a corporate member or the partnership, or under Part VIII of this Act in relation to an individual member, if the ground of the petition is one of the circumstances set out in section 221(7). (2) In this section “petitioning insolvency practitioner” means a person who has presented a petition under subsection (1). (3) If the ground of the petition presented under subsection (1) is that the partnership is unable to pay its debts and the petitioning insolvency practitioner is able to satisfy the court that an insolvency order has been made against the member whose liquidator or trustee he is because of that member’s inability to pay a joint debt, that order shall, unless it is proved otherwise to the satisfaction of the court, be proof for the purposes of section 221(7) that the partnership is unable to pay its debts. (4) Where a winding-up petition is presented under subsection (1), the court may appoint the petitioning insolvency practitioner as provisional liquidator of the partnership under section 135 (appointment and powers of provisional liquidator). (5) Where a winding-up order is made against an insolvent partnership after the presentation of a petition under subsection (1), the court may appoint the petitioning insolvency practitioner as liquidator of the partnership; and where the court makes an appointment under this subsection, section 140(3) (official receiver not to become liquidator) applies as if an appointment had been made under that section. (6) Where a winding-up petition is presented under subsection (1), in the event of the partnership property being insufficient to satisfy the costs of the petitioning insolvency practitioner the costs may be paid out of the assets of the corporate or individual member, as the case may be, as part of the expenses of the liquidation, administration, bankruptcy or voluntary arrangement of that member, in the same order of priority as expenses properly chargeable or incurred by the practitioner in getting in any of the assets of the member.

Section 222: Inability to pay debts: unpaid creditor for £750 or more

4

Section 222 is modified so as to read as follows:—

(222) (1) An insolvent partnership is deemed (for the purposes of section 221) unable to pay its debts if there is a creditor, by assignment or otherwise, to whom the partnership is indebted in a sum exceeding £750 then due and— (a) the creditor has served on the partnership, in the manner specified in subsection (2) below, a written demand in the prescribed form requiring the partnership to pay the sum so due, and (b) the partnership has for 3 weeks after the service of the demand neglected to pay the sum or to secure or compound for it to the creditor’s satisfaction. (2) Service of the demand referred to in subsection (1)(a) shall be effected— (a) by leaving it at a principal place of business of the partnership in England and Wales, or (b) by leaving it at a place of business of the partnership in England and Wales at which business is carried on in the course of which the debt (or part of the debt) referred to in subsection (1) arose, or (c) by delivering it to an officer of the partnership, or (d) by otherwise serving it in such manner as the court may approve or direct. (3) The money sum for the time being specified in subsection (1) is subject to increase or reduction by regulations under section 417 in Part XV; but no increase in the sum so specified affects any case in which the winding-up petition was presented before the coming into force of the increase.

Section 223: Inability to pay debts: debt remaining unsatisfied after action brought

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Section 223 is modified so as to read as follows:—

(223) (1) An insolvent partnership is deemed (for the purposes of section 221) unable to pay its debts if an action or other proceeding has been instituted against any member for any debt or demand due, or claimed to be due, from the partnership, or from him in his character of member, and— (a) notice in writing of the institution of the action or proceeding has been served on the partnership in the manner specified in subsection (2) below, and (b) the partnership has not within 3 weeks after service of the notice paid, secured or compounded for the debt or demand, or procured the action or proceeding to be stayed or sisted, or indemnified the defendant or defender to his reasonable satisfaction against the action or proceeding, and against all costs, damages and expenses to be incurred by him because of it. (2) Service of the notice referred to in subsection (1)(a) shall be effected— (a) by leaving it at a principal place of business of the partnership in England and Wales, or (b) by leaving it at a place of business of the partnership in England and Wales at which business is carried on in the course of which the debt or demand (or part of the debt or demand) referred to in subsection (1) arose, or (c) by delivering it to an officer of the partnership, or (d) by otherwise serving it in such manner as the court may approve or direct.

PART II — OTHER MODIFIED PROVISIONS OF THE ACT ABOUT WINDING UP BY THE COURT

Section 117: High Court and county court jurisdiction

6

Section 117 is modified so as to read as follows:—

(117) (1) Subject to subsections (3) and (4) below, the High Court has jurisdiction to wind up any insolvent partnership as an unregistered company by virtue of article 7 of the Insolvent Partnerships Order 1994 if the partnership has, or at any time had, in England and Wales either— (a) a principal place of business, or (b) a place of business at which business is or has been carried on in the course of which the debt (or part of the debt) arose which forms the basis of the petition for winding up the partnership. (2) Subject to subsections (3) and (4) below, a petition for the winding up of an insolvent partnership by virtue of the said article 7 may be presented to a county court in England and Wales if the partnership has, or at any time had, within the insolvency district of that court either— (a) a principal place of business, or (b) a place of business at which business is or has been carried on in the course of which the debt (or part of the debt) arose which forms the basis of the winding-up petition. (3) Subject to subsection (4) below, the court only has jurisdiction to wind up an insolvent partnership if the business of the partnership has been carried on in England and Wales at any time in the period of 3 years ending with the day on which the petition for winding it up is presented. (4) If an insolvent partnership has a principal place of business situated in Scotland or in Northern Ireland, the court shall not have jurisdiction to wind up the partnership unless it had a principal place of business in England and Wales— (a) in the case of a partnership with a principal place of business in Scotland, at any time in the period of 1 year, or (b) in the case of a partnership with a principal place of business in Northern Ireland, at any time in the period of 3 years, ending with the day on which the petition for winding it up is presented. (5) The Lord Chancellor may, with the concurrence of the Lord Chief Justice, by order in a statutory instrument exclude a county court from having winding-up jurisdiction, and for the purposes of that jurisdiction may attach its district, or any part thereof, to any other county court, and may by statutory instrument revoke or vary any such order. In exercising the powers of this section, the Lord Chancellor shall provide that a county court is not to have winding-up jurisdiction unless it has for the time being jurisdiction for the purposes of Parts VIII to XI of this Act (individual insolvency). (6) Every court in England and Wales having winding-up jurisdiction has for the purposes of that jurisdiction all the powers of the High Court; and every prescribed officer of the court shall perform any duties which an officer of the High Court may discharge by order of a judge of that court or otherwise in relation to winding up. (7) This section is subject to Article 3 of the EC Regulation (jurisdiction under the EC Regulation). (8) The Lord Chief Justice may nominate a judicial office holder (as defined in section 109(4) of the Constitutional Reform Act 2005) to exercise his functions under this section.

Section 131: Statement of affairs of insolvent partnership

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Section 131 is modified so as to read as follows:—

(131) (1) Where the court has, by virtue of article 7 of the Insolvent Partnerships Order 1994, made a winding-up order or appointed a provisional liquidator in respect of an insolvent partnership, the official receiver may require some or all of the persons mentioned in subsection (3) below to make out and submit to him a statement in the prescribed form as to the affairs of the partnership. (2) The statement shall be verified by affidavit by the persons required to submit it and shall show— (a) particulars of the debts and liabilities of the partnership and of the partnership property; (b) the names and addresses of the partnership’s creditors; (c) the securities held by them respectively; (d) the dates when the securities were respectively given; and (e) such further or other information as may be prescribed or as the official receiver may require. (3) The persons referred to in subsection (1) are— (a) those who are or have been officers of the partnership; (b) those who have taken part in the formation of the partnership at any time within one year before the relevant date; (c) those who are in the employment of the partnership, or have been in its employment within that year, and are in the official receiver’s opinion capable of giving the information required; (d) those who are or have been within that year officers of, or in the employment of, a company which is, or within that year was, an officer of the partnership. (4) Where any persons are required under this section to submit a statement of affairs to the official receiver, they shall do so (subject to the next subsection) before the end of the period of 21 days beginning with the day after that on which the prescribed notice of the requirement is given to them by the official receiver. (5) The official receiver, if he thinks fit, may— (a) at any time release a person from an obligation imposed on him under subsection (1) or (2) above; or (b) either when giving the notice mentioned in subsection (4) or subsequently, extend the period so mentioned; and where the official receiver has refused to exercise a power conferred by this subsection, the court, if it thinks fit, may exercise it. (6) In this section— - “employment” includes employment under a contract for services; and - “the relevant date” means—in a case where a provisional liquidator is appointed, the date of his appointment; andin a case where no such appointment is made, the date of the winding-up order. (7) If a person without reasonable excuse fails to comply with any obligation imposed under this section, he is liable to a fine and, for continued contravention, to a daily default fine.

Section 133: Public examination of officers of insolvent partnerships

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Section 133 is modified so as to read as follows:—

(133) (1) Where an insolvent partnership is being wound up by virtue of article 7 of the Insolvent Partnerships Order 1994, the official receiver may at any time before the winding up is complete apply to the court for the public examination of any person who— (a) is or has been an officer of the partnership; or (b) has acted as liquidator or administrator of the partnership or as receiver or manager or, in Scotland, receiver of its property; or (c) not being a person falling within paragraph (a) or (b), is or has been concerned, or has taken part, in the formation of the partnership. (2) Unless the court otherwise orders, the official receiver shall make an application under subsection (1) if he is requested in accordance with the rules to do so by one-half, in value, of the creditors of the partnership. (3) On an application under subsection (1), the court shall direct that a public examination of the person to whom the application relates shall be held on a day appointed by the court; and that person shall attend on that day and be publicly examined as to the formation or management of the partnership or as to the conduct of its business and affairs, or his conduct or dealings in relation to the partnership. (4) The following may take part in the public examination of a person under this section and may question that person concerning the matters mentioned in subsection (3), namely— (a) the official receiver; (b) the liquidator of the partnership; (c) any person who has been appointed as special manager of the partnership’s property or business; (d) any creditor of the partnership who has tendered a proof in the winding up.

Section 234: Getting in the partnership property

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Section 234 is modified so as to read as follows:—

(234) (1) This section applies where, by virtue of article 7 of the Insolvent Partnerships Order 1994— (a) an insolvent partnership is being wound up, or (b) a provisional liquidator of an insolvent partnership is appointed; and “the office-holder” means the liquidator or the provisional liquidator, as the case may be. (2) Any person who is or has been an officer of the partnership, or who is an executor or administrator of the estate of a deceased officer of the partnership, shall deliver up to the office-holder, for the purposes of the exercise of the office-holder’s functions under this Act and (where applicable) the Company Directors Disqualification Act 1986²⁴¹, possession of any partnership property which he holds for the purposes of the partnership. (3) Where any person has in his possession or control any property, books, papers or records to which the partnership appears to be entitled, the court may require that person forthwith (or within such period as the court may direct) to pay, deliver, convey, surrender or transfer the property, books, papers or records to the office-holder or as the court may direct. (4) Where the office-holder— (a) seizes or disposes of any property which is not partnership property, and (b) at the time of seizure or disposal believes, and has reasonable grounds for believing, that he is entitled (whether in pursuance of an order of the court or otherwise) to seize or dispose of that property, the next subsection has effect. (5) In that case the office-holder— (a) is not liable to any person in respect of any loss or damage resulting from the seizure or disposal except in so far as that loss or damage is caused by the office-holder’s own negligence, and (b) has a lien on the property, or the proceeds of its sale, for such expenses as were incurred in connection with the seizure or disposal.

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Schedule 4 is modified so as to read as follows:—

SCHEDULE 4 (1) Power to pay any class of creditors in full. (2) Power to make any compromise or arrangement with creditors or persons claiming to be creditors, or having or alleging themselves to have any claim (present or future, certain or contingent, ascertained or sounding only in damages) against the partnership, or whereby the partnership may be rendered liable. (3) Power to compromise, on such terms as may be agreed— (a) all debts and liabilities capable of resulting in debts, and all claims (present or future, certain or contingent, ascertained or sounding only in damages) subsisting or supposed to subsist between the partnership and a contributory or alleged contributory or other debtor or person apprehending liability to the partnership, and (b) all questions in any way relating to or affecting the partnership property or the winding up of the partnership, and take any security for the discharge of any such debt, liability or claim and give a complete discharge in respect of it. (3A) Power to bring legal proceedings under section 213, 214, 238, 239 or 423 (4) Power to bring or defend any action or other legal proceeding in the name and on behalf of any member of the partnership in his capacity as such or of the partnership. (5) Power to carry on the business of the partnership so far as may be necessary for its beneficial winding up. (6) Power to sell any of the partnership property by public auction or private contract, with power to transfer the whole of it to any person or to sell the same in parcels. (7) Power to do all acts and execute, in the name and on behalf of the partnership or of any member of the partnership in his capacity as such, all deeds, receipts and other documents. (8) Power to prove, rank and claim in the bankruptcy, insolvency or sequestration of any contributory for any balance againt his estate, and to receive dividends in the bankruptcy, insolvency or sequestration in respect of that balance, as a separate debt due from the bankrupt or insolvent, and rateably with the other separate creditors. (9) Power to draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of any member of the partnership in his capacity as such or of the partnership, with the same effect with respect to the liability of the partnership or of ny member of the partnership in his capacity as such as if the bill or note had been drawn, accepted, made or endorsed in the course of the partnership’s business. (10) Power to raise on the security of the partnership property any money requisite. (11) Power to take out in his official name letters of administration to any deceased contributory, and to do in his official name any other act necessary for obtaining payment of any money due from a contributory or his estate which cannot conveniently be done in the name of the partnership. In all such cases the money due is deemed, for the purpose of enabling the liquidator to take out the letters of administration or recover the money, to be due to the liquidator himself. (12) Power to appoint an agent to do any business which the liquidator is unable to do himself. (13) Power to do all such other things as may be necessary for winding up the partnership’s affairs and distributing its property.

SCHEDULE 4 — PROVISIONS OF THE ACT WHICH APPLY WITH MODIFICATIONS FOR THE PURPOSES OF ARTICLE 8 TO WINDING UP OF INSOLVENT PARTNERSHIP ON CREDITOR'S PETITION WHERE CONCURRENT PETITIONS ARE PRESENTED AGAINST ONE OR MORE MEMBERS

PART I — MODIFIED PROVISIONS OF PART V OF THE ACT

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• (1) Sections 220 to 222 of the Act are set out as modified in Part I of this Schedule, and the provisions of the Act specified in sub-paragraph (2) below are set out as modified in Part II.

• (2) The provisions referred to in sub-paragraph (1) are sections 117, 122 to 125, 131, 133, 136, 137, 139 to 141, 143, 146, 147, 168, 172, 174, 175, 189, 211, 230, 231, 234 264, 265, 267, 268, 271, 283, 283A, 284, 288, 292 to 296, 298 to 303, 305, 313A, 314, 328, 331 and 356, and Schedule 4.

Section 220: Meaning of “unregistered company”

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Section 220 is modified so as to read as follows—

(220) For the purposes of this Part, the expression “unregistered company” includes any insolvent partnership.

Section 221: Winding up of unregistered companies

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Section 221 is modified so as to read as follows—

(221) (1) Subject to subsections (2) and (3) below and to the provisions of this Part, any insolvent partnership may be wound up under this Act if it has, or at any time had, in England and Wales either— (a) a principal place of business, or (b) a place of business at which business is or has been carried on in the course of which the debt (or part of the debt) arose which forms the basis of the petition for winding up the partnership. (2) Subject to subsection (3) below, an insolvent partnership shall not be wound up under this Act if the business of the partnership has not been carried on in England and Wales at any time in the period of 3 years ending with the day on which the winding-up petition is presented. (3) If an insolvent partnership has a principal place of business situated in Scotland or in Northern Ireland, the court shall not have jurisdiction to wind up the partnership unless it had a principal place of business in England and Wales— (a) in the case of a partnership with a principal place of business in Scotland, at any time in the period of 1 year, or (b) in the case of a partnership with a principal place of business in Northern Ireland at any time in the period of 3 years, ending with the day on which the winding-up petition is presented. (3A) The preceding subsections are subject to Article 3 of the EC Regulation (jurisdiction under the EC Regulation). (4) No insolvent partnership shall be wound up under this Act voluntarily. (5) To the extent that they are applicable to the winding up of a company by the court in England and Wales on a creditor’s petition, all the provisions of this Act and the Companies Act about winding up apply to the winding up of an insolvent partnership as an unregistered company— (a) with the exceptions and additions mentioned in the following subsections of this section, and (b) with the modifications specified in Part II of Schedule 4 to the Insolvent Partnerships Order 1994. (6) Sections 73(1), 74(2)(a) to (d) and (3), 75 to 78, 83, 154, 176A, 202, 203, 205 and 250 shall not apply. (7) Unless the contrary intention appears, a member of a partnership against whom a insolvency order has been made by virtue of article 8 of the Insolvent Partnerships Order 1994 shall not be treated as a contributory for the purposes of this Act. (8) The circumstances in which an insolvent partnership may be wound up as an unregistered company are as follows— (a) the partnership is unable to pay its debts, (b) at the time at which a moratorium for the insolvent partnership under section 1A comes to an end, no voluntary arrangement approved under Part I of this Act has effect in relation to the insolvent partnership. (9) Every petition for the winding up of an insolvent partnership under Part V of this Act shall be verified by affidavit in Form 2 in Schedule 9 to the Insolvent Partnerships Order 1994.

Section 222: Inability to pay debts: unpaid creditor for £750 or more

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Section 222 is modified so as to read as follows—

(222) (1) An insolvent partnership is deemed (for the purposes of section 221) unable to pay its debts if there is a creditor, by assignment or otherwise, to whom the partnership is indebted in a sum exceeding £750 then due and— (a) the creditor has served on the partnership, in the manner specified in subsection (2) below, a written demand in Form 4 in Schedule 9 to the Insolvent Partnerships Order 1994 requiring the partnership to pay the sum so due, (b) the creditor has also served on any one or more members or former members of the partnership liable to pay the sum due (in the case of a corporate member by leaving it at its registered office and in the case of an individual member by serving it in accordance with the rules) a demand in Form 4 in Schedule 9 to that Order, requiring that member or those members to pay the sum so due, and (c) the partnership and its members have for 3 weeks after the service of the demands, or the service of the last of them if served at different times, neglected to pay the sum or to secure or compound for it to the creditor’s satisfaction. (2) Service of the demand referred to in subsection (1)(a) shall be effected— (a) by leaving it at a principal place of business of the partnership in England and Wales, or (b) by leaving it at a place of business of the partnership in England and Wales at which business is carried on in the course of which the debt (or part of the debt) referred to in subsection (1) arose, or (c) by delivering it to an officer of the partnership, or (d) by otherwise serving it in such manner as the court may approve or direct. (3) The money sum for the time being specified in subsection (1) is subject to increase or reduction by regulations under section 417 in Part XV; but no increase in the sum so specified affects any case in which the winding-up petition was presented before the coming into force of the increase.

PART II — OTHER MODIFIED PROVISIONS OF THE ACT ABOUT WINDING UP BY THE COURT AND BANKRUPTCY OF INDIVIDUALS

Sections 117 and 265: High Court and county court jurisdiction

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Sections 117 and 265 are modified so as to read as follows—

(117) (1) Subject to the provisions of this section, the High Court has jurisdiction to wind up any insolvent partnership as an unregistered company by virtue of article 8 of the Insolvent Partnerships Order 1994 if the partnership has, or at any time had, in England and Wales either— (a) a principal place of business, or (b) a place of business at which business is or has been carried on in the course of which the debt (or part of the debt) arose which forms the basis of the petition for winding up the partnership. (2) Subject to subsections (3) and (4) below, a petition for the winding up of an insolvent partnership by virtue of the said article 8 may be presented to a county court in England and Wales if the partnership has, or at any time had, within the insolvency district of that court either— (a) a principal place of business, or (b) a place of business at which business is or has been carried on in the course of which the debt (or part of the debt) arose which forms the basis of the winding-up petition (3) Subject to subsection (4) below, the court only has jurisdiction to wind up an insolvent partnership if the business of the partnership has been carried on in England and Wales at any time in the period of 3 years ending with the day on which the petition for winding it up is presented. (4) If an insolvent partnership has a principal place of business situated in Scotland or in Northern Ireland, the court shall not have jurisdiction to wind up the partnership unless it had a principal place of business in England and Wales— (a) in the case of a partnership with a principal place of business in Scotland, at any time in the period of 1 year, or (b) in the case of a partnership with a principal place of business in Northern Ireland at any time in the period of 3 years, ending with the day on which the petition for winding it up is presented. (5) Subject to subsection (6) below, the court has jurisdiction to wind up a corporate member or former corporate member, or make a bankruptcy order against an individual member or former individual member, of a partnership against which a petition has been presented by virtue of article 8 of the Insolvent Partnerships Order 1994 if it has jurisdiction in respect of the partnership. (6) Petitions by virtue of the said article 8 for the winding up of an insolvent partnership and the bankruptcy of one or more members or former members of that partnership may not be presented to a district registry of the High Court. (7) The Lord Chancellor may, with the concurrence of the Lord Chief Justice, by order in a statutory instrument exclude a county court from having winding-up jurisdiction, and for the purposes of that jurisdiction may attach its district, or any part thereof, to any other county court, and may by statutory instrument revoke or vary any such order. - In exercising the powers of this section, the Lord Chancellor shall provide that a county court is not to have winding-up jurisdiction unless it has for the time being jurisdiction for the purposes of Parts VIII to XI of this Act (individual insolvency). (8) Every court in England and Wales having winding-up jurisdiction has for the purposes of that jurisdiction all the powers of the High Court; and every prescribed officer of the court shall perform any duties which an officer of the High Court may discharge by order of a judge of that court or otherwise in relation to winding up. (9) This section is subject to Article 3 of the EC Regulation (jurisdiction under the EC Regulation) (10) The Lord Chief Justice may nominate a judicial office holder (as defined in section 109(4) of the Constitutional Reform Act 2005) to exercise his functions under this section

Circumstances in which members of insolvent partnerships may be wound up or made bankrupt by the court: Section 122 corporate member Section 267 individual member

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• (a) Section 122 is modified so as to read as follows—

(122) A corporate member or former corporate member of an insolvent partnership may be wound up by the court if— (a) it is unable to pay its debts, (b) there is a creditor, by assignment or otherwise, to whom the insolvent partnership is indebted and the corporate member or former corporate member is liable in relation to that debt and at the time at which a moratorium for the insolvent partnership under section 1A comes to an end, no voluntary arrangement approved under Part I of this Act has effect in relation to the insolvent partnership.

• (b) Section 267 is modified so as to read as follows—

(267) (1) Where a petition for the winding up of an insolvent partnership has been presented to the court by virtue of article 8 of the Insolvent Partnerships Order 1994, a creditor’s petition against any individual member or former individual member of that partnership by virtue of that article must be in respect of one or more joint debts owed by the insolvent partnership, and the petitioning creditor or each of the petitioning creditors must be a person to whom the debt or (as the case may be) at least one of the debts is owed. (2) Subject to subsection (2A) below and section 268, a creditor’s petition may be presented to the court in respect of a joint debt or debts only if, at the time the petition is presented— (a) the amount of the debt, or the aggregate amount of the debts, is equal to or exceed the bankruptcy level, (b) the debt, or each of the debts, is for a liquidated sum payable to the petitioning creditor, or one or more of the petitioning creditors, immediately, and is unsecured, (c) the debt, or each of the debts, is a debt for which the individual member or former member is liable and which he appears to be unable to pay, and (d) there is no outstanding application to set aside a statutory demand served (under section 268 below) in respect of the debt or any of the debts. (2A) A creditor’s petition may be presented to the court in respect of a joint debt or debts if at the time at which a moratorium for the insolvent partnership under section 1A comes to an end, no voluntary arrangement approved under Part I of this Act has effect in relation to the insolvent partnership. (3) “The bankruptcy level” is £750; but the Secretary of State may by order in a statutory instrument substitute any amount specified in the order for that amount or (as th case may be) for the amount which by virtue of such an order is for the time being the mount of the bankruptcy level. (4) An order shall not be made under subsection (3) unless a draft of it has been laid before, and approved by a resolution of, each House of Parliament.

Definition of inability to pay debts: Section 123-corporate member Section 268 individual member

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• (a) Section 123 is modified so as to read as follows—

(123) (1) A corporate member or former member is deemed unable to pay its debts if there is a creditor, by assignment or otherwise, to whom the partnership is indebted in a sum exceeding £750 then due for which the member or former member is liable and— (a) the creditor has served on that member or former member and the partnership, in the manner specified in subsection (2) below, a written demand in Form 4 in Schedule 9 to the Insolvent Partnerships Order 1994 requiring that member or former member and the partnership to pay the sum so due, and (b) the corporate member or former member and the partnership have for 3 weeks after the service of the demands, or the service of the last of them if served at different times neglected to pay the sum or to secure or compound for it to the creditor’s satisfaction (2) Service of the demand referred to in subsection (1)(a) shall be effected, in th case of the corporate member or former corporate member, by leaving it at its registere office, and, in the case of the partnership— (a) by leaving it at a principal place of business of the partnership in England and Wales, or (b) by leaving it at a place of business of the partnership in England and Wales at which business is carried on in the course of which the debt (or part of the debt) referred to in subsection (1) arose, or (c) by delivering it to an officer of the partnership, or (d) by otherwise serving it in such manner as the court may approve or direct. (3) The money sum for the time being specified in subsection (1) is subject to increase or reduction by order under section 416 in Part XV.

• (b) Section 268 is modified so as to read as follows—