Insolvency Act 2000 in Northern Ireland

Schedule 1 (which—

is to have effect.

Schedule 2 (which—

is to have effect.

Schedule 3 (which enables the procedure for the approval of individual voluntary arrangements under Part VIII of the M1Insolvency Act 1986 to be started without an initial moratorium for the insolvent debtor and makes other amendments of the provisions about individual voluntary arrangements) is to have effect.

Schedule 4 (which makes minor and consequential amendments about the disqualification of company directors, etc.) is to have effect.

In section 219 of the M1Insolvency Act 1986, after subsection (2) (answers given by a person pursuant to powers conferred by section 218 may be used in evidence against him) there is inserted—

“(2A)

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

(a)

no evidence relating to the answer may be adduced, and

(b)

no question relating to it may be asked,

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

(2B)

Subsection (2A) applies to any offence other than—

(a)

an offence under section 2 or 5 of the M2Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath), or

(b)

an offence under section 44(1) or (2) of the M3Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath).”

The M1Insolvency Act 1986 is amended as provided in this Schedule.

After section 1 there is inserted—

“ Moratorium.

1A

(1)

Where the directors of an eligible company intend to make a proposal for a voluntary arrangement, they may take steps to obtain a moratorium for the company.

(2)

The provisions of Schedule A1 to this Act have effect with respect to—

(a)

companies eligible for a moratorium under this section,

(b)

the procedure for obtaining such a moratorium,

(c)

the effects of such a moratorium, and

(d)

the procedure applicable (in place of sections 2 to 6 and 7) in relation to the approval and implementation of a voluntary arrangement where such a moratorium is or has been in force.”

In section 2(1) (procedure where nominee is not the liquidator or administrator), at the end there is added “ and the directors do not propose to take steps to obtain a moratorium under section 1A for the company ”.

In section 27(3)(a) (protection of interests of creditors and members when administration order in force), “section 4 in” is omitted.

In section 122(1) (grounds on which company may be wound up by the court), after paragraph (f) there is inserted—

“(fa)

at the time at which a moratorium for the company under section 1A comes to an end, no voluntary arrangement approved under Part I has effect in relation to the company”.

In section 124 (application for winding up of company), after subsection (3) there is inserted—

“(3A)

A winding-up petition on the ground set out in section 122(1)(fa) may only be presented by one or more creditors”.

In section 387 (date which determines existence and amount of preferential debt), after subsection (2) there is inserted—

“(2A)

For the purposes of paragraph 31 of Schedule A1 (meetings to consider company voluntary arrangement where a moratorium under section 1A is in force), the relevant date in relation to a company is the date of filing.”

After section 417 there is inserted—

“ Money sums (company moratorium).

417A

(1)

The Secretary of State may by order increase or reduce any of the money sums for the time being specified in the following provisions of Schedule A1 to this Act—

• paragraph 17(1) (maximum amount of credit which company may obtain without disclosure of moratorium);

• paragraph 41(4) (minimum value of company property concealed or fraudulently removed, affecting criminal liability of company’s officer).

(2)

An order under this section may contain such transitional provisions as may appear to the Secretary of State necessary or expedient.

(3)

An order under this section shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.”

In section 432(4) (offences by bodies corporate), at the end there is inserted “ and those under paragraphs 16(2), 17(3)(a), 18(3)(a), 19(3)(a), 22(1) and 23(1)(a) of Schedule A1 ”.

In Schedule 10 (punishment of offences), before the entry relating to paragraph 4(3) of Schedule 7 there are inserted the following entries—

“

Sch. A1, para. 9(2).	Directors failing to notify nominee of beginning of moratorium.	1. On indictment. 2. Summary.	2 years or a fine, or both. 6 months or the statutory maximum, or both.
Sch. A1, para. 10(3).	Nominee failing to advertise or notify beginning of moratorium.	Summary.	One-fifth of the statutory maximum.
Sch. A1, para. 11(2).	Nominee failing to advertise or notify end of moratorium.	Summary.	One-fifth of the statutory maximum.
Sch. A1, para. 16(2).	Company and officers failing to state in correspondence etc. that moratorium in force.	Summary.	One-fifth of the statutory maximum.
Sch. A1, para. 17(3)(a).	Company obtaining credit without disclosing existence of moratorium.	1. On indictment. 2. Summary.	A fine. The statutory maximum.
Sch. A1, para. 17(3)(b).	Obtaining credit for company without disclosing existence of moratorium.	1. On indictment. 2. Summary.	2 years or a fine, or both. 6 months or the statutory maximum, or both.
Sch. A1, para. 18(3)(a).	Company disposing of property otherwise than in ordinary way of business.	1. On indictment. 2. Summary.	A fine. The statutory maximum.
Sch. A1, para. 18(3)(b).	Authorising or permitting disposal of company property.	1. On indictment. 2. Summary.	2 years or a fine, or both. 6 months or the statutory maximum, or both.
Sch. A1, para. 19(3)(a).	Company making payments in respect of liabilities existing before beginning of moratorium.	1. On indictment. 2. Summary.	A fine. The statutory maximum.
Sch. A1, para. 19(3)(b).	Authorising or permitting such a payment.	1. On indictment. 2. Summary.	2 years or a fine, or both. 6 months or the statutory maximum, or both.
Sch. A1, para. 20(9).	Directors failing to send to registrar office copy of court order permitting disposal of charged property.	Summary.	One-fifth of the statutory maximum.
Sch. A1, para. 22(1).	Company disposing of charged property.	1. On indictment. 2. Summary.	A fine. The statutory maximum.
Sch. A1, para. 22(2).	Authorising or permitting such a disposal.	1. On indictment. 2. Summary.	2 years or a fine, or both. 6 months or the statutory maximum, or both.
Sch. A1, para. 23(1)(a).	Company entering into market contract, etc.	1. On indictment. 2. Summary.	A fine. The statutory maximum.
Sch. A1, para. 23(1)(b).	Authorising or permitting company to do so.	1. On indictment. 2. Summary.	2 years or a fine, or both. 6 months or the statutory maximum, or both.
Sch. A1, para. 25(6).	Nominee failing to give notice of withdrawal of consent to act.	Summary.	One-fifth of the statutory maximum.
Sch. A1, para. 34(3).	Nominee failing to give notice of extension of moratorium.	Summary.	One-fifth of the statutory maximum.
Sch. A1, para. 41(2).	Fraud or privity to fraud in anticipation of moratorium.	1. On indictment. 2. Summary.	7 years or a fine, or both. 6 months or the statutory maximum, or both.
Sch. A1, para. 41(3).	Fraud or privity to fraud during moratorium.	1. On indictment. 2. Summary.	7 years or a fine, or both. 6 months or the statutory maximum, or both.
Sch. A1, para. 41(7).	Knowingly taking in pawn or pledge, or otherwise receiving, company property.	1. On indictment. 2. Summary.	7 years or a fine, or both. 6 months or the statutory maximum, or both.
Sch. A1, para. 42(1).	False representation or fraud for purpose of obtaining or extending moratorium.	1. On indictment. 2. Summary.	7 years or a fine, or both. 6 months or the statutory maximum, or both.

”

The M1Insolvency Act 1986 is amended as follows.

In section 1(2) (proposal for a voluntary arrangement), for “in relation to the company” there is substituted “ or authorised to act as nominee, in relation to the voluntary arrangement ”.

In section 2 (procedure where nominee is not the liquidator or administrator)—

In section 4(2) (decisions of meetings), for “in relation to the company” there is substituted “ or authorised to act as nominee, in relation to the voluntary arrangement ”.

After section 4 there is inserted—

“ Approval of arrangement.

4A

(1)

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

(2)

The decision has effect if, in accordance with the rules—

(a)

it has been taken by both meetings summoned under section 3, or

(b)

(subject to any order made under subsection (4)) it has been taken by the creditors’ meeting summoned under that section.

(3)

If the decision taken by the creditors’ meeting differs from that taken by the company meeting, a member of the company may apply to the court.

(4)

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

(a)

the day on which the decision was taken by the creditors’ meeting, or

(b)

where the decision of the company meeting was taken on a later day, that day.

(5)

Where a member of a regulated company, within the meaning given by paragraph 44 of Schedule A1, applies to the court under subsection (3), the Financial Services Authority is entitled to be heard on the application.

(6)

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

(a)

order the decision of the company meeting to have effect instead of the decision of the creditors’ meeting, or

(b)

make such other order as it thinks fit.”

In section 5 (effect of approval of voluntary arrangement)—

After that section there is inserted—

“ False representations, etc.

6A

(1)

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

(a)

makes any false representation, or

(b)

fraudulently does, or omits to do, anything,

he commits an offence.

(2)

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

(3)

For purposes of this section “officer” includes a shadow director.

(4)

A person guilty of an offence under this section is liable to imprisonment or a fine, or both.”

In section 7 (implementation of proposal)—

After that section there is inserted—

“ Prosecution of delinquent officers of company.

7A

(1)

This section applies where a moratorium under section 1A has been obtained for a company or the approval of a voluntary arrangement in relation to a company has taken effect under section 4A or paragraph 36 of Schedule A1.

(2)

If it appears to the nominee or supervisor that any past or present officer of the company has been guilty of any offence in connection with the moratorium or, as the case may be, voluntary arrangement for which he is criminally liable, the nominee or supervisor shall forthwith—

(a)

report the matter to the appropriate authority, and

(b)

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

• In this subsection, “the appropriate authority” means—

  1. (i)

     in the case of a company registered in England and Wales, the Secretary of State, and

  2. (ii)

     in the case of a company registered in Scotland, the Lord Advocate.

(3)

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

(4)

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

(5)

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

(6)

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

(a)

no evidence relating to the answer may be adduced, and

(b)

no question relating to it may be asked,

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

(7)

Subsection (6) applies to any offence other than—

(a)

an offence under section 2 or 5 of the M1Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath), or

(b)

an offence under section 44(1) or (2) of the M2Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath).

(8)

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

For this purpose—

• “agent” includes any banker or solicitor of the company and any person employed by the company as auditor, whether that person is or is not an officer of the company,

• “prosecuting authority” means the Director of Public Prosecutions, the Lord Advocate or the Secretary of State.

(9)

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

Arrangements coming to an end prematurely.

7B

For the purposes of this Part, a voluntary arrangement the approval of which has taken effect under section 4A or paragraph 36 of Schedule A1 comes to an end prematurely if, when it ceases to have effect, it has not been fully implemented in respect of all persons bound by the arrangement by virtue of section 5(2)(b)(i) or, as the case may be, paragraph 37(2)(b)(i) of Schedule A1.”

In section 387(2)(b) (date which determines existence and amount of preferential debt), for the words following “date” there is substituted “ on which the voluntary arrangement takes effect ”.

In Schedule 10 (punishment of offences), before the entry relating to section 12(2) there is inserted the following entry—

“

6A(1).

False representation or fraud for purpose of obtaining members’ or creditors’ approval of proposed voluntary arrangement.

1. On indictment. 2. Summary.

7 years or a fine, or both. 6 months or the statutory maximum, or both.

”

The Insolvency Act 1986 is amended as follows.

In section 252 (interim order of court)—

In section 253 (application for interim order)—

In section 254 (effect of application), in subsection (1)—

In section 255 (cases in which interim order can be made), in subsection (1)—

In section 256 (nominee’s report on debtor’s proposal)—

After section 256 there is inserted—

“ Procedure where no interim order made

Debtor’s proposal and nominee’s report.

256A

(1)

This section applies where a debtor (being an individual)—

(a)

intends to make a proposal under this Part (but an interim order has not been made in relation to the proposal and no application for such an order is pending), and

(b)

if he is an undischarged bankrupt, has given notice of the proposal to the official receiver and, if there is one, the trustee of his estate,

unless a bankruptcy petition presented by the debtor is pending and the court has, under section 273, appointed an insolvency practitioner to inquire into the debtor’s affairs and report.

(2)

For the purpose of enabling the nominee to prepare a report to the court, the debtor shall submit to the nominee—

(a)

a document setting out the terms of the voluntary arrangement which the debtor is proposing, and

(b)

a statement of his affairs containing—

(i)

such particulars of his creditors and of his debts and other liabilities and of his assets as may be prescribed, and

(ii)

such other information as may be prescribed.

(3)

If the nominee is of the opinion that the debtor is an undischarged bankrupt, or is able to petition for his own bankruptcy, the nominee shall, within 14 days (or such longer period as the court may allow) after receiving the document and statement mentioned in subsection (2), submit a report to the court stating—

(a)

whether, in his opinion, the voluntary arrangement which the debtor is proposing has a reasonable prospect of being approved and implemented,

(b)

whether, in his opinion, a meeting of the debtor’s creditors should be summoned to consider the debtor’s proposal, and

(c)

if in his opinion such a meeting should be summoned, the date on which, and time and place at which, he proposes the meeting should be held.

(4)

The court may—

(a)

on an application made by the debtor in a case where the nominee has failed to submit the report required by this section or has died, or

(b)

on an application made by the debtor or the nominee in a case where it is impracticable or inappropriate for the nominee to continue to act as such,

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

(5)

The court may, on an application made by the nominee, extend the period within which the nominee is to submit his report.

Creditors’ meeting”

In section 257 (summoning of creditors’ meeting), in subsection (1)—

In section 258 (decisions of creditors’ meeting), in subsection (3), for “in relation to the debtor” there is substituted “ or authorised to act as nominee, in relation to the voluntary arrangement ” and for “such as is mentioned in section 253” there is substituted “ under this Part ”.

In section 260 (effect of approval), for subsection (2)(b) there is substituted—

“(b)

binds every person who in accordance with the rules—

(i)

was entitled to vote at the meeting (whether or not he was present or represented at it), or

(ii)

would have been so entitled if he had had notice of it,

as if he were a party to the arrangement.

(2A)

If—

(a)

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

(b)

the arrangement did not come to an end prematurely,

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

After that section there is inserted—

“ False representations etc.

262A

(1)

If for the purpose of obtaining the approval of his creditors to a proposal for a voluntary arrangement, the debtor—

(a)

makes any false representation, or

(b)

fraudulently does, or omits to do, anything,

he commits an offence.

(2)

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

(3)

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

Prosecution of delinquent debtors.

262B

(1)

This section applies where a voluntary arrangement approved by a creditors’ meeting summoned under section 257 has taken effect.

(2)

If it appears to the nominee or supervisor that the debtor has been guilty of any offence in connection with the arrangement for which he is criminally liable, he shall forthwith—

(a)

report the matter to the Secretary of State, and

(b)

provide the Secretary of State with such information and give the Secretary of State such access to and facilities for inspecting and taking copies of documents (being information or documents in his possession or under his control and relating to the matter in question) as the Secretary of State requires.

(3)

Where a prosecuting authority institutes criminal proceedings following any report under subsection (2), the nominee or, as the case may be, supervisor shall give the authority all assistance in connection with the prosecution which he is reasonably able to give.

• For this purpose, “prosecuting authority” means the Director of Public Prosecutions or the Secretary of State.

(4)

The court may, on the application of the prosecuting authority, direct a nominee or supervisor to comply with subsection (3) if he has failed to do so.

Arrangements coming to an end prematurely.

262C

For the purposes of this Part, a voluntary arrangement approved by a creditors’ meeting summoned under section 257 comes to an end prematurely if, when it ceases to have effect, it has not been fully implemented in respect of all persons bound by the arrangement by virtue of section 260(2)(b)(i).”

In section 263 (implementation and supervision of approved voluntary arrangement)—

In section 347 (distress, etc.)—

In section 387 (date which determines existence and amount of preferential debt), in subsection (5), for the words following “undischarged bankrupt” there is substituted—

“(a)

where an interim order has been made under section 252 with respect to his proposal, the date of that order, and

(b)

in any other case, the date on which the voluntary arrangement takes effect.”

In Schedule 10 (punishment of offences), after the entry relating to section 235(5) there is inserted the following entry—

“

262A(1).

False representation or fraud for purpose of obtaining creditors’ approval of proposed voluntary arrangement.

1. On indictment. 2. Summary.

7 years or a fine, or both. 6 months or the statutory maximum, or both.

”

The M1Company Directors Disqualification Act 1986 is amended in accordance with this Part.

In section 1(3) (disqualification orders), after “an order” there is inserted “ or to a disqualification undertaking ” and after “those orders” there is inserted “ or, as the case may be, in the order and the undertaking ”.

In section 2(1) (disqualification on conviction of indictable offence), for the words following “a company” there is substituted “ with the receivership of a company’s property or with his being an administrative receiver of a company ”.

In section 4 (disqualification for fraud, etc., in winding up), in subsection (1)(b), for “or receiver or manager of its property” there is substituted “ receiver of the company’s property or administrative receiver of the company ” and for “receiver or manager” (in the second place) there is substituted “ receiver or administrative receiver ”.

In section 7 (applications to court under section 6; reporting provisions)—

In section 9 (matters for determining unfitness of directors)—

In section 13 (criminal penalties)—

In section 14(1) (offences by body corporate), after “disqualification order” there is inserted “ or disqualification undertaking or in contravention of section 12A ”.

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