Section 7 Abolition of requirements to hold meetings: company insolvencyI1

After Article 208ZD (inserted by section 3) insert—

“Decisions by creditors and contributories

Decisions by creditors and contributories: general

208ZE.

(1)

This Article applies where, for the purposes of Parts 1A to 7, a person (“P”) seeks a decision about any matter from a company’s creditors or contributories.

(2)

The decision may be made by any qualifying decision procedure P thinks fit, except that it may not be made by a creditors’ meeting or (as the case may be) a contributories’ meeting unless paragraph (3) applies.

(3)

This paragraph applies if at least the minimum number of creditors or (as the case may be) contributories make a request to P in writing that the decision be made by a creditors’ meeting or (as the case may be) a contributories’ meeting.

(4)

If paragraph (3) applies, P must summon a creditors’ meeting or (as the case may be) a contributories’ meeting.

(5)

Paragraph (2) is subject to any provision of this Order, the rules or any other legislation, or any order of the High Court—

(a)

requiring a decision to be made, or prohibiting a decision from being made, by a particular qualifying decision procedure (other than a creditors’ meeting or a contributories’ meeting);

(b)

permitting or requiring a decision to be made by a creditors’ meeting or a contributories’ meeting.

(6)

Article 208ZF provides that in certain cases the deemed consent procedure may be used instead of a qualifying decision procedure.

(7)

For the purposes of paragraph (3) the “minimum number” of creditors or contributories is any of the following—

(a)

10% in value of the creditors or contributories;

(b)

10% in number of the creditors or contributories;

(c)

10 creditors or contributories.

(8)

The references in paragraph (7) to creditors are to creditors of any class, even where a decision is sought only from creditors of a particular class.

(9)

In this Article references to a meeting are to a meeting where the creditors or (as the case may be) contributories are invited to be present together at the same place (whether or not it is possible to attend the meeting without being present at that place).

(10)

Except as provided by paragraph (8), references in this Article to creditors include creditors of a particular class.

(11)

In Parts 1A to 7 “qualifying decision procedure” means a procedure prescribed or authorised under paragraph 8A of Schedule 5.

Deemed consent procedure

208ZF.

(1)

The deemed consent procedure may be used instead of a qualifying decision procedure where a company’s creditors or contributories are to make a decision about any matter, unless—

(a)

a decision about the matter is required by virtue of this Order, the rules or any other legislation to be made by a qualifying decision procedure, or

(b)

the High Court orders that a decision about the matter is to be made by a qualifying decision procedure.

(2)

If the rules provide for a company’s creditors or contributories to make a decision about the remuneration of any person, they must provide that the decision is to be made by a qualifying decision procedure.

(3)

The deemed consent procedure is that the relevant creditors other than opted-out creditors or (as the case may be) the relevant contributories are given notice of—

(a)

the matter about which they are to make a decision,

(b)

the decision that the person giving the notice proposes should be made (the “proposed decision”),

(c)

the effect of paragraphs (4) and (5), and

(d)

the procedure for objecting to the proposed decision.

(4)

If less than the appropriate number of relevant creditors or (as the case may be) relevant contributories object to the proposed decision in accordance with the procedure set out in the notice, the creditors or (as the case may be) the contributories are to be treated as having made the proposed decision.

(5)

Otherwise—

(a)

the creditors or (as the case may be) the contributories are to be treated as not having made a decision about the matter in question, and

(b)

if a decision about that matter is again sought from the creditors or (as the case may be) the contributories, it must be sought using a qualifying decision procedure.

(6)

For the purposes of paragraph (4) the “appropriate number” of relevant creditors or relevant contributories is 10% in value of those creditors or contributories.

(7)

“Relevant creditors” means the creditors who, if the decision were to be made by a qualifying decision procedure, would be entitled to vote in the procedure.

(8)

“Relevant contributories” means the contributories who, if the decision were to be made by a qualifying decision procedure, would be entitled to vote in the procedure.

(9)

In this Article references to creditors include creditors of a particular class.

(10)

The rules may make further provision about the deemed consent procedure.

Power to amend Articles 208ZE and 208ZF

208ZG.

(1)

Regulations may amend Article 208ZE so as to change the definition of—

(a)

the minimum number of creditors;

(b)

the minimum number of contributories.

(2)

Regulations may amend Article 208ZF so as to change the definition of—

(a)

the appropriate number of relevant creditors;

(b)

the appropriate number of relevant contributories.

(3)

Regulations under this Article may define the minimum number or the appropriate number by reference to any one or more of—

(a)

a proportion in value;

(b)

a proportion in number;

(c)

an absolute number;

and the definition may include alternative, cumulative or relative requirements.

(4)

Regulations under paragraph (1) may define the minimum number of creditors or contributories by reference to all creditors or contributories, or by reference to creditors or contributories of a particular description.

(5)

Regulations under this Article may make transitional provision.

(6)

Regulations may not be made under this Article unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.”.

In Schedule 5 (provision that may be included in company insolvency rules), after paragraph 8 insert—

“8A.

(1)

Provision about the making of decisions by creditors and contributories, including provision—

(a)

prescribing particular procedures by which creditors and contributories may make decisions;

(b)

authorising the use of other procedures for creditors and contributories to make decisions, if those procedures comply with prescribed requirements.

(2)

Provision under sub-paragraph (1) may in particular include provision about—

(a)

how creditors and contributories may request that a creditors’ meeting or a contributories’ meeting be held;

(b)

the rights of creditors, contributories and others to be given notice of, and participate in, procedures;

(c)

creditors’ and contributories’ rights to vote in procedures;

(d)

the period within which any right to participate or vote is to be exercised;

(e)

the proportion of creditors or contributories that must vote for a proposal for it to be approved;

(f)

how the value of any debt or contribution should be determined;

(g)

the time at which decisions taken by a procedure are to be treated as having been made.”.

In Article 5 (interpretation of Parts 1A to 7), insert each of the following definitions in its appropriate place—

• ““deemed consent procedure” means the deemed consent procedure provided for by Article 208ZF;”;

• ““qualifying decision procedure” has the meaning given by Article 208ZE(11);”.