INTRODUCTORY PROVISIONS

Citation and commencement_I1

0.1. These Rules may be cited as the Insolvency Rules 1986 and shall come into force on 29th December 1986.

[^F1Construction and interpretation

0.2.—(1) In these Rules–

“the Act” means the Insolvency Act 1986 (any reference to a numbered section being to a section of that Act);

“the Companies Act” means the Companies Act 1985 ;

“CPR” means the Civil Procedure Rules 1998 and “CPR” followed by a Part or rule by number means the Part or rule with that number in those Rules;

“RSC” followed by an Order by number means the Order with that number set out in Schedule 1 to the CPR; and

“the Rules” means the Insolvency Rules 1986.

(2) References in the Rules to ex parte hearings shall be construed as references to hearings without notice being served on any other party; references to applications made ex parte as references to applications made without notice being served on any other party and other references which include the expression “ ex parte ” shall be similarly construed.

(3) Subject to paragraphs (1) and (2), Part 13 of the Rules has effect for their interpretation and application.^F1]

Extent_I2

0.3.—(1) Parts 1, 2 and 4 of the Rules, and Parts 7 to 13 as they relate to company insolvency, apply in relation to companies which the courts in England and Wales have jurisdiction to wind up.

[^F2 (2) Rule 3.1 applies to all receivers to whom Part III of the Act applies, Rule 3.39 and 3.40 apply to all receivers who are not administrative receivers, and the remainder of Part 3 of the Rules applies to administrative receivers appointed otherwise than under section 51 (Scottish Receivership).^F2]

(3) Parts 5 and 6 of the Rules, and Parts 7 to 13 as they relate to individual insolvency, extend to England and Wales only.

THE FIRST GROUP OF PARTS

PART 1 COMPANY VOLUNTARY ARRANGEMENTS

CHAPTER 1 PRELIMINARY

Scope of this Part; interpretation_I3

case1.1.—(1) The Rules in this Part apply where, pursuant to Part I of the Act, it is intended to make, and there is made, a proposal to a company and its creditors for a voluntary arrangement, that is to say, a composition in satisfaction of its debts or a scheme of arrangement of its affairs.

(2) In this Part—

[^F3 (a)Chapter 2 applies where the proposal for the voluntary arrangement is made by the directors of the company and

(i)the company is neither in liquidation nor is [^F4 the company in administration^F4] ; and

(ii)no steps have been taken to obtain a moratorium under Schedule A1 to the Act in connection with the proposal;^F3]

(b)Chapter 3 applies where the company is in liquidation or [^F5the company is in administration^F5] , and the proposal is made by the liquidator or (as the case may be) the administrator, he in either case being the nominee for the purposes of the proposal;

[^F6 (c)Chapter 4 applies in the same case as Chapter 3, but where the nominee is not the liquidator or administrator;

(d)Chapter 5 applies in all the three cases mentioned in sub-paragraphs (a) to (c) above;

(e)Chapters 7 and 8 apply to all voluntary arrangements with or without a moratorium; and

(f)Chapter 9 applies where the proposal is made by the directors of an eligible company with a view to obtaining a moratorium.^F6]

(3) In Chapters 3, 4 and 5, the liquidator or the administrator is referred to as “ the responsible insolvency practitioner ”.

[^F7 (4) In this Part, a reference to an “eligible company” is to a company that is eligible for a moratorium in accordance with paragraph 2 of Schedule A1 to the Act. ^F7]

CHAPTER 2 PROPOSAL BY DIRECTORS

Preparation of proposal_I4

1.2. The directors shall prepare for the intended nominee a proposal on which (with or without amendments to be made under Rule 1.3 below) to make his report to the court under section 2.

Contents of proposal_I5

case1.3.—(1) The directors' proposal shall provide a short explanation why, in their opinion, a voluntary arrangement under Part I of the Act is desirable, and give reasons why the company's creditors may be expected to concur with such an arrangement.

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

(a)the following matters, so far as within the directors' immediate knowledge—

(i)the company's assets, with an estimate of their respective values,

(ii)the extent (if any) to which the assets are charged in favour of creditors,

(iii)the extent (if any) to which particular assets are to be excluded from the voluntary arrangement;

(b)particulars of any property, other than assets of the company itself, which is proposed to be included in the arrangement, the source of such property and the terms on which it is to be made available for inclusion;

(c)the nature and amount of the company's liabilities (so far as within the directors' immediate knowledge), the manner in which they are proposed to be met, modified, postponed or otherwise dealt with by means of the arrangement, and (in particular)—

(i)how it is proposed to deal with preferential creditors (defined in section 4(7)) and creditors who are, or claim to be, secured,

(ii)how persons connected with the company (being creditors) are proposed to be treated under the arrangement, and

(iii)whether there are, to the directors' knowledge, any circumstances giving rise to the possibility, in the event that the company should go into liquidation, of claims under—

• section 238 (transactions at an undervalue),

• section 239 (preferences),

• section 244 (extortionate credit transactions), or

• section 245 (floating charges invalid);

and, where any such circumstances are present, whether, and if so how, it is proposed under the voluntary arrangement to make provision for wholly or partly indemnifying the company in respect of such claims;

[^F8 (ca)an estimate (to the best of the directors' knowledge and belief and subject to paragraph (4)) of—

(i)the value of the prescribed part, should the company go into liquidation if the proposal for the voluntary arrangement is not accepted, whether or not section 176A is to be disapplied; and

(ii)the value of the company’s net property on the date that the estimate is made;^F8]

(d)whether any, and if so what, guarantees have been given of the company's debts by other persons, specifying which (if any) of the guarantors are persons connected with the company;

(e)the proposed duration of the voluntary arrangement;

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

[^F9 (fa)How it is proposed to deal with the claim of any person who is bound by the arrangement by virtue of section 5(2)(b)(ii)(1);^F9]

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

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

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

(k)the manner in which funds held for the purposes of the arrangement are to be banked, invested or otherwise dealt with pending distribution to creditors;

(l)the manner in which funds held for the purpose of payment to creditors, and not so paid on the termination of the arrangement, are to be dealt with;

(m)the manner in which the business of the company is proposed to be conducted during the course of the arrangement;

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

(o)^F10the functions which are to be undertaken by the supervisor of the arrangement; ...

[^F11 (p)the name, address and qualification of the person proposed as supervisor of the voluntary arrangement, and confirmation that he is either qualified to act as an insolvency practitioner in relation to the company or is an authorised person in relation to the company; and^F11]

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

(3) With the agreement in writing of the nominee, the directors' proposal may be amended at any time up to delivery of the former's report to the court under section 2(2).

[^F12 (4) Nothing in paragraph (2)(ca) is to be taken as requiring the estimate referred to in that paragraph to include any information, the disclosure of which could seriously prejudice the commercial interests of the company. If such information is excluded from the calculation the estimate shall be accompanied by a statement to that effect.^F12]

Notice to intended nominee_I6

1.4.—(1) The directors shall give to the intended nominee written notice of their proposal.

(2) The notice, accompanied by a copy of the proposal, shall be delivered either to the nominee himself, or to a person authorised to take delivery of documents on his behalf.

(3) If the intended nominee agrees to act, he shall cause a copy of the notice to be endorsed to the effect that it has been received by him on a specified date; and the period of 28 days referred to in section 2(2) then runs from that date.

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

Statement of affairs_I7

1.5.—(1) The directors shall, within 7 days after their proposal is delivered to the nominee, or within such longer time as he may allow, deliver to him a statement of the company's affairs.

(2) The statement shall comprise the following particulars (supplementing or amplifying, so far as is necessary for clarifying the state of the company's affairs, those already given in the directors' proposal)—

(a)a list of the company's assets, divided into such categories as are appropriate for easy identification, with estimated values assigned to each category;

(b)in the case of any property on which a claim against the company is wholly or partly secured, particulars of the claim and its amount, and of how and when the security was created;

(c)the names and addresses of the company's preferential creditors (defined in section 4(7)), with the amounts of their respective claims;

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

(e)particulars of any debts owed by or to the company to or by persons connected with it;

(f)the names and addresses of the company's members, with details of their respective shareholdings;

(g)such other particulars (if any) as the nominee may in writing require to be furnished for the purposes of making his report to the court on the directors' proposal.

(3) The statement of affairs shall be made up to a date not earlier than 2 weeks before the date of the notice to the nominee under Rule 1.4.

However, the nominee may allow an extension of that period to the nearest practicable date (not earlier than 2 months before the date of the notice under Rule 1.4); and if he does so, he shall give his reasons in his report to the court on the directors' proposal.

(4) The statement shall be certified as correct, to the best of their knowledge and belief, by two or more directors of the company, or by the company secretary and at least one director (other than the secretary himself).

Additional disclosure for assistance of nominee_I8

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

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

(b)particulars of any previous proposals which have been made in respect of the company under Part I of the Act;

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

(2) The nominee may call on the directors to inform him, with respect to any person who is, or at any time in the 2 years preceding the notice under Rule 1.4 has been, a director or officer of the company, whether and in what circumstances (in those 2 years or previously) that person—

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

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

(3) For the purpose of enabling the nominee to consider their proposal and prepare his report on it, the directors must give him access to the company's accounts and records.

Nominee's report on the proposal_I9

1.7.—(1) With his report to the court under section 2 the nominee shall deliver—

(a)a copy of the directors' proposal (with amendments, if any, authorised under Rule 1.3(3)); and

(b)a copy or summary of the company's statement of affairs.

(2) If the nominee makes known his opinion [^F13that the directors' proposal has a reasonable prospect of being approved and implemented and^F13] that meetings of the company and its creditors should be summoned under section 3, his report shall have annexed to it his comments on the proposal.

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

(3) The court shall cause the nominee's report to be endorsed with the date on which it is filed in court. Any director, member or creditor of the company is entitled, at all reasonable times on any business day, to inspect the file.

(4) The nominee shall send a copy of his report, and of his comments (if any), to the company.

[^F14Replacement of nominee

1.8.—(1) Where a person other than the nominee intends to apply to the court under section 2(4) for the nominee to be replaced, (except in any case where the nominee has died) he shall give to the nominee at least 7 days' notice of his application.

(2) Where the nominee intends to apply to the court under section 2(4) of the Act to be replaced, he shall give at least 7 days' notice of his application to the person intending to make the proposal.

(3) No appointment of a replacement nominee shall be made by the court unless there is filed in court a statement by the replacement nominee—

(a)[[FORM 8.1]] indicating his consent to act, and

(b)that he is qualified to act as an insolvency practitioner in relation to the company or is an authorised person in relation to the company.^F14]

Summoning of meetings under s. 3_I10

case1.9.—(1) If in his report the nominee states that in his opinion meetings of the company and its creditors should be summoned to consider the directors' proposal, the date on which the meetings are to be held shall be not less than 14, nor more than 28, days from that on which the nominee's report is filed in court under Rule 1.7.

(2) Notices calling the meetings shall be sent by the nominee, at least 14 days before the day fixed for them to be held—

(a)in the case of the creditors' meeting, to all the creditors specified in the statement of affairs, and any other creditors of the company of whom he is otherwise aware; and

(b)in the case of the meeting of members of the company, to all persons who are, to the best of the nominee's belief, members of it.

(3) Each notice sent under this Rule shall specify the court to which the nominee's report under section 2 has been delivered and shall state the effect of Rule 1.19(1), (3) and (4) (requisite majorities (creditors)); and with each notice there shall be sent—

(a)a copy of the directors' proposal;

(b)a copy of the statement of affairs or, if the nominee thinks fit, a summary of it (the summary to include a list of creditors and the amount of their debts); and

(c)the nominee's comments on the proposal.

CHAPTER 3 PROPOSAL BY ADMINISTRATOR OR LIQUIDATOR (HIMSELF THE NOMINEE)

Preparation of proposal_I11

1.10.—(1) The responsible insolvency practitioner's proposal shall specify—

(a)all such matters as under Rule 1.3 [^F15(subject to paragraph (3) below)^F15] in Chapter 2 the directors of the company would be required to include in a proposal by them [^F16, with the addition, where the company is [^F17 in administration^F17] , of the names and addresses of the company’s preferential creditors (defined in section 4(7)), with the amounts of their respective claims^F16] , and

(b)such other matters (if any) as the insolvency practitioner considers appropriate for ensuring that members and creditors of the company are enabled to reach an informed decision on the proposal.

(2) Where the company is being wound up by the court, the insolvency practitioner shall give notice of the proposal to the official receiver.

[^F18 (3) The administrator or liquidator shall include, in place of the estimate required by Rule 1.3(2)(ca), a statement which contains—

(a)to the best of the administrator or liquidator’s knowledge and belief—

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

(ii)an estimate of the value of the company’s net property, and

(b)whether, and, if so, why, the administrator or liquidator proposes to make an application to court under section 176A(5).

(4) Nothing in this Rule is to be taken as requiring any such estimate to include any information, the disclosure of which could seriously prejudice the commercial interests of the company. If such information is excluded from the calculation the estimate shall be accompanied by a statement to that effect.^F18]

Summoning of meetings under s. 3_I12

case1.11.—(1) The responsible insolvency practitioner shall fix a venue for the creditors' meeting and the company meeting, and give at least 14 days' notice of the meetings—

(a)in the case of the creditors' meeting, to all the creditors specified in the company's statement of affairs, and to any other creditors of whom the insolvency practitioner is aware; and

(b)in the case of the company meeting, to all persons who are, to the best of his belief, members of the company.

(2) Each notice sent out under this Rule shall state the effect of Rule 1.19(1), (3) and (4) (requisite majorities (creditors)); and with it there shall be sent—

(a)a copy of the responsible insolvency practitioner's proposal, and

(b)a copy of the statement of affairs or, if he thinks fit, a summary of it (the summary to include a list of creditors and the amounts of their debts).

CHAPTER 4 PROPOSAL BY ADMINISTRATOR OR LIQUIDATOR (ANOTHER INSOLVENCY PRACTITIONER THE NOMINEE)

Preparation of proposal and notice to nominee_I13

case1.12.—(1) The responsible insolvency practitioner shall give notice to the intended nominee, and prepare his proposal for a voluntary arrangement, in the same manner as is required of the directors, in the case of a proposal by them, under Chapter 2.

(2) Rule 1.2 applies to the responsible insolvency practitioner as it applies to the directors; and Rule 1.4 applies as regards the action to be taken by the nominee.

(3) The content of the proposal shall be as required by Rule 1.3 [^F19(and, where relevant, Rule 1.10)^F19] , reading references to the directors as referring to the responsible insolvency practitioner.

(4) Rule 1.6 applies in respect of the information to be furnished to the nominee, reading references to the directors as referring to the responsible insolvency practitioner.

(5) With the proposal the responsible insolvency practitioner shall provide a copy of the company's statement of affairs.

(6) Where the company is being wound up by the court, the responsible insolvency practitioner shall send a copy of the proposal to the official receiver, accompanied by the name and address of the insolvency practitioner [^F20or authorised person^F20] who has agreed to act as nominee.

(7) Rules 1.7 to 1.9 apply as regards a proposal under this Chapter as they apply to a proposal under Chapter 2.

CHAPTER 5 PROCEEDINGS ON A PROPOSAL MADE BY THE DIRECTORS, OR BY THE ADMINISTRATOR, OR BY THE LIQUIDATOR

SECTION A: MEETINGS OF COMPANY'S CREDITORS AND MEMBERS

Summoning of meetings

case[^F21 1.13. —(1) Subject as follows, in fixing the venue for the creditors' meeting and the company meeting, the person summoning the meeting (“the convener”) shall have regard primarily to the convenience of the creditors.

(2) ) Meetings shall in each case be summoned for commencement between 10.00 and 16.00 hours on a business day.

(3) The meetings may be held on the same day or on different days. If held on the same day, the meetings shall be held in the same place, but in either case the creditors' meeting shall be fixed for a time in advance of the company meeting.

(4) Where the meetings are not held on the same day, they shall be held within 7 days of each other.

(5) With every notice summoning either meeting there shall be sent out forms of proxy.^F21]

The chairman at meetings_I14

case1.14.—(1) Subject as follows, at both the creditors' meeting and the company meeting, and at any combined meeting, the convener shall be chairman.

^F22(2) If for any reason he is unable to attend, he may nominate another person to act as chairman in his place; but a person so nominated must be ...—

[^F23 (a)a person qualified to act as an insolvency practitioner in relation to the company;

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

(c)an employee of the convenor or his firm who is experienced in insolvency matters.^F23]

The chairman as proxy-holder_I15

1.15. The chairman shall not by virtue of any proxy held by him vote to increase or reduce the amount of the remuneration or expenses of the nominee or the supervisor of the proposed arrangement, unless the proxy specifically directs him to vote in that way.

Attendance by company officers_I16

1.16.—(1) At least 14 days' notice to attend the meetings shall be given by the convener—

(a)to all directors of the company, and

(b)to any persons in whose case the convener thinks that their presence is required as being officers of the company, or as having been directors or officers of it at any time in the 2 years immediately preceding the date of the notice.

(2) The chairman may, if he thinks fit, exclude any present or former director or officer from attendance at a meeting, either completely or for any part of it; and this applies whether or not a notice under this Rule has been sent to the person excluded.

SECTION B: VOTING RIGHTS AND MAJORITIES

[^F24Entitlement to vote (creditors)

case1.17.—(1) Subject as follows, every creditor who has notice of the creditors' meeting is entitled to vote at the meeting or any adjournment of it.

(2) Votes are calculated according to the amount of the creditor’s debt as at the date of the meeting or, where the company is being wound up or is [^F25 in administration^F25] , the date of its going into liquidation or (as the case may be) of the [^F25 when the company entered administration^F25] .

(3) A creditor may vote in respect of a debt for an unliquidated amount or any debt whose value is not ascertained and for the purposes of voting (but not otherwise) his debt shall be valued at £1 unless the chairman agrees to put a higher value on it.

Procedure for admission of creditors' claims for voting purposes

case1.17A.—(1) Subject as follows, at any creditors' meeting the chairman shall ascertain the entitlement of persons wishing to vote and shall admit or reject their claims accordingly.

(2) The chairman may admit or reject a claim in whole or in part.

(3) The chairman’s decision on any matter under this Rule or under paragraph (3) of Rule 1.17 is subject to appeal to the court by any creditor or member of the company.

(4) If the chairman is in doubt whether a claim should be admitted or rejected, he shall mark it as objected to and allow votes to be cast in respect of it, subject to such votes being subsequently declared invalid if the objection to the claim is sustained.

(5) If on an appeal the chairman’s decision is reversed or varied, or votes are declared invalid, the court may order another meeting to be summoned, or make such order as it thinks just.

The court’s power to make an order under this paragraph is exercisable only if it considers that the circumstances giving rise to the appeal give rise to unfair prejudice or material irregularity.

(6) An application to the court by way of appeal against the chairman’s decision shall not be made after the end of the period of 28 days beginning with the first day on which the report required by section 4(6) has been made to the court.

(7) The chairman is not personally liable for any costs incurred by any person in respect of an appeal under this Rule.^F24]

Voting rights (members)_I17

1.18.—(1) Subject as follows, members of the company at their meeting vote according to the rights attaching to their shares respectively in accordance with the articles.

^F26(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) References in this Rule to a person's shares include any other interest which he may have as a member of the company.

Requisite majorities (creditors)_I18

case1.19.—(1) Subject as follows, at the creditors' meeting for any resolution to pass approving any proposal or modification there must be a majority in excess of three-quarters in value of the creditors present in person or by proxy and voting on the resolution.

(2) The same applies in respect of any other resolution proposed at the meeting, but substituting one-half for three-quarters.

(3) In the following cases there is to be left out of account a creditor's vote in respect of any claim or part of a claim—

(a)where written notice of the claim was not given, either at the meeting or before it, to the chairman or convener of the meeting;

(b)where the claim or part is secured;

(c)where the claim is in respect of a debt wholly or partly on, or secured by, a current bill of exchange or promissory note, unless the creditor is willing—

(i)to treat the liability to him on the bill or note of every person who is liable on it antecedently to the company, and against whom a bankruptcy order has not been made (or in the case of a company, which has not gone into liquidation), as a security in his hands, and

(ii)to estimate the value of the security and (for the purpose of entitlement to vote, but not of any distribution under the arrangement) to deduct it from his claim.

(4) Any resolution is invalid if those voting against it include more than half in value of the creditors, counting in these latter only those—

(a)to whom notice of the meeting was sent;

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

(c)who are not, to the best of the chairman's belief, persons connected with the company.

(5) It is for the chairman of the meeting to decide whether under this Rule—

(a)a vote is to be left out of account in accordance with paragraph (3), or

(b)a person is a connected person for the purposes of paragraph (4)(c);

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

(6) If the chairman uses a proxy contrary to Rule 1.15, his vote with that proxy does not count towards any majority under this Rule.

[^F27 (7) The chairman’s decision on any matter under this Rule is subject to appeal to the court by any creditor or member and paragraphs (5) to (7) of Rule 1.17A apply as regards such an appeal.^F27]

Requisite majorities (members)_I19

1.20.—(1) Subject as follows, and to any express provision made in the articles, at a company meeting any resolution is to be regarded as passed if voted for by more than one-half [^F28in value^F28] of the members present in person or by proxy and voting on the resolution.

[^F29 The value of members is determined by reference to the number of votes conferred on each member by the company’s articles.^F29]

^F30(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) If the chairman uses a proxy contrary to Rule 1.15, his vote with that proxy does not count towards any majority under this Rule.

Proceedings to obtain agreement on the proposal

[^F31 1.21 .—(1) If the chairman thinks fit, the creditors' meeting and the company meeting may be held together

(2) The chairman may, and shall if it is so resolved at the meeting in question, adjourn that meeting for not more than 14 days.

(3) If there are subsequently further adjournments, the final adjournment shall not be to a day later than 14 days after the date on which the meeting in question was originally held.

(4) In the case of a proposal by the directors, if the meetings are adjourned under paragraph (2), notice of the fact shall be given by the nominee forthwith to the court.

(5) If following the final adjournment of the creditors' meeting the proposal (with or without modifications) has not been approved by the creditors, it is deemed rejected.^F31]

SECTION C: IMPLEMENTATION OF THE ARRANGEMENT

Resolutions to follow approval_I20

1.22.[^F32—(1) If the voluntary arrangement is approved (with or without modifications) by the creditors' meeting, a resolution may be taken by the creditors, where two or more supervisors are appointed, on the question whether acts to be done in connection with the arrangement may be done by any one or more of them, or must be done by all of them.^F32]

^F33(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) If at either meeting a resolution is moved for the appointment of some person other than the nominee to be supervisor of the arrangement, there must be produced to the chairman, at or before the meeting—

(a)that person's written consent to act (unless he is present and then and there signifies his consent), and

(b)his written confirmation that he is qualified to act as an insolvency practitioner in relation to the company [^F34or is an authorised person in relation to the company^F34] .

[^F35Notice of order made under section 4A(6)

1.22A.—(1) This Rule applies where the court makes an order under section 4A(6).

(2) The member of the company who applied for the order shall serve sealed copies of it on—

(a)the supervisor of the voluntary arrangement; and

(b)the directors of the company.

(3) Service on the directors may be effected by service of a single copy on the company at its registered office.

(4) The directors or (as the case may be) the supervisor shall forthwith after receiving a copy of the court’s order, give notice of it to all persons who were sent notice of the creditors' or company meetings or who, not having been sent such notice, are affected by the order.

(5) The person on whose application the order of the court was made shall, within 7 days of the order, deliver an office copy to the registrar of companies.^F35]

Hand-over of property etc. to supervisor_I21

case1.23.—(1)[^F36 Where the decision approving the voluntary arrangement has effect under section 4A—^F36]

(a)the directors, or

(b)where the company is in liquidation or is [^F37in administration^F37] , and a person other than the responsible insolvency practitioner is appointed as supervisor of the voluntary arrangement, the insolvency practitioner,

shall forthwith do all that is required for putting the supervisor into possession of the assets included in the arrangement.

(2) Where the company is in liquidation or is [^F38in administration^F38] , the supervisor shall on taking possession of the assets discharge any balance due to the insolvency practitioner by way of remuneration or on account of—

(a)fees, costs, charges and expenses properly incurred and payable under the Act or the Rules, and

(b)any advances made in respect of the company, together with interest on such advances at the rate specified in section 17 of the Judgments Act 1838 at the date on which the company went into liquidation or (as the case may be) [^F39entered administration^F39] .

(3) Alternatively, the supervisor must, before taking possession, give the responsible insolvency practitioner a written undertaking to discharge any such balance out of the first realisation of assets.

(4) The insolvency practitioner has a charge on the assets included in the voluntary arrangement in respect of any sums due as above until they have been discharged, subject only to the deduction from realisations by the supervisor of the proper costs and expenses of such realisations.

(5) The supervisor shall from time to time out of the realisation of assets discharge all guarantees properly given by the responsible insolvency practitioner for the benefit of the company, and shall pay all the insolvency practitioner's expenses.

(6) References in this Rule to the responsible insolvency practitioner include, where a company is being wound up by the court, the official receiver, whether or not in his capacity as liquidator; and any sums due to the official receiver take priority over those due to a liquidator.

Report of meetings_I22

1.24.—(1) A report of the meetings shall be prepared by the person who was chairman of them.

(2) The report shall—

[^F40 (a)state whether the proposal for a voluntary arrangement was approved by the creditors of the company alone or by both the creditors and members of the company and in either case whether such approval was with any modifications;^F40]

(b)set out the resolutions which were taken at each meeting, and the decision on each one;

(c)^F41list the creditors and members of the company (with their respective values) who were present or represented at the meetings, and how they voted on each resolution; ...

[^F42 (ca)state whether, in the opinion of the supervisor, (i) the EC Regulation applies to the voluntary arrangement and (ii) if so, whether the proceedings are main proceedings, secondary proceedings or territorial proceedings; and^F42]

(d)include such further information (if any) as the chairman thinks it appropriate to make known to the court.

(3) A copy of the chairman's report shall, within 4 days of the meetings being held, be filed in court; and the court shall cause that copy to be endorsed with the date of filing.

(4) In respect of each of the meetings, the persons to whom notice of its result is to be sent by the chairman under section 4(6) are all those who were sent notice of the meeting under this Part of the Rules.

The notice shall be sent immediately after a copy of the chairman's report is filed in court under paragraph (3).

(5)[^F43 If the decision approving the voluntary arrangement has effect under section 4A^F43] (whether or not in the form proposed), the supervisor shall forthwith send a copy of the chairman's report to the registrar of companies.

Revocation or suspension of the arrangement_I23

1.25.—(1) This Rule applies where the court makes an order of revocation or suspension under section 6.

(2) The person who applied for the order shall serve sealed copies of it—

(a)on the supervisor of the voluntary arrangement, and

(b)on the directors of the company or the administrator or liquidator (according to who made the proposal for the arrangement).

Service on the directors may be effected by service of a single copy of the order on the company at its registered office.

(3) If the order includes a direction by the court under section 6(4)(b) for any further meetings to be summoned, notice shall also be given (by the person who applied for the order) to whoever is, in accordance with the direction, required to summon the meetings.

(4) The directors or (as the case may be) the administrator or liquidator shall—

(a)forthwith after receiving a copy of the court's order, give notice of it to all persons who were sent notice of the creditors' and company meetings or who, not having been sent that notice, appear to be affected by the order;

(b)within 7 days of their receiving a copy of the order (or within such longer period as the court may allow), give notice to the court whether it is intended to make a revised proposal to the company and its creditors, or to invite re-consideration of the original proposal.

(5) [[FORM 1.2]] The person on whose application the order of revocation or suspension was made shall, within 7 days after the making of the order, deliver a copy of the order to the registrar of companies.

Supervisor's accounts and reports_I24

1.26.—(1) Where the voluntary arrangement authorises or requires the supervisor—

(a)to carry on the business of the company or trade on its behalf or in its name, or

(b)to realise assets of the company, or

(c)otherwise to administer or dispose of any of its funds,

he shall keep accounts and records of his acts and dealings in and in connection with the arrangement, including in particular records of all receipts and payments of money.

(2) The supervisor shall, not less often than once in every 12 months beginning with the date of his appointment, prepare an abstract of such receipts and payments, and send copies of it, accompanied by his comments on the progress and efficacy of the arrangement, to—

(a)the court,

(b)the registrar of companies,

(c)[[FORM 1.3]] the company,

(d)all those of the company's creditors who are bound by the arrangement,

(e)subject to paragraph (5) below, the members of the company who are so bound, and

(f)if the company is not in liquidation, the company's auditors for the time being.

If in any period of 12 months he has made no payments and had no receipts, he shall at the end of that period send a statement to that effect to all those specified in sub-paragraphs (a) to (f) above.

(3) An abstract provided under paragraph (2) shall relate to a period beginning with the date of the supervisor's appointment or (as the case may be) the day following the end of the last period for which an abstract was prepared under this Rule; and copies of the abstract shall be sent out, as required by paragraph (2), within the 2 months following the end of the period to which the abstract relates.

(4) If the supervisor is not authorised as mentioned in paragraph (1), he shall, not less often than once in every 12 months beginning with the date of his appointment, send to all those specified in paragraph (2)(a) to (f) a report on the progress and efficacy of the voluntary arrangement.

(5) The court may, on application by the supervisor—

(a)dispense with the sending under this Rule of abstracts or reports to members of the company, either altogether or on the basis that the availability of the abstract or report to members is to be advertised by the supervisor in a specified manner;

(b)vary the dates on which the obligation to send abstracts or reports arises.

Production of accounts and records to Secretary of State_I25

1.27.—(1) The Secretary of State may at any time during the course of the voluntary arrangement or after its completion [^F44or termination^F44] require the supervisor to produce for inspection—

(a)his records and accounts in respect of the arrangement, and

(b)copies of abstracts and reports prepared in compliance with Rule 1.26.

(2) The Secretary of State may require production either at the premises of the supervisor or elsewhere; and it is the duty of the supervisor to comply with any requirement imposed on him under this Rule.

(3) The Secretary of State may cause any accounts and records produced to him under this Rule to be audited; and the supervisor shall give to the Secretary of State such further information and assistance as he needs for the purposes of his audit.

Fees, costs, charges and expenses_I26

1.28.—(1) The fees, costs, charges and expenses that may be incurred for any of the purposes of the voluntary arrangement are—

(a)any disbursements made by the nominee prior to the [^F45decision approving the arrangement taking effect under section 4A^F45] , and any remuneration for his services as such agreed between himself and the company (or, as the case may be, the administrator or liquidator);

(b)any fees, costs, charges or expenses which—

(i)are sanctioned by the terms of the arrangement, or

(ii)would be payable, or correspond to those which would be payable, in an administration or winding up.

[^F46Completion or termination of the arrangement

case1.29.—(1) Not more than 28 days after the final completion or termination of the voluntary arrangement, the supervisor shall send to creditors and members of the company who are bound by it a notice that the voluntary arrangement has been fully implemented or (as the case may be) has terminated.

(2) With the notice there shall be sent to each creditor and member a copy of a report by the supervisor summarising all receipts and payments made by him in pursuance of the arrangement, and explaining in relation to implementation of the arrangement any departure from the proposals as they originally took effect, or (in the case of termination of the arrangement) explaining the reasons why the arrangement has terminated.

(3) The supervisor shall, within the 28 days mentioned above, send to the registrar of companies and to the court a copy of the notice to creditors and members under paragraph (1), together with a copy of the report under paragraph (2), and the supervisor shall not vacate office until after such copies have been sent.

[^F47 (4) In the report under paragraph (2), the supervisor shall include a statement as to the amount paid, if any, to unsecured creditors by virtue of the application of section 176A (prescribed part).^F47,F46]]

CHAPTER 6 GENERAL

False representations, etc

^F481.30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F49CHAPTER 7 EC Regulation—Conversion of Voluntary Arrangement into Winding up

Application for conversion into winding up

1.31.—(1) Where a member State liquidator proposes to apply to the court for the conversion under Article 37 of the EC Regulation (conversion of earlier proceedings) of a voluntary arrangement into a winding up, an affidavit complying with Rule 1.32 must be prepared and sworn, and filed in court in support of the application.

(2) An application under this Rule shall be by originating application.

(3) The application and the affidavit required under this Rule shall be served upon—

(a)the company; and

(b)the supervisor.

Contents of affidavit

1.32.—(1) The affidavit shall state—

(a)that main proceedings have been opened in relation to the company in a member State other than the United Kingdom;

(b)the deponent’s belief that the conversion of the voluntary arrangement into a winding up would prove to be in the interests of the creditors in the main proceedings;

(c)the deponent’s opinion as to whether the company ought to enter voluntary winding up or be wound up by the court; and

(d)all other matters that, in the opinion of the member State liquidator, would assist the court—

(i)in deciding whether to make such an order, and

(ii)if the court were to do so, in considering the need for any consequential provision that would be necessary or desirable.

(2) An affidavit under this Rule shall be sworn by, or on behalf of, the member State liquidator.

Power of court

1.33.—(1) On hearing the application for conversion into winding up the court may make such order as it thinks fit.

(2) If the court makes an order for conversion into winding up the order may contain all such consequential provisions as the court deems necessary or desirable.

(3) Without prejudice to the generality of paragraph (1), an order under that paragraph may provide that the company be wound up as if a resolution for voluntary winding up under section 84 were passed on the day on which the order is made.

(4) Where the court makes an order for conversion into winding up under paragraph (1), any expenses properly incurred as expenses of the administration of the voluntary arrangement in question shall be a first charge on the company’s assets.

CHAPTER 8 EC Regulation—Member State Liquidator

Interpretation of creditor and notice to member State liquidator

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

(2) Where the supervisor is obliged to give notice to, or provide a copy of a document (including an order of court) to, the court, the registrar of companies or the official receiver, the supervisor shall give notice or provide copies, as appropriate, to the member State liquidator.

(3) Paragraph (2) is without prejudice to the generality of the obligations imposed by Article 31 of the EC Regulation (duty to cooperate and communicate information)^F49]

[^F50CHAPTER 9 OBTAINING A MORATORIUM

PROCEEDINGS DURING A MORATORIUM NOMINEES CONSIDERATION OF PROPOSALS WHERE MORATORIUM OBTAINED SECTION A: OBTAINING A MORATORIUM

Preparation of proposal by directors and submission to nominee

1.35.—(1) The document containing the proposal referred to in paragraph 6(1)(a) of Schedule A1 to the Act shall—

(a)be prepared by the directors;

(b)comply with the requirements of paragraphs (1) and (2) of Rule 1.3 (save that the reference to preferential creditors shall be to preferential creditors within the meaning of paragraph 31(8) of Schedule A1 to the Act); and

(c)state the address to which notice of the consent of the nominee to act and the documents referred to in Rule 1.38 shall be sent.

(2) With the agreement in writing of the nominee, the directors may amend the proposal at any time before submission to them by the nominee of the statement required by paragraph 6(2) of Schedule A1 to the Act.

Delivery of documents to the intended nominee etc.

1.36.—(1) The documents required to be delivered to the nominee pursuant to paragraph 6(1) of Schedule A1 to the Act shall be delivered to the nominee himself or to a person authorised to take delivery of documents on his behalf.

(2) On receipt of the documents, the nominee shall forthwith issue an acknowledgement of receipt of the documents to the directors which shall indicate the date on which the documents were received.

Statement of affairs

1.37.—(1) [[FORM 1.2]] The statement of the company’s affairs required to be delivered to the nominee pursuant to paragraph 6(1)(b) of Schedule A1 to the Act shall be delivered to the nominee no later than 7 days after the delivery to him of the document setting out the terms of the proposed voluntary arrangement or such longer time as he may allow.

(2) The statement of affairs shall comprise the same particulars as required by Rule 1.5(2) (supplementing or amplifying, so far as is necessary for clarifying the state of the company’s affairs, those already given in the directors' proposal).

(3) The statement of affairs shall be made up to a date not earlier than 2 weeks before the date of the delivery of the document containing the proposal for the voluntary arrangement to the nominee under Rule 1.36(1).

• However, the nominee may allow an extension of that period to the nearest practicable date (not earlier than 2 months before the date of delivery of the documents referred to in Rule 1.36(1)) and if he does so, he shall give a statement of his reasons in writing to the directors.

(4) The statement of affairs shall be certified as correct, to the best of their knowledge and belief, by two or more directors of the company, or by the company secretary and at least one director (other than the secretary himself).

The nominee’s statement

1.38.—(1) [[FORM 1.3]] The nominee shall submit to the directors the statement required by paragraph 6(2) of Schedule A1 to the Act within 28 days of the submission to him of the document setting out the terms of the proposed voluntary arrangement.

(2) [[FORM 1.4]] The statement shall have annexed to it—

(a)the nominee’s comments on the proposal, unless the statement contains an opinion in the negative on any of the matters referred to in paragraph 6(2)(a) and (b) of Schedule A1 to the Act, in which case he shall instead give his reasons for that opinion, and

(b)where he is willing to act in relation to the proposed arrangement, a statement of his consent to act.

Documents submitted to the court to obtain moratorium

1.39.—(1) [[FORM 2.1]] Where pursuant to paragraph 7 of Schedule A1 to the Act the directors file the document and statements referred to in that paragraph in court, those documents shall be delivered together with 4 copies of a schedule listing them within 3 working days of the date of the submission to them of the nominee’s statement under paragraph 6(2) of Schedule A1 to the Act.

(2) When the directors file the document and statements referred to in paragraph (1), they shall also file—

(a)a copy of any statement of reasons made by the nominee pursuant to Rule 1.37(3); and

(b)a copy of the nominee’s comments on the proposal submitted to them pursuant to Rule 1.38(2).

(3) The copies of the schedule shall be endorsed by the court with the date on which the documents were filed in court and 3 copies of the schedule sealed by the court shall be returned by the court to the person who filed the documents in court.

(4) [[FORM 2.2]] The statement of affairs required to be filed under paragraph 7(1)(b) of Schedule A1 to the Act shall comprise the same particulars as required by Rule 1.5(2).

Notice and advertisement of beginning of a moratorium

1.40—(1) After receiving the copies of the schedule endorsed by the court under Rule 1.39(3), the directors shall forthwith serve 2 of them on the nominee and one on the company.

(2) [[FORM 2.3]] Forthwith after receiving the copies of the schedule pursuant to paragraph (1) the nominee shall advertise the coming into force of the moratorium once in the Gazette, and once in such newspaper as he thinks most appropriate for ensuring that its coming into force comes to the notice of the company’s creditors.

(3) [[FORM 2.4]] The nominee shall forthwith notify the registrar of companies, the company and any petitioning creditor of the company of whose claim he is aware of the coming into force of the moratorium and such notification shall specify the date on which the moratorium came into force.

(4) The nominee shall give notice of the coming into force of the moratorium specifying the date on which it came into force to—

(a)any sheriff or other officer who, to his knowledge, is charged with an execution or other legal process against the company or its property; and

(b)any person who, to his knowledge, has distrained against the company or its property.

Notice of extension of moratorium

1.41.—(1) [[FORM 2.5]] [[FORM 2.6]] The nominee shall forthwith notify the registrar of companies and the court of a decision taking effect pursuant to paragraph 36 of Schedule A1 to the Act to extend or further extend the moratorium and such notice shall specify the new expiry date of the moratorium.

(2) [[FORM 2.7]] Where an order is made by the court extending or further extending or renewing or continuing a moratorium, the nominee shall forthwith after receiving a copy of the same give notice to the registrar of companies and with the notice shall send an office copy of the order.

Notice and advertisement of end of moratorium

1.42.—(1) [[FORM 2.8]] After the moratorium comes to an end, the nominee shall forthwith advertise its coming to an end once in the Gazette, and once in such newspaper as he thinks most appropriate for ensuring that its coming to an end comes to the notice of the company’s creditors, and such notice shall specify the date on which the moratorium came to an end.

(2) [[FORM 2.9]] [[FORM 2.10]] The nominee shall forthwith give notice of the ending of the moratorium to the registrar of companies, the court, the company and any creditor of the company of whose claim he is aware and such notice shall specify the date on which the moratorium came to an end.

SECTION B: PROCEEDINGS DURING A MORATORIUM

Disposal of charged property etc. during a moratorium

1.43.—(1) This Rule applies in any case where the company makes an application to the court under paragraph 20 of Schedule A1 to the Act for leave to dispose of property of the company which is subject to a security, or goods in possession of the company under an agreement to which that paragraph relates.

(2) The court shall fix a venue for the hearing of the application and the company shall forthwith give notice of the venue to the person who is the holder of the security or, as the case may be, the owner under the agreement.

(3) If an order is made, the company shall forthwith give notice of it to that person or owner.

(4) The court shall send 2 sealed copies of the order to the company, who shall send one of them to that person or owner.

SECTION C: NOMINEES

Withdrawal of nominee’s consent to act

1.44. Where the nominee withdraws his consent to act he shall, pursuant to paragraph 25(5) of Schedule A1 to the Act, forthwith give notice of his withdrawal and the reason for withdrawing his consent to act to—

(a)[[FORM 2.11]] the registrar of companies;

(b)[[FORM 8.2]] the court;

(c)the company; and

(d)any creditor of the company of whose claim he is aware.

Replacement of nominee by the court

1.45.—(1) Where the directors intend to make an application to the court under paragraph 28 of Schedule A1 to the Act for the nominee to be replaced, they shall give to the nominee at least 7 days' notice of their application.

(2) Where the nominee intends to make an application to the court under that paragraph to be replaced, he shall give to the directors at least 7 days' notice of his application.

(3) [[FORM 2.12]] No appointment of a replacement nominee shall be made by the court unless there is filed in court a statement by the replacement nominee indicating his consent to act.

Notification of appointment of a replacement nominee

1.46. Where a person is appointed as a replacement nominee, he shall forthwith give notice of his appointment to—

(a)[[FORM 2.13]] [[FORM 2.14]] the registrar of companies;

(b)the court (in any case where he was not appointed by the court); and

(c)the person whom he has replaced as nominee.

Applications to court under paragraphs 26 or 27 of Schedule A1 to the Act

1.47. Where any person intends to make an application to the court pursuant to paragraph 26 or 27 of Schedule A1 to the Act, he shall give to the nominee at least 7 days' notice of his application.

SECTION D: CONSIDERATION OF PROPOSALS WHERE MORATORIUM OBTAINED

Summoning of meetings; procedure at meetings etc.

1.48.—(1) Where the nominee summons meetings of creditors and the company pursuant to paragraph 29(1) of Schedule A1 to the Act, each of those meetings shall be summoned for a date that is not more than 28 days from the date on which the moratorium came into force.

(2) Notices calling the creditors' meetings shall be sent by the nominee to all creditors specified in the statement of affairs and any other creditors of the company of whose address he is aware at least 14 days before the day fixed for the meeting.

(3) Notices calling the company meeting shall be sent by the nominee to all persons who are, to the best of the nominee’s belief, members of the company at least 14 days before the day fixed for the meeting.

(4) Each notice sent under this Rule shall specify the court in which the documents relating to the obtaining of the moratorium were filed and state the effect of paragraphs (1), (3) and (4) of Rule 1.52 (requisite majorities (creditors)) and with each notice there shall be sent—

(a)a copy of the directors' proposal;

(b)a copy of the statement of the company’s affairs or, if the nominee thinks fit, a summary of it (the summary to include a list of creditors and the amount of their debts); and

(c)the nominee’s comments on the proposal.

(5) The provisions of Rules 1.13 to 1.16 shall apply.

Entitlement to vote (creditors)

1.49.—(1) Subject as follows, every creditor who has notice of the creditors' meeting is entitled to vote at the meeting or any adjournment of it.

(2) Votes are calculated according to the amount of the creditor’s debt as at the beginning of the moratorium, after deducting any amounts paid in respect of that debt after that date.

(3) A creditor may vote in respect of a debt for an unliquidated amount or any debt whose value is not ascertained and for the purposes of voting (but not otherwise) his debt shall be valued at £1 unless the chairman agrees to put a higher value on it.

Procedure for admission of creditors' claims for voting purposes

1.50.—(1) Subject as follows, at any creditors' meeting the chairman shall ascertain the entitlement of persons wishing to vote and shall admit or reject their claims accordingly.

(2) The chairman may admit or reject a claim in whole or in part.

(3) The chairman’s decision on any matter under this Rule or under paragraph (3) of Rule 1.49 is subject to appeal to the court by any creditor or member of the company.

(4) If the chairman is in doubt whether a claim should be admitted or rejected, he shall mark it as objected to and allow votes to be cast in respect of it, subject to such votes being subsequently declared invalid if the objection to the claim is sustained.

(5) If on an appeal the chairman’s decision is reversed or varied, or votes are declared invalid, the court may order another meeting to be summoned, or make such order as it thinks just.

• The court’s power to make an order under this paragraph is exercisable only if it considers that the circumstances giving rise to the appeal are such as give rise to unfair prejudice or material irregularity.

(6) An application to the court by way of appeal against the chairman’s decision shall not be made after the end of the period of 28 days beginning with the first day on which the report required by paragraph 30(3) of Schedule A1 to the Act has been made to the court.

(7) The chairman is not personally liable for any costs incurred by any person in respect of an appeal under this Rule.

Voting rights (members)

1.51. Rule 1.18 shall apply.

Requisite majorities (creditors)

1.52.—(1) Subject as follows, at the creditors' meeting for any resolution to pass approving any proposal or modification there must be a majority in excess of three-quarters in value of the creditors present in person or by proxy and voting on the resolution.

(2) The same applies in respect of any other resolution proposed at the meeting, but substituting one-half for three-quarters.

(3) At a meeting of the creditors for any resolution to pass extending (or further extending) a moratorium, or to bring a moratorium to an end before the end of the period of any extension, there must be a majority in excess of three quarters in value of the creditors present in person or by proxy and voting on the resolution. For this purpose paragraph (4)(b) below shall not apply and a secured creditor is entitled to vote in respect of the amount of his claim without deducting the value of his security.

(4) In the following cases there is to be left out of account a creditor’s vote in respect of any claim or part of a claim—

(a)where written notice of the claim was not given, either at the meeting or before it, to the chairman or convenor of the meeting;

(b)where the claim or part is secured;

(c)where the claim is in respect of a debt wholly or partly on, or secured by, a current bill of exchange or promissory note, unless the creditor is willing—

(i)to treat the liability to him on the bill or note of every person who is liable on it antecedently to the company, and against whom a bankruptcy order has not been made (or, in the case of a company, which has not gone into liquidation), as a security in his hands, and

(ii)to estimate the value of the security and (for the purpose of entitlement to vote, but not of any distribution under the arrangement) to deduct it from his claim.

(5) Any resolution is invalid if those voting against it include more than half in value of the creditors, counting in these latter only those—

(a)who have notice of the meeting;

(b)whose votes are not to be left out of account under paragraph (4); and

(c)who are not, to the best of the chairman’s belief, persons connected with the company.

(6) It is for the chairman of the meeting to decide whether under this Rule—

(a)a vote is to be left out of account in accordance with paragraph [^F51 (4)^F51] , or

(b)a person is a connected person for the purposes of paragraph (5)(c);

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

(7) If the chairman uses a proxy contrary to Rule 1.15 as it applies by virtue of Rule [^F52 1.48(5)^F52] , his vote with that proxy does not count towards any majority under this Rule.

(8) The chairman’s decision on any matter under this Rule is subject to appeal to the court by any creditor or member and paragraphs (5) to (7) of Rule 1.50 apply as regards such an appeal.

Requisite majorities (members) and proceedings to obtain agreement on the proposal

1.53.—(1) Rule 1.20 shall apply.

(2) If the chairman thinks fit, the creditors' meeting and the company meeting may be held together.

(3) The chairman may, and shall if it is so resolved at the meeting in question, adjourn that meeting, but any adjournment shall not be to a day which is more than 14 days after the date on which the moratorium (including any extension) ends.

(4) If the meetings are adjourned under paragraph (3), notice of the fact shall be given by the nominee forthwith to the court.

(5) If following the final adjournment of the creditors' meeting the proposal (with or without modifications) has not been approved by the creditors, it is deemed rejected.

Implementation of the arrangement

1.54.—(1) Where a decision approving the arrangement has effect under paragraph 36 of Schedule A1 to the Act, the directors shall forthwith do all that is required for putting the supervisor into possession of the assets included in the arrangement.

(2) [[FORM 2.15]] Subject to paragraph (3), Rules 1.22, 1.22A and 1.24 to 1.29 apply.

(3) [[FORM 2.16]] The provisions referred to in paragraph (2) are modified as follows—

(a)[[FORM 2.17]] in paragraph (1) of Rule 1.22A the reference to section 4A(6) is to be read as a reference to paragraph 36(5) of Schedule A1 to the Act;

(b)[[FORM 3.1]] in paragraph (4) of Rule 1.24 the reference to section 4(6) is to be read as a reference to paragraph 30(3) of Schedule A1 to the Act;

(c)in paragraph (5) of Rule 1.24 the reference to section 4A is to be read as a reference to paragraph 36 of Schedule A1 to the Act;

(d)in paragraph (1) of Rule 1.25 the reference to section 6 is to be read as a reference to paragraph 38 of Schedule A1 to the Act and the references in paragraphs (2) and (4) to the administrator or liquidator shall be ignored;

(e)in paragraph (3) of Rule 1.25 the reference to section 6(4)(b) is to be read as a reference to paragraph 38 (4)(b) of Schedule A1 to the Act; and

(f)in sub-paragraph (a) of paragraph (1) of Rule 1.28 the reference to section 4A is to be read as a reference to paragraph 36 of Schedule A1 to the Act.^F50]

[^F53PART 2 ADMINISTRATION PROCEDURE

CHAPTER 1 PRELIMINARY

Introductory and interpretation

2.1.—(1) In this Part—

(a)Chapter 2 applies in relation to the appointment of an administrator by the court;

(b)Chapter 3 applies in relation to the appointment of an administrator by the holder of a qualifying floating charge under paragraph 14;

(c)Chapter 4 applies in relation to the appointment of an administrator by the company or the directors under paragraph 22;

(d)The following Chapters apply in all the cases mentioned in sub-paragraphs (a)-(c) above:

• Chapter 5: Process of administration;

• Chapter 6: Meetings and reports;

• Chapter 7: The creditors' committee;

• Chapter 8: Disposal of charged property;

• Chapter 9: Expenses of the administration;

• Chapter 10: Distributions to creditors;

• Chapter 11: The administrator;

• Chapter 12: Ending administration;

• Chapter 13: Replacing administrator;

• Chapter 14: EC Regulation—conversion of administration into winding up;

• Chapter 15: EC Regulation—member State liquidator.

(2) In this Part of these Rules a reference to a numbered paragraph shall, unless otherwise stated, be to the paragraph so numbered in Schedule B1 to the Act.

CHAPTER 2 APPOINTMENT OF ADMINISTRATOR BY COURT

Affidavit in support of administration application

case2.2.—(1) Where it is proposed to apply to the court for an administration order to be made in relation to a company, the administration application shall be in [[FORM 8.1]] Form 2.1B and an affidavit complying with Rule 2.4 must be prepared and sworn, with a view to its being filed with the court in support of the application.

(2) If the administration application is to be made by the company or by the directors, the affidavit shall be made by one of the directors, or the secretary of the company, stating himself to make it on behalf of the company or, as the case may be, on behalf of the directors.

(3) If the application is to be made by creditors, the affidavit shall be made by a person acting under the authority of them all, whether or not himself one of their number. In any case there must be stated in the affidavit the nature of his authority and the means of his knowledge of the matters to which the affidavit relates.

(4) If the application is to be made by the supervisor of a voluntary arrangement under Part I of the Act, it is to be treated as if it were an application by the company.

Form of application

case2.3.—(1) If made by the company or by the directors, the application shall state the name of the company and its address for service, which (in the absence of special reasons to the contrary) is that of the company’s registered office.

(2) If the application is made by the directors, it shall state that it is so made under paragraph 12(1)(b); but from and after making it is to be treated for all purposes as the application of the company.

(3) If made by a single creditor, the application shall state his name and address for service.

(4) If the application is made by two or more creditors, it shall state that it is so made (naming them); but from and after making it is to be treated for all purposes as the application of only one of them, named in the application as applying on behalf of himself and other creditors. An address for service for that one shall be specified.

(5) There shall be attached to the application a written statement which shall be in [[FORM 1.1]] Form 2.2B by each of the persons proposed to be administrator stating—

(a)that he consents to accept appointment;

(b)details of any prior professional relationship(s) that he has had with the company to which he is to be appointed as administrator; and

(c)his opinion that it is reasonably likely that the purpose of administration will be achieved.

Contents of application and affidavit in support

case2.4.—(1) The administration application shall contain a statement of the applicant’s belief that the company is, or is likely to become, unable to pay its debts, except where the applicant is the holder of a qualifying floating charge and is making the application in reliance on paragraph 35.

(2) There shall be attached to the application an affidavit in support which shall contain—

(a)a statement of the company’s financial position, specifying (to the best of the applicant’s knowledge and belief) the company’s assets and liabilities, including contingent and prospective liabilities;

(b)details of any security known or believed to be held by creditors of the company, and whether in any case the security is such as to confer power on the holder to appoint an administrative receiver or to appoint an administrator under paragraph 14. If an administrative receiver has been appointed, that fact shall be stated;

(c)details of any insolvency proceedings in relation to the company including any petition that has been presented for the winding up of the company so far as within the immediate knowledge of the applicant;

(d)where it is intended to appoint a number of persons as administrators, details of the matters set out in paragraph 100(2) regarding the exercise of the function of the administrators; and

(e)any other matters which, in the opinion of those intending to make the application for an administration order, will assist the court in deciding whether to make such an order, so far as lying within the knowledge or belief of the applicant.

(3) Where the application is made by the holder of a qualifying floating charge in reliance on paragraph 35, he shall give sufficient details in the affidavit in support to satisfy the court that he is entitled to appoint an administrator under paragraph 14.

(4) The affidavit shall state whether, in the opinion of the person making the application, (i) the EC Regulation will apply and (ii) if so, whether the proceedings will be main proceedings or territorial proceedings.

Filing of application

case2.5.—(1) The application (and all supporting documents) shall be filed with the court, with a sufficient number of copies for service and use as provided by Rule 2.6.

(2) Each of the copies filed shall have applied to it the seal of the court and be issued to the applicant; and on each copy there shall be endorsed the date and time of filing.

(3) The court shall fix a venue for the hearing of the application and this also shall be endorsed on each copy of the application issued under paragraph (2).

(4) After the application is filed, it is the duty of the applicant to notify the court in writing of the existence of any insolvency proceedings, and any insolvency proceedings under the EC Regulation, in relation to the company, as soon as he becomes aware of them.

Service of application

case2.6.—(1) In the following paragraphs of this Rule, references to the application are to a copy of the application issued by the court under Rule 2.5(2) together with the affidavit in support of it and the documents attached to the application.

(2) Notification for the purposes of paragraph 12(2) shall be by way of service in accordance with Rule 2.8, verified in accordance with Rule 2.9.

(3) The application shall be served in addition to those persons referred to in paragraph 12(2)—

(a)if an administrative receiver has been appointed, on him;

(b)if there is pending a petition for the winding-up of the company, on the petitioner (and also on the provisional liquidator, if any);

(c)if a member State liquidator has been appointed in main proceedings in relation to the company, on him;

(d)on the person proposed as administrator;

(e)on the company, if the application is made by anyone other than the company;

(f)if a supervisor of a voluntary arrangement under Part I of the Act has been appointed, on him.

Notice to sheriff, etc

case2.7. The applicant shall as soon as reasonably practicable after filing the application give notice of its being made to—

(a)any sheriff or other officer who to his knowledge is charged with an execution or other legal process against the company or its property; and

(b)any person who to his knowledge has distrained against the company or its property.

Manner in which service to be effected

case2.8.—(1) Service of the application in accordance with Rule 2.6 shall be effected by the applicant, or his solicitor, or by a person instructed by him or his solicitor, not less than 5 days before the date fixed for the hearing.

(2) Service shall be effected as follows—

(a)on the company (subject to paragraph (3) below), by delivering the documents to its registered office;

(b)on any other person (subject to paragraph (4) below), by delivering the documents to his proper address;

(c)in either case, in such other manner as the court may direct.

(3) If delivery to a company’s registered office is not practicable, service may be effected by delivery to its last known principal place of business in England and Wales.

(4) Subject to paragraph (5), for the purposes of paragraph (2)(b) above, a person’s proper address is any which he has previously notified as his address for service; but if he has not notified any such address, service may be effected by delivery to his usual or last known address.

(5) In the case of a person who—

(a)is an authorised deposit-taker or former authorised deposit-taker;

(b)(i)has appointed, or is or may be entitled to appoint, an administrative receiver of the company, or

(ii)is, or may be, entitled to appoint an administrator of the company under paragraph 14; and

(c)has not notified an address for service,

the proper address is the address of an office of that person where, to the knowledge of the applicant, the company maintains a bank account or, where no such office is known to the applicant, the registered office of that person, or, if there is no such office, his usual or last known address.

(6) Delivery of documents to any place or address may be made by leaving them there, or sending them by first class post.

Proof of service

2.9.—(1) Service of the application shall be verified by an affidavit of service in [[FORM 1.2]] Form 2.3B, specifying the date on which, and the manner in which, service was effected.

(2) The affidavit of service, with a sealed copy of the application exhibited to it, shall be filed with the court as soon as reasonably practicable after service, and in any event not less than 1 day before the hearing of the application.

Application to appoint specified person as administrator by holder of qualifying floating charge

case2.10.—(1) Where the holder of a qualifying floating charge applies to the court under paragraph 36(1)(b), he shall produce to the court—

(a)the written consent of all holders of any prior qualifying floating charge;

(b)a written statement in the Form 2.2B made by the specified person proposed by him as administrator; and

(c)sufficient evidence to satisfy the court that he is entitled to appoint an administrator under paragraph 14.

(2) If an administration order is made appointing the specified person, the costs of the person who made the administration application and the applicant under paragraph 36(1)(b) shall, unless the court otherwise orders, be paid as an expense of the administration.

Application where company in liquidation

2.11.—(1) Where an administration application is made under paragraph 37 or paragraph 38, the affidavit in support of the administration application shall contain—

(a)full details of the existing insolvency proceedings, the name and address of the liquidator, the date he was appointed and by whom;

(b)the reasons why it has subsequently been considered appropriate that an administration application should be made;

(c)all other matters that would, in the opinion of the applicant, assist the court in considering the need to make provisions in respect of matters arising in connection with the liquidation; and

(d)the details required in Rules 2.4(2) and (4).

(2) Where the application is made by the holder of a qualifying floating charge he shall set out sufficient evidence in the affidavit to satisfy the court that he is entitled to appoint an administrator under paragraph 14.

The hearing

case2.12.—(1) At the hearing of the administration application, any of the following may appear or be represented—

(a)the applicant;

(b)the company;

(c)one or more of the directors;

(d)if an administrative receiver has been appointed, that person;

(e)any person who has presented a petition for the winding-up of the company;

(f)the person proposed for appointment as administrator;

(g)if a member State liquidator has been appointed in main proceedings in relation to the company, that person;

(h)any person that is the holder of a qualifying floating charge;

(j)any supervisor of a voluntary arrangement under Part I of the Act;

(k)with the permission of the court, any other person who appears to have an interest justifying his appearance.

(2) If the court makes an administration order, it shall be in [[FORM 1.3]] Form 2.4B.

(3) If the court makes an administration order, the costs of the applicant, and of any person whose costs are allowed by the court, are payable as an expense of the administration.

2.13. Where the court makes an administration order in relation to a company upon an application under paragraph 37 or 38, the court shall include in the order—

(a)in the case of a liquidator appointed in a voluntary winding-up, his removal from office;

(b)details concerning the release of the liquidator;

(c)provision for payment of the expenses of the liquidation;

(d)provisions regarding any indemnity given to the liquidator;

(e)provisions regarding the handling or realisation of any of the company’s assets in the hands of or under the control of the liquidator;

(f)such provision as the court thinks fit with respect to matters arising in connection with the liquidation; and

(g)such other provisions as the court shall think fit.

Notice of administration order

2.14.—(1) If the court makes an administration order, it shall as soon as reasonably practicable send two sealed copies of the order to the person who made the application.

(2) The applicant shall send a sealed copy of the order as soon as reasonably practicable to the person appointed as administrator.

(3) If the court makes an order under paragraph 13(1)(d) or any other order under paragraph 13(1)(f), it shall give directions as to the persons to whom, and how, notice of that order is to be given.

CHAPTER 3 APPOINTMENT OF ADMINISTRATOR BY HOLDER OF FLOATING CHARGE

Notice of intention to appoint

case2.15.—(1) The prescribed form for the notice of intention to appoint for the purposes of paragraph 44(2) is [[FORM 1.4]] Form 2.5B.

(2) For the purposes of paragraph 44(2), a copy of Form 2.5B shall be filed with the court at the same time as it is sent in accordance with paragraph 15(1) to the holder of any prior qualifying floating charge.

(3) The provisions of Rule 2.8(2) to 2.8(6) shall apply to the sending of a notice under this Rule as they apply to the manner in which service of an administration application is effected under that Rule.

Notice of appointment

case2.16.—(1) The notice of appointment for the purposes of an appointment under paragraph 14 shall be in [[FORM 2.1]] Form 2.6B.

(2) The copies of the notice filed with the court, shall be accompanied by—

(a)the administrator’s written statement in Form 2.2B; and

(b)either—

(i)evidence that the person making the appointment has given such notice as may be required by paragraph 15(1)(a); or

(ii)copies of the written consent of all those required to give consent in accordance with paragraph 15(1)(b); and

(c)a statement of those matters provided for in paragraph 100(2), if applicable.

(3) The statutory declaration on Form 2.6B shall be made not more than 5 business days before the form is filed with the court.

(4) Written consent may be given by the holder of a prior qualifying floating charge where a notice of intention to appoint an administrator has been given and filed with the court in accordance with Rule 2.15 above, by completing the section provided on Form 2.5B and returning to the appointor a copy of the form.

(5) Where the holder of a prior qualifying floating charge does not choose to complete the section provided on Form 2.5B to indicate his consent, or no such form has been sent to him, his written consent shall include—

(a)details of the name, address of registered office and registered number of the company in respect of which the appointment is proposed to be made;

(b)details of the charge held by him including the date it was registered and, where applicable, any financial limit and any deeds of priority;

(c)his name and address;

(d)the name and address of the holder of the qualifying floating charge who is proposing to make the appointment;

(e)the date that notice of intention to appoint was given;

(f)the name of the proposed administrator;

(g)a statement of consent to the proposed appointment,

and it shall be signed and dated.

(6) This Rule and the following Rule are subject to Rule 2.19, the provisions of which apply when an appointment is to be made out of court business hours.

2.17.—(1) Three copies of the notice of appointment shall be filed with the court and shall have applied to them the seal of the court and be endorsed with the date and time of filing.

(2) The court shall issue two of the sealed copies of the notice of appointment to the person making the appointment, who shall as soon as reasonably practicable send one of the sealed copies to the administrator.

2.18. Where, after receiving notice that an administration application has been made, the holder of a qualifying floating charge appoints an administrator in reliance on paragraph 14, he shall as soon as reasonably practicable send a copy of the notice of appointment to the person making the administration application and to the court in which the application has been made.

Appointment taking place out of court business hours

case2.19.—(1) The holder of a qualifying floating charge may file a notice of appointment with the court, notwithstanding that the court is not open for public business. When the court is closed (and only when it is closed) a notice of appointment may be filed with the court by faxing that form in accordance with paragraph (3). The notice of appointment shall be in [[FORM 2.2]] Form 2.7B.

(2) The filing of a notice in accordance with this Rule shall have the same effect for all purposes as a notice of appointment filed in accordance with Rule 2.16 with the court specified in the notice as having jurisdiction in the case.

(3) The notice shall be faxed to a designated telephone number which shall be provided by the Court Service for that purpose. The Secretary of State shall publish the telephone number of the relevant fax machine on The Insolvency Service website and on request to The Insolvency Service, make it available in writing.

(4) The appointor shall ensure that a fax transmission report detailing the time and date of the fax transmission and containing a copy of the first page (in part or in full) of the document faxed is created by the fax machine that is used to fax the form.

(5) The appointment shall take effect from the date and time of that fax transmission. The appointor shall notify the administrator, as soon as reasonably practicable, that the notice has been filed.

(6) The copy of the faxed notice of appointment received by the Court Service fax machine shall be forwarded as soon as reasonably practicable to the court specified in the notice as the court having jurisdiction in the case, to be placed on the relevant court file.

(7) The appointor shall take three copies of the notice of appointment that was faxed to the designated telephone number, together with the transmission report showing the date and time that the form was faxed to the designated telephone number and all the necessary supporting documents listed on Form 2.7B, to the court on the next day that the court is open for business.

(8) The appointor shall attach to the notice a statement providing full reasons for the out of hours filing of the notice of appointment, including why it would have been damaging to the company and its creditors not to have so acted.

(9) The copies of the notice shall be sealed by the court and shall be endorsed with the date and time when, according to the appointor’s fax transmission report, the notice was faxed and the date when the notice and accompanying documents were delivered to the court.

(10) The administrator’s appointment shall cease to have effect if the requirements of paragraph (7) are not completed within the time period indicated in that paragraph.

(11) Where any question arises in respect of the date and time that the notice of appointment was filed with the court it shall be a presumption capable of rebuttal that the date and time shown on the appointor’s fax transmission report is the date and time at which the notice was so filed.

(12) The court shall issue two of the sealed copies of the notice of appointment to the person making the appointment, who shall, as soon as reasonably practicable, send one of the copies to the administrator.

CHAPTER 4 APPOINTMENT OF ADMINISTRATOR BY COMPANY OR DIRECTORS

Notice of intention to appoint

case2.20.—(1) The notice of intention to appoint an administrator for the purposes of paragraph 26 shall be in [[FORM 2.3]] Form 2.8B.

(2) A copy of the notice of intention to appoint must, in addition to the persons specified in paragraph 26, be given to—

(a)any sheriff who, to the knowledge of the person giving the notice, is charged with execution or other legal process against the company;

(b)any person who, to the knowledge of the person giving the notice, has distrained against the company or its property;

(c)any supervisor of a voluntary arrangement under Part I of the Act; and

(d)the company, if the company is not intending to make the appointment.

(3) The provisions of Rule 2.8(2) to 2.8(6) shall apply to the sending or giving of a notice under this Rule as they apply to the manner in which service of an administration application is effected under that Rule.

2.21. The statutory declaration on Form 2.8B shall be made not more than 5 business days before the notice is filed with the court.

case2.22. The notice of intention to appoint shall be accompanied by either a copy of the resolution of the company to appoint an administrator (where the company intends to make the appointment) or a record of the decision of the directors (where the directors intend to make the appointment).

Notice of appointment

case2.23.—(1) The notice of appointment for the purposes of an appointment under paragraph 22 shall be in [[FORM 2.4]] Form 2.9B or Form 2.10B, as appropriate.

(2) The copies of the notice filed with the court shall be accompanied by—

(a)the administrator’s written statement in Form 2.2B;

(b)the written consent of all those persons to whom notice was given in accordance with paragraph 26(1) unless the period of notice set out in paragraph 26(1) has expired; and

(c)a statement of the matters provided for in paragraph 100(2), where applicable.

2.24. The statutory declaration on Form 2.9B or Form 2.10B shall be made not more than 5 business days before the notice is filed with the court.

case2.25. Where a notice of intention to appoint an administrator has not been given, the notice of appointment shall be accompanied by the documents specified in Rule 2.22 above.

case2.26.—(1) Three copies of the notice of appointment shall be filed with the court and shall have applied to them the seal of the court and be endorsed with the date and time of filing.

(2) The court shall issue two of the sealed copies of the notice of appointment to the person making the appointment who shall as soon as reasonably practicable send one of the sealed copies to the administrator.

CHAPTER 5 PROCESS OF ADMINISTRATION

Notification and advertisement of administrator’s appointment

case2.27.—(1) The administrator shall advertise his appointment once in the Gazette, and once in such newspaper as he thinks most appropriate for ensuring that the appointment comes to the notice of the company’s creditors. The advertisement shall be in [[FORM 2.5]] Form 2.11B.

(2) The administrator shall, as soon as reasonably practicable after the date specified in paragraph 46(6), give notice of his appointment—

(a)if a receiver or an administrative receiver has been appointed, to him;

(b)if there is pending a petition for the winding up of the company, to the petitioner (and also to the provisional liquidator, if any);

(c)to any sheriff who, to the administrator’s knowledge, is charged with execution or other legal process against the company;

(d)to any person who, to the administrator’s knowledge, has distrained against the company or its property; and

(e)any supervisor of a voluntary arrangement under Part I of the Act.

(3) Where, under a provision of Schedule B1 to the Act or these Rules, the administrator is required to send a notice of his appointment to any person he shall do so in [[FORM 2.6]] Form 2.12B.

Notice requiring statement of affairs

case 2.28. —(1) In this Chapter “ relevant person ” shall have the meaning given to it in paragraph 47(3).

(2) The administrator shall send notice in [[FORM 2.7]] Form 2.13B to each relevant person whom he determines appropriate requiring him to prepare and submit a statement of the company’s affairs.

(3) The notice shall inform each of the relevant persons—

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

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

(c)of the effect of paragraph 48(4) (penalty for non-compliance); and

(d)of the application to him, and to each other relevant person, of section 235 (duty to provide information, and to attend on the administrator, if required).

(4) The administrator shall furnish each relevant person to whom he has sent notice in Form 2.13B with the forms required for the preparation of the statement of affairs.

Verification and filing

case2.29.—(1) The statement of the company’s affairs shall be in [[FORM 2.8]] Form 2.14B, contain all the particulars required by that form and be verified by a statement of truth by the relevant person.

(2) The administrator may require any relevant person to submit a statement of concurrence in [[FORM 2.9]] Form 2.15B stating that he concurs in the statement of affairs. Where the administrator does so, he shall inform the person making the statement of affairs of that fact.

(3) The statement of affairs shall be delivered by the relevant person making the statement of truth, together with a copy, to the administrator. The relevant person shall also deliver a copy of the statement of affairs to all those persons whom the administrator has required to make a statement of concurrence.

(4) A person required to submit a statement of concurrence shall do so before the end of the period of 5 business days (or such other period as the administrator may agree) beginning with the day on which the statement of affairs being concurred with is received by him.

(5) A statement of concurrence may be qualified in respect of matters dealt with in the statement of affairs, where the maker of the statement of concurrence is not in agreement with the relevant person, or he considers the statement of affairs to be erroneous or misleading, or he is without the direct knowledge necessary for concurring with it.

(6) Every statement of concurrence shall be verified by a statement of truth and be delivered to the administrator by the person who makes it, together with a copy of it.

(7) Subject to Rule 2.30 below, the administrator shall as soon as reasonably practicable send to the registrar of companies and file with the court a [[FORM 2.10]] Form 2.16B together with a copy of the statement of affairs and any statement of concurrence.

Limited disclosure

case2.30.—(1) Where the administrator thinks that it would prejudice the conduct of the administration for the whole or part of the statement of the company’s affairs to be disclosed, he may apply to the court for an order of limited disclosure in respect of the statement, or any specified part of it.

(2) The court may, on such application, order that the statement or, as the case may be, the specified part of it, shall not be filed with the registrar of companies.

(3) The administrator shall as soon as reasonably practicable send to the registrar of companies a Form 2.16B together with a copy of the order and the statement of affairs (to the extent provided by the order) and any statement of concurrence.

(4) If a creditor seeks disclosure of a statement of affairs or a specified part of it in relation to which an order has been made under this Rule, he may apply to the court for an order that the administrator disclose it or a specified part of it. The application shall be supported by written evidence in the form of an affidavit.

(5) The applicant shall give the administrator notice of his application at least 3 days before the hearing.

(6) The court may make any order for disclosure subject to any conditions as to confidentiality, duration, the scope of the order in the event of any change of circumstances, or other matters as it sees fit.

(7) If there is a material change in circumstances rendering the limit on disclosure or any part of it unnecessary, the administrator shall, as soon as reasonably practicable after the change, apply to the court for the order or any part of it to be rescinded.

(8) The administrator shall, as soon as reasonably practicable after the making of an order under paragraph (7) above, file with the registrar of companies Form 2.16B together with a copy of the statement of affairs to the extent provided by the order.

(9) When the statement of affairs is filed in accordance with paragraph (8), the administrator shall, where he has sent a statement of proposals under paragraph 49, provide the creditors with a copy of the statement of affairs as filed, or a summary thereof.

(10) The provisions of Part 31 of the CPR shall not apply to an application under this Rule.

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

2.31.—(1) The power of the administrator under paragraph 48(2) to give a release from the obligation imposed by paragraph 47(1), or to grant an extension of time, may be exercised at the administrator’s own discretion, or at the request of any relevant person.

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

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

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

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

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

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

(7) On any application under this Rule the relevant person’s costs shall be paid in any event by him and, unless the court otherwise orders, no allowance towards them shall be made out of the assets.

Expenses of statement of affairs

2.32.—(1) A relevant person making the statement of the company’s affairs or statement of concurrence shall be allowed, and paid by the administrator out of his receipts, any expenses incurred by the relevant person in so doing which the administrator considers reasonable.

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

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

Administrator’s proposals

case2.33.—(1) The administrator shall, under paragraph 49, make a statement which he shall send to the registrar of companies attached to [[FORM 2.11]] Form 2.17B.

(2) The statement shall include, in addition to those matters set out in paragraph 49—

(a)details of the court where the proceedings are and the relevant court reference number;

(b)the full name, registered address, registered number and any other trading names of the company;

(c)details relating to his appointment as administrator, including the date of appointment and the person making the application or appointment and, where there are joint administrators, details of the matters set out in paragraph 100(2);

(d)the names of the directors and secretary of the company and details of any shareholdings in the company they may have;

(e)an account of the circumstances giving rise to the appointment of the administrator;

(f)if a statement of the company’s affairs has been submitted, a copy or summary of it, with the administrator’s comments, if any;

(g)if an order limiting the disclosure of the statement of affairs (under Rule 2.30) has been made, a statement of that fact, as well as—

(i)details of who provided the statement of affairs;

(ii)the date of the order of limited disclosure; and

(iii)the details or a summary of the details that are not subject to that order;

(h)if a full statement of affairs is not provided, the names, addresses and debts of the creditors including details of any security held;

(j)if no statement of affairs has been submitted, details of the financial position of the company at the latest practicable date (which must, unless the court otherwise orders, be a date not earlier than that on which the company entered administration), a list of the company’s creditors including their names, addresses and details of their debts, including any security held, and an explanation as to why there is no statement of affairs;

(k)the basis upon which it is proposed that the administrator’s remuneration should be fixed under Rule 2.106;

(l)(except where the administrator proposes a voluntary arrangement in relation to the company and subject to paragraph (3))—

(i)to the best of the administrator’s knowledge and belief—

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

(bb)an estimate of the value of the company’s net property; and

(ii)whether, and, if so, why, the administrator proposes to make an application to court under section 176A(5);

(m)how it is envisaged the purpose of the administration will be achieved and how it is proposed that the administration shall end. If a creditors' voluntary liquidation is proposed, details of the proposed liquidator must be provided, and a statement that, in accordance with paragraph 83(7) and Rule 2.117(3), creditors may nominate a different person as the proposed liquidator, provided that the nomination is made after the receipt of the proposals and before the proposals are approved;

(n)where the administrator has decided not to call a meeting of creditors, his reasons;

(o)the manner in which the affairs and business of the company—

(i)have, since the date of the administrator’s appointment, been managed and financed, including, where any assets have been disposed of, the reasons for such disposals and the terms upon which such disposals were made; and

(ii)will, if the administrator’s proposals are approved, continue to be managed and financed;

(p)whether—

(i)the EC Regulation applies; and

(ii)if so, whether the proceedings are main proceedings or territorial proceedings; and

(q)such other information (if any) as the administrator thinks necessary to enable creditors to decide whether or not to vote for the adoption of the proposals.

(3) Nothing in paragraph (2)(l) is to be taken as requiring any such estimate to include any information, the disclosure of which could seriously prejudice the commercial interests of the company. If such information is excluded from the calculation the estimate shall be accompanied by a statement to that effect.

(4) Where the court orders, upon an application by the administrator under paragraph 107, an extension of the period of time in paragraph 49(5), the administrator shall notify in Form [[FORM 8.2]] 2.18B all the persons set out in paragraph 49(4) as soon as reasonably practicable after the making of the order.

(5) Where the administrator has made a statement under paragraph 52(1) and has not called an initial meeting of creditors, the proposals sent out under this Rule and paragraph 49 will (if no meeting has been requisitioned under paragraph 52(2) within the period set out in Rule 2.37(1)) be deemed to have been approved by the creditors.

(6) Where the administrator intends to apply to the court (or file a notice under paragraph 80(2)) for the administration to cease at a time before he has sent a statement of his proposals to creditors in accordance with paragraph 49, he shall, at least 10 days before he makes such an application (or files such a notice), send to all creditors of the company (so far as he is aware of their addresses) a report containing the information required by paragraphs (2)(a)-(p) of this Rule.

(7) Where the administrator wishes to publish a notice under paragraph 49(6) he shall publish the notice once in such newspaper as he thinks most appropriate for ensuring that the notice comes to the attention of the company’s members. The notice shall—

(a)state the full name of the company;

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

(c)give details of the administrator’s appointment; and

(d)specify an address to which members can write for a copy of the statement of proposals.

(8) This notice must be published as soon as reasonably practicable after the administrator sends his statement of proposals to the company’s creditors but no later than 8 weeks (or such other period as may be agreed by the creditors or as the court may order) from the date that the company entered administration.

CHAPTER 6 MEETINGS AND REPORTS

SECTION A: CREDITORS' MEETINGS

Meetings to consider administrator’s proposals

case2.34.—(1) Notice of an initial creditors' meeting shall (unless the court otherwise directs) be given by notice in the newspaper in which the administrator’s appointment was advertised and, if he considers it appropriate to do so, in such other newspaper as he thinks most appropriate for ensuring that the notice comes to the attention of the company’s creditors.

(2) Notice in [[FORM 2.12]] Form 2.19B to attend the meeting shall be sent out at the same time to any directors or officers of the company (including persons who have been directors or officers in the past) whose presence at the meeting is, in the administrator’s opinion, required.

(3) Where the court orders an extension to the period set out in paragraph 51(2)(b) the administrator shall send a notice in Form 2.18B to each person to whom he is required to send notice by paragraph 49(4).

(4) If at the meeting there is not the requisite majority for approval of the administrator’s proposals (with modifications, if any), the chairman may, and shall if a resolution is passed to that effect, adjourn the meeting for not more than 14 days and may only adjourn once (subject to any direction by the court).

Creditors' meetings generally

2.35.—(1) This Rule applies to creditors' meetings summoned by the administrator under—

(a)paragraph 51 (initial creditors' meeting);

(b)paragraph 52(2) (at the request of the creditors);

(c)paragraph 54(2) (to consider revision to the administrator’s proposals);

(d)paragraph 56(1) (further creditors' meetings); and

(e)paragraph 62 (general power to summon meetings of creditors).

(2) Notice of any of the meetings set out in paragraph (1) above shall be in [[FORM 2.13]] Form 2.20B.

(3) In fixing the venue for the meeting, the administrator shall have regard to the convenience of creditors and the meeting shall be summoned for commencement between 10.00 and 16.00 hours on a business day, unless the court otherwise directs.

(4) Subject to paragraphs (6) and (7) below, at least 14 days' notice of the meeting shall be given to all creditors who are known to the administrator and had claims against the company at the date when the company entered administration unless that creditor has subsequently been paid in full; and the notice shall—

(a)specify the purpose of the meeting;

(b)contain a statement of the effect of Rule 2.38 (entitlement to vote); and

(c)contain the [[FORM 2.14]] forms of proxy.

(5) If within 30 minutes from the time fixed for commencement of the meeting there is no person present to act as chairman, the meeting stands adjourned to the same time and place in the following week or, if that is not a business day, to the business day immediately following.

(6) The meeting may be adjourned once, if the chairman thinks fit, but not for more than 14 days from the date on which it was fixed to commence, subject to the direction of the court.

(7) If a meeting is adjourned the administrator shall as soon as reasonably practicable notify the creditors of the venue of the adjourned meeting.

The chairman at meetings

2.36.—(1) At any meeting of creditors summoned by the administrator, either he shall be chairman, or a person nominated by him in writing to act in his place.

(2) A person so nominated must be either—

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

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

Meeting requisitioned by creditors

case2.37.—(1) The request for a creditors' meeting under paragraph 52(2) or 56(1) shall be in [[FORM 2.15]] Form 2.21B. A request for an initial creditors' meeting shall be made within 12 days of the date on which the administrator’s statement of proposals is sent out. A request under paragraph 52(2) or 56(1) shall include—

(a)a list of the creditors concurring with the request, showing the amounts of their respective debts in the administration;

(b)from each creditor concurring, written confirmation of his concurrence; and

(c)a statement of the purpose of the proposed meeting,

but sub-paragraph (a) does not apply if the requisitioning creditor’s debt is alone sufficient without the concurrence of other creditors.

(2) A meeting requested under paragraph 52(2) or 56(1) shall be held within 28 days of the administrator’s receipt of the notice requesting the meeting.

(3) The expenses of summoning and holding a meeting at the request of a creditor shall be paid by that person, who shall deposit with the administrator security for their payment.

(4) The sum to be deposited shall be such as the administrator may determine, and he shall not act without the deposit having been made.

(5) The meeting may resolve that the expenses of summoning and holding it are to be payable out of the assets of the company as an expense of the administration.

(6) To the extent that any deposit made under this Rule is not required for the payment of expenses of summoning and holding the meeting, it shall be repaid to the person who made it.

Entitlement to vote

case2.38.—(1) Subject as follows, at a meeting of creditors in administration proceedings a person is entitled to vote only if—

(a)he has given to the administrator, not later than 12.00 hours on the business day before the day fixed for the meeting, details in writing of the debt which—

(i)he claims to be due to him from the company; or

(ii)in relation to a member State liquidator, is claimed to be due to creditors in proceedings in relation to which he holds office;

(b)the claim has been duly admitted under the following provisions of this Rule; and

(c)there has been lodged with the administrator any proxy which he intends to be used on his behalf,

and details of the debt must include any calculation for the purposes of Rules 2.40 to 2.42.

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

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

(4) Votes are calculated according to the amount of a creditor’s claim as at the date on which the company entered administration, less any payments that have been made to him after that date in respect of his claim and any adjustment by way of set-off in accordance with Rule 2.85 as if that Rule were applied on the date that the votes are counted.

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

(6) No vote shall be cast by virtue of a claim more than once on any resolution put to the meeting.

(7) Where—

(a)a creditor is entitled to vote under this Rule;

(b)has lodged his claim in one or more sets of other proceedings; and

(c)votes (either in person or by proxy) on a resolution put to the meeting; and

(d)the member State liquidator casts a vote in respect of the same claim,

only the creditor’s vote shall be counted.

(8) Where—

(a)a creditor has lodged his claim in more than one set of other proceedings; and

(b)more than one member State liquidator seeks to vote by virtue of that claim,

the entitlement to vote by virtue of that claim is exercisable by the member State liquidator in main proceedings, whether or not the creditor has lodged his claim in the main proceedings.

(9) For the purposes of paragraph (6), the claim of a creditor and of any member State liquidator in relation to the same debt are a single claim.

(10) For the purposes of paragraphs (7) and (8), “ other proceedings ” means main proceedings, secondary proceedings or territorial proceedings in another member State.

Admission and rejection of claims

case2.39.—(1) At any creditors' meeting the chairman has power to admit or reject a creditor’s claim for the purpose of his entitlement to vote; and the power is exercisable with respect to the whole or any part of the claim.

(2) The chairman’s decision under this Rule, or in respect of any matter arising under Rule 2.38, is subject to appeal to the court by any creditor.

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

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

(5) In the case of the meeting summoned under paragraph 51 to consider the administrator’s proposals, an application to the court by way of appeal under this Rule against a decision of the chairman shall not be made later than 14 days after the delivery of the administrator’s report in accordance with paragraph 53(2).

(6) Neither the administrator nor any person nominated by him to be chairman is personally liable for costs incurred by any person in respect of an appeal to the court under this Rule, unless the court makes an order to that effect.

Secured creditors

2.40.—(1) At a meeting of creditors a secured creditor is entitled to vote only in respect of the balance (if any) of his debt after deducting the value of his security as estimated by him.

(2) However, in a case where the administrator has made a statement under paragraph 52(1)(b) and an initial creditors' meeting has been requisitioned under paragraph 52(2) then a secured creditor is entitled to vote in respect of the full value of his debt without any deduction of the value of his security.

Holders of negotiable instruments

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

(a)to treat the liability to him on the bill or note of every person who is liable on it antecedently to the company, and against whom a bankruptcy order has not been made (or, in the case of a company, which has not gone into liquidation), as a security in his hands; and

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

Hire-purchase, conditional sale and chattel leasing agreements

case2.42.—(1) Subject as follows, an owner of goods under a hire-purchase or chattel leasing agreement, or a seller of goods under a conditional sale agreement, is entitled to vote in respect of the amount of the debt due and payable to him by the company on the date that the company entered administration.

(2) In calculating the amount of any debt for this purpose, no account shall be taken of any amount attributable to the exercise of any right under the relevant agreement, so far as the right has become exercisable solely by virtue of the making of an administration application, a notice of intention to appoint an administrator or any matter arising as a consequence, or of the company entering administration.

Resolutions

2.43.—(1) Subject to paragraph (2), at a creditors' meeting in administration proceedings, a resolution is passed when a majority (in value) of those present and voting, in person or by proxy, have voted in favour of it.

(2) Any resolution is invalid if those voting against it include more than half in value of the creditors to whom notice of the meeting was sent and who are not, to the best of the chairman’s belief, persons connected with the company.

Minutes

2.44.—(1) The chairman of the meeting shall cause minutes of its proceedings to be entered in the company’s minute book.

(2) The minutes shall include a list of the names and addresses of creditors who attended (personally or by proxy) and, if a creditors' committee has been established, the names and addresses of those elected to be members of the committee.

Revision of the administrator’s proposals

case2.45.—(1) The administrator shall, under paragraph 54, make a statement setting out the proposed revisions to his proposals which he shall attach to [[FORM 2.16]] Form 2.22B and send to all those to whom he is required to send a copy of his revised proposals.

(2) The statement of revised proposals shall include—

(a)details of the court where the proceedings are and the relevant court reference number;

(b)the full name, registered address, registered number and any other trading names of the company;

(c)details relating to his appointment as administrator, including the date of appointment and the person making the administration application or appointment;

(d)the names of the directors and secretary of the company and details of any shareholdings in the company they may have;

(e)a summary of the initial proposals and the reason(s) for proposing a revision;

(f)details of the proposed revision including details of the administrator’s assessment of the likely impact of the proposed revision upon creditors generally or upon each class of creditors (as the case may be);

(g)where a proposed revision relates to the ending of the administration by a creditors' voluntary liquidation and the nomination of a person to be the proposed liquidator of the company, a statement that, in accordance with paragraph 83(7) and Rule 2.117(3), creditors may nominate a different person as the proposed liquidator, provided that the nomination is made after the receipt of the revised proposals and before those revised proposals are approved; and

(h)any other information that the administrator thinks necessary to enable creditors to decide whether or not to vote for the proposed revisions.

(3) Subject to paragraph 54(3), within 5 days of sending out the statement in paragraph (1) above, the administrator shall send a copy of the statement to every member of the company.

(4) When the administrator is acting under paragraph 54(3), the notice shall be published once in such newspaper as he thinks most appropriate for ensuring that the notice comes to the attention of the company’s members. The notice shall—

(a)state the full name of the company;

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

(c)specify an address to which members can write for a copy of the statement; and

(d)be published as soon as reasonably practicable after the administrator sends the statement to creditors.

Notice to creditors

case2.46. As soon as reasonably practicable after the conclusion of a meeting of creditors to consider the administrator’s proposals or revised proposals, the administrator shall—

(a)send notice in [[FORM 2.17]] Form 2.23B of the result of the meeting (including details of any modifications to the proposals that were approved) to every creditor who received notice of the meeting and any other person who received a copy of the original proposals; and

(b)file with the court, and send to the registrar of companies, and any creditors who did not receive notice of the meeting (of whose claim he has become subsequently aware), a copy of Form 2.23B, attaching a copy of the proposals considered at the meeting.

Reports to creditors

case 2.47. —(1) “ Progress report ” means a report which includes—

(a)details of the court where the proceedings are and the relevant court reference number;

(b)full details of the company’s name, address of registered office and registered number;

(c)full details of the administrator’s name and address, date of appointment and name and address of appointor, including any changes in office-holder, and, in the case of joint administrators, their functions as set out in the statement made for the purposes of paragraph 100(2);

(d)details of any extensions to the initial period of appointment;

(e)details of progress during the period of the report, including a receipts and payments account (as detailed in paragraph (2) below);

(f)details of any assets that remain to be realised; and

(g)any other relevant information for the creditors.

(2) A receipts and payments account shall state what assets of the company have been realised, for what value, and what payments have been made to creditors or others. The account is to be in the form of an abstract showing receipts and payments during the period of the report and where the administrator has ceased to act, the receipts and payments account shall include a statement as to the amount paid to unsecured creditors by virtue of the application of section 176A (prescribed part).

(3) The progress report shall cover—

(a)the period of 6 months commencing on the date that the company entered administration, and every subsequent period of 6 months; and

(b)when the administrator ceases to act, any period from the date of the previous report, if any, and from the date that the company entered administration if there is no previous report, until the time that the administrator ceases to act.

(4) The administrator shall send a copy of the progress report, attached to [[FORM 3.1]] Form 2.24B, within 1 month of the end of the period covered by the report, to—

(a)the creditors;

(b)the court; and

(c)the registrar of companies.

(5) The court may, on the administrator’s application, extend the period of 1 month mentioned in paragraph (4) above, or make such other order in respect of the content of the report as it thinks fit.

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

Correspondence instead of creditors' meetings

2.48.—(1) The administrator may seek to obtain the passing of a resolution by the creditors by sending a notice in Form [[FORM 3.2]] 2.25B to every creditor who is entitled to be notified of a creditors' meeting under Rule 2.35(4).

(2) In order to be counted, votes must be received by the administrator by 12.00 hours on the closing date specified on Form 2.25B and must be accompanied by the statement in writing on entitlement to vote required by Rule 2.38.

(3) If any votes are received without the statement as to entitlement, or the administrator decides that the creditor is not entitled to vote according to Rules 2.38 and 2.39, then that creditor’s votes shall be disregarded.

(4) The closing date shall be set at the discretion of the administrator. In any event it must not be set less than 14 days from the date of issue of the Form 2.25B.

(5) For any business to be transacted the administrator must receive at least 1 valid Form 2.25B by the closing date specified by him.

(6) If no valid Form 2.25B is received by the closing date specified then the administrator shall call a meeting of the creditors in accordance with Rule 2.35.

(7) Any single creditor, or a group of creditors, of the company whose debt(s) amount to at least 10% of the total debts of the company may, within 5 business days from the date of the administrator sending out a resolution or proposals, require him to summon a meeting of creditors to consider the matters raised therein in accordance with Rule 2.37. Any meeting called under this Rule shall be conducted in accordance with Rule 2.35.

(8) If the administrator’s proposals or revised proposals are rejected by the creditors pursuant to this Rule, the administrator may call a meeting of creditors.

(9) A reference in these Rules to anything done, or required to be done, at, or in connection with, or in consequence of, a creditors' meeting includes a reference to anything done in the course of correspondence in accordance with this Rule.

SECTION B: COMPANY MEETINGS

Venue and conduct of company meeting

2.49.—(1) Where the administrator summons a meeting of members of the company, he shall fix a venue for it having regard to their convenience.

(2) The chairman of the meeting shall be the administrator or a person nominated by him in writing to act in his place.

(3) A person so nominated must be either—

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

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

(4) If within 30 minutes from the time fixed for commencement of the meeting there is no person present to act as chairman, the meeting stands adjourned to the same time and place in the following week or, if that is not a business day, to the business day immediately following.

(5) Subject as above, the meeting shall be summoned and conducted as if it were a general meeting of the company summoned under the company’s articles of association, and in accordance with the applicable provisions of the Companies Act.

(6) Paragraph (5) does not apply where the laws of a member State and not the laws of England and Wales apply in relation to the conduct of the meeting. The meeting shall be summoned and conducted in accordance with the constitution of the company and the laws of the member State referred to in this paragraph shall apply to the conduct of the meeting.

(7) The chairman of the meeting shall cause minutes of its proceedings to be entered in the company’s minute book.

CHAPTER 7 THE CREDITORS' COMMITTEE

Constitution of committee

2.50.—(1) Where it is resolved by a creditors' meeting to establish a creditors' committee for the purposes of the administration, the committee shall consist of at least 3 and not more than 5 creditors of the company elected at the meeting.

(2) Any creditor of the company is eligible to be a member of the committee, so long as his claim has not been rejected for the purpose of his entitlement to vote.

(3) A body corporate may be a member of the committee, but it cannot act as such otherwise than by a representative appointed under Rule 2.55 below.

Formalities of establishment

case2.51.—(1) The creditors' committee does not come into being, and accordingly cannot act, until the administrator has issued a certificate in [[FORM 3.3]] Form 2.26B of its due constitution.

(2) No person may act as a member of the committee unless and until he has agreed to do so and, unless the relevant proxy or authorisation contains a statement to the contrary, such agreement may be given by his proxy-holder or representative under section 375 of the Companies Act present at the meeting establishing the committee.

(3) The administrator’s certificate of the committee’s due constitution shall not be issued unless and until at least 3 of the persons who are to be members of the committee have agreed to act and shall be issued as soon as reasonably practicable thereafter.

(4) As and when the others (if any) agree to act, the administrator shall issue an amended certificate in Form 2.26B.

(5) The certificate, and any amended certificate, shall be filed with the court and a copy sent to the registrar of companies by the administrator, as soon as reasonably practicable.

(6) If after the first establishment of the committee there is any change in its membership, the administrator shall as soon as reasonably practicable report the change to the court and the registrar of companies in [[FORM 8.3]] Form 2.27B.

Functions and meetings of the committee

2.52.—(1) The creditors' committee shall assist the administrator in discharging his functions, and act in relation to him in such manner as may be agreed from time to time.

(2) Subject as follows, meetings of the committee shall be held when and where determined by the administrator.

(3) The administrator shall call a first meeting of the committee not later than 6 weeks after its first establishment, and thereafter he shall call a meeting—

(a)if so requested by a member of the committee or his representative (the meeting then to be held within 14 days of the request being received by the administrator); and

(b)for a specified date, if the committee has previously resolved that a meeting be held on that date.

(4) The administrator shall give 7 days' written notice of the venue of any meeting to every member of the committee (or his representative designated for that purpose), unless in any case the requirement of notice has been waived by or on behalf of any member. Waiver may be signified either at or before the meeting.

The chairman at meetings

2.53.—(1) Subject to Rule 2.62(3), the chairman at any meeting of the creditors' committee shall be the administrator or a person nominated by him in writing to act.

(2) A person so nominated must be either—

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

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

Quorum

2.54. A meeting of the committee is duly constituted if due notice of it has been given to all the members, and at least 2 members are present or represented.

Committee-members' representatives

2.55.—(1) A member of the committee may, in relation to the business of the committee, be represented by another person duly authorised by him for that purpose.

(2) A person acting as a committee-member’s representative must hold a letter of authority entitling him so to act (either generally or specially) and signed by or on behalf of the committee-member, and for this purpose any proxy or any authorisation under section 375 of the Companies Act in relation to any meeting of creditors of the company shall, unless it contains a statement to the contrary, be treated as a letter of authority to act generally signed by or on behalf of the committee-member.

(3) The chairman at any meeting of the committee may call on a person claiming to act as a committee-member’s representative to produce his letter of authority, and may exclude him if it appears that his authority is deficient.

(4) No member may be represented by a body corporate, a person who is an undischarged bankrupt, [^F54 or^F54] a disqualified director or a person who is subject to a [^F55 bankruptcy restrictions order, bankruptcy restrictions undertaking or interim bankruptcy restrictions order^F55] .

(5) No person shall on the same committee, act at one and the same time as representative of more than one committee-member.

(6) Where a member’s representative signs any document on the member’s behalf, the fact that he so signs must be stated below his signature.

Resignation

2.56. A member of the committee may resign by notice in writing delivered to the administrator.

Termination of membership

2.57.—(1) Membership of the creditors' committee is automatically terminated if the member—

(a)becomes bankrupt ^F56...; or

(b)at 3 consecutive meetings of the committee is neither present nor represented (unless at the third of those meetings it is resolved that this Rule is not to apply in his case); or

(c)ceases to be, or is found never to have been, a creditor.

(2) However, if the cause of termination is the member’s bankruptcy, his trustee in bankruptcy replaces him as a member of the committee.

Removal

2.58. A member of the committee may be removed by resolution at a meeting of creditors' at least 14 days' notice having been given of the intention to move that resolution.

Vacancies

2.59.—(1) The following applies if there is a vacancy in the membership of the creditors' committee.

(2) The vacancy need not be filled if the administrator and a majority of the remaining members of the committee so agree, provided that the total number of members does not fall below the minimum required under Rule 2.50(1).

(3) The administrator may appoint any creditor (being qualified under the Rules to be a member of the committee) to fill the vacancy, if a majority of the other members of the committee agree to the appointment, and the creditor concerned consents to act.

Procedure at meetings

2.60.—(1) At any meeting of the creditors' committee, each member of it (whether present himself, or by his representative) has one vote; and a resolution is passed when a majority of the members present or represented have voted in favour of it.

(2) Every resolution passed shall be recorded in writing, either separately or as part of the minutes of the meeting.

(3) A record of each resolution shall be signed by the chairman and placed in the company’s minute book.

Resolutions of creditors' committee by post

2.61.—(1) In accordance with this Rule, the administrator may seek to obtain the agreement of members of the creditors' committee to a resolution by sending to every member (or his representative designated for the purpose) a copy of the proposed resolution.

(2) Where the administrator makes use of the procedure allowed by this Rule, he shall send out to members of the committee or their representatives (as the case may be) a copy of any proposed resolution on which a decision is sought, which shall be set out in such a way that agreement with or dissent from each separate resolution may be indicated by the recipient on the copy so sent.

(3) Any member of the committee may, within 7 business days from the date of the administrator sending out a resolution, require him to summon a meeting of the committee to consider matters raised by the resolution.

(4) In the absence of such a request, the resolution is deemed to have been passed by the committee if and when the administrator is notified in writing by a majority of the members that they concur with it.

(5) A copy of every resolution passed under this Rule, and a note that the committee’s concurrence was obtained, shall be placed in the company’s minute book.

Information from administrator

2.62.—(1) Where the committee resolves to require the attendance of the administrator under paragraph 57(3)(a), the notice to him shall be in writing signed by the majority of the members of the committee for the time being. A member’s representative may sign for him.

(2) The meeting at which the administrator’s attendance is required shall be fixed by the committee for a business day, and shall be held at such time and place as he determines.

(3) Where the administrator so attends, the members of the committee may elect any one of their number to be chairman of the meeting, in place of the administrator or a nominee of his.

Expenses of members

2.63.—(1) Subject as follows, the administrator shall, out of the assets of the company, defray any reasonable travelling expenses directly incurred by members of the creditors' committee or their representatives in relation to their attendance at the committee’s meetings, or otherwise on the committee’s business, as an expense of the administration.

(2) Paragraph (1) does not apply to any meeting of the committee held within 6 weeks of a previous meeting, unless the meeting in question is summoned at the instance of the administrator.

Members' dealing with the company

2.64.—(1) Membership of the committee does not prevent a person from dealing with the company while the company is in administration, provided that any transactions in the course of such dealings are in good faith and for value.

(2) The court may, on the application of any person interested, set aside any transaction which appears to it to be contrary to the requirements of this Rule, and may give such consequential directions as it thinks fit for compensating the company for any loss which it may have incurred in consequence of the transaction.

Formal defects

case2.65. The acts of the creditors' committee established for any administration are valid notwithstanding any defect in the appointment, election or qualifications of any member of the committee or any committee-member’s representative or in the formalities of its establishment.

CHAPTER 8 DISPOSAL OF CHARGED PROPERTY

2.66.—(1) The following applies where the administrator applies to the court under paragraphs 71 or 72 for authority to dispose of property of the company which is subject to a security (other than a floating charge), or goods in the possession of the company under a hire purchase agreement.

(2) The court shall fix a venue for the hearing of the application, and the administrator shall as soon as reasonably practicable give notice of the venue to the person who is the holder of the security or, as the case may be, the owner under the agreement.

(3) If an order is made under paragraphs 71 or 72 the court shall send two sealed copies to the administrator.

(4) The administrator shall send one of them to that person who is the holder of the security or owner under the agreement.

(5) The administrator shall send a Form [[FORM 3.4]] 2.28B to the registrar of companies with a copy of the sealed order.

CHAPTER 9 EXPENSES OF THE ADMINISTRATION

case2.67.—(1) The expenses of the administration are payable in the following order of priority—

(a) expenses properly incurred by the administrator in performing his functions in the administration of the company;

(b) the cost of any security provided by the administrator in accordance with the Act or the Rules;

(c) where an administration order was made, the costs of the applicant and any person appearing on the hearing of the application and where the administrator was appointed otherwise than by order of the court, any costs and expenses of the appointor in connection with the making of the appointment and the costs and expenses incurred by any other person in giving notice of intention to appoint an administrator;

(d) any amount payable to a person employed or authorised, under Chapter 5 of this Part of the Rules, to assist in the preparation of a statement of affairs or statement of concurrence;

(e) any allowance made, by order of the court, towards costs on an application for release from the obligation to submit a statement of affairs or statement of concurrence;

(f) any necessary disbursements by the administrator in the course of the administration (including any expenses incurred by members of the creditors' committee or their representatives and allowed for by the administrator under Rule 2.63, but not including any payment of corporation tax in circumstances referred to in sub-paragraph (j) below);

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

(h) the remuneration of the administrator agreed under Chapter 11 of this Part of the Rules;

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

(2) The priorities laid down by paragraph (1) of this Rule are subject to the power of the court to make orders under paragraph (3) of this Rule where the assets are insufficient to satisfy the liabilities.

(3) The court may, in the event of the assets being insufficient to satisfy the liabilities, make an order as to the payment out of the assets of the expenses incurred in the administration in such order of priority as the court thinks just.

CHAPTER 10 DISTRIBUTIONS TO CREDITORSSECTION A: APPLICATION OF CHAPTER AND GENERAL

case2.68.—(1) This Chapter applies where the administrator makes, or proposes to make, a distribution to any class of creditors. Where the distribution is to a particular class of creditors, references in this Chapter to creditors shall, in so far as the context requires, be a reference to that class of creditors only.

(2) The administrator shall give notice to the creditors of his intention to declare and distribute a dividend in accordance with Rule 2.95.

(3) Where it is intended that the distribution is to be a sole or final dividend, the administrator shall, after the date specified in the notice referred to in paragraph (2)—

(a) defray any outstanding expenses of a liquidation (including any of the items mentioned in Rule 4.218) or provisional liquidation that immediately preceded the administration;

(b) defray any items payable in accordance with the provisions of paragraph 99;

(c) defray any amounts (including any debts or liabilities and his own remuneration and expenses) which would, if the administrator were to cease to be the administrator of the company, be payable out of the property of which he had custody or control in accordance with the provisions of paragraph 99; and

(d) declare and distribute that dividend without regard to the claim of any person in respect of a debt not already proved.

(4) The court may, on the application of any person, postpone the date specified in the notice.

Debts of insolvent company to rank equally

case2.69. Debts other than preferential debts rank equally between themselves in the administration and, after the preferential debts, shall be paid in full unless the assets are insufficient for meeting them, in which case they abate in equal proportions between themselves.

Supplementary provisions as to dividend

2.70.—(1) In the calculation and distribution of a dividend the administrator shall make provision for—

(a)any debts which appear to him to be due to persons who, by reason of the distance of their place of residence, may not have had sufficient time to tender and establish their proofs;

(b)any debts which are the subject of claims which have not yet been determined; and

(c)disputed proofs and claims.

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

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

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

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

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

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

Division of unsold assets

case2.71. The administrator may, with the permission of the creditors' committee, or if there is no creditors' committee, the creditors, divide in its existing form amongst the company’s creditors, according to its estimated value, any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold.

SECTION B: MACHINERY OF PROVING A DEBT

Proving a debt

case2.72.—(1) A person claiming to be a creditor of the company and wishing to recover his debt in whole or in part must (subject to any order of the court to the contrary) submit his claim in writing to the administrator.

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

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

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

(b)state the following matters—

(i)the creditor’s name and address;

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

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

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

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

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

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

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

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

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

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

Claim established by affidavit

2.73.—(1) The administrator may, if he thinks it necessary, require a claim of debt to be verified by means of an affidavit in [[FORM 3.5]] Form 2.29B.

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

Costs of proving

2.74. Unless the court otherwise orders—

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

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

Administrator to allow inspection of proofs

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

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

(b)any contributory of the company; and

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

New administrator appointed

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

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

Admission and rejection of proofs for dividend

case2.77.—(1) A proof may be admitted for dividend either for the whole amount claimed by the creditor, or for part of that amount.

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

Appeal against decision on proof

case2.78.—(1) If a creditor is dissatisfied with the administrator’s decision with respect to his proof (including any decision on the question of preference), he may apply to the court for the decision to be reversed or varied. The application must be made within 21 days of his receiving the statement sent under Rule 2.77(2).

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

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

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

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

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

Withdrawal or variation of proof

case2.79. A creditor’s proof may at any time, by agreement between himself and the administrator, be withdrawn or varied as to the amount claimed.

Expunging of proof by the court

case2.80.—(1) The court may expunge a proof or reduce the amount claimed—

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

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

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

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

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

SECTION C: QUANTIFICATION OF CLAIMS

Estimate of quantum

case2.81.—(1) The administrator shall estimate the value of any debt which, by reason of its being subject to any contingency or for any other reason, does not bear a certain value; and he may revise any estimate previously made, if he thinks fit by reference to any change of circumstances or to information becoming available to him. He shall inform the creditor as to his estimate and any revision of it.

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

Negotiable instruments, etc

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

Secured creditors

case2.83.—(1) If a secured creditor realises his security, he may prove for the balance of his debt, after deducting the amount realised.

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

Discounts

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

Mutual credit and set-off _cross-notes

case2.85.—(1) This Rule applies—

(a)where the administrator, being authorised to make the distribution in question, has pursuant to Rule 2.95 given notice that he proposes to make it; and

(b)only for the purposes of determining the claims to be taken into account for the purposes of calculating that distribution.

(2) In this Rule “ mutual dealings ” means mutual credits, mutual debts or other mutual dealings between the company and any creditor of the company proving or claiming to prove for a debt in the administration.

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

(4) Sums due either to or from the company shall not be taken into account under paragraph (3) if—

(a)they became due after the company entered administration;

(b)the other party had notice at the time the sums became due that—

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

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

(c)the administration was immediately preceded by a winding up and the sums became due during the winding up; or

(d)the administration was immediately preceded by a winding up and the other party had notice at the time the sums became due that—

(i)a meeting of creditors had been summoned under section 98; or

(ii)a petition for the winding up of the company was pending.

(5) Only the balance (if any) of the account is provable in the administration. Alternatively the amount shall be paid to the administrator as part of the assets.

Debt in foreign currency _cross-notes

case2.86.—(1) For the purpose of proving a debt incurred or payable in a currency other than sterling, the amount of the debt shall be converted into sterling at the official exchange rate prevailing on the date when the company entered administration.

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

Payments of a periodical nature

case2.87.—(1) In the case of rent and other payments of a periodical nature, the creditor may prove for any amounts due and unpaid up to the date when the company entered administration.

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

Interest

case2.88.—(1) Where a debt proved in the administration bears interest, that interest is provable as part of the debt except in so far as it is payable in respect of any period after the company entered administration.

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

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

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

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

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

(7) Subject to Rule 2.105(3), any surplus remaining after payment of the debts proved shall, before being applied for any purpose, be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the company entered administration.

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

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

Debt payable at future time

case2.89. A creditor may prove for a debt of which payment was not yet due on the date when the company entered administration, subject to Rule 2.105 (adjustment of dividend where payment made before time).

Value of security

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

(2) However, if a secured creditor—

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

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

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

Surrender for non-disclosure

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

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

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

Redemption by administrator

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

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

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

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

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

Test of security’s value

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

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

Realisation of security by creditor

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

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

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

Notice of proposed distribution

case2.95.—(1) Where an administrator is proposing to make a distribution to creditors he shall give 28 days' notice of that fact.

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

(a)be sent to—

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

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

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

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

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

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

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

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

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

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

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

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

Admission or rejection of proofs

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

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

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

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

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

(4) Subject to Rule 2.104, where—

(a)a creditor has proved; and

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

payment shall only be made to the creditor.

Declaration of dividend

case2.97.—(1) Subject to paragraph (2), within the 2 month period referred to in Rule 2.95(4)(a) the administrator shall proceed to declare the dividend to one or more classes of creditor of which he gave notice.

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

Notice of declaration of a dividend

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

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

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

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

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

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

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

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

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

Payments of dividends and related matters

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

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

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

Notice of no dividend, or no further dividend

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

(a)that no funds have been realised; or

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

Proof altered after payment of dividend

case2.101.—(1) If after payment of dividend the amount claimed by a creditor in his proof is increased, the creditor is not entitled to disturb the distribution of the dividend; but he is entitled to be paid, out of any money for the time being available for the payment of any further dividend, any dividend or dividends which he has failed to receive.

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

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

Secured creditors

case2.102.—(1) The following applies where a creditor re-values his security at a time when a dividend has been declared.

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

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

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

Disqualification from dividend

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

Assignment of right to dividend

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

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

Debt payable at future time

case2.105.—(1) Where a creditor has proved for a debt of which payment is not due at the date of the declaration of dividend, he is entitled to dividend equally with other creditors, but subject as follows.

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

(3) Other creditors are not entitled to interest out of surplus funds under Rule 2.88 until any creditor to whom paragraphs (1) and (2) apply has been paid the full amount of his debt.

CHAPTER 11 THE ADMINISTRATOR

Fixing of remuneration

case2.106.—(1) The administrator is entitled to receive remuneration for his services as such.

(2) The remuneration shall be fixed either—

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(9) For the purpose of this Rule and Rule 2.107, in a case where the administrator has made a statement under paragraph 52(1)(b), a resolution of the creditors shall be taken as passed if (and only if) passed with the approval of—

(a)each secured creditor of the company; or

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

(i)each secured creditor of the company; and

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

Recourse to meeting of creditors

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

Recourse to the court

case2.108.—(1) If the administrator considers that the remuneration fixed for him by the creditors' committee, or by resolution of the creditors, is insufficient, he may apply to the court for an order increasing its amount or rate.

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

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

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

Creditors' claim that remuneration is excessive

case2.109.—(1) Any creditor of the company may, with the concurrence of at least 25 per cent in value of the creditors (including himself), apply to the court for an order that the administrator’s remuneration be reduced, on the grounds that it is, in all the circumstances, excessive.

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

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

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

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

CHAPTER 12 ENDING ADMINISTRATION

Final progress reports

case2.110.—(1) In this Chapter reference to a progress report is to a report in the form specified in Rule 2.47.

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

(a)the administrator’s proposals;

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

(c)the steps taken during the administration; and

(d)the outcome.

Notice of automatic end of administration

2.111.—(1) Where the appointment of an administrator has ceased to have effect, and the administrator is not required by any other Rule to give notice of that fact, he shall, as soon as reasonably practicable, and in any event within 5 business days of the date when the appointment has ceased, file a notice of automatic end of administration in [[FORM 3.6]] Form 2.30B with the court. The notice shall be accompanied by a final progress report.

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

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

Applications for extension of administration

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

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

(3) The administrator shall use the notice of extension of period of administration in [[FORM 3.7]] Form 2.31B in all circumstances where he is required to give such notice.

Notice of end of administration

2.113.—(1) Where an administrator who was appointed under paragraph 14 or 22 gives notice that the purpose of administration has been sufficiently achieved he shall use [[FORM 4.1]] Form 2.32B. The notice shall be accompanied by a final progress report.

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

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

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

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

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

(7) The notice must—

(a)state the full name of the company;

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

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

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

Application to court by administrator

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

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

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

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

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

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

Application to court by creditor

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

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

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

Notification by administrator of court order

2.116. Where the court makes an order to end the administration, the administrator shall notify the registrar of companies in [[FORM 4.2] [FORM 4.3]] Form 2.33B, attaching a copy of the court order and a copy of his final progress report.

Moving from administration to creditors' voluntary liquidation

case2.117.—(1) Where for the purposes of paragraph 83(3) the administrator sends a notice of moving from administration to creditors' voluntary liquidation to the registrar of companies, he shall do so in [[FORM 4.4] [FORM 4.5]] Form 2.34B and shall attach to that notice a final progress report which must include details of the assets to be dealt with in the liquidation.

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

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

Moving from administration to dissolution

2.118.—(1) Where, for the purposes of paragraph 84(1), the administrator sends a notice of moving from administration to dissolution to the registrar of companies, he shall do so in [[FORM 4.6]] Form 2.35B and shall attach to that notice a final progress report.

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

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

(4) The administrator shall use [[FORM 4.2] [FORM 4.3]] Form 2.36B to notify the registrar of companies in accordance with paragraph 84(8) of any order made by the court under paragraph 84(7).

CHAPTER 13 REPLACING ADMINISTRATOR

Grounds for resignation

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

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

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

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

Notice of intention to resign

2.120.—(1) The administrator shall in all cases give at least 7 days' notice in [[FORM 4.7]] Form 2.37B of his intention to resign, or to apply for the court’s permission to do so, to the following persons—

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

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

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

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

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

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

Notice of resignation

2.121.—(1) The notice of resignation shall be in [[FORM 4.8]] Form 2.38B.

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

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

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

Application to court to remove administrator from office

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

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

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

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

(5) A copy of the order shall also be sent to the registrar of companies in [[FORM 4.9]] Form 2.39B within the same time period.

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

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

Administrator deceased

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

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

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

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

Application to replace

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

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

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

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

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

Notification and advertisement of appointment of replacement administrator

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

Notification and advertisement of appointment of joint administrator

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

2.128. The replacement or additional administrator shall send notice of the appointment in [[FORM 4.10]] Form 2.40B to the registrar of companies.

Administrator’s duties on vacating office

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

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

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

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

CHAPTER 14 EC REGULATION: CONVERSION OF ADMINISTRATION INTO WINDING UP

Application for conversion into winding up

2.130.—(1) Where a member State liquidator proposes to apply to the court for the conversion under Article 37 of the EC Regulation (conversion of earlier proceedings) of an administration into a winding up, an affidavit complying with Rule 2.131 must be prepared and sworn, and filed with the court in support of the application.

(2) An application under this Rule shall be by originating application.

(3) The application and the affidavit required under this Rule shall be served upon—

(a)the company; and

(b)the administrator.

Contents of affidavit

2.131.—(1) The affidavit shall state—

(a)that main proceedings have been opened in relation to the company in a member State other than the United Kingdom;

(b)the deponent’s belief that the conversion of the administration into a winding up would prove to be in the interests of the creditors in the main proceedings;

(c)the deponent’s opinion as to whether the company ought to enter voluntary winding up or be wound up by the court; and

(d)all other matters that, in the opinion of the member State liquidator, would assist the court—

(i)in deciding whether to make such an order; and

(ii)if the court were to do so, in considering the need for any consequential provision that would be necessary or desirable.

(2) An affidavit under this rule shall be sworn by, or on behalf of, the member State liquidator.

Power of court

2.132.—(1) On hearing the application for conversion into winding up the court may make such order as it thinks fit.

(2) If the court makes an order for conversion into winding up the order may contain all such consequential provisions as the court deems necessary or desirable.

(3) Without prejudice to the generality of paragraph (1), an order under that paragraph may provide that the company be wound up as if a resolution for voluntary winding up under section 84 were passed on the day on which the order is made.

CHAPTER 15 EC REGULATION: MEMBER STATE LIQUIDATOR

Interpretation of creditor and notice to member State liquidator

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

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

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

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

(5) Where the administrator is obliged to give notice to, or provide a copy of a document (including an order of court) to, the court, the registrar of companies or the official receiver, the administrator shall give notice or provide copies, as the case may be, to the member State liquidator.

(6) Paragraph (5) is without prejudice to the generality of the obligations imposed by Article 31 of the EC Regulation (duty to co-operate and communicate information).^F53]

PART 3 ADMINISTRATIVE RECEIVERSHIP

CHAPTER 1 APPOINTMENT OF ADMINISTRATIVE RECEIVER

[^F57Acceptance and confirmation of acceptance of appointment

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

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

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

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

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

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

(b)the time and date of acceptance.^F57]

Notice and advertisement of appointment_I27

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

(2) The following matters shall be stated in the [^F58notices sent to the company and the creditors^F58] —

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

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

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

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

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

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

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

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

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

CHAPTER 2 STATEMENT OF AFFAIRS AND REPORT TO CREDITORS

Notice requiring statement of affairs_I28

3.3.—(1) [[FORM 3.1]] [^F59 Where^F59] the administrative receiver determines to require a statement of the company's affairs to be made out and submitted to him in accordance with section 47, he shall send notice to each of the persons whom he considers should be made responsible under that section, requiring them to prepare and submit the statement.

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

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

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

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

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

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

(4) The administrative receiver shall, on request, furnish each deponent with [^F60the forms required for the preparation of the statement of affairs^F60] .

Verification and filing_I29

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

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

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

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

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

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

Limited disclosure_I30

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

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

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

Release from duty to submit statement of affairs; extension of time_I31

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

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

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

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

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

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

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

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

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

Expenses of statement of affairs_I32

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

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

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

Report to creditors_I33

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

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

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

(4) [[FORM 3.3]] If the statement of affairs or affidavits of concurrence, if any, have not been submitted to the receiver by the time he sends a copy of his report to the registrar of companies, he shall send a copy of the statement and any affidavits of concurrence as soon thereafter as he receives them.

[^F61 (5) The receiver’s report under section 48(1) shall state, to the best of his knowledge and belief—

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

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

(6) Nothing in this Rule is to be taken as requiring any such estimate to include any information, the disclosure of which could seriously prejudice the commercial interests of the company.

• If such information is excluded from the calculation the estimate shall be accompanied by a statement to that effect.

(7) The report shall also state whether, and if so why, the receiver proposes to make an application to court under section 176A(5).^F61]

CHAPTER 3 CREDITORS' MEETING

Procedure for summoning meeting under s.48(2)_I34

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

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

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

(4) [[FORM 8.3]] With the notice summoning the meeting there shall be sent out forms of proxy.

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

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

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

The chairman at the meeting_I35

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

(2) A person so nominated must be either—

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

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

Voting rights_I36

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

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

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

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

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

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

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

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

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

(a)to treat the liability to him on the bill or note of every person who is liable on it antecedently to the company, and against whom a bankruptcy order has not been made (or, in the case of a company, which has not gone into liquidation), as a security in his hands, and

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

Admission and rejection of claim_I37

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

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

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

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

(5) Neither the receiver nor any person nominated by him to be chairman is personally liable for costs incurred by any person in respect of an appeal to the court under this Rule, unless the court makes an order to that effect.

Quorum_I38

^F623.13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjournment_I39

3.14.—(1) The creditors' meeting shall not be adjourned, even if no quorum is present, unless the chairman decides that it is desirable; and in that case he shall adjourn it to such date, time and place as he thinks fit.

(2) Rule 3.9(1) and (2) applies, with necessary modifications, to any adjourned meeting.

(3) If there is no quorum, and the meeting is not adjourned, it is deemed to have been duly summoned and held.

Resolutions and minutes_I40

3.15.—(1) At the creditors' meeting, a resolution is passed when a majority (in value) of those present and voting in person or by proxy have voted in favour of it.

(2) The chairman of the meeting shall cause a record to be made of the proceedings, and kept as part of the records of the receivership.

(3) The record shall include a list of the creditors who attended (personally or by proxy) and, if a creditors' committee has been established, the names and addresses of those elected to be members of the committee.

CHAPTER 4 THE CREDITORS' COMMITTEE

Constitution of committee_I41

3.16.—(1) Where it is resolved by the creditors' meeting to establish a creditors' committee, the committee shall consist of at least 3 and not more than 5 creditors of the company elected at the meeting.

(2) Any creditor of the company is eligible to be a member of the committee, so long as his claim has not been rejected for the purpose of his entitlement to vote.

(3) A body corporate may be a member of the committee, but it cannot act as such otherwise than by a representative appointed under Rule 3.21 below.

Formalities of establishment_I42

3.17.—(1) The creditors' committee does not come into being, and accordingly cannot act, until the administrative receiver has issued a certificate of its due constitution.

[^F63 (2) No person may act as a member of the committee unless and until he has agreed to do so and, unless the relevant proxy or authorisation contains a statement to the contrary, such agreement may be given by his proxy-holder or representative under section 375 of the Companies Act present at the meeting establishing the committee.

(2A) The receiver’s certificate of the committee’s due constitution shall not issue unless and until at least 3 of the persons who are to be members of the committee have agreed to act.^F63]

(3) As and when the others (if any) agree to act, the receiver shall issue an amended certificate.

(4) [[FORM 3.4]] The certificate, and any amended certificate, shall be sent by the receiver to the registrar of companies.

(5) [[FORM 3.5]] If, after the first establishment of the committee, there is any change in its membership, the receiver shall report the change to the registrar of companies.

Functions and meetings of the committee_I43

3.18.—(1) The creditors' committee shall assist the administrative receiver in discharging his functions, and act in relation to him in such manner as may be agreed from time to time.

(2) Subject as follows, meetings of the committee shall be held when and where determined by the receiver.

(3) The receiver shall call a first meeting of the committee not later than 3 months after its establishment; and thereafter he shall call a meeting—

(a)if requested by a member of the committee or his representative (the meeting then to be held within 21 days of the request being received by the receiver), and

(b)for a specified date, if the committee has previously resolved that a meeting be held on that date.

(4) The receiver shall give 7 days' written notice of the venue of any meeting to every member (or his representative designated for that purpose), unless in any case the requirement of notice has been waived by or on behalf of any member.

Waiver may be signified either at or before the meeting.

The chairman at meetings_I44

3.19.—(1) Subject to Rule 3.28(3), the chairman at any meeting of the creditors' committee shall be the administrative receiver, or a person nominated by him in writing to act.

(2) A person so nominated must be either—

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

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

Quorum_I45

3.20. A meeting of the committee is duly constituted if due notice has been given to all the members, and at least 2 members are present or represented.

Committee-members' representatives_I46

3.21.—(1) A member of the committee may, in relation to the business of the committee, be represented by another person duly authorised by him for that purpose.

(2) A person acting as a committee-member's representative must hold a letter of authority entitling him so to act (either generally or specially) and signed by or on behalf of the committee-member [^F64, and for this purpose any proxy or any authorisation under section 375 of the Companies Act in relation to any meeting of creditors of the company shall, unless it contains a statement to the contrary, be treated as a letter of authority to act generally signed by or on behalf of the committee-member^F64] .

(3) The chairman at any meeting of the committee may call on a person claiming to act as a committee-member's representative to produce his letter of authority, and may exclude him if it appears that his authority is deficient.

(4) No member may be represented by a body corporate, or by a person who is an undischarged bankrupt, [^F65or a disqualified director,^F65] or is subject to a [^F66bankruptcy restrictions order, bankruptcy restrictions undertaking or interim bankruptcy restrictions order^F66] .

(5) No person shall—

(a)on the same committee, act at one and the same time as representative of more than one committee-member, or

(b)act both as a member of the committee and as representative of another member.

(6) Where a member's representative signs any document on the member's behalf, the fact that he so signs must be stated below his signature.

Resignation_I47

3.22. A member of the committee may resign by notice in writing delivered to the administrative receiver.

Termination of membership_I48

3.23.—(1) Membership of the creditors' committee is automatically terminated if the member—

(a)^F67becomes bankrupt ..., or

(b)at 3 consecutive meetings of the committee is neither present nor represented (unless at the third of those meetings it is resolved that this Rule is not to apply in his case), or

(c)ceases to be, or is found never to have been, a creditor.

(2) However, if the cause of termination is the member's bankruptcy, his trustee in bankruptcy replaces him as a member of the committee.

Removal_I49

3.24. A member of the committee may be removed by resolution at a meeting of creditors, at least 14 days' notice having been given of the intention to move that resolution.

Vacancies_I50

3.25.—(1) The following applies if there is a vacancy in the membership of the creditors' committee.

(2) The vacancy need not be filled if the administrative receiver and a majority of the remaining members of the committee so agree, provided that the total number of members does not fall below the minimum required under Rule 3.16.

(3) The receiver may appoint any creditor (being qualified under the Rules to be a member of the committee) to fill the vacancy, if a majority of the other members of the committee agree to the appointment and the creditor concerned consents to act.

Procedure at meetings_I51

3.26.—(1) At any meeting of the committee, each member of it (whether present himself or by his representative) has one vote; and a resolution is passed when a majority of the members present or represented have voted in favour of it.

(2) Every resolution passed shall be recorded in writing, either separately or as part of the minutes of the meeting.

(3) A record of each resolution shall be signed by the chairman and kept as part of the records of the receivership.

Resolutions by post_I52

3.27.—(1) In accordance with this Rule, the administrative receiver may seek to obtain the agreement of members of the creditors' committee to a resolution by sending to every member (or his representative designated for the purpose) a copy of the proposed resolution.

(2) Where the receiver makes use of the procedure allowed by this Rule, he shall send out to members of the committee or their representatives (as the case may be) [^F68a copy of any proposed resolution on which a decision is sought, which shall be set out in such a way that agreement with or dissent from each separate resolution may be indicated by the recipient on the copy so sent^F68] .

(3) Any member of the committee may, within 7 business days from the date of the receiver sending out a resolution, require him to summon a meeting of the committee to consider the matters raised by the resolution.

(4) In the absence of such a request, the resolution is deemed to have been passed by the committee if and when the receiver is notified in writing by a majority of the members that they concur with it.

(5) A copy of every resolution passed under this Rule, and a note that the committee's concurrence was obtained, shall be kept with the records of the receivership.

Information from receiver_I53

3.28.—(1) Where the committee resolves to require the attendance of the administrative receiver under section 49(2), the notice to him shall be in writing signed by the majority of the members of the committee for the time being. A member's representative may sign for him.

(2) The meeting at which the receiver's attendance is required shall be fixed by the committee for a business day, and shall be held at such time and place as he determines.

(3) Where the receiver so attends, the members of the committee may elect any one of their number to be chairman of the meeting, in place of the receiver or any nominee of his.

Expenses of members_I54

3.29.—(1) Subject as follows, the administrative receiver shall out of the assets of the company defray any reasonable travelling expenses directly incurred by members of the creditors' committee or their representatives in relation to their attendance at the committee's meetings, or otherwise on the committee's business, as an expense of the receivership.

(2) Paragraph (1) does not apply to any meeting of the committee held within 3 months of a previous meeting, unless the meeting in question is summoned at the instance of the administrative receiver.

Members' dealings with the company_I55

3.30.—(1) Membership of the committee does not prevent a person from dealing with the company while the receiver is acting, provided that any transactions in the course of such dealings are entered into in good faith and for value.

(2) The court may, on the application of any person interested, set aside a transaction which appears to it to be contrary to the requirements of this Rule, and may give such consequential directions as it thinks fit for compensating the company for any loss which it may have incurred in consequence of the transaction.

[^F69Formal defects

3.30A. The acts of the creditors' committee established for any administrative receivership are valid notwithstanding any defect in the appointment, election or qualifications of any member of the committee or any committee-member’s representative or in the formalities of its establishment.^F69]

CHAPTER 5 THE ADMINISTRATIVE RECEIVER (MISCELLANEOUS)

Disposal of charged property_I56

3.31.—(1) The following applies where the administrative receiver applies to the court under section 43(1) for authority to dispose of property of the company which is subject to a security.

(2) The court shall fix a venue for the hearing of the application, and the receiver shall forthwith give notice of the venue to the person who is the holder of the security.

(3) If an order is made under section 43(1), the receiver shall forthwith give notice of it to that person.

(4) The court shall send 2 sealed copies of the order to the receiver, who shall send one of them to that person.

Abstract of receipts and payments_I57

3.32.—(1) The administrative receiver shall—

(a)within 2 months after the end of 12 months from the date of his appointment, and of every subsequent period of 12 months, and

(b)within 2 months after he ceases to act as administrative receiver,

[[FORM 3.6]] send to the registrar of companies, to the company and to the person by whom he was appointed, and to each member of the creditors' committee (if there is one), the requisite accounts of his receipts and payments as receiver.

(2) The court may, on the receiver's application, extend the period of 2 months referred to in paragraph (1).

(3) The accounts are to be in the form of an abstract showing—

(a)receipts and payments during the relevant period of 12 months, or

(b)where the receiver has ceased to act, receipts and payments during the period from the end of the last 12-month period to the time when he so ceased (alternatively, if there has been no previous abstract, receipts and payments in the period since his appointment as administrative receiver).

(4) This Rule is without prejudice to the receiver's duty to render proper accounts required otherwise than as above.

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

Resignation_I58

3.33.—(1) Subject as follows, before resigning his office the administrative receiver shall give at least 7 days' notice of his intention to do so to—

(a)^F70the person by whom he was appointed, ...

(b)the company or, if it is then in liquidation, its liquidator [^F71, and

(c)in any case, to the members of the creditors' committee (if any)^F71] .

(2) A notice given under this Rule shall specify the date on which the receiver intends his resignation to take effect.

(3) No notice is necessary if the receiver resigns in consequence of the making of an administration order.

Receiver deceased_I59

3.34. If the administrative receiver dies, the person by whom he was appointed shall, forthwith on his becoming aware of the death, give notice of it to—

(a)^F72[[FORM 3.7]] the registrar of companies, ...

(b)the company or, if it is in liquidation, the liquidator [^F73, and

(c)in any case, to the members of the creditors' committee (if any)^F73] .

Vacation of office_I60

3.35.—(1) The administrative receiver, on vacating office on completion of the receivership, or in consequence of his ceasing to be qualified as an insolvency practitioner, shall forthwith give notice of his doing so—

[^F74 (a)to the company or, if it is in liquidation, the liquidator, and^F74]

(b)^F75... to the members of the creditors' committee (if any).

(2) Where the receiver's office is vacated, the notice to the registrar of companies which is required by section 45(4) may be given by means of an indorsement on the notice required by section 405(2) of the Companies Act (notice for the purposes of the register of charges).

CHAPTER 6 VAT BAD DEBT RELIEF

Issue of certificate of insolvency_I61

3.36.—(1) In accordance with this Rule, it is the duty of the administrative receiver to issue a certificate in the terms of paragraph (b) of section 22(3) of the Value Added Tax Act 1983(1) (which specifies the circumstances in which a company is deemed insolvent for the purposes of that section) forthwith upon his forming the opinion described in that paragraph.

(2) There shall in the certificate be specified—

(a)the name of the company and its registered number;

(b)the name of the administrative receiver and the date of his appointment; and

(c)the date on which the certificate is issued.

(3) The certificate shall be intituled “CERTIFICATE OF INSOLVENCY FOR THE PURPOSES OF SECTION 22(3)(b) OF THE VALUE ADDED TAX ACT 1983 ”.

Notice to creditors_I62

3.37.—(1) Notice of the issue of the certificate shall be given by the administrative receiver within 3 months of his appointment or within 2 months of issuing the certificate, whichever is the later, to all of the company's unsecured creditors of whose address he is then aware and who have, to his knowledge, made supplies to the company, with a charge to value added tax, at any time before his appointment.

(2) Thereafter, he shall give the notice to any such creditor of whose address and supplies to the company he becomes aware.

(3) He is not under obligation to provide any creditor with a copy of the certificate.

Preservation of certificate with company's records_I63

3.38.—(1) The certificate shall be retained with the company's accounting records, and section 222 of the Companies Act (where and for how long records are to be kept) shall apply to the certificate as it applies to those records.

(2) It is the duty of the administrative receiver, on vacating office, to bring this Rule to the attention of the directors or (as the case may be) any successor of his as receiver.

[^F76CHAPTER 7 SECTION 176A: THE PRESCRIBED PART

Report to creditors

3.39.—(1) This Rule applies where—

(a)a receiver (other than an administrative receiver) is appointed by the court or otherwise under a charge which as created was a floating charge; and

(b)section 176A applies.

(2) Within 3 months (or such longer period as the court may allow) of the date of his appointment the receiver shall send to creditors, details of whose names and addresses are available to him, notice of his appointment and a report which will include the following matters—

(a)to the best of the receiver’s knowledge and belief—

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

(ii)an estimate of the value of company’s net property;

(b)whether, and if so, why, he proposes to make an application to court under section 176A(5); and

(c)whether he proposes to present a petition for the winding up of the company.

(3) Nothing in this Rule is to be taken as requiring any such estimate to include any information, the disclosure of which could seriously prejudice the commercial interests of the company. If such information is excluded from the calculation the estimate shall be accompanied by a statement to that effect.

(4) Where the receiver thinks that it is impracticable to send the report required under paragraph (2) or where full details of the unsecured creditors of the company are not available to him, he may, instead of sending a report as required by this Rule, publish a notice to the same effect in such newspaper as he thinks most appropriate for ensuring that it comes to the notice of the company’s unsecured creditors.

Receiver to deal with prescribed part

3.40. Where Rule 3.39 applies—

(a)the receiver may present a petition for the winding up of the company if the ground of the petition is that in section 122(1)(f);

(b)where a liquidator or administrator has been appointed to the company, the receiver shall deliver up the sums representing the prescribed part to him;

(c)in any other case, the receiver shall apply to the court for directions as to the manner in which he is to discharge his duty under section 176A(2)(a) and shall act in accordance with such directions as are given by the court.^F76]

PART 4 COMPANIES WINDING UP

CHAPTER 1 THE SCHEME OF THIS PART OF THE RULES

Voluntary winding up; winding up by the court_I64

case4.1.[^F77—(1) In a members' voluntary winding up, the Rules in this Part do not apply, except as follows—

(a)Rule 4.3 applies in the same way as it applies in a creditors' voluntary winding up;

(b)Rule 4.72 (additional provisions concerning meetings in relation to [^F78 the Financial Services Authority^F78] and [^F79 the scheme manager^F79] ) applies in the winding up of [^F80 authorised deposit-takers or former authorised deposit-takers^F80] , whether members' or creditors' voluntary or by the court;

(c)Chapters 9 (proof of debts in a liquidation), 10 (secured creditors), 15 (disclaimer) and 18 (special manager) apply wherever, and in the same way as, they apply in a creditors' voluntary winding up;

(d)Section F of Chapter 11 (the liquidator) applies only in a members' voluntary winding up, and not otherwise;

(e)Section G of that Chapter (court’s power to set aside certain transactions; rule against solicitation) applies in any winding up, whether members' or creditors' voluntary or by the court;

(f)Rule 4.182A applies only in a members' voluntary winding up, and not otherwise; and

(g)Rule 4.223-CVL (liquidator’s statements) applies in the same way as it applies in a creditors' voluntary winding up.^F77]

(2) Subject as follows, the Rules in this Part apply both in a creditors' voluntary winding up and in a winding up by the court; and for this purpose a winding up is treated as a creditors' voluntary [^F81winding up^F81] if, and from the time when, the liquidator forms the opinion that the company will be unable to pay its debts in full, and determines accordingly to summon a creditors' meeting under section 95.

(3) The following Chapters, or Sections of Chapters, of this Part do not apply in a creditors' voluntary winding up—

• Chapter 2—The statutory demand;

• Chapter 3—Petition to winding-up order;

• Chapter 4—Petition by contributories;

• Chapter 5—Provisional liquidator;

• Chapter 13—The liquidation committee where winding up follows immediately on administration;

• Chapter 16—Settlement of list of contributories;

• Chapter 17—Calls;

• Chapter 19—Public examination of company officers and others;

• [^F82 Chapter 11 (Section F)—The liquidator in a members' voluntary winding up;^F82]

• Chapter 21 (Section A)—Return of capital;

• [^F83 Chapter 21 (Section C)—Dissolution after winding up^F83] .

(4) Where at the head of any Rule, or at the end of any paragraph of a Rule, there appear the words “(NO CVL APPLICATION)”, this signifies that the Rule or, as the case may be, the paragraph does not apply in a creditors' voluntary winding up.

However, this does not affect the court's power to make orders under section 112 (exercise in relation to voluntary winding up of powers available in winding up by the court).

(5) Where to any Rule or paragraph there is given a number incorporating the letter “CVL”, that signifies that the Rule or (as the case may be) the paragraph applies in a creditors' voluntary winding up, and not in a winding up by the court.

[^F84 (6) In a voluntary winding up which is commenced by the registration of a notice under paragraph 83(3) of Schedule B1 to the Act, the following provisions of this Part shall not apply—

• Rules 4.34, 4.38, 4.49, 4.51, 4.53, 4.62, 4.101, 4.103, 4.106, 4.152, 4.153, 4.206-4.210.^F84]

Winding up by the court: the various forms of petition [^F85(NO CVL APPLICATION)^F85] _I65

4.2.—(1) Insofar as the Rules in this Part apply to winding up by the court, they apply (subject as follows) whether the petition for winding up is presented under any of the several paragraphs of section 122(1), namely—

• paragraph (a)—company special resolution for winding up by the court;

• paragraph (b)—public company without certificate under section 117 of the Companies Act;

• paragraph (c)—old public company;

• paragraph (d)—company not commencing business after formation, or suspending business;

• paragraph (e)—number of company's members reduced below 2;

• paragraph (f)—company unable to pay its debts;

• [^F86 paragraph (fa)—end of moratorium without approval of voluntary arrangement;^F86]

• paragraph (g)—court's power under the “just and equitable” rule,

or under any enactment enabling the presentation of a winding-up petition.

(2) Except as provided by the following two paragraphs or by any particular Rule, the Rules apply whether the petition for winding up is presented by the company, the directors, one or more creditors, one or more contributories, the Secretary of State, the official receiver, or any person entitled under any enactment to present such a petition.

(3) Chapter 2 (statutory demand) has no application except in relation to an unpaid creditor of the company satisfying section 123(1)(a) (the first of the two cases specified, in relation to England and Wales, of the company being deemed unable to pay its debts within section 122(1)(f)) or section 222(1) (the equivalent provision in relation to unregistered companies).

(4) Chapter 3 (petition to winding-up order) has no application to a petition for winding up presented by one or more contributories; and in relation to a petition so presented Chapter 4 has effect.

Time-limits_I66

case4.3. Where by any provision of the Act or the Rules about winding up, the time for doing anything is limited, the court may extend the time, either before or after it has expired, on such terms, if any, as it thinks fit.

CHAPTER 2 THE STATUTORY DEMAND (NO CVL APPLICATION)

Preliminary_I67

4.4.—(1) This Chapter does not apply where a petition for the winding up of a company is presented under section 124 on or after the date on which the Rules come into force and the petition is based on failure to comply with a written demand served on the company before that date.

(2) A written demand served by a creditor on a company under section 123(1)(a) (registered companies) or 222(1)(a) (unregistered companies) is known in winding-up proceedings as “the statutory demand”.

(3) The statutory demand must be dated, and be signed either by the creditor himself or by a person stating himself to be authorised to make the demand on the creditor's behalf.

Form and content of statutory demand_I68

4.5.—(1) [[FORM 4.1]] The statutory demand must state the amount of the debt and the consideration for it (or, if there is no consideration, the way in which it arises).

(2) If the amount claimed in the demand includes—

(a)any charge by way of interest not previously notified to the company as included in its liability, or

(b)any other charge accruing from time to time,

the amount or rate of the charge must be separately identified, and the grounds on which payment of it is claimed must be stated.

In either case the amount claimed must be limited to that which has accrued due at the date of the demand.

Information to be given in statutory demand_I69

4.6.—(1) The statutory demand must include an explanation to the company of the following matters—

(a)the purpose of the demand, and the fact that, if the demand is not complied with, proceedings may be instituted for the winding up of the company;

(b)the time within which it must be complied with, if that consequence is to be avoided; and

(c)the methods of compliance which are open to the company.

(2) Information must be provided for the company as to how an officer or representative of it may enter into communication with one or more named individuals, with a view to securing or compounding for the debt to the creditor's satisfaction.

In the case of any individual so named in the demand, his address and telephone number (if any) must be given.

CHAPTER 3 PETITION TO WINDING-UP ORDER (NO CVL APPLICATION) (NO APPLICATION TO PETITION BY CONTRIBUTORIES)

Presentation and filing of petition_I70

case4.7.—(1) [[FORM 4.2] [FORM 4.3]] The petition, verified by affidavit in accordance with Rule 4.12 below, shall be filed in court.

[^F87 (2) No petition shall be filed unless there is produced on presentation of the petition a receipt for the deposit payable or paragraph (2A) applies.