Insolvency Act 1986, section 11

Effect of order

Part II Administration Orders

(1)On the making of an administration order—

(a)any petition for the winding up of the company shall be dismissed, and

(b)any administrative receiver of the company shall vacate office.

(2)Where an administration order has been made, any receiver of part of the company’s property shall vacate office on being required to do so by the administrator.

(3)During the period for which an administration order is in force—

(a)no resolution may be passed or order made for the winding up of the company;

(b)no administrative receiver of the company may be appointed;

[F116 (ba)no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may imposeF116]

(c)no other steps may be taken to enforce any security over the company’s property, or to repossess goods in the company’s possession under any hire-purchase agreement, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose; and

(d)no other proceedings and no execution or other legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as aforesaid.

(4)Where at any time an administrative receiver of the company has vacated office under subsection (1)(b), or a receiver of part of the company’s property has vacated office under subsection (2)—

(a)his remuneration and any expenses properly incurred by him, and

(b)any indemnity to which he is entitled out of the assets of the company.

shall be charged on and (subject to subsection (3) above) paid out of any property of the company which was in his custody or under his control at that time in priority to any security held by the person by or on whose behalf he was appointed.

(5)Neither an administrative receiver who vacates office under subsection (1)(b) nor a receiver who vacates office under subsection (2) is required on or after so vacating office to take any steps for the purpose of complying with any duty imposed on him by section 40 or 59 of this Act (duty to pay preferential creditors).

Definitions used in section 11 4

the company

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act
administrator

1 (1) For the purposes of this Act “administrator” of a company means a person appointed under this Schedule to manage the company’s affairs, business and property.

Defined in Sch.B1 para.1(1) · see it in the full Act
consent

(3) But where the administrator has made a statement under paragraph 52(1)(b) “consent” means—

(a) consent of each secured creditor of the company, or

(b) if the administrator thinks that a distribution may be made to preferential creditors, consent of—

(i) each secured creditor of the company, and

(ii) the preferential creditors of the company.

Defined in Sch.B1 para.108(3) · see it in the full Act
agreement

4 For the purposes of sections 72B and 72E and this Schedule “agreement” includes an agreement or undertaking effected by—

(a)contract,

(b)deed, or

(c)any other instrument intended to have effect in accordance with the law of England and Wales, Scotland or another jurisdiction.

Defined in Sch.2A para.4 · see it in the full Act

(2) “Agreement” includes any agreement or undertaking effected by—

(a)contract,

(b)deed, or

(c)any other instrument intended to have effect in accordance with the law of England and Wales, Scotland or another jurisdiction.

Defined in Sch.ZA1 para.19(2) · see it in the full Act

Cases considering section 11 23

Winsor v Bloom (In re Railtrack plc)

[2002] EWCA Civ 955 · 10 July 2002Interprets

The court construed the moratorium as directed to legal or quasi-legal proceedings against the company or its property, while preserving the distinction between proceedings and the other detailed prohibitions in subsection (3). The court used the distinction between steps to enforce security or repossess goods and legal proceedings to support a narrower reading of “other proceedings”. The court held that section 11(3)(d), as modified for railway administration, did not cover the section 17 regulatory procedure. It did cover later civil proceedings to enforce a direction under section 144 and the specified enforcement procedures.

In Plus Group Limited v John Albert Pyke

[2002] EWCA Civ 147 · 6 February 2002

Confirms that an administration order did not require referral to the Companies Court in these circumstances. Requiring the administrator-supported proceedings to continue only after £5,000 was lodged as security did not offend the provision.

Polly Peck International Plc v The Marangos Hotel Company Ltd & Ors

[1998] EWCA Civ 789 · 7 May 1998

Applies the administration moratorium: proceedings may not be commenced against a company during administration without the administrators’ consent or the court’s leave. Leave requires a seriously arguable claim on the merits and jurisdiction. (see Application for Leave; Seriously Arguable Case)

3 more judgments, and what each says about section 11, are in the case-law panel in the full Act.

Amendments and notes

9 notes from legislation.gov.uk

Amendments

  1. F116S. 11(3)(ba) inserted (2.4.2001) by 2000 c. 39, s. 9(3); S.I. 2001/766, art. 2(1)(b) (subject to transitional provisions in art. 3)

Modifications

  1. C133S. 11 applied (with modifications) by Water Act 1989 (c. 15, SIF 130), s. 23, Sch. 6 Pt. I para. 1 (with ss. 58(7), 101(1), 141(6), 160(1)(2)(4), 163, 189(4)?(10), 190, 193(1), Sch. 26 paras. 3(1)(2), 17, 40(4), 57(6), 58)
  2. C134Ss. 11-15 modified (E.W) (1.12.1991) by Water Industry Act 1991 (c. 56), ss. 23(3), 223(2), Sch. 3 Pts. I, II paras. 1, 12(2) (with ss. 82(3), 186(1), 222(1), Sch. 14 para. 6)
  3. C135S. 11(2) excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 175(1), 182(4), Sch. 22 para. 11(2); S.I. 1991/878, art. 2, Sch.
  4. C136S. 11(2) excluded by The Financial Market and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979), reg. 19(1ZA) (as inserted 1.10.2009 by The Financial Markets and Insolvency (Settlement Finality) (Amendment) Regulations 2009 (S.I. 2009/1972), reg. 7(a))
  5. C137S. 11(3) excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 161(4), 182(4), Sch. 22 para. 5(2); S.I. 1991/878, art. 2, Sch.
  6. C138S. 11(3)(c) excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 175(1)(a), 182(4), Sch. 22 para. 11(1); S.I. 1991/878, art. 2, Sch.
  7. C139s. 11(3)(c) excluded by The Financial Market and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979), reg. 19(1ZA) (as inserted 1.10.2009 by The Financial Markets and Insolvency (Settlement Finality) (Amendment) Regulations 2009 (S.I. 2009/1972), reg. 7(a))
  8. C140S. 11(3)(d) modified (25.4.1991) by Companies Act 1989 (c. 40), s. 182(4), Sch. 22 para. 12(4); S.I. 1991/878, art. 2, Sch.