Insolvency Act 1986, section 253

Application for interim order

Part VIII Individual Voluntary Arrangements

(1) Application to the court for an interim order may be made where the debtor intends to make a proposal [F571 under this Part, that is, a proposal F571] to his creditors for a composition in satisfaction of his debts or a scheme of arrangement of his affairs (from here on referred to, in either case, as a “voluntary arrangement”).

(2) The proposal must provide for some person (“the nominee”) to act in relation to the voluntary arrangement either as trustee or otherwise for the purpose of supervising its implementation [F572 and the nominee must be a person who is qualified to act as an insolvency practitioner, or authorised to act as nominee, in relation to the voluntary arrangement F572] .

(3)Subject as follows, the application may be made—

(a)if the debtor is an undischarged bankrupt, by the debtor, the trustee of his estate, or the official receiver, and

(b)in any other case, by the debtor.

(4)An application shall not be made under subsection (3)(a) unless the debtor has given notice of [F573the proposalF573] to the official receiver and, if there is one, the trustee of his estate.

F574(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Definitions used in section 253 1

the debtor

(2) In Schedule 6 “the debtor” means the company or the individual concerned.

Defined in s.386(2) · see it in the full Act

Cases considering section 253 11

Bramston v Haut

[2012] EWCA Civ 1637 · 14 December 2012

The section supplied the proper application procedure for a debtor seeking an interim order to facilitate an individual voluntary arrangement. The bankrupt could have applied under it, but compliance with its safeguards was required. (see paras [57]-[64]) An application had to provide for a suitably qualified or authorised nominee to act in relation to the proposed voluntary arrangement. (see para [58]) A debtor could not apply for an interim order without first giving notice of the proposal to the official receiver and any trustee. That safeguard had not been observed. (see paras [58]; [62])

Welburn v Dibb Lupton Broomhead

[2002] EWCA Civ 1601 · 24 October 2002Interprets

Section 253(2) makes clear that a nominee or supervisor may act as trustee or otherwise. Whether the supervisor is a trustee depends on the intention shown by the wording of the voluntary arrangement (see the first-issue discussion).

Eyers & Anor v Barclays Bank Plc

[2001] EWCA Civ 222 · 16 February 2001Interprets

The court uses s 253(2) to reject the suggestion that a trust can never arise under an individual voluntary arrangement. The provision recognises that the nominee may act as a trustee or otherwise in supervising implementation. (see unpaginated judgment, discussion of Re Naeem)

What each judgment says about section 253 is in the case-law panel in the full Act.

Amendments and notes

6 notes from legislation.gov.uk

Amendments

  1. F571Words in s. 253(1) inserted (1.1.2003) by 2000 c. 39, s. 3, Sch. 3 para. 3(a); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)
  2. F572Words in s. 253(2) inserted (1.1.2003) by 2000 c. 39, s. 3, Sch. 3 para. 3(b); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)
  3. F573Words in s. 253(4) substituted (1.1.2003) by 2000 c. 39, s. 3, Sch. 3 para. 3(c); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)
  4. F574S. 253(5) omitted (6.4.2016) by virtue of Enterprise and Regulatory Reform Act 2013 (c. 24), s. 103(3), Sch. 19 para. 2; S.I. 2016/191, art. 2 (with art. 3)

Modifications

  1. C919S. 253 amended (1.12.2001) by 2000 c. 8, s. 357(1); S.I. 2001/3538, art. 2(1)
  2. C920S. 253 restricted (24.3.2022) by Commercial Rent (Coronavirus) Act 2022 (c. 12), ss. 25(2)(b), 31(4) (with s. 30)