Insolvency Act 1986, section 255

Cases in which interim order can be made

Part VIII Individual Voluntary Arrangements

(1)The court shall not make an interim order on an application under section 253 unless it is satisfied—

(a)that the debtor intends to make [F577a proposal under this PartF577] ;

(b)that on the day of the making of the application the debtor was an undischarged bankrupt or was able to [F578make a bankruptcy applicationF578] ;

(c)that no previous application has been made by the debtor for an interim order in the period of 12 months ending with that day; and

(d)F579that the nominee under the debtor’s proposal . . . is willing to act in relation to the proposal.

(2)The court may make an order if it thinks that it would be appropriate to do so for the purpose of facilitating the consideration and implementation of the debtor’s proposal.

(3)Where the debtor is an undischarged bankrupt, the interim order may contain provision as to the conduct of the bankruptcy, and the administration of the bankrupt’s estate, during the period for which the order is in force.

(4)Subject as follows, the provision contained in an interim order by virtue of subsection (3) may include provision staying proceedings in the bankruptcy or modifying any provision in this Group of Parts, and any provision of the rules in their application to the debtor’s bankruptcy.

(5)An interim order shall not, in relation to a bankrupt, make provision relaxing or removing any of the requirements of provisions in this Group of Parts, or of the rules, unless the court is satisfied that that provision is unlikely to result in any significant diminution in, or in the value of, the debtor’s estate for the purposes of the bankruptcy.

(6)Subject to the following provisions of this Part, an interim order made on an application under section 253 ceases to have effect at the end of the period of 14 days beginning with the day after the making of the order.

Definitions used in section 255 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 255 10

Bramston v Haut

[2012] EWCA Civ 1637 · 14 December 2012Limits

The court had to be satisfied of the statutory gateway matters, including the debtor’s intention to make a proposal, the absence of a previous interim-order application within 12 months, and the nominee’s willingness to act. (see para [59]) An interim order could be made where appropriate to facilitate consideration and implementation of a serious and viable voluntary-arrangement proposal. (see para [59]) The power to stay bankruptcy proceedings or modify provisions governing individual insolvency was wide enough to permit modification of the automatic-discharge regime. (see para [57]) The court could not relax or remove bankruptcy requirements unless satisfied that doing so was unlikely significantly to diminish the debtor’s estate or its value for bankruptcy purposes. (see para [59])

Hurst v Bennett & Ors

[2001] EWCA Civ 1398 · 8 October 2001

The court applied the prohibition on making an interim order where the debtor had made a previous application within 12 months. The later, materially different proposal was a fresh application, so the court had no jurisdiction to entertain it. (see paras [24]-[28]; [31]; [37])

Hurst v Bennett & Ors

[2001] EWCA Civ 1316 · 2 August 2001Limits

The judgment records the statutory condition that an interim order cannot be made unless no previous application for an interim order was made in the preceding 12 months. The Court of Appeal leaves the relationship between that condition and section 375 for fuller argument. (See the opening paragraph and the paragraph beginning “The point which has arisen”.)

What each judgment says about section 255 is in the case-law panel in the full Act.

Amendments and notes

3 notes from legislation.gov.uk

Amendments

  1. F577Words in s. 255(1)(a) substituted (1.1.2003) by 2000 c. 39, s. 3, Sch. 3 para. 5(a); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)
  2. F578Words in s. 255(1)(b) substituted (6.4.2016) by Enterprise and Regulatory Reform Act 2013 (c. 24), s. 103(3), Sch. 19 para. 3; S.I. 2016/191, art. 2 (with art. 3)
  3. F579Words in s. 255(1)(d) repealed (1.1.2003) by 2000 c. 39, ss. 3, 15, Sch. 3 paras. 5(b), Sch. 5; S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)