A40 Application of Part where two or more persons act as monitor
(1) Where two or more persons act jointly as the monitor—
(a) a reference in this Act to the monitor is a reference to those persons acting jointly;
(b) where an offence of omission is committed by the monitor, each of the persons appointed to act jointly—
(i) commits the offence, and
(ii) may be proceeded against and punished individually.
(2) Where persons act jointly in respect of only some of the functions of the monitor, subsection (1) applies only in relation to those functions.
(3) Where two or more persons act concurrently as the monitor a reference in this Act to the monitor is a reference to any of the persons appointed (or any combination of them).
(1) Any of the persons specified below may apply to the court on the ground that an act, omission or decision of the monitor during a moratorium has unfairly harmed the interests of the applicant.
(2) The persons who may apply are—
(a) a creditor, director or member of the company, or
(b) any other person affected by the moratorium.
(3) An application under subsection (1) may be made during the moratorium or after it has ended.
(4) On an application under subsection (1) the court may—
(a) confirm, reverse or modify any act or decision of the monitor,
(b) give the monitor directions, or
(c) make such other order as it thinks fit (but may not, under this paragraph, order the monitor to pay any compensation).
(5) Where an application under subsection (1) relates to a failure by the monitor to bring the moratorium to an end under section A38(1), an order under subsection (4) may, in particular, bring the moratorium to an end and make such consequential provision as the court thinks fit.
(6) Where an application under subsection (1) relates to the monitor bringing a moratorium to an end under section A38(1), an order under subsection (4) may, in particular, provide that the moratorium is not to be taken into account for the purposes of paragraph 2(1)(b) of Schedule ZA1 (company not eligible for moratorium if moratorium in force within previous 12 months).
(7) In making an order under subsection (4) the court must have regard to the need to safeguard the interests of persons who have dealt with the company in good faith and for value.
(8) See also section A17 (obligations to notify change in end of moratorium).
A43 Challenges to monitor remuneration in insolvency proceedings
(1) The rules may confer on an administrator or liquidator of a company the right to apply to the court on the ground that remuneration charged by the monitor in relation to a prior moratorium for the company was excessive.
(2) Rules under subsection (1) may (among other things) make provision as to—
(a) time limits;
(b) disposals available to the court;
(c) the treatment of costs (or, in Scotland, the expenses) of the application in the administration or winding up.
(1) A creditor or member of a company may apply to the court for an order under this section on the ground that—
(a) during a moratorium, the company’s affairs, business and property are being or have been managed by the directors in a manner which has unfairly harmed the interests of its creditors or members generally or of some part of its creditors or members (including at least the applicant), or
(b) any actual or proposed act or omission of the directors during a moratorium causes or would cause such harm.
(2) An application under subsection (1) may be made during the moratorium or after it has ended.
(3) On an application under subsection (1) the court may make such order as it thinks fit.
(4) An order under subsection (3) may in particular—
(a) regulate the management by the directors of the company’s affairs, business and property during the remainder of the moratorium,
(b) require the directors to refrain from doing or continuing an act complained of by the applicant or to do an act which the applicant has complained they have omitted to do,
(c) require a decision of the company’s creditors to be sought (using a qualifying decision procedure) on such matters as the court may direct, or
(d) bring the moratorium to an end and make such consequential provision as the court thinks fit.
(5) In making an order under subsection (3) the court must have regard to the need to safeguard the interests of persons who have dealt with the company in good faith and for value.
(6) See also section A17 (obligations to notify change in end of moratorium).
A45 Challenge brought by Board of the Pension Protection Fund
(1) This section applies where—
(a) a moratorium—
(i) is in force in relation to a company that is an employer in respect of an eligible scheme, or
(ii) is or has been in force in relation to a company that has been an employer in respect of an eligible scheme at any time during the moratorium, and
(b) the trustees or managers of the scheme are a creditor of the company.
(2) The Board of the Pension Protection Fund may make any application under section A42(1) or A44(1) that could be made by the trustees or managers as a creditor.
(3) For the purposes of such an application, any reference in section A42(1) or A44(1) to the interests of the applicant is to be read as a reference to the interests of the trustees or managers as a creditor.
(4) In this section “eligible scheme” has the meaning given by section 126 of the Pensions Act 2004.
A46 Offence of fraud etc during or in anticipation of moratorium
(1) An officer of a company commits an offence if, during a moratorium for the company or at any time within the period of 12 months ending with the day on which a moratorium for the company comes into force, the officer—
(a) does any of the things mentioned in subsection (2), or
(b) was privy to the doing by others of any of the things mentioned in subsection (2)(c), (d) and (e).
(2) Those things are—
(a) concealing any part of the company’s property to the value of £500 or more, or concealing any debt due to or from the company,
(b) fraudulently removing any part of the company’s property to the value of £500 or more,
(c) concealing, destroying, mutilating or falsifying any document affecting or relating to the company’s property or affairs,
(d) making any false entry in any document affecting or relating to the company’s property or affairs,
(e) fraudulently parting with, altering or making any omission in any document affecting or relating to the company’s property or affairs, or
(f) pawning, pledging or disposing of any property of the company which has been obtained on credit and has not been paid for (unless the pawning, pledging or disposal was in the ordinary way of the company’s business).
(3) It is a defence—
(a) for a person charged with an offence under subsection (1) in respect of any of the things mentioned in subsection (2)(a) or (f) to prove that the person had no intent to defraud, and
(b) for a person charged with an offence under subsection (1) in respect of any of the things mentioned in subsection (2)(c) or (d) to prove that the person had no intent to conceal the state of affairs of the company or to defeat the law.
(4) Where a person pawns, pledges or disposes of any property of a company in circumstances which amount to an offence under subsection (1), every person who takes in pawn or pledge, or otherwise receives, the property commits an offence if the person knows it to be pawned, pledged or disposed of in circumstances which—
(a) amount to an offence under subsection (1), or
(b) would, if a moratorium were obtained for the company within the period of 12 months beginning with the day on which the pawning, pledging or disposal took place, amount to an offence under subsection (1).
(5) In this section, “officer” includes a shadow director.
A47 Offence of false representation etc to obtain a moratorium
(1) An officer of a company commits an offence if, for the purpose of obtaining a moratorium for the company or an extension of a moratorium for the company, the officer—
(a) makes any false representation, or
(b) fraudulently does, or omits to do, anything.
(2) Subsection (1) applies even if no moratorium or extension is obtained.
(3) In this section, “officer” includes a shadow director.
(1) This section applies where a moratorium has been obtained for a company.
(2) If it appears to the monitor that any past or present officer of the company has committed an offence in connection with the moratorium, the monitor must forthwith—
(a) report the matter to the appropriate authority, and
(b) provide the appropriate authority with such information and give the authority such access to and facilities for inspecting and taking copies of documents (being information or documents in the possession or under the control of the monitor and relating to the matter in question) as the authority requires.
(3) In subsection (2), “the appropriate authority”—
(a) in the case of a company registered in England and Wales, means the Secretary of State,
(b) in the case of a company registered in Scotland, means the Lord Advocate, and
(c) in the case of an unregistered company means—
(i) if it has a principal place of business in England and Wales but not Scotland, the Secretary of State,
(ii) if it has a principal place of business in Scotland but not England and Wales, the Lord Advocate,
(iii) if it has a principal place of business in both England and Wales and Scotland, the Secretary of State and the Lord Advocate, and
(iv) if it does not have a principal place of business in England and Wales or Scotland, the Secretary of State.
(4) Where a matter is reported to the Secretary of State under subsection (2), the Secretary of State may, for the purpose of investigating the matter and such other matters relating to the affairs of the company as appear to the Secretary of State to require investigation, exercise any of the powers which are exercisable by inspectors appointed under section 431 or 432 of the Companies Act 1985.
(5) For the purpose of such an investigation any obligation imposed on a person by any provision of the Companies Acts to produce documents or give information to, or otherwise to assist, inspectors so appointed is to be regarded as an obligation similarly to assist the Secretary of State in the Secretary of State’s investigation.
(6) Where a question is put to a person in exercise of the powers conferred by subsection (4), the person’s answer may be used in evidence against them.
(7) However, in criminal proceedings in which the person is charged with an offence other than a false statement offence—
(a) no evidence relating to the answer may be adduced, and
(b) no question relating to it may be asked,
by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of the person.
(8) In subsection (7) “false statement offence” means—
(a) an offence under section 2 or 5 of the Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath), or
(b) an offence under section 44(1) or (2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath).
(9) Where a prosecuting authority institutes criminal proceedings following any report under subsection (2), the monitor, and every officer and agent of the company past and present (other than the defendant or defender), must give the authority all assistance in connection with the prosecution which they are reasonably able to give.
(10) For this purpose—
“agent” includes any banker or solicitor of the company and any person employed by the company as auditor, whether that person is or is not an officer of the company;
“prosecuting authority” means the Director of Public Prosecutions, the Lord Advocate or the Secretary of State.
(11) The court may, on the application of the prosecuting authority, direct a person who has failed to comply with subsection (9) to comply with it.
A49 Regulated companies: modifications to this Part
(1) For the purposes of sections A3 and A4 as they apply in relation to a regulated company, section A6(1) has effect as if the documents listed there included a reference to the written consent of the appropriate regulator to the appointment of the proposed monitor.
(2) The remaining provisions of this section apply in relation to a moratorium for a regulated company.
(3) Any notice under section A8(2), A17(2) to (4) or A39(8) must also be sent by the monitor to the appropriate regulator.
(4) The directors must give the appropriate regulator notice of any qualifying decision procedure by which a decision of the company’s creditors is sought for the purposes of section A12(2) or A44(4)(c).
(5) If the directors fail to comply with subsection (4), any director who did not have a reasonable excuse for the failure commits an offence.
(6) The appropriate regulator, or a person appointed by the appropriate regulator, may in the way provided for by the rules, participate (but not vote) in any qualifying decision procedure by which a decision of the company’s creditors is sought for the purposes of this Part.
(7) The appropriate regulator is entitled to be heard on any application to the court for permission under section A31(1) or A32(1) (disposal of charged property, etc).
(8) The court may make an order under section A39(1) only if the appropriate regulator has given its written consent to the appointment of the proposed monitor.
(9) The persons who may apply to the court under section A39(3), A42(1) or A44(1) include the appropriate regulator.
(10) If a person other than a regulator applies to the court under section A39(3), A42(1) or A44(1) the appropriate regulator is entitled to be heard on the application.
(11) If either regulator makes an application to the court under section A39(3), A42(1) or A44(1) in relation to a PRA-regulated company, the other regulator is entitled to be heard on the application.
(12) This section does not affect any right that the appropriate regulator has (apart from this section) as a creditor of a regulated company.
(13) In this section—
“the appropriate regulator” means—
where the regulated company is a PRA-regulated company, each of the Financial Conduct Authority and the Prudential Regulation Authority, and
where the regulated company is not a PRA-regulated company, the Financial Conduct Authority;
“PRA-authorised person” has the meaning given by section 2B(5) of the Financial Services and Markets Act 2000;
“PRA-regulated company” means a regulated company which—
is, or has been, a PRA-authorised person,
is, or has been, an appointed representative within the meaning given by section 39 of the Financial Services and Markets Act 2000, whose principal (or one of whose principals) is, or was, a PRA-authorised person, or
is carrying on, or has carried on, a PRA-regulated activity (within the meaning of section 22A of that Act) in contravention of the general prohibition;
“regulated activity” has the meaning given by section 22 of the Financial Services and Markets Act 2000, taken with Schedule 2 to that Act and any order under that section;
“regulated company” means a company which—
is, or has been, an authorised person within the meaning given by section 31 of the Financial Services and Markets Act 2000,
is, or has been, an appointed representative within the meaning given by section 39 of that Act, or
is carrying on, or has carried on, a regulated activity in contravention of the general prohibition within the meaning given by section 19 of that Act;
“regulator” means the Financial Conduct Authority or the Prudential Regulation Authority.
(14) The Secretary of State may by regulations amend this section for the purposes of changing the definition of “regulated company” in subsection (13).
(15) Regulations under subsection (14) are subject to the affirmative resolution procedure.
A50 Power to modify this Part etc in relation to certain companies
(1) The Secretary of State may by regulations make provision under the law of England and Wales or Scotland—
(a) to modify this Part as it applies in relation to a company for which there is a special administration regime, or
(b) in connection with the interaction between this Part and any other insolvency procedure in relation to such a company.
(2) The Welsh Ministers may by regulations make provision under the law of England and Wales—
(a) to modify this Part as it applies in relation to a company that is a social landlord registered under Part 1 of the Housing Act 1996, or
(b) make provision in connection with the interaction between this Part and any other insolvency procedure in relation to such a company.
(3) The Scottish Ministers may by regulations make provision under the law of Scotland—
(a) to modify this Part as it applies in relation to a company that is a social landlord registered under Part 2 of the Housing (Scotland) Act 2010 (asp 17), or
(b) make provision in connection with the interaction between this Part and any other insolvency procedure in relation to such a company.
(4) The Secretary of State may, by regulations, make any provision under the law of England and Wales, Scotland or Northern Ireland that appears to the Secretary of State to be appropriate in view of provision made under subsection (1), (2) or (3).
(5) The power in subsection (1), (2), (3) or (4) may, in particular, be used to amend, repeal, revoke or otherwise modify any provision made by an enactment.
(6) Regulations under subsection (1) or (4) are subject to the affirmative resolution procedure.
(7) A statutory instrument containing regulations under subsection (2) may not be made unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of Senedd Cymru.
(8) Regulations made by the Scottish Ministers under subsection (3) are subject to the affirmative procedure (see section 29 of the Interpretation and Legislative Reform (Scotland) Act 2010 (asp 10)).
(9) In this section—
“insolvency procedure” includes—
in relation to subsection (1)(b), the provision made by sections 143A to 159 of the Housing and Regeneration Act 2008;
in relation to subsection (2)(b), the provision made by sections 39 to 50 of the Housing Act 1996;
in relation to subsection (3)(b), the provision made by Part 7 of the Housing (Scotland) Act 2010;
“ordinary administration” means the insolvency procedure provided for by Schedule B1;
“special administration regime” means provision made by an enactment for an insolvency procedure that—
is similar or corresponds to ordinary administration, and
provides for the administrator to have one or more special objectives instead of or in addition to the objectives of ordinary administration.
A51 Power to make provision in connection with pension schemes
(1) The Secretary of State may by regulations provide that, in a case where—
(a) a moratorium—
(i) is in force in relation to a company that is an employer in respect of an eligible scheme, or
(ii) is or has been in force in relation to a company that has been an employer in respect of an eligible scheme at any time during the moratorium, and
(b) the trustees or managers of the scheme are a creditor of the company,
the Board of the Pension Protection Fund may exercise any of the following rights.
(2) The rights are those which are exercisable by the trustees or managers as a creditor of the company under or by virtue of—
(a) section A12, or
(b) a court order under section A44(4)(c).
(3) Regulations under subsection (1) may provide that the Board may exercise any such rights—
(a) to the exclusion of the trustees or managers of the scheme, or
(b) in addition to the exercise of those rights by the trustees or managers of the scheme.
(4) Regulations under subsection (1)—
(a) may specify conditions that must be met before the Board may exercise any such rights;
(b) may provide for any such rights to be exercisable by the Board for a specified period;
(c) may make provision in connection with any such rights ceasing to be so exercisable at the end of such a period.
(5) Regulations under subsection (1) are subject to the affirmative resolution procedure.
(6) In this section “eligible scheme” has the meaning given by section 126 of the Pensions Act 2004.
(1) A provision in an instrument creating a floating charge is void if it provides for the obtaining of a moratorium, or anything done with a view to obtaining a moratorium, to be—
(a) an event causing the floating charge to crystallise,
(b) an event causing restrictions which would not otherwise apply to be imposed on the disposal of property by the company, or
(c) a ground for the appointment of a receiver.
(2) The reference in subsection (1) to anything done with a view to obtaining a moratorium includes any preliminary decision or investigation.
(3) In subsection (1) “receiver” includes a manager and a person who is appointed both receiver and manager.
(4) Subsection (1) does not apply to a provision in an instrument creating a floating charge that is—
(a) a collateral security (as defined by section A27);
(b) a market charge (as defined by section A27);
(c) a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));
(d) a system-charge (as defined by section A27).
A53 Meaning of “pre-moratorium debt” and “moratorium debt”
(1) In this Part “pre-moratorium debt”, in relation to a company for which a moratorium is or has been in force, means—
(a) any debt or other liability to which the company becomes subject before the moratorium comes into force, or
(b) any debt or other liability to which the company has become or may become subject during the moratorium by reason of any obligation incurred before the moratorium comes into force,
but this is subject to subsection (3).
(2) In this Part “moratorium debt”, in relation to a company for which a moratorium is or has been in force, means—
(a) any debt or other liability to which the company becomes subject during the moratorium, other than by reason of an obligation incurred before the moratorium came into force, or
(b) any debt or other liability to which the company has become or may become subject after the end of the moratorium by reason of an obligation incurred during the moratorium,
but this is subject to subsection (3).
(3) For the purposes of this Part—
(a) a liability in tort or delict is a “pre-moratorium debt” if either—
(i) the cause of action has accrued before the moratorium comes into force, or
(ii) all the elements necessary to establish the cause of action exist before the moratorium comes into force except for actionable damage;
(b) a liability in tort or delict is a “moratorium debt” if it does not fall within paragraph (a) and either—
(i) the cause of action has accrued during the moratorium, or
(ii) all the elements necessary to establish the cause of action exist before the moratorium comes to an end except for actionable damage.
(4) The Secretary of State may by regulations amend this section for the purposes of changing the definition of “pre-moratorium debt” or “moratorium debt” in this Part.
(5) Regulations under subsection (4) are subject to the affirmative resolution procedure.
(1) In this Part—
“company” means—
a company registered under the Companies Act 2006 in England and Wales or Scotland, or
an unregistered company that may be wound up under Part 5 of this Act;
“the court” means such court as is prescribed;
“eligible”, in relation to a company, has the meaning given by Schedule ZA1;
“employer”, in relation to a pension scheme—
in sections A8(2)(c), A17(8)(c) and A39(8)(c), means an employer within the meaning of section 318(1) of the Pensions Act 2004;
elsewhere in this Part, has the same meaning that it has for the purposes of Part 2 of the Pensions Act 2004 (see section 318(1) and (4) of that Act);
“enactment” includes an Act of the Scottish Parliament and an instrument made under such an Act;
“hire-purchase agreement” includes a conditional sale agreement, a chattel leasing agreement and a retention of title agreement;
“liability” means (subject to subsection (2)) a liability to pay money or money’s worth, including any liability under an enactment, a liability for breach of trust, any liability in contract, tort, delict or bailment, and any liability arising out of an obligation to make restitution;
“money purchase scheme” has the meaning given by section 181(1) of the Pension Schemes Act 1993;
“the monitor”, in relation to a moratorium, means the person who has the functions of the monitor in relation to the moratorium (see also section A40 for cases where two or more persons act as the monitor);
“moratorium” means a moratorium under this Part;
“moratorium debt” has the meaning given by section A53;
“occupational pension scheme” has the meaning given by section 1 of the Pension Schemes Act 1993;
“pension scheme” has the meaning given by section 1 of the Pension Schemes Act 1993;
“pre-moratorium debt” has the meaning given by section A53;
“qualified person” means a person qualified to act as an insolvency practitioner;
“unable to pay its debts”—
in relation to a registered company, has the same meaning as in Part 4 (see section 123);
in relation to an unregistered company, has the same meaning as in Part 5 (see sections 222 to 224).
(2) For the purposes of references in any provision of this Part to a debt or liability it is immaterial whether the debt or liability is present or future, whether it is certain or contingent, or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion.
(3) In this Part references to filing a document with the court are, in relation to a court in Scotland, references to lodging it in court.
(4) The Secretary of State may by regulations amend this section for the purposes of changing the definition of “qualified person” in subsection (1).
(5) Regulations under subsection (4) are subject to the affirmative resolution procedure.
(1) Regulations under this Part may make—
(a) different provision for different purposes;
(b) consequential, supplementary, incidental or transitional provision or savings.
(2) Regulations under this Part are to be made by statutory instrument, unless they are made by the Scottish Ministers.
(3) Where regulations of the Secretary of State under this Part are subject to “the affirmative resolution procedure”, they may not be made unless a draft of the statutory instrument containing them has been laid before Parliament and approved by a resolution of each House of Parliament.
(1) The directors of a company (other than one which is in administration or being wound up) may make a proposal under this Part to the company and to its creditors for a composition in satisfaction of its debts or a scheme of arrangement of its affairs (from here on referred to, in either case, as a “voluntary arrangement”).
(2) A proposal under this Part is one which provides 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; and the nominee must be a person who is qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement.
(3) Such a proposal may also be made—
(a) where the company is in administration, by the administrator,
(b) where the company is being wound up, by the liquidator.
(4) In this Part “company” means—
(a) a company registered under the Companies Act 2006 in England and Wales or Scotland;
(b) a company incorporated in an EEA State ...; or
(c) a company not incorporated in an EEA State but having its centre of main interests in a member State (other than Denmark) or in the United Kingdom.
(5) In subsection (4), in relation to a company, “centre of main interests” has the same meaning as in the Article 3 of the EU Regulation.
(6) If a company incorporated outside the United Kingdom has a principal place of business in Northern Ireland, no proposal under this Part shall be made in relation to it unless it also has a principal place of business in England and Wales or Scotland (or both in England and Wales or Scotland).
2 Procedure where nominee is not the liquidator or administrator.
(1) This section applies where the nominee under section 1 is not the liquidator or administrator of the company ....
(2) The nominee shall, within 28 days (or such longer period as the court may allow) after he is given notice of the proposal for a voluntary arrangement, submit a report to the court stating—
(a) whether, in his opinion, the proposed voluntary arrangement has a reasonable prospect of being approved and implemented,
(b) whether, in his opinion, the proposal should be considered by a meeting of the company and by the company's creditors, and
(c) if in his opinion it should, the date on which, and time and place at which, he proposes a meeting of the company should be held.
(3) For the purposes of enabling the nominee to prepare his report, the person intending to make the proposal shall submit to the nominee—
(a) a document setting out the terms of the proposed voluntary arrangement, and
(b) a statement of the company’s affairs containing—
(i) such particulars of its creditors and of its debts and other liabilities and of its assets as may be prescribed, and
(ii) such other information as may be prescribed.
(4) The court may—
(a) on an application made by the person intending to make the proposal, in a case where the nominee has failed to submit the report required by this section or has died, or
(b) on an application made by that person or the nominee, in a case where it is impracticable or inappropriate for the nominee to continue to act as such,
direct that the nominee be replaced as such by another person qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement.
(1) Where the nominee under section 1 is not the liquidator or administrator, and it has been report to the court under section 2(2) that the proposal should be considered by a meeting of the company and by the company's creditors, the person making the report shall (unless the court otherwise directs)—
(a) summon a meeting of the company to consider the proposal for the time, date and place proposed in the report, and
(b) seek a decision from the company's creditors as to whether they approve the proposal.
(2) Where the nominee is the liquidator or administrator, he shall—
(a) summon a meeting of the company to consider the proposal for such time, date and place as he thinks fit, and
(b) seek a decision from the company's creditors as to whether they approve the proposal.
(3) A decision of the company's creditors as to whether they approve the proposal is to be made by a qualifying decision procedure.
(4) Notice of the qualifying decision procedure must be given to every creditor of the company of whose claim and address the person seeking the decision is aware.
(1) This section applies where, under section 3—
(a) a meeting of the company is summoned to consider the proposed voluntary arrangement, and
(b) the company's creditors are asked to decide whether to approve the proposed voluntary arrangement.
(1A) The company and its creditors may approve the proposed voluntary arrangement with or without modifications.
(2) The modifications may include one conferring the functions proposed to be conferred on the nominee on another person qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement.
But they shall not include any modification by virtue of which the proposal ceases to be a proposal such as is mentioned in section 1.
(3) Neither the company nor its creditors may approve any proposal or modification which affects the right of a secured creditor of the company to enforce his security, except with the concurrence of the creditor concerned.
(4) Subject as follows, neither the company nor its creditors may approve any proposal or modification under which—
(a) any preferential debt of the company is to be paid otherwise than in priority to such of its debts as are not preferential debts, ...
(aa) any ordinary preferential debt of the company is to be paid otherwise than in priority to any secondary preferential debts that it may have,
(b) a preferential creditor of the company is to be paid an amount in respect of an ordinary preferential debt that bears to that debt a smaller proportion than is borne to another ordinary preferential debt by the amount that is to be paid in respect of that other debt , ...
(c) a preferential creditor of the company is to be paid an amount in respect of a secondary preferential debt that bears to that debt a smaller proportion than is borne to another secondary preferential debt by the amount that is to be paid in respect of that other debt. or
(d) in the case of a company which is a relevant financial institution (see section 387A), any non-preferential debt is to be paid otherwise than in accordance with the rules in section 176AZA(2) or (3).
However, ... such a proposal or modification may be approved with the concurrence of the ... creditor concerned.
(4A) Subject to subsection (4B), where the nominee’s report under section 2(2) is submitted to the court before the end of the period of 12 weeks beginning with the day after the end of any moratorium for the company under Part A1, neither the company nor its creditors may approve any proposal or modification under which the following are to be paid otherwise than in full—
(a) moratorium debts (within the meaning given by section 174A);
(b) priority pre-moratorium debts (within the meaning given by section 174A).
(4B) Subsection (4A) does not prevent the approval of such a proposal or modification with the concurrence of the creditor concerned.
(5) Subject as above, the meeting of the company and the qualifying decision procedure shall be conducted in accordance with the rules.
(6) After the conclusion of the company meeting in accordance with the rules, the chairman of the meeting shall report the result of the meeting to the court, and, immediately after reporting to the court, shall give notice of the result of the meeting to such persons as may be prescribed.
(6A) After the company's creditors have decided whether to approve the proposed voluntary arrangement the person who sought the decision must—
(a) report the creditors' decision to the court, and
(b) immediately after reporting to the court, give notice of the creditors' decision to such persons as may be prescribed.
(7) References in this section to preferential debts , ordinary preferential debts, secondary preferential debts and preferential creditors are to be read in accordance with section 386 in Part XII of this Act.
(1) This section applies to a decision, under section 4, with respect to the approval of a proposed voluntary arrangement.
(2) The decision has effect if, in accordance with the rules—
(a) it has been taken by the meeting of the company summoned under section 3 and by the company's creditors pursuant to that section, or
(b) (subject to any order made under subsection (6)) it has been taken by the company's creditors pursuant to that section.
(3) If the decision taken by the company's creditors differs from that taken by the company meeting, a member of the company may apply to the court.
(4) An application under subsection (3) shall not be made after the end of the period of 28 days beginning with—
(a) the day on which the decision was taken by the company's creditors, or
(b) where the decision of the company meeting was taken on a later day, that day.
(5) Where a member of a regulated company, as defined by section A49(13), applies to the court under subsection (3), the appropriate regulator is entitled to be heard on the application.
(5A) The appropriate regulator” means—
(a) where the regulated company is a PRA-regulated company as defined by section A49(13), the Financial Conduct Authority and the Prudential Regulation Authority, and
(b) in any other case, the Financial Conduct Authority.
(6) On an application under subsection (3), the court may—
(a) order the decision of the company meeting to have effect instead of the decision of the company's creditors, or
(b) make such other order as it thinks fit.
(1) This section applies where a decision approving a voluntary arrangement has effect under section 4A.
(2) The ... voluntary arrangement—
(a) takes effect as if made by the company at the time the creditors decided to approve the voluntary arrangement, and
(b) binds every person who in accordance with the rules—
(i) was entitled to vote in the qualifying decision procedure by which the creditors' decision to approve the voluntary arrangement was made, or
(ii) would have been so entitled if he had had notice of it,
as if he were a party to the voluntary arrangement.
(2A) If—
(a) when the arrangement ceases to have effect any amount payable under the arrangement to a person bound by virtue of subsection (2)(b)(ii) has not been paid, and
(b) the arrangement did not come to an end prematurely,
the company shall at that time become liable to pay to that person the amount payable under the arrangement.
(3) Subject as follows, if the company is being wound up or is in administration, the court may do one or both of the following, namely—
(a) by order stay or sist all proceedings in the winding up or provide for the appointment of the administrator to cease to have effect;
(b) give such directions with respect to the conduct of the winding up or the administration as it thinks appropriate for facilitating the implementation of the ... voluntary arrangement.
(3A) Where immediately before the voluntary arrangement took effect a moratorium for the company was in force under Part A1 and a petition for the winding up of the company, other than an excepted petition within the meaning of section A20, was presented before the beginning of the moratorium, the court must dismiss the petition.
(4) The court shall not make an order under subsection (3)(a) or dismiss a petition under subsection (3A)—
(a) at any time before the end of the period of 28 days beginning with the first day on which each of the reports required by section 4(6) and (6A) has been made to the court, or
(b) at any time when an application under the next section or an appeal in respect of such an application is pending, or at any time in the period within which such an appeal may be brought.
(5) Where the company is in energy administration, the court shall not make an order or give a direction under subsection (3) unless—
(a) the court has given the Secretary of State or the Gas and Electricity Markets Authority a reasonable opportunity of making representations to it about the proposed order or direction; and
(b) the order or direction is consistent with the objective of the energy administration.
(6) In subsection (5) “in energy administration” and “objective of the energy administration” are to be construed in accordance with Schedule B1 to this Act, as applied by Part 1 of Schedule 20 to the Energy Act 2004.
(1) Subject to this section, an application to the court may be made, by any of the persons specified below, on one or both of the following grounds, namely—
(a) that a voluntary arrangement which has effect under section 4A unfairly prejudices the interests of a creditor, member or contributory of the company;
(b) that there has been some material irregularity at or in relation to the meeting of the company, or in relation to the relevant qualifying decision procedure.
(1A) In this section—
(a) the “relevant qualifying decision procedure” means the qualifying decision procedure in which the company's creditors decide whether to approve a voluntary arrangement;
(b) references to a decision made in the relevant qualifying decision procedure include any other decision made in that qualifying decision procedure.
(2) The persons who may apply under subsection (1) are—
(a) a person entitled, in accordance with the rules, to vote at the meeting of the company or in the relevant qualifying decision procedure;
(aa) a person who would have been entitled, in accordance with the rules, to vote in the relevant qualifying decision procedure if he had had notice of it;
(b) the nominee or any person who has replaced him under section 2(4) or 4(2); and
(c) if the company is being wound up or is in administration, the liquidator or administrator.
(2A) Subject to this section, where a voluntary arrangement in relation to a company in energy administration is approved at the meetings summoned under section 3, an application to the court may be made—
(a) by the Secretary of State, or
(b) with the consent of the Secretary of State, by the Gas and Electricity Markets Authority,
on the ground that the voluntary arrangement is not consistent with the achievement of the objective of the energy administration.
(3) An application under this section shall not be made
(a) after the end of the period of 28 days beginning with the first day on which each of the reports required by section 4(6) and (6A) has been made to the court or
(b) in the case of a person who was not given notice of the relevant qualifying decision procedure, after the end of the period of 28 days beginning with the day on which he became aware that the relevant qualifying decision procedure had taken place,
but (subject to that) an application made by a person within subsection (2)(aa) on the ground that the voluntary arrangement prejudices his interests may be made after the arrangement has ceased to have effect, unless it came to an end prematurely.
(4) Where on such an application the court is satisfied as to either of the grounds mentioned in subsection (1) or, in the case of an application under subsection (2A), as to the ground mentioned in that subsection, it may do any of the following, namely—
(a) revoke or suspend any decision approving the voluntary arrangement which has effect under section 4A or, in a case falling within subsection (1)(b), any decision taken by the meeting of the company, or in the relevant qualifying decision procedure, which has effect under that section;
(b) give a direction to any person for the summoning of a further company meeting to consider any revised proposal the person who made the original proposal may make or, in the case falling within subsection (1)(b), and relating to the company meeting, a further company meeting to reconsider the original proposal;
(c) direct any person—
(i) to seek a decision from the company's creditors (using a qualifying decision procedure) as to whether they approve any revised proposal the person who made the original proposal may make, or
(ii) in a case falling within subsection (1)(b) and relating to the relevant qualifying decision procedure, to seek a decision from the company's creditors (using a qualifying decision procedure) as to whether they approve the original proposal.
(5) Where at any time after giving a direction under subsection (4)(b) or (c) in relation to a revised proposal the court is satisfied that the person who made the original proposal does not intend to submit a revised proposal, the court shall revoke the direction and revoke or suspend any decision approving the voluntary arrangement which has effect under section 4A.
(6) In a case where the court, on an application under this section with respect to any meeting or relevant qualifying decision procedure —
(a) gives a direction under subsection (4)(b) or (c), or
(b) revokes or suspends an approval under subsection (4)(a) or (5),
the court may give such supplemental directions as it thinks fit and, in particular, directions with respect to things done under the voluntary arrangement since it took effect.
(7) Except in pursuance of the preceding provisions of this section,
(a) a decision taken at a company meeting summoned under section 3 is not invalidated by any irregularity at or in relation to the meeting , and
(b) a decision of the company's creditors made in the relevant qualifying decision procedure is not invalidated by any irregularity in relation to the relevant qualifying decision procedure.
(8) In this section “in energy administration” and “objective of the energy administration” are to be construed in accordance with Schedule B1 to this Act, as applied by Part 1 of Schedule 20 to the Energy Act 2004.
(1) If, for the purpose of obtaining the approval of the members or creditors of a company to a proposal for a voluntary arrangement, a person who is an officer of the company—
(a) makes any false representation, or
(b) fraudulently does, or omits to do, anything,
he commits an offence.
(2) Subsection (1) applies even if the proposal is not approved.
(3) For purposes of this section “officer” includes a shadow director.
(4) A person guilty of an offence under this section is liable to imprisonment or a fine, or both.
(1) This section applies where a voluntary arrangement has effect under section 4A.
(2) The person who is for the time being carrying out in relation to the voluntary arrangement the functions conferred—
(a) on the nominee by virtue of the approval of the voluntary arrangement by the company or its creditors (or both) pursuant to section 3,
(b) by virtue of section 2(4) or 4(2) on a person other than the nominee,
shall be known as the supervisor of the voluntary arrangement.
(3) If any of the company’s creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the court; and on the application the court may—
(a) confirm, reverse or modify any act or decision of the supervisor,
(b) give him directions, or
(c) make such other order as it thinks fit.
(4) The supervisor—
(a) may apply to the court for directions in relation to any particular matter arising under the voluntary arrangement, and
(b) is included among the persons who may apply to the court for the winding up of the company or for an administration order to be made in relation to it.
(5) The court may, whenever—
(a) it is expedient to appoint a person to carry out the functions of the supervisor, and
(b) it is inexpedient, difficult or impracticable for an appointment to be made without the assistance of the court,
make an order appointing a person who is qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement, either in substitution for the existing supervisor or to fill a vacancy.
(6) The power conferred by subsection (5) is exercisable so as to increase the number of persons exercising the functions of supervisor or, where there is more than one person exercising those functions, so as to replace one or more of those persons.
(1) This section applies where the approval of a voluntary arrangement in relation to a company has taken effect under section 4A.
(2) If it appears to the supervisor that any past or present officer of the company has committed an offence in connection with the voluntary arrangement, the supervisor must forthwith
(a) report the matter to the appropriate authority, and
(b) provide the appropriate authority with such information and give the authority such access to and facilities for inspecting and taking copies of documents (being information or documents in the possession or under the control of the ... supervisor and relating to the matter in question) as the authority requires.
In this subsection, “the appropriate authority” means—
in the case of a company registered in England and Wales, the Secretary of State, and
in the case of a company registered in Scotland, the Lord Advocate.
(3) Where a report is made to the Secretary of State under subsection (2), he may, for the purpose of investigating the matter reported to him and such other matters relating to the affairs of the company as appear to him to require investigation, exercise any of the powers which are exercisable by inspectors appointed under section 431 or 432 of the the Companies Act 1985 to investigate a company’s affairs.
(4) For the purpose of such an investigation any obligation imposed on a person by any provision of the the Companies Acts to produce documents or give information to, or otherwise to assist, inspectors so appointed is to be regarded as an obligation similarly to assist the Secretary of State in his investigation.
(5) An answer given by a person to a question put to him in exercise of the powers conferred by subsection (3) may be used in evidence against him.
(6) However, in criminal proceedings in which that person is charged with an offence to which this subsection applies—
(a) no evidence relating to the answer may be adduced, and
(b) no question relating to it may be asked,
by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.
(7) Subsection (6) applies to any offence other than—
(a) an offence under section 2 or 5 of the Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath), or
(b) an offence under section 44(1) or (2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath).
(8) Where a prosecuting authority institutes criminal proceedings following any report under subsection (2), the ... supervisor, and every officer and agent of the company past and present (other than the defendant or defender), shall give the authority all assistance in connection with the prosecution which he is reasonably able to give.
For this purpose—
“agent” includes any banker or solicitor of the company and any person employed by the company as auditor, whether that person is or is not an officer of the company,
“prosecuting authority” means the Director of Public Prosecutions, the Lord Advocate or the Secretary of State.
(9) The court may, on the application of the prosecuting authority, direct any person referred to in subsection (8) to comply with that subsection if he has failed to do so.
For the purposes of this Part, a voluntary arrangement the approval of which has taken effect under section 4A ... comes to an end prematurely if, when it ceases to have effect, it has not been fully implemented in respect of all persons bound by the arrangement by virtue of section 5(2)(b)(i) ....
(1) An application to the court for an administration order shall be by petition presented either by the company or the directors, or by a creditor or creditors (including any contingent or prospective creditor or creditors), or by the clerk of a magistrates’ court in the exercise of the power conferred by section 87A of the Magistrates’ Courts Act 1980 (enforcement of fines imposed on companies) or by all or any of those parties, together or separately.
(2) Where a petition is presented to the court—
(a) notice of the petition shall be given forthwith to any person who has appointed, or is or may be entitled to appoint, an administrative receiver of the company, and to such other persons as may be prescribed, and
(b) the petition shall not be withdrawn except with the leave of the court.
(3) Where the court is satisfied that there is an administrative receiver of the company, the court shall dismiss the petition unless it is also satisfied either—
(a) that the person by whom or on whose behalf the receiver was appointed has consented to the making of the order, or
(b) that, if an administration order were made, any security by virtue of which the receiver was appointed would—
(i) be void against the administrator to any extent by virtue of the provisions of Part XII of the Companies Act 1985 (registration of company charges),
(i)(ii) be liable to be released or discharged under sections 238 to 240 in Part VI (transactions at an undervalue and preferences),
(ii)(iii) be avoided under section 245 in that Part (avoidance of floating charges), or
(iii)(iv) be challengeable under section 242 (gratuitous alienations) or 243 (unfair preferences) in that Part, or under any rule of law in Scotland.
(4) Subject to subsection (3), on hearing a petition the court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order that it thinks fit.
(5) Without prejudice to the generality of subsection (4), an interim order under that subsection may restrict the exercise of any powers of the directors or of the company (whether by reference to the consent of the court or of a person qualified to act as an insolvency practitioner in relation to the company, or otherwise).
(1) During the period beginning with the presentation of a petition for an administration order and ending with the making of such an order or the dismissal of the petition—
(a) no resolution may be passed or order made for the winding up of the company;
(aa) 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 leave of the court and subject to such terms as the court may impose
(b) no 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 leave of the court and subject to such terms as the court may impose; and
(c) 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 leave of the court and subject to such terms as aforesaid.
(2) Nothing in subsection (1) requires the leave of the court—
(a) for the presentation of a petition for the winding up of the company,
(b) for the appointment of an administrative receiver of the company, or
(c) for the carrying out by such a receiver (whenever appointed) of any of his functions.
(3) Where—
(a) a petition for an administration order is presented at a time when there is an administrative receiver of the company, and
(b) the person by or on whose behalf the receiver was appointed has not consented to the making of the order,
the period mentioned in subsection (1) is deemed not begin unless and until that person so consents.
(4) References in this section and the next to hire-purchase agreements include conditional sale agreements, chattel leasing agreements and retention of title agreements.
(5) In the application of this section and the next to Scotland, references to execution being commenced or continued include references to diligence being carried out or continued, and references to distress being levied shall be omitted.
(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;
(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 impose
(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).
(1) Every invoice, order for goods or business letter which, at a time when an administration order is in force in relation to a company, is issued by or on behalf of the company or the administrator, being a document on or in which the company’s name appears, shall also contain the administrator’s name and a statement that the affairs, business and property of the company are being managed by the administrator.
(2) If default is made in complying with this section, the company and any of the following persons who without reasonable excuse authorises or permits the default, namely, the administrator and any officer of the company, is liable to a fine.
(1) The administrator of a company shall be appointed either by the administration order or by an order under the next subsection.
(2) If a vacancy occurs by death, resignation or otherwise in the office of the administrator, the court may by order fill the vacancy.
(3) An application for an order under subsection (2) may be made—
(a) by any continuing administrator of the company; or
(b) where there is no such administrator, by a creditors’ committee established under section 26 below; or
(c) where there is no such administrator and no such committee, by the company or the directors or by any creditor or creditors of the company.
(1) The administrator of a company—
(a) may do all such things as may be necessary for the management of the affairs, business and property of the company, and
(b) without prejudice to the generality of paragraph (a), has the powers specified in Schedule 1 to this Act;
and in the application of that Schedule to the administrator of a company the words “he” and “him” refer to the administrator.
(2) The administrator also has power—
(a) to remove any director of the company and to appoint any person to be a director of it, whether to fill a vacancy or otherwise, and
(b) to call any meeting of the members or creditors of the company.
(3) The administrator may apply to the court for directions in relation to any particular matter arising in connection with the carrying out of his functions.
(4) Any power conferred on the company or its officers, whether by this Act or the Companies Act or by the memorandum or articles of association, which could be exercised in such a way as to interfere with the exercise by the administrator of his powers is not exercisable except with the consent of the administrator, which may be given either generally or in relation to particular cases.
(5) In exercising his powers the administrator is deemed to act as the company’s agent.
(6) A person dealing with the administrator in good faith and for value is not concerned to inquire whether the administrator is acting within his powers.
(1) The administrator of a company may dispose of or otherwise exercise his powers in relation to any property of the company which is subject to a security to which this subsection applies as if the property were not subject to the security.
(2) Where, on an application by the administrator, the court is satisifed that the disposal (with or without other assets) of—
(a) any property of the company subject to a security to which this subsection applies, or
(b) any goods in the possession of the company under a hire-purchase agreement,
would be likely to promote the purpose or one or more of the purposes specified in the administration order, the court may by order authorise the administrator to dispose of the property as if it were not subject to the security or to dispose of the goods as if all rights of the owner under the hire-purchase agreement were vested in the company.
(3) Subsection (1) applies to any security which, as created, was a floating charge; and subsection (2) applies to any other security.
(4) Where property is disposed of under subsection (1), the holder of the security has the same priority in respect of any property of the company directly or indirectly representing the property disposed of as he would have had in respect of the property subject to the security.
(5) It shall be a condition of an order under subsection (2) that—
(a) the net proceeds of the disposal, and
(b) where those proceeds are less than such amount as may be determined by the court to be the net amount which would be realised on a sale of the property or goods in the open market by a willing vendor, such sums as may be required to make good the deficiency,
shall be applied towards discharging the sums secured by the security or payable under the hire-purchase agreement.
(6) Where a condition imposed in pursuance of subsection (5) relates to two or more securities, that condition requires the net proceeds of the disposal and, where paragraph (b) of that subsection applies, the sums mentioned in that paragraph to be applied towards discharging the sums secured by those securities in the order of their priorities.
(7) An office copy of an order under subsection (2) shall, within 14 days after the making of the order, be sent by the administrator to the registrar of companies.
(8) If the administrator without reasonable excuse fails to comply with subsection (7), he is liable to a fine and, for continued contravention, to a daily default fine.
(9) References in this section to hire-purchase agreements include conditional sale agreements, chattel leasing agreements and retention of title agreements.
(1) Where property is disposed of under section 15 in its application to Scotland, the administrator shall grant to the disponee an appropriate document of transfer or conveyance of the property, and—
(a) that document, or
(b) where any recording, intimation or registration of the document is a legal requirement for completion of title to the property, that recording, intimation or registration,
has the effect of disencumbering the property of or, as the case may be, freeing the property from the security.
(2) Where goods in the possession of the company under a hire-purchase agreement, conditional sale agreement, chattel leasing agreement or retention of title agreement are disposed of under section 15 in its application to Scotland, the disposal has the effect of extinguishing, as against the disponee, all rights of the owner of the goods under the agreement.
(1) The administrator of a company shall, on his appointment, take into his custody or under his control all the property to which the company is or appears to be entitled.
(2) The administrator shall manage the affairs, business and property of the company—
(a) at any time before proposals have been approved (with or without modifications) under section 24 below, in accordance with any directions given by the court, and
(b) at any time after proposals have been so approved, in accordance with those proposals as from time to time revised, whether by him or a predecessor of his.
(3) The administrator shall summon a meeting of the company’s creditors if—
(a) he is requested, in accordance with the rules, to do so by one-tenth, in value, of the company’s creditors, or
(b) he is directed to do so by the court.
18 Discharge or variation of administration order.
(1) The administrator of a company may at any time apply to the court for the administration order to be discharged, or to be varied so as to specify an additional purpose.
(2) The administrator shall make an application under this section if—
(a) it appears to him that the purpose or each of the purposes specified in the order either has been achieved or is incapable of achievement, or
(b) he is required to do so by a meeting of the company’s creditors summoned for the purpose in accordance with the rules.
(3) On the hearing of an application under this section, the court may by order discharge or vary the administration order and make such consequential provision as it thinks fit, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order it thinks fit.
(4) Where the administration order is discharged or varied the administrator shall, within 14 days after the making of the order effecting the discharge or variation, send an office copy of that order to the registrar of companies.
(5) If the administrator without reasonable excuse fails to comply with subsection (4), he is liable to a fine and, for continued contravention, to a daily default fine.
(1) The administrator of a company may at any time be removed from office by order of the court and may, in the prescribed circumstances, resign his office by giving notice of his resignation to the court.
(2) The administrator shall vacate office if—
(a) he ceases to be qualified to act as an insolvency practitioner in relation to the company, or
(b) the administration order is discharged.
(3) Where at any time a person ceases to be administrator, the following subsections apply.
(4) His remuneration and any expenses properly incurred by him shall be charged on and paid out of any property of the company which is in his custody or under his control at that time in priority to any security to which section 15(1) then applies.
(5) Any sums payable in respect of debts or liabilities incurred, while he was administrator, under contracts entered into . . . by him or a predecessor of his in the carrying out of his or the predecessor’s functions shall be charged on and paid out of any such property as is mentioned in subsection (4) in priority to any charge arising under that subsection.
(6) Any sums payable in respect of liabilities incurred, while he was administrator, under contracts of employment adopted by him or a predecessor of his in the carrying out of his or the predecessor’s functions shall, to the extent that the liabilities are qualifying liabilities, be charged on and paid out of any such property as is mentioned in subsection (4) and enjoy the same priority as any sums to which subsection (5) applies.
For this purpose, the administrator is not to be taken to have adopted a contract of employment by reason of anything done or omitted to be done within 14 days after his appointment.
(7) For the purposes of subsection (6), a liability under a contract of employment is a qualifying liability if—
(a) it is a liability to pay a sum by way of wages or salary or contribution to an occupational pension scheme, and
(b) it is in respect of services rendered wholly or partly after the adoption of the contract.
(8) There shall be disregarded for the purposes of subsection (6) so much of any qualifying liability as represents payment in respect of services rendered before the adoption of the contract.
(9) For the purposes of subsections (7) and (8)—
(a) wages or salary payable in respect of a period of holiday or absence from work through sickness or other good cause are deemed to be wages or (as the case may be) salary in respect of services rendered in that period, and
(b) a sum payable in lieu of holiday is deemed to be wages or (as the case may be) salary in respect of services rendered in the period by reference to which the holiday entitlement arose.
(10) In subsection (9)(a), the reference to wages or salary payable in respect of a period of holiday includes any sums which, if they had been paid, would have been treated for the purposes of the enactments relating to social security as earnings in respect of that period.