1. Those who may propose an arrangement
(1) The directors of the company (other than one of
which administration order is force, or which is being wound up) may
take a proposal under this Part to the company and to its creditors
for a composition is satisfaction of its debts or a scheme or
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 a 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 company.
(3) Such a proposal may also be made;
(a) Where an administration order is in force in
relation to the company, by the administrator, and
(b) Where the company is being wound up, by the
liquidator.
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, meetings of the
company and of its creditors should be summoned to consider the
proposal, and
(b) if in his opinion such meetings should be
summoned, the date on which, and time and place at which, he
proposes the meetings 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, 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, direct that the
nominee be replaced as such by another person qualified to act as an
insolvency practitioner in relation to the company.
3. Summoning of Meetings
(1) Where the nominee under section 1 is not the
liquidator or administrator, and it has been reported to the court
that such meetings as are mentioned in section 2(2) should be summoned,
the person making the report shall (unless the court otherwise
directs) summon those meetings for the time, date and place proposed
in the report.
(2) Where the nominee is the liquidator or
administrator, he shall summon meetings of the company and of its
creditors to consider the proposal for such a time, date and place as
he thinks fit.
(3) The persons to be summoned to a creditors'
meeting under this section are every creditor of the company whose
claim and address the person summoning the meeting is aware.
Consideration and implementation of proposal
4. Decisions of Meetings
(1) The meetings summoned under section 3 shall
decide whether to 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 insolvency practitioner in relation to the company.
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) A meeting so summoned shall not 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, a meeting so summoned shall
not 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, or
(b) a preferential creditor of the company is to be paid an amount
in respect of a preferential debt that bears to that debt a smaller
proportion than is borne to another preferential debt by the amount
that is to be paid in respect of that other debt.
However, the meeting may approve such a proposal or
modification with the concurrence of the preferential creditor
concerned.
(5) Subject as above, each of the meetings shall be
conducted in accordance with the rules.
(6) After the conclusion of either 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.
(7) References in this section to preferential debts
and preferential creditors are to be read in accordance with section
386 in Part XII of this Act.
5. Effect of Approval
(1) This section has effect where each of the
meetings summoned under section 3 approves the proposed voluntary
arrangement either with the same modifications or without
modifications.
(2) The approved voluntary arrangement;
(a) takes effect as if made by the company at the
creditors' meeting and;
(b) binds every person who in accordance with the
rules had notice of, and was entitled to vote at, that meeting (whether
or not he was present or represented at the meeting) as if he were a
party of the voluntary arrangement.
(3) Subject as follows, if the company is being
wound up or an administration order is in force, the court may do one
or both of the following, namely;
(a) by order stay or sist all proceedings in the
winding up or discharge the administration order;
(b) give such directors with respect to the
conduct of the winding up or the administration as it thinks
appropriate for facilitating the implementation of the approved
voluntary arrangement.
(4) The court shall not make an order under section
(3)(a);
(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) 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.
6. Challenge of decisions
(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 approved at the
meetings summoned under section 3 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 either of the meetings.
(2) The persons who may apply under this section
are:
(a) a person entitled, in accordance with the
rules, to vote at either of the meetings:
(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 an
administration order is in force, the liquidator or administrator.
(3) An application under this section shall not be
made 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) has been
made to the court.
(4) Where on such an application the court is
satisfied as to either of the grounds mentioned in subsection (1), it
may do one or both of the following, namely:
(a) revoke or suspend the approvals given by the
meetings or, in a case falling within subsection (1)(b), any
approval given by the meeting in question:
(b) give a direction to any person for the
summoning of further meetings to consider any revised proposal the
person who made the original proposal may make or, in a case falling
within subsection (1)(b), a further company or (as the case may be)
creditors' meeting to reconsider the original proposal.
(5) Where at any time after giving a direction under
subsection (4)(b) for the summoning of meetings to consider 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 approval given at the
previous meetings.
(6) In a case where the court, on an application
under this section with respect to any meeting:
(a) gives a direction under subsection (4)(b), 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 since the meeting under any voluntary
arrangement approved by the meeting.
(7) Except in pursuance of the preceding provisions
of this section, an approval given at a meeting summoned under section
3 is not invalidated by any irregularity at or in relation to the
meeting.
7. Implementation of proposal
(1) This section applies where a voluntary
arrangement approved by the meetings summoned under section 3 has
taken effect.
(2) The person who is for the time being carrying
out in relation to the voluntary arrangement the functions conferred:
(a) by virtue of the approval on the nominee, or
(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 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 a 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
insolvency practitioner in relation to the company, 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.
