Small Business, Enterprise and Employment Bill (HC Bill 117)

Small Business, Enterprise and Employment BillPage 230

(2) The moratorium may not be extended (or further extended) to a
day later than the end of the period of two months beginning with
the day after the last day of the period mentioned in paragraph
8(3).

(23) 5In paragraph 32(3)—

(a) for “At any meeting where” substitute “Where”;

(b) after “the meeting” insert “of the company or (as the case may be)
inform the company’s creditors”.

(24) In paragraph 32(4)—

(a) 10after “a meeting” insert “of the company or informs the company’s
creditors,”;

(b) after “resolve” insert “, or (as the case may be) the creditors by a
qualifying decision procedure shall decide,”.

(25) In paragraph 32(6) for “may resolve” substitute “of the company may
15resolve, and the creditors by a qualifying decision procedure may decide,”.

(26) In paragraph 33(3) for “At any meeting where” substitute “Where”.

(27) In paragraph 35, for sub-paragraphs (1) and (2) substitute—

(1) This paragraph applies where in accordance with paragraph 32 a
meeting of the company resolves, or the company’s creditors
20decide, that the moratorium be extended (or further extended).

(1A) The meeting may resolve, and the company’s creditors may by a
qualifying decision procedure decide, that a committee be
established to exercise the functions conferred on it by the meeting
or (as the case may be) by the company’s creditors.

(2) 25The meeting may resolve that such a committee be established
only if—

(a) the nominee consents, and

(b) the meeting approves an estimate of the expenses to be
incurred by the committee in the exercise of the proposed
30functions.

(2A) A decision of the company’s creditors that such a committee be
established has effect only if—

(a) the nominee consents, and

(b) the creditors by a qualifying decision procedure approve
35an estimate of the expenses to be incurred by the
committee in the exercise of the proposed functions.

(28) In paragraph 36(2)—

(a) in paragraph (a) for “both meetings summoned under paragraph 29”
substitute “the meeting of the company summoned under paragraph
4029 and by the company’s creditors”;

(b) in paragraph (b) for “creditors’ meeting summoned under that
paragraph” substitute “company’s creditors”.

(29) In paragraph 36(3), (4)(a) and (5)(a) for “creditors’ meeting” substitute
“company’s creditors”.

(30) 45In paragraph 37(2)—

Small Business, Enterprise and Employment BillPage 231

(a) in paragraph (a) for “creditors’ meeting” substitute “time the
creditors decided to approve the voluntary arrangement”;

(b) in paragraph (b)(i) for the words from “at that” to “it)” substitute “in
the qualifying decision procedure by which the creditors’ decision to
5approve the voluntary arrangement was made”.

(31) In paragraph 37(5)(a)—

(a) omit “of the meetings”;

(b) after “30(3)” insert “and (4)”.

(32) In paragraph 38(1)—

(a) 10in paragraph (a) for the words from “approved” to “effect” substitute
“which has taken effect under paragraph 37”;

(b) in paragraph (b) for “either of those meetings” substitute “the
meeting of the company summoned under paragraph 29, or in
relation to the relevant qualifying decision procedure”.

(33) 15After paragraph 38(1) insert—

(1A) In this paragraph—

(a) the “relevant qualifying decision procedure” means the
qualifying decision procedure in which the creditors
decided whether to approve the voluntary arrangement;

(b) 20references to a decision made in the relevant qualifying
decision procedure include any other decision made in
that qualifying decision procedure.

(34) In paragraph 38(2)—

(a) in paragraph (a) for “either of the meetings” substitute “the meeting
25of the company or in the relevant qualifying decision procedure”;

(b) in paragraph (b) for “at the creditors’ meeting” substitute “in the
relevant qualifying decision procedure”.

(35) In paragraph 38(3)(a) after “30(3)” insert “and (4)”.

(36) In paragraph 38(3)(b)—

(a) 30for “creditors’ meeting” substitute “relevant qualifying decision
procedure”;

(b) for “the meeting” substitute “the relevant qualifying decision
procedure”.

(37) In paragraph 38(4)(a)(ii) for “in question” substitute “of the company, or in
35the relevant qualifying decision procedure,”.

(38) In paragraph 38(4)(b)—

(a) for “further meetings” substitute “a further company meeting”;

(b) after “(1)(b)” insert “and relating to the company meeting”;

(c) omit “or (as the case may be) creditors’”.

(39) 40In paragraph 38(4), after paragraph (b) insert—

(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 for a voluntary
45arrangement which the directors may make, or

Small Business, Enterprise and Employment BillPage 232

(ii) in a case falling within sub-paragraph (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
5they approve the original proposal.

(40) In paragraph 38(5), after “(4)(b)(i)” insert “or (c)(i)”.

(41) In paragraph 38(6) and (7)(a), after “(4)(b)” insert “or (c)”.

(42) In paragraph 38(9)—

(a) the words from “a decision” to the end become paragraph (a);

(b) 10in that paragraph (a), after “at a” insert “company”;

(c) after that paragraph (a) insert , 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
15relevant qualifying decision procedure.

(43) In paragraph 39(1) for the words from “approved” to the end substitute “has
taken effect under paragraph 37.”

(44) In paragraph 40(5)—

(a) in paragraph (c), omit “creditors or”;

(b) 20after paragraph (c) insert—

(ca) require a decision of the company’s creditors to be
sought (using a qualifying decision procedure) on
such matters as the court may direct,.

(45) For paragraph 44(8) substitute—

(8) 25The appropriate regulator must be given notice of any qualifying
decision procedure by which a decision of the company’s
creditors is sought for the purposes of this Schedule.

(8A) The appropriate regulator, or a person appointed by the
appropriate regulator, may in the way provided for by the rules
30participate in (but not vote in) any qualifying decision procedure
by which a decision of the company’s creditors is sought for the
purposes of this Schedule.

(46) Omit paragraph 44(9)(a).

(47) In paragraph 44(17A)(b) for “sub-paragraph” substitute “sub-paragraphs
35(8A) and”.

Administration

10 (1) Schedule B1 (administration) is amended as follows.

(2) In paragraph 49(4)(b), after “company” insert “, other than an opted-out
creditor,”.

(3) 40Omit paragraph 50 and the heading before it.

(4) For the heading before paragraph 51 substitute “Consideration of
administrator’s proposals by creditors”.

Small Business, Enterprise and Employment BillPage 233

(5) In paragraph 51, for sub-paragraphs (1) to (3) substitute—

(1) The administrator must seek a decision from the company’s
creditors as to whether they approve the proposals set out in the
statement made under paragraph 49(1).

(2) 5The initial decision date for that decision must be within the
period of 10 weeks beginning with the day on which the company
enters administration.

(3) The “initial decision date” for that decision—

(a) if the decision is initially sought using the deemed consent
10procedure, is the date on which a decision will be made if
the creditors by that procedure approve the proposals, and

(b) if the decision is initially sought using a qualifying
decision procedure, is the date on or before which a
decision will be made if it is made by that qualifying
15decision procedure (assuming that date does not change
after the procedure is instigated).

(6) In paragraph 52(2), for the words from “summon” to “requested” substitute
“seek a decision from the company’s creditors as to whether they approve
the proposals set out in the statement made under paragraph 49(1) if
20requested to do so”.

(7) For paragraph 52(3) substitute—

(3) Where a decision is sought by virtue of sub-paragraph (2) the
initial decision date (as defined in paragraph 51(3)) must be within
the prescribed period.

(8) 25For the heading before paragraph 53 substitute “Creditors’ decision”.

(9) In paragraph 53, for sub-paragraph (1) substitute—

(1) The company’s creditors may approve the administrator’s
proposals—

(a) without modification, or

(b) 30with modification to which the administrator consents.

(10) In paragraph 53(2)—

(a) for “After the conclusion of an initial creditors’ meeting the”
substitute “The”;

(b) after “taken” insert “by the company’s creditors”.

(11) 35In paragraph 54(1)(a) for “at an initial creditors’ meeting” substitute “by the
company’s creditors”.

(12) Omit paragraph 54(2)(a).

(13) In paragraph 54(2)(b)—

(a) omit “with the notice of the meeting sent”;

(b) 40after “creditor” insert “who is not an opted-out creditor”.

(14) For paragraph 54(2)(d) substitute—

(d) seek a decision from the company’s creditors as to whether
they approve the proposed revision.

Small Business, Enterprise and Employment BillPage 234

(15) For paragraph 54(5) substitute—

(5) The company’s creditors may approve the proposed revision—

(a) without modification, or

(b) with modification to which the administrator consents.

(16) 5In paragraph 54(6)—

(a) for “After the conclusion of a creditors’ meeting the” substitute
“The”;

(b) after “taken” insert “by the company’s creditors”.

(17) For paragraph 55(1) substitute—

(1) 10This paragraph applies where an administrator—

(a) reports to the court under paragraph 53 that a company’s
creditors have failed to approve the administrator’s
proposals, or

(b) reports to the court under paragraph 54 that a company’s
15creditors have failed to approve a revision of the
administrator’s proposals.

(18) In the heading before paragraph 56, for “meetings” substitute “decisions”.

(19) In paragraph 56(1), for “summon a creditors’ meeting”—

(a) in the first place, substitute “seek a decision from the company’s
20creditors on a matter”;

(b) in the second place, substitute “do so”.

(20) In paragraph 56(2), for “summon a creditors’ meeting” substitute “seek a
decision from the company’s creditors on a matter”.

(21) In paragraph 57(1), for “A creditors’ meeting may” substitute “The
25company’s creditors may, in accordance with the rules,”.

(22) Omit paragraph 58 and the heading before it.

(23) In paragraph 62, for the words from “may” to the end substitute may—

(a) call a meeting of members of the company;

(b) seek a decision on any matter from the company’s
30creditors.

(24) For paragraph 74(4)(c) substitute—

(c) require a decision of the company’s creditors to be sought
on a matter;.

(25) For paragraph 78(1)(b) substitute—

(b) 35if the company has unsecured debts, the unsecured
creditors of the company.

(26) For paragraph 78(2)(b)(ii) substitute—

(ii) the preferential creditors of the company.

(27) After paragraph 78(2) insert—

(2A) 40Whether the company’s unsecured creditors or preferential
creditors consent is to be determined by the administrator seeking
a decision from those creditors as to whether they consent.

Small Business, Enterprise and Employment BillPage 235

(28) Omit paragraph 78(3).

(29) In paragraph 79(2)(c) for “a creditors’ meeting requires him to” substitute
“the company’s creditors decide that he must”.

(30) In paragraph 80(4) after “company” insert “, other than an opted-out
5creditor,”.

(31) In paragraph 83(5)(b) after “creditor” insert “, other than an opted-out
creditor,”.

(32) In paragraph 84(5)(b) after “creditor” insert “, other than an opted-out
creditor,”.

(33) 10In the heading before paragraph 97, for “meeting” substitute “decision”.

(34) For paragraph 97(2) and (3) substitute—

(2) The administrator may be replaced by a decision of the creditors
made by a qualifying decision procedure.

(3) The decision has effect only if, before the decision is made, the new
15administrator has consented to act in writing.

(35) In paragraph 98(2)(b), for the second “resolution” substitute “decision”.

(36) In paragraph 98(3)—

(a) after “as passed” insert “and a decision shall be taken as made”;

(b) after “if) passed” insert “or made”.

(37) 20For paragraph 98(3)(b)(ii) substitute—

(ii) the preferential creditors of the company.

(38) After paragraph 98(3) insert—

(3A) Whether the company’s preferential creditors give their approval
is to be determined by a decision of those creditors as to whether
25they give their approval.

(3B) In a case where the administrator is removed from office, that
decision must be made by a qualifying decision procedure.

(39) For paragraph 108(2)(b) substitute—

(b) if the company has unsecured debts, the unsecured
30creditors of the company.

(40) For paragraph 108(3)(b)(ii) substitute—

(ii) the preferential creditors of the company.

(41) After paragraph 108(3) insert—

(3A) Whether the company’s unsecured creditors or preferential
35creditors consent is to be determined by the administrator seeking
a decision from those creditors as to whether they consent.

(42) Omit paragraph 108(4).

(43) In paragraph 111, omit the definitions of “correspondence” and “creditors’
meeting”.

11 (1) 40Schedule 10 (offences) is amended as follows.

Small Business, Enterprise and Employment BillPage 236

(2) In the entry for Schedule B1, paragraph 51(5), in column 2, for “arrange
initial creditors’ meeting” substitute “seek creditors’ decision”.

(3) In the entry for Schedule B1, paragraph 53(3), in column 2, for “at initial
creditors’ meeting” substitute “by creditors”.

(4) 5In the entry for Schedule B1, paragraph 54(7), in column 2, for the words
from “decision” to “consider” insert “creditors’ decision on”.

(5) In the entry for Schedule B1, paragraph 56(2), in column 2, for “summon
creditors’ meeting” substitute “seek creditors’ decision”.

Receivers and managers

12 (1) 10Section 48 (report by administrative receiver - England and Wales) is
amended as follows.

(2) In subsection (1), after “such creditors” insert “, other than opted-out
creditors,”.

(3) In subsection (2)—

(a) 15in paragraph (a), after “company” insert “, other than opted-out
creditors,”;

(b) omit the words after paragraph (b).

(4) Omit subsection (3).

13 In section 49(1) (committee of creditors - England and Wales), for the words
20from the beginning to “fit” substitute “Where an administrative receiver has
sent or published a report as mentioned in section 48(2) the company’s
unsecured creditors may, in accordance with the rules”.

14 (1) Section 67 (report by receiver - Scotland) is amended as follows.

(2) In subsection (1), after “such creditors” insert “, other than opted-out
25creditors,”.

(3) In subsection (2)—

(a) in paragraph (a), after “company” insert “, other than opted-out
creditors”;

(b) omit the words after paragraph (b).

(4) 30Omit subsection (3).

15 In section 68(1) (committee of creditors - Scotland), for the words from the
beginning to “fit” substitute “Where a receiver has sent or published a report
as mentioned in section 67(2) the company’s unsecured creditors may, in
accordance with the rules”.

35Winding-up

16 For section 94 (members’ voluntary winding up: final meeting of company
prior to dissolution) substitute—

94 Final account prior to dissolution

(1) As soon as the company’s affairs are fully wound up the liquidator
40must make up an account of the winding up, showing how it has
been conducted and the company’s property has been disposed of.

Small Business, Enterprise and Employment BillPage 237

(2) The liquidator must send a copy of the account to the members of the
company before the end of the period of 14 days beginning with the
day on which the account is made up.

(3) The liquidator must send a copy of the account to the registrar of
5companies before the end of that period (but not before sending it to
the members of the company).

(4) If the liquidator does not comply with subsection (2) the liquidator is
liable to a fine.

(5) If the liquidator does not comply with subsection (3) the liquidator is
10liable to a fine and, for continued contravention, a daily default fine.

17 (1) Section 95 (effect of company’s insolvency) is amended as follows.

(2) After subsection (1) insert—

(1A) The liquidator must before the end of the period of 7 days beginning
with the day after the day on which the liquidator formed that
15opinion—

(a) make out a statement in the prescribed form as to the affairs
of the company, and

(b) send it to the company’s creditors.

(3) Omit subsections (2) to (3) and (5) to (7).

18 (1) 20Section 96 (conversion to creditors’ voluntary winding up) is amended as
follows.

(2) For “creditors’ meeting is held under section 95” substitute “liquidator sends
a statement of the company’s affairs to the company’s creditors under
section 95(1A)(b)”.

(3) 25For paragraph (b) substitute—

(b) the statement of affairs sent to the company’s creditors under
section 95(1A)(b) were the statement required by section 99;.

19 In section 97(2) (application of Chapter 4), for “Sections 98 and 99 do”
substitute “Section 99 does”.

20 30Omit section 98 (meeting of creditors).

21 (1) Section 99 (directors to lay statement of affairs before creditors) is amended
as follows.

(2) For subsection (1) substitute—

(1) The directors of the company must, before the end of the period of 7
35days beginning with the day after the day on which the company
passes a resolution for voluntary winding up—

(a) make out a statement in the prescribed form as to the affairs
of the company, and

(b) send the statement to the company’s creditors.

(3) 40For subsection (3) substitute—

(3) If the directors without reasonable excuse fail to comply with
subsection (1), (2) or (2A), they are guilty of an offence and liable to
a fine.

Small Business, Enterprise and Employment BillPage 238

22 (1) For section 100 (appointment of liquidator) substitute—

100 Appointment of liquidator

(1) The company may nominate a person to be liquidator at the
company meeting at which the resolution for voluntary winding up
5is passed.

(2) If the company nominates a person at that meeting, the directors of
the company must—

(a) seek a decision from the company’s creditors as to whether
they agree to the appointment of that person as liquidator,
10and

(b) ensure that the initial decision date for that decision is within
the period of 14 days beginning with the day after the day of
that meeting.

(3) If the creditors agree to the appointment as liquidator of the person
15nominated by the company, that person is to be the liquidator.

(4) If the creditors do not agree to the appointment as liquidator of the
person nominated by the company, the liquidator is to be the person
(if any) nominated by the creditors in accordance with the rules,
subject to subsection (5).

(5) 20If the company and the creditors nominate different persons, any
director, member or creditor of the company may, before the end of
the period of 7 days beginning with the day after the day on which
the nomination was made by the creditors, apply to the court for an
order either—

(a) 25directing that the person nominated as liquidator by the
company is to be liquidator instead of or jointly with the
person nominated by the creditors, or

(b) appointing some other person to be liquidator instead of the
person nominated by the creditors.

(6) 30If the company does not nominate a person to be liquidator at the
meeting at which the resolution for voluntary winding up is passed,
the liquidator is to be the person (if any) nominated by the creditors
in accordance with the rules.

(7) In the case of a winding-up which is converted to a creditors’
35voluntary winding-up under section 96—

(a) subsection (2) does not apply;

(b) the person who is the liquidator of the company immediately
before the conversion (“the existing liquidator”) must—

(i) seek a decision from the company’s creditors as to
40whether they agree to the existing liquidator’s
appointment as liquidator, and

(ii) ensure that the initial decision date for that decision is
within the period of 28 days beginning with the day
after the day on which the existing liquidator forms
45the opinion mentioned in section 95(1);

(c) subsections (3) to (5) apply as if the existing liquidator had
been nominated to be liquidator by the company.

Small Business, Enterprise and Employment BillPage 239

(8) The “initial decision date” for a decision of the company’s creditors
as to whether they agree to a person’s appointment as liquidator—

(a) if the decision is initially sought using the deemed consent
procedure, is the date on which a decision will be made if the
5creditors by that procedure agree to the person’s
appointment as liquidator, and

(b) if the decision is initially sought using a qualifying decision
procedure, is the date on or before which a decision will be
made if it is made by that qualifying decision procedure
10(assuming that date does not change after the procedure is
instigated).

(9) If the directors without reasonable excuse fail to comply with
subsection (2) they are guilty of an offence and liable to a fine.

(2) In section 100 (as substituted by sub-paragraph (1)), after subsection (5)
15insert—

(5A) The court must grant an application under subsection (5) made by
the holder of a qualifying floating charge in respect of the company’s
property (within the meaning of paragraph 14 of Schedule B1) unless
the court thinks it right to refuse the application because of the
20particular circumstances of the case.

23 (1) Section 101 (appointment of liquidation committee) is amended as follows.

(2) For subsection (1) substitute—

(1) The creditors may in accordance with the rules appoint a committee
(“the liquidation committee”) of not more than 5 persons to exercise
25the functions conferred on it by or under this Act.

(3) In subsection (3)—

(a) for “resolve” (in both places) substitute “decide”;

(b) for “the persons mentioned in the resolution” (in both places)
substitute “those persons”.

24 30Omit section 102 (creditors’ meeting where winding up converted under
section 96).

25 In section 104A (progress report to company and creditors at year’s end
(England and Wales)), in subsection (1)(b)(i), after “creditors” insert “, other
than opted-out creditors”.

26 (1) 35Section 105 (meetings of company and creditors at each year’s end
(Scotland)) is amended as follows.

(2) In subsection (1), after “company and” insert “(despite section 246ZE)”.

(3) In subsection (4), for “creditors meeting under section 95 is held” substitute
“liquidator sends a statement of affairs to the company’s creditors under
40section 95(1A)(b)”.

27 For section 106 (creditors’ voluntary winding-up: final meetings of company