Corporate Insolvency and Governance Bill (HC Bill 128)

17 (1) For the purposes of paragraph 15 a project has “step-in rights” if a
person who provides finance in connection with the project has a
conditional entitlement under an agreement to—

(a) assume sole or principal responsibility under an
5agreement for carrying out all or part of the project, or

(b) make arrangements for carrying out all or part of the
project.

(2) In sub-paragraph (1) a reference to the provision of finance
includes a reference to the provision of an indemnity.

10Overseas companies with corresponding functions

18 A company is excluded from being eligible if its registered office
or head office is outside the United Kingdom and—

(a) its functions correspond to those of a company mentioned
in any of the previous paragraphs of this Schedule apart
15from paragraph 2 and, if it were a company registered
under the Companies Act 2006 in England and Wales or
Scotland, it would be excluded from being eligible by that
paragraph, or

(b) it has entered into a transaction or done anything else that,
20if done in England and Wales or Scotland by a company
registered under the Companies Act 2006 in England and
Wales or Scotland, would result in the company being
excluded by any of the previous paragraphs of this
Schedule apart from paragraph 2.

25Interpretation of Schedule

19 (1) This paragraph applies for the purposes of this Schedule.

(2) “Agreement” includes any agreement or undertaking effected
by—

(a) contract,

(b) 30deed, or

(c) any other instrument intended to have effect in accordance
with the law of England and Wales, Scotland or another
jurisdiction.

(3) “The filing date” means the date on which documents are filed
35with the court under section A3, A4 or A5.

(4) “Party” to an arrangement includes a party to an agreement
which—

(a) forms part of the arrangement,

(b) provides for the raising of finance as part of the
40arrangement, or

(c) is necessary for the purposes of implementing the
arrangement.

Powers to amend Schedule

20 (1) The Secretary of State may by regulations amend this Schedule so
as to alter the circumstances in which a company is “eligible” for
the purposes of this Part.

(2) 5Regulations under this paragraph are subject to the affirmative
resolution procedure.

21 (1) The Welsh Ministers may by regulations amend this Schedule—

(a) so as provide that a social landlord registered under Part 1
of the Housing Act 1996 is excluded from being “eligible”
10for the purposes of this Part;

(b) so as to reverse the effect of any provision made under
paragraph (a).

(2) Regulations under this paragraph extend to England and Wales
only.

(3) 15A statutory instrument containing regulations under this
paragraph 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.

22 (1) The Scottish Ministers may by regulations amend this Schedule—

(a) 20so as provide that a social landlord registered under Part 2
of the Housing (Scotland) Act 2010 (asp 17)2010 (asp 17) is excluded
from being “eligible” for the purposes of this Part;

(b) so as to reverse the effect of any provision made under
paragraph (a).

(2) 25Regulations under this paragraph extend to Scotland only.

(3) Regulations under this paragraph are subject to the affirmative
procedure (see section 29 of the Interpretation and Legislative
Reform (Scotland) Act 2010 (asp 10)2010 (asp 10)).”

Section 1(3)

SCHEDULE 2 30Moratoriums in Great Britain: contracts involving financial services

In the Insolvency Act 1986, after Schedule ZA1 (inserted by Schedule 1 to
this Act) insert—

Section A18

““Schedule ZA2 Moratorium: contract or other instrument involving financial
services

35Introductory

1 For the purposes of section A18 “contract or other instrument
involving financial services” means a contract or other instrument
to which any of the following paragraphs applies.

Financial contracts

2 (1) This paragraph applies to a financial contract.

(2) “Financial contract” means—

(a) a contract for the provision of financial services consisting
5of—

(i) lending (including the factoring and financing of
commercial transactions),

(ii) financial leasing, or

(iii) providing guarantees or commitments;

(b) 10a securities contract, including—

(i) a contract for the purchase, sale or loan of a
security, group or index of securities;

(ii) an option on a security or group or index of
securities;

(iii) 15a repurchase or reverse repurchase transaction on
any such security, group or index;

(c) a commodities contract, including—

(i) a contract for the purchase, sale or loan of a
commodity or group or index of commodities for
20future delivery;

(ii) an option on a commodity or group or index of
commodities;

(iii) a repurchase or reverse repurchase transaction on
any such commodity, group or index;

(d) 25a futures or forwards contract, including a contract (other
than a commodities contract) for the purchase, sale or
transfer of a commodity or property of any other
description, service, right or interest for a specified price at
a future date;

(e) 30a swap agreement, including—

(i) a swap or option relating to interest rates, spot or
other foreign exchange agreements, currency, an
equity index or equity, a debt index or debt,
commodity indexes or commodities, weather,
35emissions or inflation;

(ii) a total return, credit spread or credit swap;

(iii) any agreement or transaction that is similar to an
agreement that is referred to in sub-paragraph (i) or
(ii) and is the subject of recurrent dealing in the
40swaps or derivatives markets;

(f) an inter-bank borrowing agreement where the term of the
borrowing is three months or less;

(g) a master agreement for any of the contracts or agreements
referred to in paragraphs (a) to (f).

(3) 45For the purposes of this paragraph “commodities” includes—

(a) units recognised for compliance with the requirements of
EU Directive 2003/87/EC establishing a scheme for
greenhouse gas emission allowance trading,

(b) allowances under paragraph 5 of Schedule 2 to the Climate
Change Act 2008 relating to a trading scheme dealt with
under Part 1 of that Schedule (schemes limiting activities
relating to emissions of greenhouse gas), and

(c) 5renewables obligation certificates issued—

(i) by the Gas and Electricity Markets Authority under
an order made under section 32B of the Electricity
Act 1989, or

(ii) by the Northern Ireland Authority for Utility
10Regulation under the Energy (Northern Ireland)
Order 2003 (S.I. 2003/419 (N.I. 6)S.I. 2003/419 (N.I. 6)) and pursuant to
an order made under Articles 52 to 55F of that
Order.

Securities financing transactions

3 (1) 15This paragraph applies to a securities financing transaction.

(2) “Securities financing transaction” has the meaning given by
Article 3(11) of Regulation (EU) 2015/2365 on the transparency of
securities financing transactions.

(3) But for the purposes of that Article as it applies for the purposes of
20this paragraph, references to “commodities” in that Regulation are
to be taken as including the units, allowances and certificates
referred to in paragraph 2(3)(a), (b) and (c).

Derivatives

4 This paragraph applies to a derivative, within the meaning given
25by Article 2(5) of Regulation (EU) No. 648/2012.

Spot contracts

5 (1) This paragraph applies to a spot contract.

(2) “Spot contract” has the meaning given by Article 7(2) or 10(2) of
Commission Delegated Regulation of 25.4.2016 supplementing
30Directive 2014/65/EU of the European Parliament and of the
Council as regards organisational requirements and operating
conditions for investment firms and defined terms for the
purposes of that Directive.

Capital market arrangements

6 35This paragraph applies to a capital market arrangement within the
meaning given by paragraph 13(2) of Schedule ZA1.

Contracts forming part of a public-private partnership

7 This paragraph applies to a contract forming part of a public-
private partnership project within the meaning given by
40paragraph 16 of Schedule ZA1.

Market contracts

8 This paragraph applies to a market contract within the meaning of
Part 7 of the Companies Act 1989 (see section 155 of that Act).

Qualifying collateral arrangements and qualifying property transfers

9 5This paragraph applies to qualifying collateral arrangements and
qualifying property transfers within the meaning of Part 7 of the
Companies Act 1989 (see section 155A of that Act).

Contracts secured by certain charges or arrangements

10 This paragraph applies to a contract where any obligation under
10the contract is—

(a) secured by a market charge within the meaning of Part 7 of
the Companies Act 1989 (see section 173 of that Act),

(b) secured by a system-charge within the meaning of the
Financial Markets and Insolvency Regulations 1996 (S.I.
151996/1469) (see regulation 2 of those Regulations), or

(c) secured or otherwise covered by a financial collateral
arrangement within the meaning of the Financial
Collateral Arrangements (No. 2) Regulations 2003 (S.I.
2003/3226) (see regulation 3 of those Regulations).

20Default arrangements and transfer orders

11 This paragraph applies to a contract which is included in default
arrangements, or a transfer order, within the meaning of the
Financial Markets and Insolvency (Settlement Finality)
Regulations 1999 (S.I. 1999/2979S.I. 1999/2979) (see regulation 2 of those
25Regulations).

Card-based payment transactions

12 This paragraph applies to a contract to accept and process card-
based payment transactions within the meaning given by
Regulation (EU) 2015/751 of the European Parliament and of the
30Council of 29th April 2015 on interchange fees for card-based
payment transactions.

Power to amend Schedule

13 (1) The Secretary of State may by regulations amend this Schedule so
as to change the meaning of “contract or other instrument
35involving financial services” for the purposes of section A18.

(2) Regulations under this paragraph are subject to the affirmative
resolution procedure.”

Section 2

SCHEDULE 3 Moratoriums in Great Britain: further amendments

Insolvency Act 1986

1 The Insolvency Act 1986 is amended as follows.

2 5Omit section 1A (moratorium where directors propose voluntary
arrangement).

3 In section 2 (procedure where nominee is not the liquidator or
administrator), in subsection (1), omit from “and the directors” to the end.

4 (1) Section 4 (decision of the company and its creditors in relation to voluntary
10arrangement) is amended as follows.

(2) After subsection (4) insert—

“(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
15the 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;

(b) pre-moratorium debts for which the company did not have a
20payment holiday during the moratorium (within the
meaning given by section A18).

(4B) Subsection (4A) does not prevent the approval of such a proposal or
modification with the concurrence of the creditor concerned.”

(3) After subsection (7) insert—

“(8) 25In this section “moratorium debt” and “pre-moratorium debt” have
the meaning given by section A51.”

5 (1) Section 4A (approval of voluntary arrangement) is amended as follows.

(2) In subsection (2)(b), for “(4)” substitute “(6)”.

(3) In subsection (5), for “within the meaning given by paragraph 44 of Schedule
30A1” substitute “as defined by section A48(13)”.

(4) In subsection (5A), for “within the meaning of paragraph 44 of Schedule A1”
substitute “as defined by section A48(13)”.

6 (1) Section 5 (effect of approval of voluntary arrangement) is amended as
follows.

(2) 35After subsection (3) insert—

“(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
40beginning of the moratorium, the court must dismiss the petition.”

(3) In subsection (4) after “subsection (3)(a)” insert “or dismiss a petition under
subsection (3A)”.

7 (1) Section 7A (prosecution of delinquent officers of company) is amended as
follows.

(2) 5For subsection (1) substitute—

“(1) This section applies where the approval of a voluntary arrangement
in relation to a company has taken effect under section 4A.”

(3) In subsection (2)—

(a) for the words before paragraph (a) substitute “If it appears to the
10supervisor that any past or present officer of the company has
committed an offence in connection with the voluntary arrangement,
the supervisor must forthwith”;

(b) in paragraph (b), omit “nominee or”.

(4) In subsection (8), omit “nominee or”.

8 15In section 7B (arrangements coming to an end prematurely) omit—

(a) “or paragraph 36 of Schedule A1”;

(b) “or, as the case may be, paragraph 37(2)(b)(i) of Schedule A1”.

9 In section 115 (expenses of voluntary winding up), at the beginning insert
“After the payment of any liabilities to which section 174A applies,”.

10 20In section 122 (circumstances in which company may be wound up by the
court), in subsection (1), omit paragraph (fa).

11 In section 124 (winding up by the court), omit subsection (3A).

12 In section 127 (avoidance of property dispositions etc), after subsection (2)
insert—

“(3) 25This section has no effect in respect of anything done during a
moratorium under Part A1, or during a period mentioned in section
5(4)(a) following the end of a moratorium, where the winding-up
order was made on a petition presented before the moratorium
begins, unless the petition was presented under section 367 of the
30Financial Services and Markets Act 2000 on the ground mentioned in
section 367(3)(b) of that Act.”

13 Before section 175 (and before the italic heading “Preferential debts” above
that section) insert—

““Moratorium: order of priority of payment of debts

174A 35Moratorium debts etc: priority

(1) This section applies where proceedings for the winding up of a
company are begun 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.

(2) 40In the winding up, the following are payable out of the company’s
assets (in the order of priority shown) in preference to all other
claims—

(a) any prescribed fees or expenses of the official receiver acting
in any capacity in relation to the company;

(b) moratorium debts, and pre-moratorium debts for which the
company did not have a payment holiday during the
5moratorium (within the meaning given by section A18).

(3) The rules may make provision as to the order in which the debts
mentioned in subsection (2)(b) rank among themselves in a case
where the assets of the company are insufficient to meet them in full.

(4) For the purposes of this section proceedings for the winding up of a
10company are begun when—

(a) a winding-up petition is presented, or

(b) a resolution for voluntary winding up is passed.

(5) In this section “moratorium debt” and “pre-moratorium debt” have
the meaning given by section A51.”

14 (1) 15Section 175 (preferential debts: general provision) is amended as follows.

(2) In subsection (1), at the end insert “after the payment of—

(a) any liabilities to which section 174A applies, and

(b) expenses of the winding up.”

(3) In subsection (1A), omit “after the expenses of the winding up”.

15 (1) 20Section 233 (supplies of gas, water, electricity etc) is amended as follows.

(2) In subsection (1)—

(a) omit paragraph (ba);

(b) in the words after paragraph (e), omit “the nominee,”.

(3) In subsection (4), omit paragraph (ba).

16 25In section 246ZD (power to assign certain causes of action), in subsection
(2)—

(a) after “under” insert “or by virtue of”;

(b) before paragraph (a) insert—

“(za) section A43 (challenges to monitor remuneration in
30subsequent insolvency proceedings);”.

17 In section 246A (remote attendance at meetings), in subsection (10), before
paragraph (a) insert—

“(za) the monitor in relation to a moratorium under Part A1,”.

18 In section 246B (use of websites), in subsection (3), before paragraph (a)
35insert—

“(za) the monitor in relation to a moratorium under Part A1,”.

19 In section 247 (meaning of “insolvency” etc), in subsection (1), after
“includes” insert “the coming into force of a moratorium for the company
under Part A1,”.

20 40In section 387 (“the relevant date” in relation to preferential debts), omit
subsection (2A).

21 (1) Section 388 (meaning of “act as insolvency practitioner”) is amended as
follows.

(2) In subsection (1)(a), for “or administrative receiver” substitute “,
administrative receiver or monitor”.

(3) In subsection (4), at the appropriate place insert—

• “““monitor” has the same meaning as in Part A1 (moratorium);”.

22 (1) 5Section 411 (company insolvency rules) is amended as follows.

(2) In subsection (1), in the words after paragraph (b), for “Parts I” substitute
“Parts A1”.

(3) In subsection (3), for “Parts I” substitute “Parts A1”.

23 (1) Section 414 (fees orders) is amended as follows.

(2) 10In subsection (1)(a), for “Parts I” substitute “Parts A1”.

(3) In subsection (8), for “Parts I” substitute “Parts A1”.

24 Before section 416 (monetary limits (companies winding up)) insert—

“415B Monetary limits (company moratorium)

(1) The Secretary of State may by regulations increase or reduce any of
15the money sums for the time being specified in the following
provisions of Part A1—

(a) section A25(1) (maximum amount of credit which company
may obtain without disclosing moratorium);

(b) section A28(2) (maximum amount for certain payments
20without obtaining monitor consent etc);

(c) section A45(2) (minimum value of company property
concealed or fraudulently removed, affecting criminal
liability of company’s officer).

(2) Regulations under this section may contain such transitional
25provisions as may appear to the Secretary of State necessary or
expedient.

(3) Regulations under this section are to be made by statutory
instrument subject to annulment in pursuance of a resolution of
either House of Parliament.”

25 30Omit section 417A (money sums: company moratorium).

26 In section 430 (provision introducing Schedule of punishments), after
subsection (4) insert—

“(4A) In relation to an offence committed before section 154(1) of the
Criminal Justice Act 2003 comes into force, a reference in Schedule 10
35to 12 months on summary conviction in England and Wales is to be
read as a reference to 6 months.”

27 In section 431 (summary proceedings), in subsection (1), for “Parts I”
substitute “Parts A1”.

28 In section 432 (offences by bodies corporate), in subsection (4)—

(a) 40after “sections” insert “A19(5), A25(3), A26(4), A27(1), A28(5), A29(6), A30(2), A31(10), A32(4),”;

(b) omit from “and those under” to the end.

29 In section 434 (Crown application), after “Insolvency Act 1985” insert “and
Part A1”.

30 Omit Schedule A1 (moratorium where directors propose voluntary
arrangement).

31 (1) 5Schedule B1 (administration) is amended as follows.

(2) Omit paragraph 24.

(3) Before paragraph 65 (but after the italic heading “Distribution”) insert—

“64A (1) This paragraph applies where a company enters administration
before the end of the period of 12 weeks beginning with the day
10after the end of any moratorium for the company under Part A1.

(2) The administrator must make a distribution to the creditors of the
company in respect of—

(a) moratorium debts, and

(b) pre-moratorium debts for which the company did not have
15a payment holiday during the moratorium (within the
meaning given by section A18).

(3) A sum payable under sub-paragraph (2) is to be paid in priority
to—

(a) any security to which paragraph 70 applies or paragraph
20115(1) applies;

(b) any sums payable under paragraph 99.

(4) The administrator must realise any property necessary to comply
with sub-paragraph (2).

(5) The rules may make provision as to the order in which the
25moratorium and pre-moratorium debts mentioned in sub-
paragraph (2) rank among themselves for the purposes of this
paragraph in a case where the assets of the company are
insufficient to meet them in full.

(6) In this paragraph “moratorium debt” and “pre-moratorium debt”
30have the meaning given by section A51.”

(4) In paragraph 65, for sub-paragraph (1) substitute—

“(1) If the assets of a company are sufficient to meet any debts or other
liabilities payable under paragraph 64A in full, the administrator
of the company may make a distribution to any other creditor of
35the company.”

(5) In paragraph 66, for “The administrator of a company” substitute “If the
debts and other liabilities payable under paragraph 64A have been met, the
administrator of a company”.

32 (1) Schedule 8 (provision capable of inclusion in company insolvency rules) is
40amended as follows.

(2) In paragraph 2, for “Parts I” substitute “Parts A1”.

(3) In paragraph 8, after “is,” insert “the monitor in relation to a moratorium
under Part A1 or”.