Corporate Insolvency and Governance Bill (HC Bill 128)

(2) The court may give permission under subsection (1) only if the court
thinks that it will support the rescue of the company as a going concern.

(3) Where the court gives permission under subsection (1), the company
must apply the following towards discharging the sums payable under
5the hire-purchase agreement—

(a) the net proceeds of disposal of the goods, and

(b) any additional money required to be added to the net proceeds
so as to produce the amount determined by the court as the net
amount which would be realised on a sale of the goods in the
10open market by a willing vendor.

(4) If a company fails to comply with subsection (3)—

(a) the company commits an offence, and

(b) any officer of the company who without reasonable excuse
authorised or permitted the failure commits an offence.

(5) 15Where the court makes an order giving permission under
subsection (1), the directors must, within the period of 14 days
beginning with the date of the order, send a copy of it to the registrar of
companies.

(6) If the directors fail to comply with subsection (5), any director who did
20not have a reasonable excuse for the failure commits an offence.

(7) In Scotland, where goods in the possession of the company under a
hire-purchase agreement are disposed of under subsection (1), the
disposal has the effect of extinguishing, as against the disponee, all
rights of the owner of the goods under the agreement.

25Effect of contravention of certain provisions of Chapter

A33 Contravention of certain requirements imposed under this Chapter

The fact that a company contravenes section A19 or any of sections A25
to A32 does not—

(a) make any transaction void or unenforceable, or

(b) 30affect the validity of any other thing.

CHAPTER 5 The monitor

A34 Status of monitor

The monitor in relation to a moratorium is an officer of the court.

A35 Monitoring

(1) 35During a moratorium, the monitor must monitor the company’s affairs
for the purpose of forming a view as to whether it remains likely that
the moratorium will result in the rescue of the company as a going
concern.

(2) In forming the view mentioned in subsection (1), the monitor is entitled
40to rely on information provided by the company, unless the monitor
has reason to doubt its accuracy.

A36 Provision of information to monitor

(1) The monitor may require the directors of the company to provide any
information required by the monitor for the purpose of carrying out the
monitor’s functions.

(2) 5The directors must comply with a requirement to provide information
as soon as practicable.

(3) For the potential consequences of failing to comply with a requirement
to provide information, see section A38.

A37 Application by monitor for directions

10The monitor in relation to a moratorium may apply to the court for
directions about the carrying out of the monitor’s functions.

A38 Termination of moratorium by monitor

(1) The monitor must bring a moratorium to an end by filing a notice with
the court if—

(a) 15the monitor thinks that the moratorium is no longer likely to
result in the rescue of the company as a going concern,

(b) the monitor thinks that the objective of rescuing the company as
a going concern has been achieved,

(c) the monitor thinks that, by reason of a failure by the directors to
20comply with a requirement under section A36, the monitor is
unable properly to carry out the monitor’s functions, or

(d) the monitor thinks that the company is unable to pay any of the
following that have fallen due—

(i) moratorium debts;

(ii) 25pre-moratorium debts for which the company does not
have a payment holiday during the moratorium (see
section A18).

(2)
The rules may provide for debts that are to be disregarded for the
purposes of subsection (1)(d).

(3) 30On the filing with the court of a notice under subsection (1), the
moratorium comes to an end.

(4) The rules may make provision about the timing of a notice required to
be given under subsection (1).

(5) The Secretary of State may by regulations amend this section for the
35purposes of changing the circumstances in which the monitor must
bring a moratorium to an end under subsection (1).

(6) Regulations under subsection (5) are subject to the affirmative
resolution procedure.

(7) See also section A17 (obligations to notify change in end of
40moratorium).

A39 Replacement of monitor or appointment of additional monitor

(1) The court may make an order authorising the appointment of a
qualified person to act as the monitor in relation to a moratorium
instead of, or in addition to, a person who already acts as the monitor.

(2) The court may make an order providing that a person ceases to act as
the monitor in relation to a moratorium.

(3) An order under subsection (1) or (2) may be made only on an
application by the directors or the monitor.

(4) 5The court may make an order authorising the appointment of a monitor
under subsection (1) only if the person has provided the court with a
statement that the person—

(a) is a qualified person, and

(b) consents to act as the monitor in relation to the moratorium.

(5) 10Where it is proposed that more than one person should act as the
monitor in relation to the moratorium, the statement under subsection
(4) must specify—

(a) which functions (if any) are to be exercised by the persons
acting jointly, and

(b)
15which functions (if any) are to be exercised by any or all of the
persons.

(6) The rules may make provision about the date on which the statement
under subsection (4) must be made.

(7) Where the court makes an order under subsection (1) or (2) the person
20begins to act as the monitor, or ceases to act as the monitor, in relation
to the moratorium at the time specified in, or determined in accordance
with, the order (“the relevant time”).

(8) As soon as reasonably practicable after the relevant time, the monitor
must notify the following of the effect of the order—

(a) 25the registrar of companies, and

(b) every creditor of the company of whose claim the monitor is
aware.

(9) If the monitor without reasonable excuse fails to comply with
subsection (8), the monitor commits an offence.

A40 30Application 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
35of 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) 40Where 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).

A41 Presumption of validity

An act of the monitor is valid in spite of a defect in the monitor’s
45appointment or qualification.

CHAPTER 6 Challenges

A42 Challenge to monitor’s actions

(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
5moratorium 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
10moratorium 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
15paragraph, 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) 20Where 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
25within 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
30moratorium).

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
35excessive.

(2) Rules under subsection (1) may (among other things) make provision
as to—

(a) time limits;

(b) disposals available to the court;

(c) 40the treatment of costs (or, in Scotland, the expenses) of the
application in the administration or winding up.

A44 Challenge to directors’ actions

(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
5property 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
10moratorium 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) 15An 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
20complained 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) 25bring 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) 30See also section A17 (obligations to notify change in end of
moratorium).

CHAPTER 7 Offences: general

A45 Offence of fraud etc during or in anticipation of moratorium

(1) An officer of a company commits an offence if, during a moratorium for
35the 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
40in 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) 5making 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) 10pawning, 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) 15for 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)
20to 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
25receives, 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
30pawning, pledging or disposal took place, amount to an offence
under subsection (1).

(5) In this section, “officer” includes a shadow director.

A46 Offence of false representation etc to obtain a moratorium

(1) An officer of a company commits an offence if, for the purpose of
35obtaining 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) 40In this section, “officer” includes a shadow director.

A47 Prosecution of delinquent officers of company

(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
45company 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
5to 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
10Advocate, 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
15England 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
20England 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
25the 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
30to 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) 35However, 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
40adduced, 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
45or 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
5connection 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;

• 10“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.

CHAPTER 8 Miscellaneous and general

15Special rules for certain kinds of company

A48 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
20regulator 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) 25The 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) 30The 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
35the 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) 40The 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
5A39(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—

• 10“the appropriate regulator” means—

  (a)

  where the regulated company is a PRA-regulated
  company, each of the Financial Conduct Authority and
  the Prudential Regulation Authority, and

  (b)

  where the regulated company is not a PRA-regulated
  15company, 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—

  (a)

  is, or has been, a PRA-authorised person,

  (b)

  20is, 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

  (c)

  is carrying on, or has carried on, a PRA-regulated
  25activity (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;

• 30“regulated company” means a company which—

  (a)

  is, or has been, an authorised person within the meaning
  given by section 31 of the Financial Services and
  Markets Act 2000,

  (b)

  is, or has been, an appointed representative within the
  35meaning given by section 39 of that Act, or

  (c)

  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
  40Prudential 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
45resolution procedure.

A49 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) 5The 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) 10make 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) 15to 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)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
20company.

(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) 25The 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) 30A 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
35subject to the affirmative procedure (see section 29 of the Interpretation
and Legislative Reform (Scotland) Act 2010 (asp 10)2010 (asp 10)).

(9) In this section—

• “insolvency procedure” includes—

  (a)

  in relation to subsection (1)(b), the provision made by
  40sections 143A to 159 of the Housing and Regeneration
  Act 2008;

  (b)

  in relation to subsection (2)(b), the provision made by
  sections 39 to 50 of the Housing Act 1996;

  (c)

  in relation to subsection (3)(b), the provision made by
  45Part 7 of the Housing (Scotland) Act 2010;

• “ordinary administration” means the insolvency procedure
  provided for by Schedule B1;

Corporate Insolvency and Governance BillPage 30

• “special administration regime” means provision made by an
  enactment for an insolvency procedure that—

  (a)

  is similar or corresponds to ordinary administration,
  and

  (b)

  5provides for the administrator to have one or more
  special objectives instead of or in addition to the
  objectives of ordinary administration.

Floating charges

A50 Void provisions in floating charge documents

(1) 10A 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
15to 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) 20In subsection (1) “receiver” includes a manager and a person who is
appointed both receiver and manager.

Interpretation of this Part

A51 Meaning of “pre-moratorium debt” and “moratorium debt”

(1) In this Part “pre-moratorium debt”, in relation to a company for which
25a 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
30obligation 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
35subject 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,

40but 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
5fall 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
10actionable 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
15resolution procedure.

A52 Interpretation of this Part: general

(1) In this Part—

• “company” means—

  (a)

  a company registered under the Companies Act 2006 in
  20England and Wales or Scotland, or

  (b)

  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
  25Schedule ZA1;

• “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;

• 30“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;

• 35“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;

• 40“moratorium debt” has the meaning given by section A51;

• “pre-moratorium debt” has the meaning given by section A51;

• “qualified person” means a person qualified to act as an
  insolvency practitioner;

• “unable to pay its debts”—

  (a)

  45in relation to a registered company, has the same
  meaning as in Part 4 (see section 123);

  (b)

  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
5matter 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
10(1).

(5) Regulations under subsection (4) are subject to the affirmative
resolution procedure.

Regulations

A53 Regulations

(1) 15Regulations 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,
20unless 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.”

(2) 25Schedule 1 inserts into the Insolvency Act 1986 a new Schedule ZA1 (eligible
companies).

(3) Schedule 2 inserts into the Insolvency Act 1986 a new Schedule ZA2 (contracts
involving financial services).

2 Moratoriums in Great Britain: further amendments and transition

(1) 30Schedule 3 contains consequential and other amendments to do with
moratoriums under new Part A1 of the Insolvency Act 1986.

(2) Nothing in this Act affects the operation of the Insolvency Act 1986, or any
other enactment, in relation to a moratorium under Schedule A1 to that Act
which comes into force before the repeal of that Schedule by Schedule 3 to this
35Act.

(3) Subsection (2) is without prejudice to the operation of section 16 of the
Interpretation Act 1978 (general savings).

3 Moratoriums in Great Britain: temporary modifications

Schedule 4 makes temporary modifications to Part A1 of the Insolvency Act
401986 (moratorium) and other temporary provision in connection with that Part.

4 Moratoriums in Northern Ireland

(1) In the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)S.I. 1989/2405 (N.I. 19)),
immediately before Part 2 (and after the heading before Parts 2 to 7) insert—

“CHAPTER 1 Introductory

13A 5Overview

(1) This Part contains provision that enables an eligible company, in
certain circumstances, to obtain a moratorium, giving it various
protections from creditors set out in this Part.

(2) In this Chapter Article 13AA introduces Schedule ZA1 (which defines
10what is meant by an “eligible” company).

(3) Chapter 2 sets out how an eligible company may obtain a moratorium.

(4) Chapter 3 sets out for how long a moratorium has effect.

(5) Chapter 4 sets out the effects of a moratorium on the company and its
creditors.

(6) 15Chapter 5 contains provision about the monitor.

(7) Chapter 6 contains provision about challenges.

(8) Chapter 7 contains provision about certain offences.

(9) Chapter 8 contains miscellaneous and general provision, including—

(a) special provision for certain kinds of company;

(b) 20definitions for the purposes of this Part;

(c) provision about regulations under this Part.

13AA Eligible companies

Schedule ZA1 contains provision for determining whether a company
is an eligible company for the purposes of this Part.

CHAPTER 2 25Obtaining a moratorium

13B Obtaining a moratorium by filing documents at High Court

(1) This Article applies to an eligible company that—

(a) is not subject to an outstanding winding-up petition, and

(b) is not an overseas company.

(2) 30The directors of the company may obtain a moratorium for the
company by filing the relevant documents with the High Court (for the
relevant documents, see Article 13BC).

(3) For the purposes of this Chapter a company is “subject to an
outstanding winding-up petition” if—

(a) a petition for the winding up of the company has been
presented, and

(b) 5the petition has not been withdrawn or determined.

13BA Obtaining a moratorium for company subject to winding-up petition

(1) This Article applies to an eligible company that is subject to an
outstanding winding-up petition.

(2) The directors of the company may apply to the High Court for a
10moratorium for the company.

(3) The application must be accompanied by the relevant documents (for
the relevant documents, see Article 13BC).

(4) On hearing the application the Court may—

(a) make an order that the company should be subject to a
15moratorium, or

(b) make any other order which the Court thinks appropriate.

(5) The Court may make an order under paragraph (4)(a) only if it is
satisfied that a moratorium for the company would achieve a better
result for the company’s creditors as a whole than would be likely if the
20company were wound up (without first being subject to a moratorium).

13BB Obtaining a moratorium for other overseas companies

(1) This Article applies to an eligible company that—

(a) is not subject to an outstanding winding-up petition, and

(b) is an overseas company.

(2) 25The directors of the company may apply to the High Court for a
moratorium for the company.

(3) The application must be accompanied by the relevant documents (for
the relevant documents, see Article 13BC).

(4) On hearing the application the Court may—

(a) 30make an order that the company should be subject to a
moratorium, or

(b) make any other order which the Court thinks appropriate.

13BC The relevant documents

(1) For the purposes of this Chapter, “the relevant documents” are—

(a) 35a notice that the directors wish to obtain a moratorium,

(b) a statement from a qualified person (“the proposed monitor”)
that the person—

(i) is a qualified person, and

(ii) consents to act as the monitor in relation to the proposed
40moratorium,

(c) a statement from the proposed monitor that the company is an
eligible company,

(d) a statement from the directors that, in their view, the company
is, or is likely to become, unable to pay its debts, and

(e) a statement from the proposed monitor that, in the proposed
monitor’s view, it is likely that a moratorium for the company
would result in the rescue of the company as a going concern.

(2) Where it is proposed that more than one person should act as the
5monitor in relation to the proposed moratorium—

(a) each of them must make a statement under paragraph (1)(b), (c)
and (e), and

(b) the statement under paragraph (1)(b) must specify—

(i) which functions (if any) are to be exercised by the
10persons acting jointly, and

(ii) which functions (if any) are to be exercised by any or all
of the persons.

(3) The rules may make provision about the date on which a statement
comprised in the relevant documents must be made.

(4) 15Regulations may amend this Article for the purposes of changing the
definition of “the relevant documents” in paragraph (1).

(5) Regulations may not be made under paragraph (4) unless a draft of the
regulations has been laid before, and approved by a resolution of, the
Assembly.

13BD 20Beginning of moratorium and appointment of monitor

(1) A moratorium for a company comes into force at the time at which—

(a) in the case of a company to which Article 13B applies, the
relevant documents are filed with the High Court under
paragraph (2) of that Article;

(b) 25in the case of a company to which Article 13BA applies, an order
is made under Article 13BA(4)(a);

(c) in the case of a company to which Article 13BB applies, an order
is made under Article 13BB(4)(a).

(2) On the coming into force of a moratorium, the person or persons who
30made the statement mentioned in Article 13BC(1)(b) become the
monitor in relation to the moratorium.

13BE Obligations to notify where moratorium comes into force

(1) As soon as reasonably practicable after a moratorium for a company
comes into force, the directors must notify the monitor of that fact.

(2) 35As soon as reasonably practicable after receiving a notice under
paragraph (1), the monitor must notify the following that a moratorium
for the company has come into force—

(a) the registrar, and

(b) every creditor of the company of whose claim the monitor is
40aware.

(3) A notice under paragraph (2) must specify—

(a) when the moratorium came into force, and

(b) when, subject to any alteration under or by virtue of any of the
provisions mentioned in Article 13C(3) or (4), the moratorium
45will come to an end.

(4) If the directors fail to comply with paragraph (1), any director who did
not have a reasonable excuse for the failure commits an offence.

(5) If the monitor without reasonable excuse fails to comply with
paragraph (2), the monitor commits an offence.

CHAPTER 3 5Length of moratorium

Initial period

13C End of the moratorium

(1) A moratorium ends at the end of the initial period unless it is extended,
or comes to an end sooner, under or by virtue of a provision mentioned
10in paragraph (3) or (4).

(2) In this Chapter “the initial period”, in relation to a moratorium, means
the period of 20 business days beginning with the business day after the
day on which the moratorium comes into force.

(3) For provision under or by virtue of which a moratorium is or may be
15extended, see—

• Article 13CA (extension by directors without creditor consent);

• Article 13CB (extension by directors with creditor consent);

• Article 13CD (extension by High Court on application of
  directors);

• 20Article 13CE (extension while proposal for CVA pending);

• Article 13CF (extension by High Court in course of other
  proceedings).

(4) For provision under or by virtue of which the moratorium is or may be
terminated, see—

• 25Article 13CG (termination on entry into insolvency procedure etc);

• Article 13ED (termination by monitor);

• Article 13F or 13FB (termination by High Court).

(5) A moratorium may not be extended under a provision mentioned in
paragraph (3) once it has come to an end.

(6) 30Where the application of two or more of the provisions mentioned in
paragraphs (3) and (4) would produce a different length of
moratorium, the provision that applies last is to prevail (irrespective of
whether that results in a shorter or longer moratorium).

Extension of moratorium

13CA 35Extension by directors without creditor consent

(1) During the initial period, but after the first 15 business days of that
period, the directors may extend the moratorium by filing with the
High Court—

(a) a notice that the directors wish to extend the moratorium,

(b) a statement from the directors that all of the following that have
fallen due have been paid or otherwise discharged—

(i) moratorium debts, and

(ii) pre-moratorium debts for which the company does not
5have a payment holiday during the moratorium (see
Article 13D),