Corporate Insolvency and Governance Bill (HC Bill 128)

(a) does not end at the time mentioned in paragraph (1)(b), and

(b) instead, ends when the proposal is disposed of.

(3) For the purposes of this Article a proposal under Part 2 is “disposed of”
when any of the following takes place—

(a) 5the company and its creditors both decide under Article 17 not
to approve the voluntary arrangement contained in the
proposal;

(b) the decisions taken by the company and its creditors under
Article 17 differ, and—

(i) 10the period for making an application under Article
17A(3) expires and either no application has been made
within that period or any application made within that
period has been withdrawn, or

(ii) an application is made under Article 17A(3) and that
15application is disposed of, or it is withdrawn after the
expiry of the period for making an application under
Article 17A(3);

(c) the voluntary arrangement contained in the proposal takes
effect under Article 18;

(d) 20the proposal is withdrawn.

13CF Extension by High Court in the course of other proceedings

(1) Paragraph (2) applies where—

(a) an application is made under section 896 or 901C(1) of the
Companies Act 2006 (arrangements and reconstructions: court
25order for holding of meeting) in respect of a company, and

(b) during proceedings before the High Court in connection with
the application, a moratorium for the company is in force.

(2) The High Court may make an order that the moratorium be extended
to such date as is specified in the order.

30Early termination on certain grounds

13CG Company enters into insolvency procedure etc

(1) A moratorium comes to an end at any time at which the company—

(a) enters into a compromise or arrangement (see paragraph (2)), or

(b) enters into a relevant insolvency procedure (see paragraph (3)).

(2) 35For the purposes of this Article a company enters into a compromise or
arrangement if an order under section 899 or 901F of the Companies
Act 2006 (court sanction for compromise or arrangement) comes into
effect in relation to the company.

(3) For the purposes of this Article a company enters into a relevant
40insolvency procedure if—

(a) a voluntary arrangement takes effect under Article 18 in
relation to the company,

(b) the company enters administration (within the meaning of
Schedule B1 (see paragraph 2(2)(b) of that Schedule)),

(c) 45paragraph 45 of Schedule B1 (administration: interim
moratorium) begins to apply in relation to the company, or

(d) the company goes into liquidation (see Article 6).

Obligations to notify change in end of moratorium

13CH Obligations to notify change in end of moratorium

(1) The table imposes obligations on the directors of a company to notify
5the monitor where a moratorium for the company is extended or comes
to an end.

(2) After receiving a notice under paragraph (1), other than a notice under
entry 4 or 6 of the table, the monitor must notify the relevant persons of
40when the moratorium ended or, subject to any alteration under or by
virtue of any of the provisions mentioned in Article 13C(3) or (4), the
moratorium will come to an end.

(3) After receiving a notice under entry 4 or 6 of the table, the monitor must
notify the relevant persons.

(4) 45If a moratorium comes to an end under Article 13ED (termination by
monitor), the monitor must notify the company and the relevant
persons of when the moratorium ended.

(5) The rules may—

(a) make further provision about the timing of a notice required to
50be given under this Article;

(b) require a notice to be accompanied by other documents.

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

(7) If the monitor without reasonable excuse fails to comply with any of
55paragraphs (2) to (4), the monitor commits an offence.

(8) In this Article “the relevant persons” means—

(a) the registrar, and

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

CHAPTER 4 60Effects of moratorium

Introductory

13D Overview and construction of references to payment holidays

(1) This Chapter makes provision about the main effects of a moratorium
for a company.

(2) 65The provision made by this Chapter includes restrictions on the
enforcement or payment of the debts that are defined by paragraph (3)
as pre-moratorium debts for which a company has a payment holiday
during a moratorium.

(3) In this Part a reference to pre-moratorium debts for which a company
70has a payment holiday during a moratorium is to its pre-moratorium
debts that have fallen due before the moratorium, or that fall due
during the moratorium, except in so far as they consist of amounts
payable in respect of—

(a) the monitor’s remuneration or expenses,

(b) 75goods or services supplied during the moratorium,

(c) rent in respect of a period during the moratorium,

(d) wages or salary arising under a contract of employment,

(e) redundancy payments, or

(f) debts or other liabilities arising under a contract or other
instrument involving financial services.

(4) The rules may make provision as to what is, or is not, to count as the
supply of goods or services for the purposes of paragraph (3)(b).

(5) 5Regulations may amend this Article for the purposes of changing the
list in paragraph (3).

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

(7) 10In this Article—

• “contract or other instrument involving financial services” has the
  meaning given by Schedule ZA2;

• “monitor’s remuneration or expenses” does not include
  remuneration in respect of anything done by a proposed
  15monitor before the moratorium begins;

• “redundancy payment” means—

  (a)

  a redundancy payment under Part 11 of the
  Employment Rights Act 1996 or Part 12 of the
  Employment Rights (Northern Ireland) Order 1996, or

  (b)

  20a payment made to a person who agrees to the
  termination of their employment in circumstances
  where they would have been entitled to a redundancy
  payment under that Part if dismissed;

• “wages or salary” includes—

  (a)

  25a sum payable in respect of a period of holiday (for
  which purpose the sum is to be treated as relating to the
  period by reference to which the entitlement to holiday
  accrued),

  (b)

  a sum payable in respect of a period of absence through
  30illness or other good cause,

  (c)

  a sum payable in lieu of holiday, and

  (d)

  a contribution to an occupational pension scheme.

Publicity about moratorium

13DA Publicity about moratorium

(1) 35During a moratorium, the company must, in any premises—

(a) where business of the company is carried on, and

(b) to which customers of the company or suppliers of goods or
services to the company have access,

display, in a prominent position so that it may easily be read by such
40customers or suppliers, a notice containing the required information.

(2) During a moratorium, any websites of the company must state the
required information.

(3) During a moratorium, every business document issued by or on behalf
of the company must state the required information.

(4) For the purposes of paragraphs (1), (2) and (3), “the required
information” is—

(a) that a moratorium is in force in relation to the company, and

(b) the name of the monitor.

(5) 5If paragraph (1), (2) or (3) is contravened—

(a) the company commits an offence, and

(b) any officer of the company who without reasonable excuse
authorises or permits the contravention commits an offence.

(6) In this Article “business document” means—

(a) 10an invoice,

(b) an order for goods or services,

(c) a business letter, and

(d) an order form,

whether in hard copy, electronic or any other form.

15Effect on creditors etc

13DB Restrictions on insolvency proceedings etc

(1) During a moratorium—

(a) no petition may be presented for the winding up of the
company, except by the directors,

(b) 20no resolution may be passed for the voluntary winding up of
the company under Article 70(1)(a),

(c) a resolution for the voluntary winding up of the company
under Article 70(1)(b) may be passed only if the resolution is
recommended by the directors,

(d) 25no order may be made for the winding up of the company,
except on a petition by the directors,

(e) no administration application may be made in respect of the
company, except by the directors,

(f) no notice of intention to appoint an administrator of the
30company under paragraph 15 or 23(1) of Schedule B1 may be
filed with the High Court,

(g) no administrator of the company may be appointed under
paragraph 15 or 23(1) of Schedule B1, and

(h) no administrative receiver of the company may be appointed.

(2) 35Paragraph (1)(a) does not apply to an excepted petition; and paragraph
(1)(d) does not apply to an order on an excepted petition.

(3) For these purposes, “excepted petition” means a petition under—

(a) Article 104A, 104B or 104C, or

(b) section 367 of the Financial Services and Markets Act 2000 on
40the ground mentioned in subsection (3)(b) of that section.

13DC Restrictions on enforcement and legal proceedings

(1) During a moratorium—

(a) a landlord or other person to whom rent is payable may not
exercise a right of forfeiture by peaceable re-entry in relation to

premises let to the company, except with the permission of the
High Court,

(b) no steps may be taken to enforce any security over the
company’s property except—

(i) 5steps to enforce a collateral security charge (within the
meaning of the Financial Markets and Insolvency
(Settlement Finality) Regulations 1999 (S.I. 1999/2979S.I. 1999/2979)),

(ii) steps to enforce security created or otherwise arising
under a financial collateral arrangement (within the
10meaning of regulation 3 of the Financial Collateral
Arrangements (No. 2) Regulations 2003 (S.I. 2003/
3226)), or

(iii) steps taken with the permission of the High Court,

(c) no steps may be taken to repossess goods in the company’s
15possession under any hire-purchase agreement, except with the
permission of the High Court, and

(d) no legal process (including legal proceedings, enforcement and
distress) may be instituted, carried out or continued against the
company or its property except—

(i) 20employment tribunal proceedings or any legal process
arising out of such proceedings,

(ii) proceedings, not within paragraph (i), involving a claim
between an employer and a worker, or

(iii) a legal process instituted, carried out or continued with
25the permission of the High Court.

(2) An application may not be made for permission under paragraph (1)
for the purposes of enforcing a pre-moratorium debt for which the
company has a payment holiday during the moratorium.

(3) An application may not be made for permission under paragraph
30(1)(b), (c) or (d) with a view to obtaining—

(a) the crystallisation of a floating charge, or

(b) the imposition, by virtue of provision in an instrument creating
a floating charge, of any restriction on the disposal of any
property of the company.

(4) 35Permission of the High Court under paragraph (1) may be given subject
to conditions.

(5) Paragraph (1)(b)(iii) is subject to Article 13DE(1).

(6) In this Article—

• “agency worker” has the meaning given by Article 15(2) of the
  40Employment Relations (Northern Ireland) Order 1999;

• “employer”—

  (a)

  in relation to an agency worker, has the meaning given
  by Article 15(2) of the Employment Relations (Northern
  Ireland) Order 1999;

  (b)

  45otherwise, has the meaning given by Article 3(4) of the
  Employment Rights (Northern Ireland) Order 1996;

• “worker” means an individual who is—

  (a)

  a worker within the meaning of Article 3(3) of the
  Employment Rights (Northern Ireland) Order 1996, or

  Corporate Insolvency and Governance BillPage 45

  (b)

  an agency worker.

13DD Floating charges

(1) This Article applies where there is an uncrystallised floating charge on
the property of a company for which a moratorium is in force.

(2) 5During the moratorium, the holder of the floating charge may not give
any notice which would have the effect of—

(a) causing the floating charge to crystallise, or

(b) causing the imposition, by virtue of provision in the instrument
creating the charge, of any restriction on the disposal of
10property of the company.

(3) No other event occurring during the moratorium is to have the effect
mentioned in paragraph (2)(a) or (b).

(4) Paragraph (5) applies where—

(a) the holder of a floating charge (“the chargee”) is prevented by
15paragraph (2) from giving a notice mentioned there during the
moratorium, and

(b) under the terms of the floating charge, the time for giving such
a notice ends during the moratorium or before the chargee is
given notice of the end of the moratorium under Article 13CH.

(5) 20The chargee may give notice later than is required under the terms of
the floating charge, but only if the chargee does so as soon as is
practicable after—

(a) the end of the moratorium, or

(b) if later, the day on which the chargee is notified of the end of the
25moratorium.

(6) Where—

(a) paragraph (3) prevents an event which occurs during the
moratorium from having the effect mentioned there, and

(b) the holder of the floating charge gives notice of the event to the
30company as soon as is practicable after—

(i) the end of the moratorium, or

(ii) if later, the day on which the chargee is notified of the
end of the moratorium,

the event is to be treated as if it had occurred when the notice was
35given.

13DE Enforcement of security granted during moratorium

(1) Security granted by a company during a moratorium in relation to the
company may be enforced only if the monitor consented to the grant of
security under Article 13DH.

(2) 40See also Article 13DC(1)(b), which restricts enforcement during a
moratorium.

Notification of insolvency proceedings

13DF Duty of directors to notify monitor of insolvency proceedings etc

(1) The directors of a company must notify the monitor before taking any
of the following steps during a moratorium—

(a) 5presenting a petition for the winding up of the company;

(b) making an administration application in respect of the
company;

(c) appointing an administrator under paragraph 23(2) of Schedule
B1.

(2) 10The directors of a company must notify the monitor if, during a
moratorium for the company, they recommend that the company
passes a resolution for voluntary winding up under Article 70(1)(b).

(3) The rules may make provision about the timing of a notice required to
be given under paragraph (1) or (2).

(4) 15If the directors fail to comply with paragraph (1) or (2), any director
who did not have a reasonable excuse for the failure commits an
offence.

Restrictions on transactions

13DG Restrictions on obtaining credit

(1) 20During a moratorium, the company may not obtain credit to the extent
of £500 or more from a person unless the person has been informed that
a moratorium is in force in relation to the company.

(2) The reference to the company obtaining credit includes—

(a) the company entering into a conditional sale agreement in
25accordance with which goods are to be sold to the company,

(b) the company entering into any other form of hire-purchase
agreement under which goods are to be bailed to the company,
and

(c) the company being paid in advance (whether in money or
30otherwise) for the supply of goods or services.

(3) If a company contravenes paragraph (1)—

(a) the company commits an offence, and

(b) any officer of the company who without reasonable excuse
authorised or permitted the obtaining of the credit commits an
35offence.

13DH Restrictions on grant of security etc

(1) During a moratorium, the company may grant security over its
property only if the monitor consents.

(2) The monitor may give consent under paragraph (1) only if the monitor
40thinks that the grant of security will support the rescue of the company
as a going concern.

(3) In deciding whether to give consent under paragraph (1), the monitor
is entitled to rely on information provided by the company unless the
monitor has reason to doubt its accuracy.

(4) If the company grants security over its property during the moratorium
otherwise than as authorised by paragraph (1)—

(a) the company commits an offence, and

(b) any officer of the company who without reasonable excuse
5authorised or permitted the grant of the security commits an
offence.

(5) For the consequences of a company granting security over its property
in contravention of paragraph (1), see also Article 13DE.

(6) The monitor may not give consent under this Article if the granting of
10security is an offence under Article 13DI.

13DI Prohibition on entering into market contracts etc

(1) If a company enters into a transaction to which this Article applies
during a moratorium for the company—

(a) the company commits an offence, and

(b) 15any officer of the company who without reasonable excuse
authorised or permitted the company to enter into the
transaction commits an offence.

(2) A company enters into a transaction to which this Article applies if it—

(a) enters into a market contract,

(b) 20enters into a financial collateral arrangement,

(c) gives a transfer order,

(d) grants a market charge or a system-charge, or

(e) provides any collateral security.

(3) Where during the moratorium a company enters into a transaction to
25which this Article applies, nothing done by or in pursuance of the
transaction is to be treated as done in contravention of any of Articles
13DA, 13DC, 13DG, 13DH and 13DJ to 13DN.

(4) In this Article—

• “collateral security” has the same meaning as in the Financial
  30Markets and Insolvency (Settlement Finality) Regulations 1999
  (S.I. 1999/2979S.I. 1999/2979);

• “financial collateral arrangement” has the same meaning as in the
  Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I.
  2003/3226);

• 35“market charge” has the same meaning as in Part 5 of the
  Companies (No. 2) (Northern Ireland) Order 1990;

• “market contract” has the same meaning as in Part 5 of the
  Companies (No. 2) (Northern Ireland) Order 1990;

• “system-charge” has the meaning given by the Financial Markets
  40and Insolvency Regulations (Northern Ireland) 1996 (S.R. 1996/
  252);

• “transfer order” has the same meaning as in the Financial Markets
  and Insolvency (Settlement Finality) Regulations 1999 (S.I.
  1999/2979).

Restrictions on payments and disposal of property

13DJ Restrictions on payment of certain pre-moratorium debts

(1) During a moratorium, the company may make one or more relevant
payments to a person that (in total) exceed the specified maximum
5amount only if—

(a) the monitor consents,

(b) the payment is in pursuance of a court order, or

(c) the payment is required by Article 13DM(3) or 13DN(3).

(2) In paragraph (1)—

• 10“relevant payments” means payments in respect of pre-
  moratorium debts for which the company has a payment
  holiday during the moratorium (see Article 13D);

• “specified maximum amount” means an amount equal to the
  greater of—

  (a)

  15£5000, and

  (b)

  1% of the value of the debts and other liabilities owed by
  the company to its unsecured creditors when the
  moratorium began, to the extent that the amount of such
  debts and liabilities can be ascertained at that time.

(3) 20The monitor may give consent under paragraph (1)(a) only if the
monitor thinks that it will support the rescue of the company as a going
concern.

(4) In deciding whether to give consent under paragraph (1)(a), the
monitor is entitled to rely on information provided by the company
25unless the monitor has reason to doubt its accuracy.

(5) If the company makes a payment to which paragraph (1) applies
otherwise than as authorised by that paragraph—

(a) the company commits an offence, and

(b) any officer of the company who without reasonable excuse
30authorised or permitted the payment commits an offence.

13DK Restrictions on disposal of property

(1) During a moratorium, the company may dispose of its property only if
authorised by paragraph (2) or (5).

(2) In the case of property that is not subject to a security interest, the
35company may dispose of the property if—

(a) the disposal is made in the ordinary way of the company’s
business,

(b) the monitor consents, or

(c) the disposal is in pursuance of a court order.

(3) 40The monitor may give consent under paragraph (2)(b) only if the
monitor thinks that it will support the rescue of the company as a going
concern.

(4) In deciding whether to give consent under paragraph (2)(b), the
monitor is entitled to rely on information provided by the company
45unless the monitor has reason to doubt its accuracy.

(5) In the case of property that is subject to a security interest, the company
may dispose of the property if the disposal is in accordance with—

(a) Article 13DM(1), or

(b) the terms of the security.

(6) 5If the company disposes of its property during the moratorium
otherwise than as authorised by this Article—

(a) the company commits an offence, and

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

13DL 10Restrictions on disposal of hire-purchase property

(1) During a moratorium, the company may dispose of any goods in the
possession of the company under a hire-purchase agreement only if the
disposal is in accordance with —

(a) Article 13DN(1), or

(b) 15the terms of the agreement.

(2) If the company disposes of goods in the possession of the company
under a hire-purchase agreement otherwise than as authorised by
paragraph (1)—

(a) the company commits an offence, and

(b) 20any officer of the company who without reasonable excuse
authorised or permitted the disposal commits an offence.

Disposals of property free from charges etc

13DM Disposal of charged property free from charge

(1) During a moratorium, the company may, with the permission of the
25High Court, dispose of property which is subject to a security interest
as if it were not subject to the security interest.

(2) The Court may give permission under paragraph (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 paragraph (1) other than in
30relation to a floating charge, the company must apply the following
towards discharging the sums secured—

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

(b) any money required to be added to the net proceeds so as to
produce the amount determined by the Court as the net amount
35which would be realised on a sale of the property in the open
market by a willing vendor.

(4) Where the permission relates to two or more security interests, the
condition in paragraph (3) requires the application of money in the
order of the priorities of the security interests.

(5) 40Where property subject to a floating charge is disposed of under
paragraph (1), the holder of the floating charge has the same priority in
respect of acquired property as they had in respect of the property
disposed of.

(6) In paragraph (5) “acquired property” means property of the company
45which directly or indirectly represents the property disposed of.