Corporate Insolvency and Governance Bill (HC Bill 128)

(b) any debt or other liability to which the company has become or
may become subject during the moratorium by reason of any
obligation incurred before the moratorium comes into force,

but this is subject to paragraph (3).

(2) 5In 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
subject during the moratorium, other than by reason of an
obligation incurred before the moratorium came into force, or

(b) 10any 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,

but this is subject to paragraph (3).

(3) For the purposes of this Part—

(a) 15a liability in tort 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
20actionable damage;

(b) a liability in tort is a “moratorium debt” if it does not fall within
sub-paragraph (a) and either—

(i) the cause of action has accrued during the moratorium,
or

(ii) 25all the elements necessary to establish the cause of action
exist before the moratorium comes to an end except for
actionable damage.

(4) Regulations may amend this Article for the purposes of changing the
definition of “pre-moratorium debt” and “moratorium debt” in this
30Part.

(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.

13HD Interpretation of this Part: general

(1) 35In this Part—

• “company” means—

  (a)

  a company registered under the Companies Act 2006 in
  Northern Ireland, or

  (b)

  an unregistered company that may be wound up under
  40Part 6 of this Order;

• “eligible”, in relation to a company, has the meaning given by
  Schedule ZA1;

• “hire-purchase agreement” includes a conditional sale agreement,
  a chattel leasing agreement and a retention of title agreement;

• 45“the monitor”, in relation to a moratorium, means the person who
  has the functions of the monitor in relation to the moratorium
  (see also Article 13EF for cases where two or more persons act
  as the monitor);

Corporate Insolvency and Governance BillPage 61

• “moratorium” means a moratorium under this Part;

• “moratorium debt” has the meaning given by Article 13HC;

• “pre-moratorium debt” has the meaning given by Article 13HC;

• “qualified person” means a person qualified to act as an
  5insolvency practitioner;

• “unable to pay its debts”—

  (a)

  in relation to a registered company, has the same
  meaning as in Part 5 (see Article 103);

  (b)

  in relation to an unregistered company, has the same
  10meaning as in Part 6 (see Articles 186 to 188).

(2) Regulations may amend this Article for the purposes of changing the
definition of “qualified person” in paragraph (1).

(3) Regulations may not be made under paragraph (2) unless a draft of the
regulations has been laid before, and approved by a resolution of, the
15Assembly.

Regulations

13HE Regulations

Regulations made in the exercise of any power conferred by this Part
may make consequential, supplementary, incidental or transitional
20provision or savings.”

(2) Schedule 5 inserts into the Insolvency (Northern Ireland) Order 1989 a new
Schedule ZA1 (eligible companies).

(3) Schedule 6 inserts into the Insolvency (Northern Ireland) Order 1989 a new
Schedule ZA2 (contracts involving financial services).

5 25Moratoriums in Northern Ireland: further amendments and transition

(1) Schedule 7 contains consequential and other amendments to do with
moratoriums under new Part 1A of the Insolvency (Northern Ireland) Order
1989 (S.I. 1989/2405 (N.I. 19)S.I. 1989/2405 (N.I. 19)).

(2) Nothing in this Act affects the operation of the Insolvency (Northern Ireland)
30Order 1989, or any other statutory provision, in relation to a moratorium under
Schedule A1 to that Order which comes into force before the repeal of that
Schedule by Schedule 7 to this Act.

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

(4) 35In this section “statutory provision” has the meaning given by section 1(f) of
the Interpretation Act (Northern Ireland) 1954.

6 Moratoriums in Northern Ireland: temporary modifications

Schedule 8 makes temporary modifications to Part 1A of the Insolvency
(Northern Ireland) Order 1989 (moratorium) and other temporary provision in
40connection with that Part.

Arrangements and reconstructions for companies in financial difficulty

7 Arrangements and reconstructions for companies in financial difficulty

Schedule 9 contains provision about arrangements and reconstructions for
companies in financial difficulty.

5Winding-up petitions

8 Winding-up petitions: Great Britain

Schedule 10 contains temporary provision in relation to winding-up petitions
in Great Britain.

9 Winding-up petitions: Northern Ireland

10Schedule 11 contains temporary provision in relation to winding-up petitions
in Northern Ireland.

Wrongful trading

10 Suspension of liability for wrongful trading: Great Britain

(1) In determining for the purposes of section 214 or 246ZB of the Insolvency Act
151986 (liability of director for wrongful trading) the contribution (if any) to a
company’s assets that it is proper for a person to make, the court is to assume
that the person is not responsible for any worsening of the financial position of
the company or its creditors that occurs during the relevant period.

(2) In this section the “relevant period” is the period which—

(a) 20begins with 1 March 2020, and

(b) ends with 30 June 2020 or one month after the coming into force of this
Act, whichever is the later.

(3) Subsection (1) does not apply if at any time during the relevant period the
company concerned is excluded from being eligible by any of the paragraphs
25of Schedule ZA1 to the Insolvency Act 1986 listed in subsection (4), as they
apply for the purposes of this subsection (see subsection (5)).

(4) The paragraphs of Schedule ZA1 to the Insolvency Act 1986 are—

(a) paragraph 3 (insurance companies),

(b) paragraph 4 (banks),

(c) 30paragraph 5 (electronic money institutions),

(d) paragraph 6 (investment banks and investment firms),

(e) paragraph 8 (payment institutions),

(f) paragraph 10 (operators of payment systems etc),

(g) paragraph 11 (recognised investment exchanges, clearing houses etc),

(h) 35paragraph 12 (securitisation companies),

(i) paragraph 13 (parties to capital market arrangement),

(j) paragraph 15 (public-private partnership project companies), and

(k) paragraph 18 (overseas companies with corresponding functions).

(5) In their application for the purposes of subsection (3)—

(a) each of paragraphs 13 and 15 of Schedule ZA1 to the Insolvency Act
1986 has effect as if in sub-paragraph (1)—

(i) the words “, on the filing date” were omitted, and

(ii) paragraph (b) were omitted, and

(b) 5paragraph 18 of that Schedule has effect as if for “paragraph 2”, in both
places, there were substituted “paragraphs 2, 7 and 9”.

(6) Subsection (1) also does not apply if at any time during the relevant period the
company concerned—

(a) has permission under Part 4A of the Financial Services and Markets Act
102000 to carry on a regulated activity, and

(b) is not subject to a requirement imposed under that Act to refrain from
holding money for clients.

(7) This section has effect—

(a) in so far as it relates to section 214 of the Insolvency Act 1986, as if it
15were contained in Part 4 of that Act, and

(b) in so far as it relates to section 246ZB of the Insolvency Act 1986, as if it
were contained in Part 6 of that Act.

(8) But this section does not have effect in relation to the following bodies (which
are bodies to which provisions contained in Parts 4 and 6 of the Insolvency Act
201986 apply)—

(a) a society that is registered within the meaning of the Friendly Societies
Act 1974 and that at any time during the relevant period carries on the
regulated activity of effecting or carrying out contracts of insurance;

(b) a building society within the meaning of the Building Societies Act
251986;

(c) a society that is incorporated under the Friendly Societies Act 1992;

(d) a registered society within the meaning of the Co-operative and
Community Benefit Societies Act 2014 that is registered under that Act
as a credit union;

(e) 30a registered society within the meaning of the Co-operative and
Community Benefit Societies Act 2014 that at any time during the
relevant period carries on the regulated activity of effecting or carrying
out contracts of insurance.

(9) In this section “regulated activity” has the meaning given by section 22 of the
35Financial Services and Markets Act 2000, taken with Schedule 2 to that Act and
any order under that section.

11 Suspension of liability for wrongful trading: Northern Ireland

(1) In determining for the purposes of Article 178 of the Insolvency (Northern
Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)S.I. 1989/2405 (N.I. 19)) (liability of director for wrongful
40trading) the contribution (if any) to a company’s assets that it is proper for a
person to make, the High Court is to assume that the person is not responsible
for any worsening of the financial position of the company or its creditors that
occurs during the relevant period.

(2) In this section the “relevant period” is the period which—

(a) 45begins with 1 March 2020, and

(b) ends with 30 June 2020 or one month after the coming into force of this
Act, whichever is the later.

(3) Subsection (1) does not apply if at any time during the relevant period the
company concerned is excluded from being eligible by any of the paragraphs
of Schedule ZA1 to the Insolvency (Northern Ireland) Order 1989 listed in
subsection (4), as they apply for the purposes of this subsection (see subsection
5(5)).

(4) The paragraphs of Schedule ZA1 to the Insolvency (Northern Ireland) Order
1989 are—

(a) paragraph 3 (insurance companies),

(b) paragraph 4 (banks),

(c) 10paragraph 5 (electronic money institutions),

(d) paragraph 6 (investment banks and investment firms),

(e) paragraph 8 (payment institutions),

(f) paragraph 10 (operators of payment systems etc),

(g) paragraph 11 (recognised investment exchanges, clearing houses etc),

(h) 15paragraph 12 (securitisation companies),

(i) paragraph 13 (parties to capital market arrangement),

(j) paragraph 15 (public-private partnership project companies), and

(k) paragraph 18 (overseas companies with corresponding functions).

(5) In their application for the purposes of subsection (3)—

(a) 20each of paragraphs 13 and 15 of Schedule ZA1 to the Insolvency
(Northern Ireland) Order 1989 has effect as if in sub-paragraph (1)—

(i) the words “, on the filing date” were omitted, and

(ii) paragraph (b) were omitted, and

(b) paragraph 18 of that Schedule has effect as if for “paragraph 2”, in both
25places, there were substituted “paragraphs 2, 7 and 9”.

(6) Subsection (1) also does not apply if at any time during the relevant period the
company concerned—

(a) has permission under Part 4A of the Financial Services and Markets Act
2000 to carry on a regulated activity, and

(b) 30is not subject to a requirement imposed under that Act to refrain from
holding money for clients.

(7) This section has effect as if it were contained in Part 5 of the Insolvency
(Northern Ireland) Order 1989.

(8) But this section does not have effect in relation to the following bodies (which
35are bodies to which provisions contained in Part 5 of the Insolvency (Northern
Ireland) Order 1989 apply)—

(a) a registered society within the meaning of the Co-operative and
Community Benefit Societies Act (Northern Ireland) 1969 (c. 24 (N.I.))
that at any time during the relevant period carries on the regulated
40activity of effecting or carrying out contracts of insurance;

(b) a society that is registered within the meaning of the Friendly Societies
Act 1974 and that at any time during the relevant period carries on the
regulated activity of effecting or carrying out contracts of insurance;

(c) a building society within the meaning of the Building Societies Act
451986;

(d) a credit union within the meaning of the Credit Unions (Northern
Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)S.I. 1985/1205 (N.I. 12));

(e) a society that is incorporated under the Friendly Societies Act 1992.

(9) In this section “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.

Termination clauses in supply contracts

12 5Protection of supplies of goods and services: Great Britain

(1) In the Insolvency Act 1986, after section 233A insert—

“233B Protection of supplies of goods and services

(1) This section applies where a company becomes subject to a relevant
insolvency procedure.

(2) 10A company becomes subject to a relevant insolvency procedure for the
purposes of this section where—

(a) a moratorium under Part A1 comes into force for the company,

(b) the company enters administration,

(c) an administrative receiver of the company is appointed
15(otherwise than in succession to another administrative
receiver),

(d) a voluntary arrangement approved under Part 1 takes effect in
relation to the company,

(e) the company goes into liquidation,

(f) 20a provisional liquidator of the company is appointed (otherwise
than in succession to another provisional liquidator), or

(g) a court order is made under section 901C(1) of the Companies
Act 2006 in relation to the company (order summoning meeting
relating to compromise or arrangement).

(3) 25A provision of a contract for the supply of goods or services to the
company ceases to have effect when the company becomes subject to
the relevant insolvency procedure if and to the extent that, under the
provision—

(a) the contract or the supply would terminate, or any other thing
30would take place, because the company becomes subject to the
relevant insolvency procedure, or

(b) the supplier would be entitled to terminate the contract or the
supply, or to do any other thing, because the company becomes
subject to the relevant insolvency procedure.

(4) 35Where—

(a) under a provision of a contract for the supply of goods or
services to the company the supplier is entitled to terminate the
contract or the supply because of an event occurring before the
start of the insolvency period, and

(b) 40the entitlement arises before the start of that period,

the entitlement may not be exercised during that period.

(5) Where a provision of a contract ceases to have effect under subsection
(3) or an entitlement under a provision of a contract is not exercisable
under subsection (4), the supplier may terminate the contract if—

(a) in a case where the company has become subject to a relevant
insolvency procedure as specified in subsection (2)(b), (c), (e) or
(f), the office-holder consents to the termination of the contract,

(b) in any other case, the company consents to the termination of
5the contract, or

(c) the court is satisfied that the continuation of the contract would
cause the supplier hardship and grants permission for the
termination of the contract.

(6) Where a provision of a contract ceases to have effect under subsection
10(3) and the company becomes subject to a further relevant insolvency
procedure, the supplier may terminate the contract in accordance with
subsection (5)(a) to (c).

(7) The supplier shall not make it a condition of any supply of goods and
services after the time when the company becomes subject to the
15relevant insolvency procedure, or do anything which has the effect of
making it a condition of such a supply, that any outstanding charges in
respect of a supply made to the company before that time are paid.

(8) In this section “the insolvency period”, in relation to a relevant
insolvency procedure, means the period beginning when the company
20becomes subject to the relevant insolvency procedure and ending—

(a) in the case of a moratorium under Part A1, when the
moratorium comes to an end,

(b) in the case of the company entering administration, when the
appointment of the administrator ceases to have effect under—

(i) 25paragraphs 76 to 84 of Schedule B1, or

(ii) an order under section 901F of the Companies Act 2006,

(c) in the case of the appointment of an administrative receiver of
the company, when the receiver or any successor to the receiver
ceases to hold office without a successor being appointed,

(d) 30in the case of a voluntary arrangement approved under Part 1
taking effect in relation to the company, when the arrangement
ceases to have effect,

(e) in the case of the company going into liquidation, when—

(i) the liquidator complies with section 94(2), 106(2) or
35146(3) (duties relating to final account), or

(ii) the appointment of the liquidator ceases to have effect
under an order under section 901F of the Companies Act
2006,

(f) in the case of the appointment of a provisional liquidator for the
40company, when the provisional liquidator or any successor to
the provisional liquidator ceases to hold office without a
successor being appointed, and

(g) in the case of the making of a court order under section 901C(1)
of the Companies Act 2006 in relation to the company, when—

(i) 45an order made by the court under section 901F of that
Act takes effect, or

(ii) the court decides not to make such an order.

(9) In this section “office-holder”, in relation to a company which has
entered into an insolvency procedure as specified in subsection (2)(b),

(c), (e) or (f), means the administrator, administrative receiver,
liquidator or provisional liquidator respectively.

(10) Schedule 4ZZA provides for exclusions from the operation of this
section.

233C 5Powers to amend section 233B and Schedule 4ZZA

(1) The Secretary of State may by regulations omit any of paragraphs (a) to
(g) of section 233B(2) (relevant insolvency procedures).

(2) The Secretary of State may by regulations amend Schedule 4ZZA so as
to—

(a) 10remove or amend any exclusion from section 233B for the time
being specified there, or

(b) add further exclusions from section 233B.

(3) In subsection (2), references to exclusions from section 233B are to
circumstances in which section 233B, or any provision of that section,
15does not apply.

(4) The circumstances referred to in subsection (3) may be framed by
reference to kinds of company, supplier, contract, goods or services or
in any other way.

(5) Regulations under this section may make—

(a) 20different provision for different purposes;

(b) consequential provision;

(c) transitional and supplementary provision.

(6) Regulations under this section made by virtue of subsection (5) may in
particular make provision amending this Act or any other enactment
25whenever passed or made (including, if paragraph 1(1) or (2) of
Schedule 4ZZA is omitted, provision omitting section 233A or 233
respectively).

(7) Regulations under subsection (1) may not omit section 233B(2)(c)
unless the Secretary of State has first consulted the Scottish Ministers.

(8) 30In this section “enactment” includes an Act of the Scottish Parliament
and an instrument made under such an Act.

(9) Regulations under this section are to be made by statutory instrument.

(10) A statutory instrument containing regulations under this section may
not be made unless a draft of the instrument has been laid before and
35approved by a resolution of each House of Parliament.”

(2) In the Insolvency Act 1986, in section 434 (Crown application), before “bind”
insert “and sections 233A and 233B and Schedule 4ZZA”.

(3) Schedule 12—

(a) inserts a new Schedule into the Insolvency Act 1986 which provides for
40exclusions from the operation of section 233B of that Act, and

(b) contains consequential amendments.

(4) The amendments made by this section and Schedule 12 have effect in relation
to a company which becomes subject to a relevant insolvency procedure on or

after the day on which this section comes into force (but in respect of contracts
entered into before, as well as those entered into on or after, that day).

13 Temporary exclusion for small suppliers: Great Britain

(1) Section 233B of the Insolvency Act 1986 does not apply in relation to a contract
5for the supply of goods or services to a company where—

(a) the company becomes subject to a relevant insolvency procedure
during the relevant period, and

(b) the supplier is a small entity at the time the company becomes subject
to the procedure.

(2) 10In subsection (1)(a) “relevant period” means the period which—

(a) begins with the day on which this section comes into force, and

(b) ends with 30 June 2020 or one month after the coming into force of this
section, whichever is later.

(3) For the purposes of subsection (1)(b), whether the supplier is a “small entity”
15at the time the company becomes subject to a relevant insolvency procedure
(the “relevant time”) is to be determined under subsections (4) to (10).

(4) Where the supplier is not in its first financial year at the relevant time, the
supplier is a small entity at the relevant time if at least two of the following
conditions were met in relation to its most recent financial year—

20Condition 1: the supplier’s turnover was not more than £10.2 million;

Condition 2: the supplier’s balance sheet total was not more than £5.1 million;

Condition 3: the number of the supplier’s employees was not more than 50.

(5) For the purposes of Condition 1 in subsection (4), if the supplier’s most recent
financial year was not 12 months, the maximum figure for turnover must be
25proportionately adjusted.

(6) For the purposes of Condition 2 in subsection (4), the supplier’s balance sheet
total means the aggregate of the amounts shown as assets in the supplier’s
balance sheet.

(7) For the purposes of Condition 3 in subsection (4), the number of the supplier’s
30employees means the average number of persons employed by the supplier in
its most recent financial year, determined as follows—

(a) find for each month in that financial year the number of persons
employed under contracts of service by the supplier in that month
(whether throughout the month or not),

(b) 35add together the monthly totals, and

(c) divide by the number of months in the financial year.

(8) In subsections (4) to (7) the supplier’s “most recent financial year” is the
financial year of the supplier which, at the relevant time, has ended most
recently.

(9) 40Where the supplier is in its first financial year at the relevant time, the supplier
is a small entity at the relevant time if at least two of the following conditions
are met—

Condition 1: the supplier’s average turnover for each complete month in the
supplier’s first financial year is not more than £850,000;

Condition 2: the aggregate of amounts which would be shown in a balance
sheet of the supplier drawn up at the relevant time is not more than £5.1
million;

5Condition 3: the average number of persons employed by the supplier in the
supplier’s first financial year (determined as specified in subsection (7)) is not
more than 50.

(10) In this section—

• “entity” means—

  (a)

  10a company,

  (b)

  a limited liability partnership,

  (c)

  any other association or body of persons, whether or not
  incorporated, and

  (d)

  an individual carrying on a trade or business;

• 15“relevant insolvency procedure” has the same meaning as in section 233B
  of the Insolvency Act 1986.

(11) This section has effect as if it were included in Part 6 of the Insolvency Act 1986.

14 Protection of supplies of electricity, gas, water, etc: Northern Ireland

(1) Article 197 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405S.I. 1989/2405
20(N.I. 19)) is amended as follows.

(2) Paragraph (3) is amended in accordance with subsections (3) to (5).

(3) After sub-paragraph (a) insert—

“(aza) a supply of electricity by a class of person within Class A (small
supply) or Class B (resale) of Schedule 3 to the Electricity (Class
25Exemptions from the Requirement for a Licence) Order
(Northern Ireland) 2013 (S.R. 2013/93S.R. 2013/93);”.

(4) After sub-paragraph (b) insert—

“(ba) a supply of water by a person who has an interest in the
premises to which the supply is given;”.

(5) 30After sub-paragraph (c) (and before the words “and in this paragraph”)
insert—

“(d) a supply of communications services by a person who carries on
a business which includes giving such supplies;

(e) a supply of goods or services mentioned in paragraph (3A) by a
35person who carries on a business which includes giving such
supplies, where the supply is for the purpose of enabling or
facilitating anything to be done by electronic means;”.

(6) After paragraph (3) insert—

“(3A) The goods and services referred to in paragraph (3)(e) are—

(a) 40point of sale terminals;

(b) computer hardware and software;

(c) information, advice and technical assistance in connection with
the use of information technology;

(d) data storage and processing;

(e) 45website hosting.”