Small Business, Enterprise and Employment Bill (HL Bill 91)

(6) “Relevant creditors” means the creditors who, if the decision were to be
made by a qualifying decision procedure, would be entitled to vote in
the procedure.

(7) “Relevant contributories” means the contributories who, if the decision
5were to be made by a qualifying decision procedure, would be entitled
to vote in the procedure.

(8) In this section references to creditors include creditors of a particular
class.

(9) The rules may make further provision about the deemed consent
10procedure.”

(3) In Schedule 8 (provisions which may be included in company insolvency
rules), after paragraph 8 insert—

“8A (1) Provision about the making of decisions by creditors and
contributories, including provision—

(a) 15prescribing particular procedures by which creditors and
contributories may make decisions;

(b) authorising the use of other procedures for creditors and
contributories to make decisions, if those procedures comply
with prescribed requirements.

(2) 20Provision under sub-paragraph (1) may in particular include
provision about—

(a) how creditors and contributories may request that a
creditors’ meeting or a contributories’ meeting be held,

(b) the rights of creditors, contributories and others to be given
25notice of, and participate in, procedures,

(c) creditors’ and contributories’ rights to vote in procedures,

(d) the period within which any right to participate or vote is to
be exercised,

(e) the proportion of creditors or contributories that must vote
30for a proposal for it to be approved,

(f) how the value of any debt or contribution should be
determined,

(g) the time at which decisions taken by a procedure are to be
treated as having been made.”

(4) 35In section 251 (interpretation of first Group of Parts)—

(a) after the definition of “the court” insert—

• ““deemed consent procedure” means the deemed consent
  procedure provided for by section 246ZF;”;

(b) after the definition of “prescribed” insert—

• 40““qualifying decision procedure” has the meaning given
  by section 246ZE(9);”.

123 Abolition of requirements to hold meetings: individual insolvency

(1) The Insolvency Act 1986 is amended as follows.

(2) After section 379 insert—

“Creditors’ decisions

379ZA Creditors’ decisions: general

(1) This section applies where, for the purposes of this Group of Parts, a
person (“P”) seeks a decision from an individual’s creditors about any
5matter.

(2) The decision may be made by any creditors’ decision procedure P
thinks fit, except that it may not be made by a creditors’ meeting unless
subsection (3) applies.

(3) This subsection applies if at least the prescribed proportion of the
10creditors request in writing that the decision be made by a creditors’
meeting.

(4) If subsection (3) applies, P must summon a creditors’ meeting.

(5) Subsection (2) is subject to any provision of this Act, the rules or any
other legislation, or any order of the court—

(a) 15requiring a decision to be made, or prohibiting a decision from
being made, by a particular creditors’ decision procedure (other
than a creditors’ meeting);

(b) permitting or requiring a decision to be made by a creditors’
meeting.

(6) 20Section 379ZB provides that in certain cases the deemed consent
procedure may be used instead of a creditors’ decision procedure.

(7) In this section references to a meeting are to a meeting where the
creditors are invited to be present together at the same place (whether
or not it is possible to attend the meeting without being present at that
25place).

(8) In this section references to creditors include creditors of a particular
class.

(9) In this Group of Parts “creditors’ decision procedure” means a
procedure prescribed or authorised under paragraph 11A of Schedule
309.

379ZB Deemed consent procedure

(1) The deemed consent procedure may be used instead of a creditors’
decision procedure where an individual’s creditors are to make a
decision about any matter, unless—

(a) 35a decision about the matter is required by virtue of this Act, the
rules or any other legislation to be made by a creditors’ decision
procedure, or

(b) the court orders that a decision about the matter is to be made
by a creditors’ decision procedure.

(2) 40If the rules provide for an individual’s creditors to make a decision
about the remuneration of any person, they must provide that the
decision is to be made by a creditors’ decision procedure.

(3) The deemed consent procedure is that the relevant creditors (other than
opted-out creditors) are given notice of—

(a) the matter about which the creditors are to make a decision,

(b) the decision the person giving the notice proposes should be
5made (the “proposed decision”),

(c) the effect of subsections (4) and (5), and

(d) the procedure for objecting to the proposed decision.

(4) If less than the prescribed proportion of the relevant creditors object to
the proposed decision in accordance with the procedure set out in the
10notice, the creditors are to be treated as having made the proposed
decision.

(5) Otherwise—

(a) the creditors are to be treated as not having made a decision
about the matter in question, and

(b) 15if a decision about that matter is again sought from the
creditors, it must be sought using a creditors’ decision
procedure.

(6) “Relevant creditors” means the creditors who, if the decision were to be
made by a creditors’ decision procedure, would be entitled to vote in
20the procedure.

(7) In this section references to creditors include creditors of a particular
class.

(8) The rules may make further provision about the deemed consent
procedure.”

(3) 25In Schedule 9 (provisions which may be included in individual insolvency
rules), after paragraph 11 insert—

“11A (1) Provision about the making of decisions by creditors, including
provision—

(a) prescribing particular procedures by which creditors may
30make decisions;

(b) authorising the use of other procedures for creditors to make
decisions, if those procedures comply with prescribed
requirements.

(2) Provision under sub-paragraph (1) may in particular include
35provision about—

(a) how creditors may request that a creditors’ meeting be held,

(b) the rights of creditors and others to be given notice of, and
participate in, procedures,

(c) creditors’ rights to vote in procedures,

(d) 40the period within which any right to participate or vote is to
be exercised,

(e) the proportion of creditors that must vote for a proposal for
it to be approved,

(f) how the value of any debt should be determined,

(g) 45the time at which decisions taken by a procedure are to be
treated as having been made.”

(4) In section 385(1) (miscellaneous definitions relating to individual
insolvency)—

(a) after the definition of “the court” insert—

• ““creditors’ decision procedure” has the meaning given by
  5section 379ZA(9);”;

(b) after the definition of “debt relief order” insert—

• ““deemed consent procedure” means the deemed consent
  procedure provided for by section 379ZB;”.

124 Ability for creditors to opt not to receive certain notices: company insolvency

(1) 10The Insolvency Act 1986 is amended as follows.

(2) For the italic heading before section 246B substitute—

(3) After section 246B insert—

“246C Creditors’ ability to opt out of receiving certain notices

(1) Any provision of the rules which requires an office-holder of a
15company to give a notice to creditors of the company does not apply, in
circumstances prescribed by the rules, in relation to opted-out
creditors.

(2) Subsection (1)—

(a) does not apply in relation to a notice of a distribution or
20proposed distribution to creditors;

(b) is subject to any order of the court requiring a notice to be given
to all creditors (or all creditors of a particular category).

(3) Except as provided by the rules, a creditor may participate and vote in
a qualifying decision procedure or a deemed consent procedure even
25though, by virtue of being an opted-out creditor, the creditor does not
receive notice of it.

(4) In this section—

• “give” includes deliver, furnish or send;

• “notice” includes any document or information in any other form;

• 30“office-holder”, in relation to a company, means—

  (a)

  a liquidator, provisional liquidator, administrator or
  administrative receiver of the company,

  (b)

  a receiver appointed under section 51 in relation to any
  property of the company, or

  (c)

  35the supervisor of a voluntary arrangement which has
  taken effect under Part 1 in relation to the company.”

(4) After section 248 insert—

“248A Opted-out creditor”

(1) For the purposes of this Group of Parts “opted-out creditor”, in relation
40to an office-holder of a company, means a person who—

(a) is a creditor of the company, and

(b) in accordance with the rules has elected (or is deemed to have
elected) to be (and not to cease to be) an opted-out creditor in
relation to the office-holder.

(2) In this section, “office-holder”, in relation to a company, means—

(a) 5a liquidator, provisional liquidator, administrator or
administrative receiver of the company,

(b) a receiver appointed under section 51 in relation to any
property of the company, or

(c) the supervisor of a voluntary arrangement which has taken
10effect under Part 1 in relation to the company.”

(5) In Schedule 8 (provisions which may be included in company insolvency
rules), after paragraph 5 insert—

“5A Provision for enabling a creditor of a company to elect to be, or to
cease to be, an opted-out creditor in relation to an office-holder of the
15company (within the meaning of section 248A), including, in
particular, provision—

(a) for requiring an office-holder to provide information to
creditors about how they may elect to be, or cease to be,
opted-out creditors;

(b) 20for deeming an election to be, or cease to be, an opted-out
creditor in relation to a particular office-holder of a company
to be such an election also in relation to any other office-
holder of the company.”

125 Ability for creditors to opt not to receive certain notices: individual
25insolvency

(1) The Insolvency Act 1986 is amended as follows.

(2) For the italic heading before section 379B substitute—

(3) After section 379B insert—

“379C Creditors’ ability to opt out of receiving certain notices

(1) 30Any provision of the rules which requires an office-holder to give a
notice to creditors of an individual does not apply, in circumstances
prescribed by the rules, in relation to opted-out creditors.

(2) Subsection (1)—

(a) does not apply in relation to a notice of a distribution or
35proposed distribution to creditors;

(b) is subject to any order of the court requiring a notice to be given
to all creditors (or all creditors of a particular category).

(3) Except as provided by the rules, a creditor may participate and vote in
a qualifying decision procedure or a deemed consent procedure even
40though, by virtue of being an opted-out creditor, the creditor does not
receive notice of it.

(4) In this section—

Small Business, Enterprise and Employment BillPage 105

• “give” includes deliver, furnish or send;

• “notice” includes any document or information in any other form;

• “office-holder”, in relation to an individual, means—

  (a)

  where a bankruptcy order is made against the
  5individual, the official receiver or the trustee in
  bankruptcy;

  (b)

  where an interim receiver of the individual’s property is
  appointed, the interim receiver;

  (c)

  the supervisor of a voluntary arrangement approved
  10under Part 8 in relation to the individual.”

(4) After section 383 insert—

“383A Opted-out creditor”

(1) For the purposes of this Group of Parts “opted-out creditor” in relation
to an office-holder for an individual means a person who—

(a) 15is a creditor of the individual, and

(b) in accordance with the rules has elected (or is deemed to have
elected) to be (and not to cease to be) an opted-out creditor in
relation to the office-holder.

(2) In this section, “office-holder”, in relation to an individual, means—

(a) 20where a bankruptcy order is made against the individual, the
official receiver or the trustee in bankruptcy;

(b) where an interim receiver of the individual’s property is
appointed, the interim receiver;

(c) the supervisor of a voluntary arrangement approved under Part
258 in relation to the individual.”

(5) In Schedule 9 (provisions capable of inclusion in individual insolvency rules),
after paragraph 7 insert—

“7A Provision for enabling a creditor of an individual to elect to be, or to
cease to be, an opted-out creditor in relation to an office-holder for
30the individual (within the meaning of section 383A), including, in
particular, provision—

(a) for requiring an office-holder to provide information to
creditors about how they may elect to be, or cease to be,
opted-out creditors;

(b) 35for deeming an election to be, or cease to be, an opted-out
creditor in relation to a particular office-holder for an
individual to be such an election also in relation to any other
office-holder for the individual.”

126 Sections 122 to 125: further amendments

40Schedule 9 (abolition of requirements to hold meetings; opted-out creditors)—

(a) makes amendments relating to sections 122 to 125, and

(b) removes requirements to hold a general meeting of a company when
the company’s affairs are fully wound up.

Administration

127 Extension of administrator’s term of office

In paragraph 76(2)(b) of Schedule B1 to the Insolvency Act 1986
(administrator’s term of office may be extended for up to six months by
5consent) for “six months” substitute “one year”.

128 Administration: payments to unsecured creditors

(1) Schedule B1 to the Insolvency Act 1986 (administration) is amended as follows.

(2) In paragraph 65(3) (restrictions on distribution to unsecured creditors) for
“unless” substitute “unless—

(a) 10the distribution is made by virtue of section 176A(2)(a), or

(b)”.

(3) In paragraph 83 (power to move from administration to creditors’ voluntary
liquidation), in sub-paragraphs (1)(b) and (2)(b), after “any)” insert “which is
not a distribution by virtue of section 176A(2)(a)”.

129 15Administration: sales to connected persons

(1) Schedule B1 to the Insolvency Act 1986 (administration) is amended as follows.

(2) Paragraph 60 (power of administrators) becomes sub-paragraph (1) of that
paragraph.

(3) After that sub-paragraph insert—

“(2) 20But the power to sell, hire out or otherwise dispose of property is
subject to any regulations that may be made under paragraph 60A.”

(4) After paragraph 60 insert—

“60A (1) The Secretary of State may by regulations make provision for—

(a) prohibiting, or

(b) 25imposing requirements or conditions in relation to,

the disposal, hiring out or sale of property of a company by the
administrator to a connected person in circumstances specified in the
regulations.

(2) Regulations under this paragraph may in particular require the
30approval of, or provide for the imposition of requirements or
conditions by—

(a) creditors of the company,

(b) the court, or

(c) a person of a description specified in the regulations.

(3) 35In sub-paragraph (1), “connected person”, in relation to a company,
means—

(a) a relevant person in relation to the company, or

(b) a company connected with the company.

(4) For the purposes of sub-paragraph (3)—

(a) 40“relevant person”, in relation to a company, means—

(i) a director or other officer, or shadow director, of the
company;

(ii) a non-employee associate of such a person;

(iii) a non-employee associate of the company;

(b) 5a company is connected with another if any relevant person
of one is or has been a relevant person of the other.

(5) In sub-paragraph (4), “non-employee associate” of a person means a
person who is an associate of that person otherwise than by virtue of
employing or being employed by that person.

(6) 10Subsection (10) of section 435 (extended definition of company)
applies for the purposes of sub-paragraphs (3) to (5) as it applies for
the purposes of that section.

(7) Regulations under this paragraph may—

(a) make different provision for different purposes;

(b) 15make incidental, consequential, supplemental and
transitional provision.

(8) Regulations under this paragraph are to be made by statutory
instrument.

(9) Regulations under this paragraph may not be made unless a draft of
20the statutory instrument containing the regulations has been laid
before Parliament and approved by a resolution of each House of
Parliament.

(10) This paragraph expires at the end of the period of 5 years beginning
with the day on which it comes into force unless the power conferred
25by it is exercised during that period.”

130 Attachment of floating charges on administration (Scotland)

(1) Paragraph 115 of Schedule B1 (administration) to the Insolvency Act 1986 is
amended as follows.

(2) After sub-paragraph (1) insert—

“(1A) 30In Scotland, sub-paragraph (1B) applies in connection with the
giving by the court of permission as provided for in paragraph
65(3)(b).

(1B) On the giving by the court of such permission, any floating charge
granted by the company shall, unless it has already so attached,
35attach to the property which is subject to the charge.”

(3) In sub-paragraph (3), omit the words from “and” to the end.

(4) After that sub-paragraph insert—

“(4) Attachment of a floating change under sub-paragraph (1B) or (3) has
effect as if the charge is a fixed security over the property to which it
40has attached.”

Small debts

131 Creditors not required to prove small debts: company insolvency

In Schedule 8 to the Insolvency Act 1986 (provisions capable of inclusion in
company insolvency rules) after paragraph 13 insert—

“13A 5Provision for a creditor who has not proved a small debt to be treated
as having done so for purposes relating to the distribution of a
company’s property (and for provisions of, or contained in
legislation made under, this Act to apply accordingly).”

132 Creditors not required to prove small debts: individual insolvency

10In Schedule 9 to the Insolvency Act 1986 (provisions capable of inclusion in
individual insolvency rules) after paragraph 18 insert—

“18A Provision for a creditor who has not proved a small debt to be treated
as having done so for purposes relating to the distribution of a
bankrupt’s estate (and for provisions of, or contained in legislation
15made under, this Act to apply accordingly).”

Trustees in bankruptcy

133 Trustees in bankruptcy

(1) In the Insolvency Act 1986, before section 292 insert—

“291A First trustee in bankruptcy

(1) 20On the making of a bankruptcy order the official receiver becomes
trustee of the bankrupt’s estate, unless the court appoints another
person under subsection (2).

(2) If when the order is made there is a supervisor of a voluntary
arrangement approved in relation to the bankrupt under Part 8, the
25court may on making the order appoint the supervisor of the
arrangement as the trustee.

(3) Where a person becomes trustee of a bankrupt’s estate under this
section, the person must give notice of that fact to the bankrupt’s
creditors (or, if the court so allows, advertise it in accordance with the
30court’s directions).

(4) A notice or advertisement given by a trustee appointed under
subsection (2) must explain the procedure for establishing a creditors’
committee under section 301.”

(2) Schedule 10 makes consequential amendments.

Voluntary arrangements

134 Time limit for challenging IVAs

In section 262(3)(a) of the Insolvency Act 1986 (time limit for challenging
voluntary arrangement), for the words from “the report” to “section 259”
5substitute “the creditors decided whether to approve the proposed voluntary
arrangement or, where a report was required to be made to the court under
section 259(1)(b), the day on which the report was made”.

135 Abolition of fast-track voluntary arrangements

(1) Omit sections 263A to 263G of the Insolvency Act 1986 (fast-track voluntary
10arrangements (England and Wales)) and the cross heading immediately before
section 263A.

(2) In consequence of the repeals made by subsection (1), in the Insolvency Act
1986—

(a) in section 282 (court’s power to annul bankruptcy order), in subsection
15(4), omit “or 263D”, and

(b) in Schedule 4A (bankruptcy restrictions order and undertaking), in
paragraph 11, omit “, 263D”.

(3) Also in consequence of the repeals made by subsection (1), in the Enterprise
Act 2002—

(a) 20omit section 264(2) to (4) (orders to extend application of provisions of
sections 263B to 263G of the Insolvency Act 1986),

(b) in Schedule 22, omit paragraph 2 (fast-track voluntary arrangements)
and the heading immediately before it, and

(c) in Schedule 23 (minor and consequential amendments), omit
25paragraph 4(a) and the “and” immediately after it.

(4) The repeals made by this section have no effect in relation to a case where a
debtor has submitted the document and statement mentioned in section
263B(1) to the official receiver before this section comes into force.

Progress reports

136 30Voluntary winding-up: progress reports

(1) The Insolvency Act 1986 is amended as follows.

(2) In section 92A (progress reports in members’ voluntary winding-up)—

(a) in subsection (1), for the words from “in the event” to “one year,”
substitute “where the company is registered in England and Wales”;

(b) 35in the heading, omit “at year’s end”.

(3) In section 104A (progress reports in creditors’ voluntary winding-up)—

(a) in subsection (1), for the words from “If the” to “one year,” substitute
“Where the company is registered in England and Wales”;

(b) in the heading, omit “at year’s end”.

(4) 40In the table in Schedule 10 (punishment of offences)—

(a) in the entry for section 92A(2), in column 2, omit “at year’s end”;