Small Business, Enterprise and Employment Bill (HL Bill 103)

Small Business, Enterprise and Employment BillPage 100

(5) In Part 2 of Schedule 3 (appeals from orders in Scotland: orders which take
effect until matter disposed of by Inner House), omit the entry relating to
orders under section 167 or 169.

(6) In Schedule 4 (powers of liquidator in a winding up)—

(a) 5in paragraph 3, omit “In the case of a winding up in Scotland,”,

(b) omit paragraph 6A, and

(c) omit the headings for each of Parts 1 to 3.

121 Exercise of powers by trustee in bankruptcy: removal of need for sanction

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

(2) 10In section 314 (bankruptcy: powers of trustee)—

(a) for subsection (1) substitute—

(1) The trustee may exercise any of the powers specified in Parts 1
and 2 of Schedule 5.,

(b) in subsection (2), omit “With the permission of the creditors’ committee
15or the court,”, and

(c) omit subsections (3) and (4).

(3) In Schedule 5 (powers of trustee in bankruptcy), omit the headings for each of
Parts 1 to 3.

Position of creditors

122 20Abolition of requirements to hold meetings: company insolvency

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

(2) After section 246ZD (as inserted by section 118) insert—

Decisions by creditors and contributories

246ZE Decisions by creditors and contributories: general

(1) This section applies where, for the purposes of this Group of Parts, a
25person (“P”) seeks a decision about any matter from a company’s
creditors or contributories.

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

(3) 30This subsection applies if at least the minimum number of creditors or
(as the case may be) contributories make a request to P in writing that
the decision be made by a creditors’ meeting or (as the case may be) a
contributories’ meeting.

(4) If subsection (3) applies P must summon a creditors’ meeting or (as the
35case may be) a contributories’ meeting.

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

Small Business, Enterprise and Employment BillPage 101

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

(b) permitting or requiring a decision to be made by a creditors’
5meeting or a contributories’ meeting.

(6) Section 246ZF provides that in certain cases the deemed consent
procedure may be used instead of a qualifying decision procedure.

(7) For the purposes of subsection (3) the “minimum number” of creditors
or contributories is any of the following—

(a) 1010% in value of the creditors or contributories;

(b) 10% in number of the creditors or contributories;

(c) 10 creditors or contributories.

(8) The references in subsection (7) to creditors are to creditors of any class,
even where a decision is sought only from creditors of a particular
15class.

(9) In this section references to a meeting are to a meeting where the
creditors or (as the case may be) contributories 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 place).

(10) 20Except as provided by subsection (8), references in this section to
creditors include creditors of a particular class.

(11) In this Group of Parts “qualifying decision procedure” means a
procedure prescribed or authorised under paragraph 8A of Schedule 8.

246ZF Deemed consent procedure

(1) 25The deemed consent procedure may be used instead of a qualifying
decision procedure where a company’s creditors or contributories are
to make a decision about any matter, unless—

(a) a decision about the matter is required by virtue of this Act, the
rules, or any other legislation to be made by a qualifying
30decision procedure, or

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

(2) If the rules provide for a company’s creditors or contributories to make
a decision about the remuneration of any person, they must provide
35that the decision is to be made by a qualifying decision procedure.

(3) The deemed consent procedure is that the relevant creditors (other than
opted-out creditors) or (as the case may be) the relevant contributories
are given notice of—

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

(b) 40the decision that the person giving the notice proposes should
be made (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 appropriate number of relevant creditors or (as the case
45may be) relevant contributories object to the proposed decision in
accordance with the procedure set out in the notice, the creditors or (as

Small Business, Enterprise and Employment BillPage 102

the case may be) the contributories are to be treated as having made the
proposed decision.

(5) Otherwise—

(a) the creditors or (as the case may be) the contributories are to be
5treated as not having made a decision about the matter in
question, and

(b) if a decision about that matter is again sought from the creditors
or (as the case may be) the contributories, it must be sought
using a qualifying decision procedure.

(6) 10For the purposes of subsection (4) the “appropriate number” of relevant
creditors or relevant contributories is 10% in value of those creditors or
contributories.

(7) “Relevant creditors” means the creditors who, if the decision were to be
made by a qualifying decision procedure, would be entitled to vote in
15the procedure.

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

(9) In this section references to creditors include creditors of a particular
20class.

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

246ZG Power to amend sections 246ZE and 246ZF

(1) The Secretary of State may by regulations amend section 246ZE so as to
25change the definition of—

(a) the minimum number of creditors;

(b) the minimum number of contributories.

(2) The Secretary of State may by regulations amend section 246ZF so as to
change the definition of—

(a) 30the appropriate number of relevant creditors;

(b) the appropriate number of relevant contributories.

(3) Regulations under this section may define the minimum number or the
appropriate number by reference to any one or more of—

(a) a proportion in value,

(b) 35a proportion in number,

(c) an absolute number,

and the definition may include alternative, cumulative or relative
requirements.

(4) Regulations under subsection (1) may define the minimum number of
40creditors or contributories by reference to all creditors or
contributories, or by reference to creditors or contributories of a
particular description.

(5) Regulations under this section may make provision that will result in
section 246ZE or 246ZF having different definitions for different cases,
45including—

Small Business, Enterprise and Employment BillPage 103

(a) for creditors and for contributories,

(b) for different kinds of decisions.

(6) Regulations under this section may make transitional provision.

(7) The power of the Secretary of State to make regulations under this
5section is exercisable by statutory instrument.

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

(3) In Schedule 8 (provisions which may be included in company insolvency
10rules), after paragraph 8 insert—

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

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

(b) 15authorising the use of other procedures for creditors and
contributories to make decisions, if those procedures comply
with prescribed requirements.

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

(a) 20how 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
notice of, and participate in, procedures,

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

(d) 25the period within which any right to participate or vote is to
be exercised,

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

(f) how the value of any debt or contribution should be
30determined,

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

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

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

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

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

  • “qualifying decision procedure” has the meaning given
    by section 246ZE(11);.

123 40Abolition of requirements to hold meetings: individual insolvency

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

Small Business, Enterprise and Employment BillPage 104

(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 minimum number of creditors
10request 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) requiring a decision to be made, or prohibiting a decision from
15being 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) Section 379ZB provides that in certain cases the deemed consent
20procedure may be used instead of a creditors’ decision procedure.

(7) For the purposes of subsection (3) the “minimum number” of creditors
is any of the following—

(a) 10% in value of the creditors;

(b) 10% in number of the creditors;

(c) 2510 creditors.

(8) The references in subsection (7) to creditors are to creditors of any class,
even where a decision is sought only from creditors of a particular
class.

(9) In this section references to a meeting are to a meeting where the
30creditors 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
place).

(10) Except as provided by subsection (8), references in this section to
creditors include creditors of a particular class.

(11) 35In this Group of Parts “creditors’ decision procedure” means a
procedure prescribed or authorised under paragraph 11A of Schedule
9.

379ZB Deemed consent procedure

(1) The deemed consent procedure may be used instead of a creditors’
40decision procedure where an individual’s creditors are to make a
decision about any matter, unless—

Small Business, Enterprise and Employment BillPage 105

(a) a 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
5by a creditors’ decision procedure.

(2) If 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
10opted-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
made (the “proposed decision”),

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

(d) 15the procedure for objecting to the proposed decision.

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

(5) 20Otherwise—

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

(b) if a decision about that matter is again sought from the
creditors, it must be sought using a creditors’ decision
25procedure.

(6) For the purposes of subsection (4) the “appropriate number” of relevant
creditors is 10% in value of those creditors.

(7) “Relevant creditors” means the creditors who, if the decision were to be
made by a creditors’ decision procedure, would be entitled to vote in
30the 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
procedure.

379ZC 35 Power to amend sections 379ZA and 379ZB

(1) The Secretary of State may by regulations amend section 379ZA so as
to change the definition of the minimum number of creditors.

(2) The Secretary of State may by regulations amend section 379ZB so as to
change the definition of the appropriate number of relevant creditors.

(3) 40Regulations under this section may define the minimum number or the
appropriate number by reference to any one or more of—

(a) a proportion in value,

(b) a proportion in number,

(c) an absolute number,

Small Business, Enterprise and Employment BillPage 106

and the definition may include alternative, cumulative or relative
requirements.

(4) Regulations under subsection (1) may define the minimum number of
creditors by reference to all creditors, or by reference to creditors of a
5particular description.

(5) Regulations under this section may make provision that will result in
section 379ZA or 379ZB having different definitions for different cases,
including for different kinds of decisions.

(6) Regulations under this section may make transitional provision.

(7) 10The power of the Secretary of State to make regulations under this
section is exercisable by statutory instrument.

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

(3) 15In 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
20make 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
25provision 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) 30the 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) 35the 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—

  • 40“creditors’ decision procedure” has the meaning given by
    section 379ZA(11);;

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

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

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

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

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

(3) After section 246B insert—

246C 5 Creditors’ ability to opt out of receiving certain notices

(1) Any provision of the rules which requires an office-holder of a
company 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) 10Subsection (1)

(a) does not apply in relation to a notice of a distribution or
proposed 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) 15Except as provided by the rules, a creditor may participate and vote in
a qualifying decision procedure or a deemed consent procedure even
though, by virtue of being an opted-out creditor, the creditor does not
receive notice of it.

(4) In this section—

  • 20“give” includes deliver, furnish or send;

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

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

    (a)

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

    (b)

    25a receiver appointed under section 51 in relation to any
    property of the company, or

    (c)

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

(4) After section 248 insert—

248A 30Opted-out creditor”

(1) For the purposes of this Group of Parts “opted-out creditor”, in relation
to 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
35elected) 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) a liquidator, provisional liquidator, administrator or
administrative receiver of the company,

(b) 40a receiver appointed under section 51 in relation to any
property of the company, or

Small Business, Enterprise and Employment BillPage 108

(c) the supervisor of a voluntary arrangement which has taken
effect 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 5Provision 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
company (within the meaning of section 248A), including, in
particular, provision—

(a) for requiring an office-holder to provide information to
10creditors about how they may elect to be, or cease to be,
opted-out creditors;

(b) for 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-
15holder of the company.

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

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

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

(3) 20After section 379B insert—

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

(1) Any 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) 25Subsection (1)

(a) does not apply in relation to a notice of a distribution or
proposed 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) 30Except as provided by the rules, a creditor may participate and vote in
a qualifying decision procedure or a deemed consent procedure even
though, by virtue of being an opted-out creditor, the creditor does not
receive notice of it.

(4) In this section—

  • 35“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
    individual, the official receiver or the trustee in
    40bankruptcy;

    (b)

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

    Small Business, Enterprise and Employment BillPage 109

    (c)

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

(4) After section 383 insert—

383A Opted-out creditor”

(1) 5For the purposes of this Group of Parts “opted-out creditor” in relation
to an office-holder for an individual means a person who—

(a) is 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
10relation to the office-holder.

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

(a) where 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
15appointed, the interim receiver;

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

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

7A 20Provision 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
the individual (within the meaning of section 383A), including, in
particular, provision—

(a) for requiring an office-holder to provide information to
25creditors about how they may elect to be, or cease to be,
opted-out creditors;

(b) for 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
30office-holder for the individual.

126 Sections 122 to 125: further amendments

Schedule 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
35the 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
40consent) 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.