The Insolvency (Northern Ireland) Order 1989

• Citation: S.I. 1989/2405 (N.I.)
• Sections: 1023

Section 1 Title and commencement

(1) This Order may be cited as the Insolvency (Northern Ireland) Order 1989.

(2) This Order shall come into operation on such day or days as the Head of the Department may by order appoint .

(3) An order under paragraph (2) may contain such transitional and supplementary provisions as appear to the Head of the Department to be necessary or expedient.

Section 2 General interpretation

(1) The Interpretation Act (Northern Ireland) 1954 shall apply to Article 1 and the following provisions of this Order as it applies to a Measure of the Northern Ireland Assembly.

(2) In this Order—

“the Bankruptcy Acts” means the Bankruptcy Acts (Northern Ireland) 1857 to 1980;

“ body corporate ” includes a body incorporated outside Northern Ireland, but does not include—

a corporation sole, or

a partnership that, whether or not a legal person, is not regarded as a body corporate under the law by which it is governed;

“business” includes a trade or profession;

“ the Companies Acts ” means the Companies Acts (as defined in section 2 of the Companies Act 2006) as they have effect in Northern Ireland;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“conditional sale agreement” and“hire‐purchase agreement” have the same meanings as in the Consumer Credit Act 1974 ;

“corporate member” means an insolvent member which is a company;

“the Department” means the Department of Economic Development;

“the EU Regulation” means Regulation (EU) 2015/848 of the European Parliament and of the Council as it forms part of domestic law on and after exit day ;

“ EEA State ” means a state that is a Contracting Party to the Agreement on the European Economic Area signed at Oporto on 2 nd May 1992 as adjusted by the Protocol signed at Brussels on 17 th March 1993;

“employees' share scheme” means a scheme for encouraging or facilitating the holding of shares in or debentures of a company by or for the benefit of—

the bona fide employees or former employees of—

the company,

any subsidiary of the company, or

the company's holding company or any subsidiary of the company's holding company, or

the spouses, civil partners, surviving spouses, surviving civil partners, or minor children or step-children of such employees or former employees;

...

“individual member” means an insolvent member who is an individual;

“insolvent member” means a member of an insolvent partnership, against whom an insolvency petition is being or has been presented;

“insolvency order” means—

in the case of an insolvent partnership or a corporate member, a winding-up order; and

in the case of an individual member, a bankruptcy order;

“insolvency petition” means—

in the case of a petition presented against a corporate member, a petition for its winding up by the High Court; and

in the case of a petition presented against an individual member, a petition to the Court for a bankruptcy order to be made against the individual,

where the petition is presented in conjunction with a petition for the winding up of the partnership by the Court as an unregistered company under the Order;

“liability” means (subject to paragraph (4)) a liability to pay money or money's worth, including any liability under a statutory provision, any liability for breach of trust, any liability in contract, tort or bailment and any liability arising out of an obligation to make restitution;

...

“modifications” includes additions, alterations and omissions;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“the official receiver” means, in relation to any bankruptcy , winding up , individual voluntary arrangement, debt relief order or application for such an order , any officer of the Department who by virtue of Article 355 or 357 is authorised to act as the official receiver in relation to that bankruptcy , winding up , individual voluntary arrangement, debt relief order or application for such an order ;

“prescribed”

in Articles 48(3), 95(1) ... and in Part XII, means prescribed by regulations; and

except as provided in sub‐paragraph (a) in Article 150A(9) and in paragraph 3 of Schedule 4, means prescribed by rules;

“property” includes money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property;

“records” includes computer records and other non‐documentary records;

“regulations” means regulations made by the Department subject (except in Part 1A, Article 148A(6), Article 197C and Article 359(5) ... and paragraph 61A of Schedule B1 ) to negative resolution;

“responsible insolvency practitioner” means—

in winding up, the liquidator; and

in bankruptcy, the trustee,

and in either case includes the official receiver when so acting.

“rules”, except in Article 350, means rules made under Article 359;

“statutory provision” has the meaning assigned to it by section 1(f) of the Interpretation Act (Northern Ireland) 1954 ;

“transaction” includes a gift, agreement or arrangement, and references to entering into a transaction shall be construed accordingly.

(2A) The following expressions have the same meaning in this Order as in the Companies Acts—

“ articles ”, in relation to a company (see section 18 of the Companies Act 2006);

“debenture” (see section 738 of that Act);

“holding company” (see sections 1159 and 1160 of, and Schedule 6 to, that Act);

“the Joint Stock Companies Acts” (see section 1171 of that Act);

“overseas company” (see section 1044 of that Act);

“paid up” (see section 583 of that Act);

“private company” and “public company” (see section 4 of that Act);

“share” (see section 540 of that Act);

“subsidiary” (see sections 1159 and 1160 of, and Schedule 6 to, that Act).

(3) In determining for the purposes of any provision of this Order whether any liability in tort is a bankruptcy debt, the bankrupt is deemed to become subject to that liability by reason of an obligation incurred at the time when the cause of action accrued.

(3A) In determining for the purposes of any provision in this Order whether any liability in tort is a debt provable in the winding up of a company or where a company is in administration, that liability is provable if either—

(a) the cause of action has accrued—

(i) in the case of a winding up which was not immediately preceded by an administration, at the date on which the company went into liquidation;

(ii) in the case of a winding up which was immediately preceded by an administration, at the date on which the company entered administration;

(iii) in the case of an administration which was not immediately preceded by a winding up, at the date on which the company entered administration;

(iv) in the case of an administration which was immediately preceded by a winding up, at the date on which the company went into liquidation; or

(b) all the elements necessary to establish the cause of action exist at that date except for actionable damage.

(4) For the purposes of references in any provision of this Order to a debt or liability, it is immaterial whether the debt or liability is present or future, whether it is certain or contingent or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed criteria or as a matter of opinion; and references in any such provision to owing a debt are to be read accordingly.

(5) In this Order (except Article 355(1)) references to the official receiver include an officer of the Department appointed under Article 357(1) as deputy official receiver.

(6) For the purposes of any provision in this Order whereby an officer of a company who is in default shall be guilty of an offence,“officer who is in default” means an officer of the company who knowingly and wilfully authorises or permits the default, refusal or contravention mentioned in the provision.

Section 2A Proceedings under EU Regulation: modified definition of property

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 3 “Act as insolvency practitioner”

(1) A person acts as an insolvency practitioner in relation to a company by acting—

(a) as its liquidator, provisional liquidator, administrator , administrative receiver or monitor , or

(b) where a voluntary arrangement in relation to the company is proposed or approved under Part II, as nominee or supervisor.

(2) A person acts as an insolvency practitioner in relation to an individual by acting—

(a) as his trustee in bankruptcy or interim receiver of his property; or

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) where a voluntary arrangement in relation to the individual is proposed or approved under Part VIII, as nominee or supervisor;

(d) in the case of a deceased individual to the administration of whose estate this Article applies by virtue of an order under Article 365 (application of provisions of this Order to insolvent estates of deceased persons), as administrator of that estate.

(3) A person acts as an insolvency practitioner in relation to an insolvent partnership by acting—

(a) as its liquidator, provisional liquidator or administrator, or

(b) as trustee of the partnership under Article 11 of the Insolvent Partnerships Order (Northern Ireland) 1995, or

(c) where a voluntary arrangement in relation to the insolvent partnership is proposed or approved under Part II, as nominee or supervisor.

(3A) In relation to a voluntary arrangement proposed under Part II or VIII , a person acts as nominee if he performs any of the functions conferred on nominees under the Part in question.

(4) In this Article—

“administrative receiver” has the meaning given by Article 5(1);

“ company ” means—

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

(b) a company that may be wound up under Part 6 of this Order (unregistered companies).

“ monitor ” has the same meaning as in Part 1A (moratorium).

(5) Nothing in this Article applies to anything done by the official receiver.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 4 “Associate”

(1) For the purposes of this Order any question whether a person is an associate of another person is to be determined in accordance with the following provisions of this Article (any provision that a person is an associate of another person being taken to mean that they are associates of each other).

(2) A person is an associate of an individual if that person is—

(a) the individual's husband or wife or civil partner,

(b) a relative of—

(i) the individual, or

(ii) the individual's husband or wife or civil partner, or

(c) the husband or wife or civil partner of a relative of—

(i) the individual, or

(ii) the individual's husband or wife or civil partner.

(3) A person is an associate of any person with whom he is in partnership, and of the husband or wife or civil partner or a relative of any individual with whom he is in partnership; and a Scottish firm is an associate of any person who is a member of the firm.

(4) A person is an associate of any person whom he employs or by whom he is employed.

(5) A person in his capacity as trustee of a trust other than—

(a) a trust arising under Parts VIII to X ... of this Order, Parts VIII to IX of the Insolvency Act 1986 or the Bankruptcy (Scotland) Act 2016 , or

(b) a pension scheme or an employees' share scheme . . . ,

is an associate of another person if the beneficiaries of the trust include, or the terms of the trust confer a power that may beexercised for the benefit of, that other person or an associate of that other person.

(6) A company is an associate of another company—

(a) if the same person has control of both, or a person has control of one and persons who are his associates, or he and persons who are his associates, have control of the other, or

(b) if a group of 2 or more persons has control of eachcompany, and the groups either consist of the same personsor could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person of whom he is an associate.

(7) A company is an associate of another person if that person has control of it or if that person and persons who are his associates together have control of it.

(8) For the purposes of this Article a person is a relative of an individual if he is that individual's brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant, treating—

(a) any relationship of the half blood as a relationship of the whole blood and the stepchild or adopted child of any person as his child, and

(b) an illegitimate child as the legitimate child of his mother and reputed father;

and references in this Article to a husband and wife include a former husband or wife and reputed husband or wife and references to a civil partner include a former civil partner and a reputed civil partner .

(9) For the purposes of this Article any director of other officer of a company is to be treated as employed by that company.

(10) For the purposes of this Article a person is to be taken as having control of a company if—

(a) the directors of the company or of another company which has control of it (or any of them) are accustomed to act in accordance with his directions or instructions, or

(b) he is entitled to exercise, or control the exercise of, one‐third or more of the voting power at any general meeting of the company or of another company which has control of it;

and where 2 or more persons together satisfy either of the conditions mentioned in sub‐paragraph (a) or (b), they are to be taken as having control of the company.

(11) In this Article“company” includes any body corporate (whether incorporated in Northern Ireland or elsewhere); and references to directors and other officers of a company and to voting power at any general meeting of a company have effect with any necessary modifications.

Section 5 Interpretation

(1) In Parts 1A to 7 —

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“administrative receiver” means—

a receiver or manager of the whole (or substantially the whole) of a company's property appointed by or on behalf of the holders of any debentures of the company secured by a charge which, as created, was a floating charge, or by such a charge and one or more other securities; or

a person who would be such a receiver or manager but for the appointment of some other person as the receiver of part of the company's property;

“ agent ” does not include a person's counsel acting as such;

“books and papers” and “ books or papers ” includes accounts, deeds, writing and documents;

“business day” means any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday in Northern Ireland under the Banking and Financial Dealings Act 1971 ;

“chattel leasing agreement” means an agreement for the bailment of goods which is capable of subsisting for more than 3 months;

“debt”, in relation to the winding up of a company or where a company is in administration , means (subject to Article 2(3A) ) any of the following—

any debt or liability to which the company is subject at the relevant date;

any debt or liability to which the company may become subject after the relevant date by reason of any obligation incurred before that date; and

any interest on a debt proved in the liquidation or in the administration which bears interest, except in so far as it is payable in respect of any period after the relevant date;

“director” includes any person occupying the position of director, by whatever name called;

“ document ” includes summons, notice, order and other legal process, and registers;

“floating charge” means a charge which, as created, was a floating charge;

...

“ officer ”, in relation to a body corporate, includes a director, manager or secretary;

“the official rate”, in relation to interest, means the rate payable under Article 160(4);

“ the registrar ” means the registrar of companies for Northern Ireland;

“a resolution for voluntary winding up” means a resolution passed under either of the sub-paragraphs of Article 70(1);

“retention of title agreement” means an agreement for the sale of goods to a company being an agreement—

which does not constitute a charge on the goods, but

under which, if the seller is not paid and the company is wound up, the seller will have priority over all other creditors of the company as respects the goods or any property representing the goods;

“secured creditor”, in relation to a company, means a creditor of the company who holds in respect of his debt a security over property of the company, and“unsecured creditor” is to be read accordingly;

“security” means any mortgage, charge, lien or other security;

“shadow director”, in relation to a company, means a person in accordance with whose directions or instructions the directors of the company are accustomed to act , but so that a person is not deemed a shadow director by reason only that the directors act—

on advice given by that person in a professional capacity;

in accordance with instructions, a direction, guidance or advice given by that person in the exercise of a function conferred by or under a statutory provision;

in accordance with guidance or advice given by that person in that person's capacity as a Minister of the Crown (within the meaning of the Ministers of the Crown Act 1975) ;

“supervisor” means a person acting as defined in Article 20(2);

“voluntary arrangement” means an arrangement as defined in Article 14(1).

(1A) For the purposes of the definition of “debt” in paragraph (1), “ the relevant date ” means—

(a) in the case of a winding up which was not immediately preceded by an administration, the date on which the company went into liquidation;

(b) in the case of a winding up which was immediately preceded by an administration, the date on which the company entered administration;

(c) in the case of an administration which was not immediately preceded by a winding up, the date on which the company entered administration;

(d) in the case of an administration which was immediately preceded by a winding up, the date on which the company went into liquidation.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 6 “Insolvency” and“go into liquidation”

(1) In Parts 1A to 7 , “insolvency”, in relation to a company, includes the coming into force of a moratorium for the company under Part 1A, the approval of a voluntary arrangement under Part II, or the appointment of an administrator or administrative receiver .

(2) For the purposes of any provision in Parts 1A to 7 , a company goes into liquidation if it passes a resolution for voluntary winding up or an order for its winding up is made by the High Court at a time when it has not already gone into liquidation by passing such a resolution.

(3) The reference to a resolution for voluntary winding up in paragraph (2) includes a reference to a resolution which is deemed to occur by virtue of—

(a) paragraph 84(5)(b) of Schedule B1, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 7 “Connected with a company”

For the purposes of any provision in Parts 1A to 7 , a person is connected with a company if—

(a) he is a director or shadow director of the company or an associate of such a director or shadow director, or

(b) he is an associate of the company.

Section 8 “Member of a company”

For the purposes of any provision in Parts 1A to 7 , a person who is not a member of a company but to whom shares in the company have been transferred, or transmitted by operation of law, is to be regarded as a member of the company, and references to a member or members are to be read accordingly.

Section 9 Interpretation

(1) In Parts 7A to 10 —

“bankrupt” means an individual who has been adjudged bankrupt and, in relation to a bankruptcy order, it means the individual adjudged bankrupt by that order;

“bankruptcy debt”, in relation to a bankrupt, means (subject to Article 2(3)) any of the following—

any debt or liability to which he is subject at the commencement of the bankruptcy,

any debt or liability to which he may become subject after the commencement of the bankruptcy (including after his discharge from bankruptcy) by reason of any obligation incurred before the commencement of the bankruptcy, and

any interest provable as mentioned in Article 295(2);

and“debt” shall be construed accordingly;

“bankruptcy order” means an order adjudging an individual bankrupt;

“bankruptcy petition” means a petition to the High Court for a bankruptcy order;

“creditor”

in relation to a bankrupt, means a person to whom any of the bankruptcy debts is owed, and

in relation to an individual to whom a bankruptcy petition relates, means a person who would be a creditor in the bankruptcy if a bankruptcy order were made on that petition;

...

“creditor's petition” means a bankruptcy petition under Article 238(1)(a);

“the debtor”

in relation to a debt relief order or an application for such an order, has the same meaning as in Part 7A,

in relation to a proposal for the purposes of Part VIII, means the individual making or intending to make that proposal, and

in relation to a bankruptcy petition, means the individual to whom the petition relates;

“debtor's petition” means a bankruptcy petition presented by the debtor himself under Article 238(1)(b);

“ debt relief order ” means an order made by the official receiver under Part 7A;

...

“dwelling house” includes any building or part of a building which is occupied as a dwelling and any yard, garden, garage or outhouse belonging to the dwelling house and occupied with it;

“family” in relation to a bankrupt, means the persons (if any) who are living with him and are dependent on him;

“insolvency administration” means the administration in bankruptcy of the insolvent estate of a deceased person;

“insolvency administration order” means an order for the administration in bankruptcy of the insolvent estate of a deceased debtor (being an individual at the date of his death);

“insolvency administration petition” means a petition for an insolvency administration order;

“interim order” means an order under Article 226;

“the Judgments Enforcement Order” means the Judgments Enforcement (Northern Ireland) Order 1981;

“the Land Registration Act” means the Land Registration Act (Northern Ireland) 1970;

...

...

“the Registration of Deeds Act” means the Registration of Deeds Act (Northern Ireland) 1970; and

“the Rules” means the Insolvency Rules (Northern Ireland) 1999;

“the trustee” in relation to a bankruptcy and the bankrupt, means the trustee of the bankrupt's estate;

“voluntary arrangement” means an arrangement as defined in Article 227(1).

(2) References in Parts 7A to 10 to a person's affairs include his business, if any.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Liability under the Child Support (Northern Ireland) Order 1991 to pay child support maintenance to any person is not a debt or liability for the purposes of Part 8.

Section 10 “Security”, etc.

(1) Subject to paragraphs (2) and (3) and any provision of the rules requiring a creditor to give up his security for the purposes of proving a debt, a debt is secured for the purposes of Parts 7A to 10 to the extent that the person to whom the debt is owed holds any security for the debt (whether a mortgage, charge, lien or other security) over any property of the person by whom the debt is owed.

(2) Where a statement such as is mentioned in Article 243(1)(a) has been made by a secured creditor for the purposes of any bankruptcy petition and a bankruptcy order is subsequently made on that petition, the creditor is deemed for the purposes of Parts VIII to X to have given up the security specified in the statement.

(3) In paragraph (1) the reference to a security does not include a lien on books, papers or other records, except to the extent that they consist of documents which give a title to property and are held as such.

Section 11 “Bankrupt's estate”

(1) Subject to the following provisions of this Article, a bankrupt's estate for the purposes of any of Parts VIII to X comprises—

(a) all property belonging to or vested in the bankrupt at the commencement of the bankruptcy, and

(b) any property which by virtue of any of the provisions of Part IX of this Order or Article 88(3) or 90(3) of the Judgments Enforcement (Northern Ireland) Order 1981 (effect of bankruptcy or winding up on enforcement of judgments and proceeds of such enforcement) is comprised in that estate or is treated as falling within sub‐paragraph (a).

(2) Subject to Article 281 (certain excluded property reclaimable by trustee), paragraph (1) does not apply to—

(a) such tools, books, vehicles and other items of equipment as are necessary to the bankrupt for use personally by him in his employment, business or vocation;

(b) such clothing, bedding, furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family.

(3) Paragraph (1) does not apply to property held by the bankrupt on trust for any other person.

(4) References in any of Parts VIII to X to property, in relation to a bankrupt, include references to any power exercisable by him over or in respect of property except in so far as the power is exercisable over or in respect of property not for the time being comprised in the bankrupt's estate and—

(a) is so exercisable at a time after either the official receiver has had his release in respect of that estate under Article 272(2) or a meeting summoned by the trustee of that estate under Article 304 has been held, or

(b) cannot be so exercised for the benefit of the bankrupt;

and a power exercisable over or in respect of property is deemed for the purposes of any of Parts VIII to X to vest in the person entitled to exercise it at the time of the transaction or event by virtue of which it is exercisable by that person (whether or not it becomes so exercisable at that time).

(5) For the purposes of any such provision in Parts VIII to X, property comprised in a bankrupt's estate is so comprised subject to the rights of any person other than the bankrupt (whether as a secured creditor of the bankrupt or otherwise) in relation thereto, but disregarding—

(a) any rights in relation to which a statement such as is required by Article 243(1)(a) was made in the petition on which the bankrupt was adjudged bankrupt, and

(b) any rights which have been otherwise given up in accordance with the rules.

(5A) This Article has effect subject to Article 256A.

(6) This Article has effect subject to the provisions of any statutory provision not contained in this Order under which any property is to be excluded from a bankrupt's estate.

Section 12 “Receiver or manager”

In this Order . . . —

(a) any reference to a receiver or manager of the property of a company, or to a receiver of it, includes a receiver or manager, or (as the case may be) a receiver of part only of that property and a receiver only of the income arising from the property or from part of it; and

(b) any reference to the appointment of a receiver or manager under powers contained in an instrument includes an appointment made under powers which, by virtue of any statutory provision are implied in and have effect as if contained in an instrument.

Section 13 “Contributory”

(1) In this Order . . . “contributory” means every person liable to contribute to the assets of a company in the event of its being wound up, and for the purposes of all proceedings for determining, and all proceedings prior to the final determination of, the persons who are to be deemed contributories, includes any person alleged to be a contributory.

(2) The reference in paragraph (1) to persons liable to contribute to the assets does not include a person so liable by virtue of a declaration by the High Court under Article 177 (imputed responsibility for company's fraudulent trading) or Article 178 (wrongful trading).

(3) A reference in a company's articles to a contributory does not (unless the context requires) include a person who is a contributory only by virtue of Article 63 (liability of past directors and shareholders).

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 13A Overview

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

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

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

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

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

(6) Chapter 5 contains provision about the monitor.

(7) Chapter 6 contains provision about challenges.

(8) Chapter 7 contains provision about certain offences.

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

(a) special provision for certain kinds of company;

(b) definitions for the purposes of this Part;

(c) provision about regulations under this Part.

Section 13B Obtaining a moratorium by filing documents at High Court

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

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

(b) is not an overseas company.

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

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

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

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

Section 13C End of the moratorium

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

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

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

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

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

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

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

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

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

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

Article 13ED (termination by monitor);

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

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

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

Section 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) The 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 has 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) goods 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) Regulations 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) In 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 monitor before the moratorium begins;

“redundancy payment” means—

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

a 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 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),

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

a sum payable in lieu of holiday, and

a contribution to an occupational pension scheme.

Section 13E Status of monitor

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

Section 13F Challenge to monitor’s actions

(1) Any of the persons specified below may apply to the High Court on the ground that an act, omission or decision of the monitor during a moratorium has unfairly harmed the interests of the applicant.

(2) The persons who may apply are—

(a) a creditor, director or member of the company, or

(b) any other person affected by the moratorium.

(3) An application under paragraph (1) may be made during the moratorium or after it has ended.

(4) On an application under paragraph (1) the Court may—

(a) confirm, reverse or modify any act or decision of the monitor,

(b) give the monitor directions, or

(c) make such other order as it thinks fit (but may not, under this sub-paragraph, order the monitor to pay any compensation).

(5) Where an application under paragraph (1) relates to a failure by the monitor to bring the moratorium to an end under Article 13ED(1), an order under paragraph (4) may, in particular, bring the moratorium to an end and make such consequential provision as the Court thinks fit.

(6) Where an application under paragraph (1) relates to the monitor bringing a moratorium to an end under Article 13ED(1), an order under paragraph (4) may, in particular, provide that the moratorium is not to be taken into account for the purposes of paragraph 2(1)(b) of Schedule ZA1 (company not eligible for moratorium if moratorium in force within previous 12 months).

(7) In making an order under paragraph (4) the Court must have regard to the need to safeguard the interests of persons who have dealt with the company in good faith and for value.

(8) See also Article 13CH (obligations to notify change in end of moratorium).

Section 13G Offence of fraud etc during or in anticipation of moratorium

(1) An officer of a company commits an offence if, during a moratorium for the company or at any time within the period of 12 months ending with the day on which a moratorium for the company comes into force, the officer—

(a) does any of the things mentioned in paragraph (2), or

(b) was privy to the doing by others of any of the things mentioned in paragraph (2)(c), (d) and (e).

(2) Those things are—

(a) concealing any part of the company’s property to the value of £500 or more, or concealing any debt due to or from the company,

(b) fraudulently removing any part of the company’s property to the value of £500 or more,

(c) concealing, destroying, mutilating or falsifying any document affecting or relating to the company’s property or affairs,

(d) making any false entry in any document affecting or relating to the company’s property or affairs,

(e) fraudulently parting with, altering or making any omission in any document affecting or relating to the company’s property or affairs, or

(f) pawning, pledging or disposing of any property of the company which has been obtained on credit and has not been paid for (unless the pawning, pledging or disposal was in the ordinary way of the company’s business).

(3) It is a defence—

(a) for a person charged with an offence under paragraph (1) in respect of any of the things mentioned in paragraph (2)(a) or (f) to prove that the person had no intent to defraud, and

(b) for a person charged with an offence under paragraph (1) in respect of any of the things mentioned in paragraph (2)(c) or (d) to prove that the person had no intent to conceal the state of affairs of the company or to defeat the law.

(4) Where a person pawns, pledges or disposes of any property of a company in circumstances which amount to an offence under paragraph (1), every person who takes in pawn or pledge, or otherwise receives, the property commits an offence if the person knows it to be pawned, pledged or disposed of in circumstances which—

(a) amount to an offence under paragraph (1), or

(b) would, if a moratorium were obtained for the company within the period of 12 months beginning with the day on which the pawning, pledging or disposal took place, amount to an offence under paragraph (1).

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

Section 13H Regulated companies: modifications to this Part

(1) For the purposes of Articles 13B and 13BA as they apply in relation to a regulated company, Article 13BC(1) has effect as if the documents listed there included a reference to the written consent of the appropriate regulator to the appointment of the proposed monitor.

(2) The remaining provisions of this Article apply in relation to a moratorium for a regulated company.

(3) Any notice under Article 13BE(2), 13CH(2) to (4) or 13EE(8) must also be sent by the monitor to the appropriate regulator.

(4) The directors must give the appropriate regulator notice of any meeting of the company’s creditors that is to be held for the purposes of Article 13CC(2) or 13FB(4)(c).

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

(6) The appropriate regulator, or a person appointed by the appropriate regulator, may in the way provided for by the rules, participate (but not vote) in any meeting of the company’s creditors that is held for the purposes of this Part.

(7) The appropriate regulator is entitled to be heard on any application to the High Court for permission under Article 13DM(1) or 13DN(1) (disposal of charged property, etc.).

(8) The High Court may make an order under Article 13EE(1) only if the appropriate regulator has given its written consent to the appointment of the proposed monitor.

(9) The persons who may apply to the High Court under Article 13EE(3), 13F(1) or 13FB(1) include the appropriate regulator.

(10) If a person other than a regulator applies to the High Court under Article 13EE(3), 13F(1) or 13FB(1) the appropriate regulator is entitled to be heard on the application.

(11) If either regulator makes an application to the High Court under Article 13EE(3), 13F(1) or 13FB(1) in relation to a PRA-regulated company, the other regulator is entitled to be heard on the application.

(12) This Article does not affect any right that the appropriate regulator has (apart from this Article) as a creditor of a regulated company.

(13) In this Article—

“the appropriate regulator” means—

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

where the regulated company is not a PRA-regulated company, the Financial Conduct Authority;

“PRA-authorised person” has the meaning given by section 2B(5) of the Financial Services and Markets Act 2000;

“PRA-regulated company” means a regulated company which—

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

is, or has been, an appointed representative within the meaning given by section 39 of the Financial Services and Markets Act 2000, whose principal (or one of whose principals) is, or was, a PRA-authorised person, or

is carrying on, or has carried on, a PRA-regulated activity (within the meaning of section 22A of that Act) in contravention of the general prohibition;

“regulated activity” has the meaning given by section 22 of the Financial Services and Markets Act 2000, taken with Schedule 2 to that Act and any order under that section;

“regulated company” means a company which—

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

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

is carrying on, or has carried on, a regulated activity in contravention of the general prohibition within the meaning given by section 19 of that Act;

“regulator” means the Financial Conduct Authority or the Prudential Regulation Authority.

(14) Regulations may amend this Article for the purposes of changing the definition of “regulated company” in paragraph (13).

(15) Regulations may not be made under paragraph (14) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

Section 13AA Eligible companies

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

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

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

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

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

(4) On hearing the application the Court may—

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

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

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

Section 13BB Obtaining a moratorium for other overseas companies

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

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

(b) is an overseas company.

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

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

(4) On hearing the application the Court may—

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

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

Section 13BC The relevant documents

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

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

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

(i) is a qualified person, and

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

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

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

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

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

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

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

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

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

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

(4) Regulations may amend this Article for the purposes of adding to the list of documents in paragraph (1).

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

Section 13BD Beginning of moratorium and appointment of monitor

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

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

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

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

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

Section 13BE Obligations to notify where moratorium comes into force

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

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

(a) the registrar,

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

(c) in a case where the company is or has been an employer in respect of an occupational pension scheme that is not a money purchase scheme, the Pensions Regulator, and

(d) in a case where the company is an employer in respect of such a pension scheme that is an eligible scheme within the meaning given by Article 110 of the Pensions (Northern Ireland) Order 2005, the Board of the Pension Protection Fund.

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

(a) when the moratorium came into force, and

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

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

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

Section 13CA Extension by directors without creditor consent

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

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

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

(i) moratorium debts, and

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

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

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

(2) The rules may make provision about the date on which a statement mentioned in paragraph (1) must be made.

(3) On the filing with the Court of the documents mentioned in paragraph (1), the moratorium is extended so that it ends at the end of the period—

(a) beginning immediately after the initial period ends, and

(b) ending with the 20th business day after the initial period ends.

Section 13CB Extension by directors with creditor consent

(1) At any time after the first 15 business days of the initial period the directors may, if they have obtained creditor consent, extend the moratorium by filing with the High Court—

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

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

(i) moratorium debts, and

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

(c) a statement from the directors that, in their view, the company is, or is likely to become, unable to pay its pre-moratorium debts,

(d) a statement from the monitor that, in the monitor’s view, it is likely that the moratorium will result in the rescue of the company as a going concern, and

(e) a statement from the directors that creditor consent has been obtained, and of the revised end date for which that consent was obtained.

(2) The rules may make provision about the date on which a statement mentioned in paragraph (1) must be made.

(3) On the filing with the Court of the documents mentioned in paragraph (1), the moratorium is extended so that it ends with the revised end date mentioned in the statement under paragraph (1)(e).

(4) A moratorium may be extended under this Article more than once.

Section 13CC Creditor consent for the purposes of Article 13CB

(1) References in Article 13CB to creditor consent are to the consent of pre-moratorium creditors to a revised end date for the moratorium.

(2) The decision as to consent is to be made at a meeting of pre-moratorium creditors.

(3) A meeting under paragraph (2)—

(a) is to be held at such time, date and place as the directors think fit, and

(b) is to be conducted in accordance with the rules.

(4) The revised end date must be a date before the end of the period of one year beginning with the first day of the initial period.

(5) In this Article “pre-moratorium creditor” means a creditor in respect of a pre-moratorium debt—

(a) for which the company has a payment holiday during the moratorium (see Article 13D), and

(b) which has not been paid or otherwise discharged.

(6) In determining for the purposes of paragraph (5) what counts as a pre-moratorium debt for which the company has a payment holiday during the moratorium, Articles 13D(3) and 13HD(1)(b) apply as if the references to the moratorium were to the moratorium as proposed to be extended.

(7) Regulations may amend this Article for the purposes of changing the definition of “pre-moratorium creditor”.

(8) Regulations may not be made under paragraph (7) unless a draft of the regulations has been laid before, and approved by a resolution of, the Assembly.

Section 13CD Extension by High Court on application of directors

(1) At any time after the first 15 business days of the initial period, the directors may apply to the High Court for an order that the moratorium be extended.

(2) The application must be accompanied by—

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

(i) moratorium debts, and

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

(b) a statement from the directors that, in their view, the company is, or is likely to become, unable to pay its pre-moratorium debts,

(c) a statement from the directors as to whether pre-moratorium creditors (as defined by Article 13CC(5) and (6)) have been consulted about the application and if not why not, and

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

(3) The rules may make provision about the date on which a statement mentioned in paragraph (2) must be made.

(4) On hearing the application the Court may—

(a) make an order that the moratorium be extended to such date as is specified in the order, or

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

(5) In deciding whether to make an order under paragraph (4)(a) the Court must, in particular, consider the following—

(a) the interests of pre-moratorium creditors, as defined by Article 13CC(5) and (6), and

(b) the likelihood that the extension of the moratorium will result in the rescue of the company as a going concern.

(6) Paragraph (7) applies where—

(a) an application under this Article is made, and

(b) apart from that paragraph, the moratorium would end at a time before the application has been disposed of.

(7) The moratorium—

(a) does not end at the time mentioned in paragraph (6)(b), and

(b) instead, ends—

(i) in a case in which the Court makes an order under paragraph (4)(a), in accordance with the order;

(ii) otherwise, when the application is withdrawn or disposed of.

(8) A moratorium may be extended under this Article more than once.

Section 13CE Extension while proposal for CVA pending

(1) Paragraph (2) applies where—

(a) at any time, the directors make a proposal under Part 2 (company voluntary arrangements), and

(b) apart from that paragraph, the moratorium would end at a time before the proposal is disposed of.

(2) The moratorium—

(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) the 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) the 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 application 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) the proposal is withdrawn.

Section 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 order 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.

Section 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) For 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 insolvency 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) paragraph 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).

Section 13CH Obligations to notify change in end of moratorium

(1) The table imposes obligations on the directors of a company to notify the 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 when 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) If 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 be 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 paragraphs (2) to (4), the monitor commits an offence.

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

(a) the registrar,

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

(c) in a case where the company is or has been an employer in respect of an occupational pension scheme that is not a money purchase scheme, the Pensions Regulator, and

(d) in a case where the company is an employer in respect of such a pension scheme that is an eligible scheme within the meaning given by Article 110 of the Pensions (Northern Ireland) Order 2005, the Board of the Pension Protection Fund.

Section 13DA Publicity about moratorium

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

(a) the company commits an offence, and

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

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

(a) an 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.

Section 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) no 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) no 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 company 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) Paragraph (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 the ground mentioned in subsection (3)(b) of that section.

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

(ii) steps to enforce security created or otherwise arising under a financial collateral arrangement (within the meaning 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 possession 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) employment 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 the 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 (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) Permission 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 Employment Relations (Northern Ireland) Order 1999;

“employer”—

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

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

“worker” means an individual who is—

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

an agency worker.

Section 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) During 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 property 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 paragraph (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) The 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 moratorium.

(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 company 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 given.

(7) This Article does not apply in relation to a floating charge that is—

(a) a collateral security (as defined by Article 13DI);

(b) a market charge (as defined by Article 13DI);

(c) a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));

(d) a system-charge (as defined by Article 13DI).

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

Section 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) presenting 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) The 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) If 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.

Section 13DG Restrictions on obtaining credit

(1) During 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 accordance 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 otherwise) 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 offence.

Section 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 thinks 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 authorised 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 security is an offence under Article 13DI.

Section 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) any 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) enters 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 which 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 Markets and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979);

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

“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 and 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).

Section 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 amount 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)—

“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—

£5000, and

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) The 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 unless 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 authorised or permitted the payment commits an offence.

Section 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 company 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) The 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 unless 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) If 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.

Section 13DL Restrictions 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) the 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) any officer of the company who without reasonable excuse authorised or permitted the disposal commits an offence.

Section 13DM Disposal of charged property free from charge

(1) During a moratorium, the company may, with the permission of the High 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 relation 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 which 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) Where 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 which directly or indirectly represents the property disposed of.

(7) Where the Court makes an order giving permission under paragraph (1), the directors must, within the period of 14 days beginning with the date of the order, send a copy of it to the registrar.

(8) If the directors fail to comply with paragraph (7), any director who did not have a reasonable excuse for the failure commits an offence.

(9) If a company fails to comply with paragraph (3)—

(a) the company commits an offence, and

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

(10) Paragraph (1) does not apply in relation to any property which is subject to a financial collateral arrangement, a market charge, a system-charge or a collateral security (as defined by Article 13DI).

Section 13DN Disposal of hire-purchase property

(1) During a moratorium, the company may, with the permission of the High Court, dispose of goods which are in the possession of the company under a hire-purchase agreement as if all of the rights of the owner under the agreement were vested in the company.

(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), the company must apply the following towards discharging the sums payable under the hire-purchase agreement—

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

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

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

(a) the company commits an offence, and

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

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

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