Insolvency Bill [H.L.] - continued        House of Lords
SCHEDULE A1, MORATORIUM WHERE DIRECTORS PROPOSE VOLUNTARY ARRANGEMENT - continued
PART V, CONSIDERATION AND IMPLEMENTATION OF VOLUNTARY ARRANGEMENT - continued

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Challenge of decisions
     37. - (1) Subject to the following provisions of this paragraph, any of the persons mentioned in sub-paragraph (2) may apply to the court on one or both of the following grounds-
 
 
    (a) that a voluntary arrangement approved at one or both of the meetings summoned under paragraph 28 and which has taken effect unfairly prejudices the interests of a creditor, member or contributory of the company,
 
    (b) that there has been some material irregularity at or in relation to either of those meetings.
      (2) The persons who may apply under this paragraph are-
 
 
    (a) a person entitled, in accordance with the rules, to vote at either of the meetings,
 
    (b) a person who would have been entitled, in accordance with the rules, to vote at the creditors' meeting if he had had notice of it, and
 
    (c) the nominee.
      (3) An application under this paragraph shall not be made-
 
 
    (a) after the end of the period of 28 days beginning with the first day on which each of the reports required by paragraph 29(3) has been made to the court, or
 
    (b) in the case of a person who was not given notice of the creditors' meeting, after the end of the period of 28 days beginning with the day on which he became aware that the meeting had taken place,
       but (subject to that) an application made by a person within sub-paragraph (2)(b) on the ground that the arrangement prejudices his interests may be made after the arrangement has ceased to have effect, unless it came to an end prematurely.
 
      (4) Where on an application under this paragraph the court is satisfied as to either of the grounds mentioned in sub-paragraph (1), it may do any of the following-
 
 
    (a) revoke or suspend-
 
      (i) any decision approving the voluntary arrangement which has effect under paragraph 35, or
 
      (ii) in a case falling within sub-paragraph (1)(b), any decision taken by the meeting in question which has effect under that paragraph,
 
    (b) give a direction to any person-
 
      (i) for the summoning of further meetings to consider any revised proposal for a voluntary arrangement which the directors may make, or
 
      (ii) in a case falling within sub-paragraph (1)(b), for the summoning of a further company or (as the case may be) creditors' meeting to reconsider the original proposal.
      (5) Where at any time after giving a direction under sub-paragraph (4)(b)(i) the court is satisfied that the directors do not intend to submit a revised proposal, the court shall revoke the direction and revoke or suspend any decision approving the voluntary arrangement which has effect under paragraph 35.
 
      (6) Where the court gives a direction under sub-paragraph (4)(b), it may also give a direction continuing or, as the case may require, renewing, for such period as may be specified in the direction, the effect of the moratorium.
 
      (7) Sub-paragraph (8) applies in a case where the court, on an application under this paragraph-
 
 
    (a) gives a direction under sub-paragraph (4)(b), or
 
    (b) revokes or suspends a decision under sub-paragraph (4)(a) or (5).
      (8) In such a case, the court may give such supplemental directions as it thinks fit and, in particular, directions with respect to-
 
 
    (a) things done under the voluntary arrangement since it took effect, and
 
    (b) such things done since that time as could not have been done if a moratorium had been in force in relation to the company when they were done.
      (9) Except in pursuance of the preceding provisions of this paragraph, a decision taken at a meeting summoned under paragraph 28 is not invalidated by any irregularity at or in relation to the meeting.
 
 
Implementation of voluntary arrangement
     38. - (1) This paragraph applies where a voluntary arrangement approved by one or both of the meetings summoned under paragraph 28 has taken effect.
 
      (2) The person who is for the time being carrying out in relation to the voluntary arrangement the functions conferred-
 
 
    (a) by virtue of the approval of the arrangement, on the nominee, or
 
    (b) by virtue of paragraph 30(2), on a person other than the nominee,
       shall be known as the supervisor of the voluntary arrangement.
 
      (3) If any of the company's creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the court.
 
      (4) On an application under sub-paragraph (3) the court may-
 
 
    (a) confirm, reverse or modify any act or decision of the supervisor,
 
    (b) give him directions, or
 
    (c) make such other order as it thinks fit.
      (5) The supervisor-
 
 
    (a) may apply to the court for directions in relation to any particular matter arising under the voluntary arrangement, and
 
    (b) is included among the persons who may apply to the court for the winding up of the company or for an administration order to be made in relation to it.
      (6) The court may, whenever-
 
 
    (a) it is expedient to appoint a person to carry out the functions of the supervisor, and
 
    (b) it is inexpedient, difficult or impracticable for an appointment to be made without the assistance of the court,
       make an order appointing a person who is qualified to act as an insolvency practitioner, or authorised to act as supervisor, in relation to the voluntary arrangement, either in substitution for the existing supervisor or to fill a vacancy.
 
      (7) The power conferred by sub-paragraph (6) is exercisable so as to increase the number of persons exercising the functions of supervisor or, where there is more than one person exercising those functions, so as to replace one or more of those persons.
 
  PART VI
  MISCELLANEOUS
 
Challenge of directors' actions
     39. - (1) This paragraph applies in relation to acts or omissions of the directors of a company during a moratorium.
 
      (2) A creditor or member of the company may apply to the court for an order under this paragraph on the ground-
 
 
    (a) that the company's affairs, business and property are being or have been managed by the directors in a manner which is unfairly prejudicial to the interests of its creditors or members generally, or of some part of its creditors or members (including at least the petitioner), or
 
    (b) that any actual or proposed act or omission of the directors is or would be so prejudicial.
      (3) An application for an order under this paragraph may be made during or after the moratorium.
 
      (4) On an application for an order under this paragraph the court may-
 
 
    (a) make such order as it thinks fit for giving relief in respect of the matters complained of,
 
    (b) adjourn the hearing conditionally or unconditionally, or
 
    (c) make an interim order or any other order that it thinks fit.
      (5) An order under this paragraph may in particular-
 
 
    (a) regulate the management by the directors of the company's affairs, business and property during the remainder of the moratorium,
 
    (b) require the directors to refrain from doing or continuing an act complained of by the petitioner, or to do an act which the petitioner has complained they have omitted to do,
 
    (c) require the summoning of a meeting of creditors or members for the purpose of considering such matters as the court may direct,
 
    (d) bring the moratorium to an end and make such consequential provision as the court thinks fit.
      (6) In making an order under this paragraph the court shall have regard to the need to safeguard the interests of persons who have dealt with the company in good faith and for value.
 
      (7) In relation to any time when an administration order is in force in relation to the company, or the company is being wound up, in pursuance of a petition presented before the moratorium came into force, no application for an order under this paragraph may be made by a creditor or member of the company; but such an application may be made instead by the administrator or (as the case may be) liquidator.
 
 
Offences
     40. - (1) This paragraph applies where a moratorium has been obtained for a company.
 
      (2) If, within the period of 12 months ending with the day on which the moratorium came into force, a person who was at the time an officer of the company-
 
 
    (a) did any of the things mentioned in paragraphs (a) to (f) of sub-paragraph (4), or
 
    (b) was privy to the doing by others of any of the things mentioned in paragraphs (c), (d) and (e) of that sub-paragraph,
       he is to be treated as having committed an offence at that time.
 
      (3) If, at any time during the moratorium, a person who is an officer of the company-
 
 
    (a) does any of the things mentioned in paragraphs (a) to (f) of sub-paragraph (4), or
 
    (b) is privy to the doing by others of any of the things mentioned in paragraphs (c), (d) and (e) of that sub-paragraph,
       he commits an offence.
 
      (4) 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, or
 
    (b) fraudulently removing any part of the company's property to the value of £500 or more, or
 
    (c) concealing, destroying, mutilating or falsifying any book or paper affecting or relating to the company's property or affairs, or
 
    (d) making any false entry in any book or paper affecting or relating to the company's property or affairs, or
 
    (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).
      (5) For the purposes of this paragraph, "officer" includes a shadow director.
 
      (6) It is a defence-
 
 
    (a) for a person charged under sub-paragraph (2) or (3) in respect of the things mentioned in paragraph (a) or (f) of sub-paragraph (4) to prove that he had no intent to defraud, and
 
    (b) for a person charged under sub-paragraph (2) or (3) in respect of the things mentioned in paragraph (c) or (d) of sub-paragraph (4) to prove that he had no intent to conceal the state of affairs of the company or to defeat the law.
      (7) Where a person pawns, pledges or disposes of any property of a company in circumstances which amount to an offence under sub-paragraph (2) or (3), every person who takes in pawn or pledge, or otherwise receives, the property knowing it to be pawned, pledged or disposed of in circumstances which-
 
 
    (a) 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 sub-paragraph (2), or
 
    (b) amount to an offence under sub-paragraph (3),
       commits an offence.
 
      (8) A person guilty of an offence under this paragraph is liable to imprisonment or a fine, or both.
 
      (9) The money sums specified in paragraphs (a) and (b) of sub-paragraph (4) are subject to increase or reduction by order under section 417A in Part XV.
 
 
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