PART 7 | Interpretation of this Part |
88.—(1) In this Part —| “chattels leasing agreement” means an agreement, which is capable of subsisting for more than 3 months, for the bailment of goods; |
| “company” means any corporation liable to be wound up under this Act; |
| “hire-purchase agreement” has the meaning given by section 2(1) of the Hire‑Purchase Act (Cap. 125); |
| “judicial manager”, in relation to a company, means a person appointed under this Part to manage the company and its affairs, business and property, but does not, unless a contrary intention appears, include an interim judicial manager; |
| “property”, in relation to a company, includes money, goods, things in action and every description of property, whether real or personal, and whether in Singapore or elsewhere, and also obligations and every description of interest whether present or future or vested or contingent arising out of, or incidental to, property; |
“retention of title agreement” means an agreement for the sale of goods to a company, being an agreement —| (a) | that does not constitute a charge on the goods; but | | (b) | 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. |
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(2) For the purposes of this Part —| (a) | a company is “in judicial management” while the appointment of a judicial manager of the company has effect; | | (b) | a company “enters judicial management” when the appointment of a judicial manager takes effect; | | (c) | a company ceases to be in judicial management when the company is discharged from judicial management in accordance with this Part; | | (d) | a company does not cease to be in judicial management merely because a judicial manager vacates office (by reason of resignation, death or otherwise) or is removed from office; | | (e) | where successive persons are appointed as judicial manager of a company, the company is deemed to “enter judicial management” as at the time the first appointment of a judicial manager takes effect, unless the Court orders otherwise; and | | (f) | a company is deemed to be unable to pay its debts if any of the paragraphs in section 125(2) is satisfied. |
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(3) A person may be appointed as judicial manager of a company —| (a) | by a judicial management order made by the Court under section 91; or | | (b) | by the creditors of the company under section 94(11)(e). |
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| Purpose of judicial management and judicial manager |
89.—(1) The judicial manager of a company must perform the judicial manager’s functions to achieve one or more of the following purposes of judicial management:| (a) | the survival of the company, or the whole or part of its undertaking, as a going concern; | | (b) | the approval under section 210 of the Companies Act or section 71 of a compromise or an arrangement between the company and any such persons as are mentioned in the applicable section; | | (c) | a more advantageous realisation of the company’s assets or property than on a winding up. |
| (2) A judicial manager or an interim judicial manager of a company must perform the functions of the judicial manager or interim judicial manager in the interests of the company’s creditors as a whole. |
| (3) A judicial manager or an interim judicial manager of a company must perform the functions of the judicial manager or interim judicial manager as quickly and efficiently as is reasonably practicable. |
| (4) A judicial manager or an interim judicial manager of a company is an officer of the Court (whether or not the judicial manager or interim judicial manager is appointed by the Court). |
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| Application to Court for company to be placed under judicial management and for appointment of judicial manager |
90. Where a company, or any creditor of the company, considers —| (a) | that the company is, or is likely to become, unable to pay its debts; and | | (b) | that there is a reasonable probability of rehabilitating the company or of preserving all or part of its business as a going concern, or that the interests of creditors would be better served otherwise than by resorting to a winding up, |
| an application may be made to the Court under section 91 for an order that the company should be placed under the judicial management of a judicial manager. |
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| Power of Court to make judicial management order and appoint judicial manager |
91.—(1) Where a company or its directors (pursuant to a resolution of its members or the board of directors) or any creditor (including any contingent or prospective creditor), pursuant to section 90, makes an application (called in this section an application for a judicial management order) for an order that the company should be placed under the judicial management of a judicial manager, the Court may make a judicial management order in relation to the company if, and only if —| (a) | the Court is satisfied that the company is or is likely to become unable to pay its debts; and | | (b) | the Court considers that the making of the order would be likely to achieve one or more of the purposes of judicial management mentioned in section 89(1). |
| (2) A judicial management order made under subsection (1) must direct that during the period in which the company is in judicial management, the affairs, business and property of the company must be managed by a judicial manager appointed by the Court. |
(3) In any application for a judicial management order under subsection (1), the following apply:| (a) | the applicant must nominate a person who is a licensed insolvency practitioner, but is not the auditor of the company, to act as a judicial manager; | | (b) | the person nominated to act as a judicial manager must file with the Court a statutory declaration that the person is not in a position of conflict of interest in accepting the appointment and performing the role of judicial manager; | | (c) | the Court may reject the nomination of the applicant and appoint another person in place of the applicant’s nominee; | | (d) | where a nomination is made by the company —| (i) | a majority in number and value of the creditors (including contingent or prospective creditors) may be heard in opposition to the nomination; and | | (ii) | the Court may, if satisfied as to the number and value of the creditors’ claims and as to the grounds of opposition, invite the creditors to nominate another person in place of the applicant’s nominee and, if the Court sees fit, adopt their nomination; |
| | (e) | where a nomination is made by a person mentioned in subsection (4)(b)(ii) who has appointed or is entitled to appoint a receiver and manager, the Court must, when making a judicial management order, appoint the nominee of that person as judicial manager unless the Court considers that the appointment would not be appropriate because of the particular circumstances of the case; | | (f) | nothing in this subsection prevents the Minister from nominating a person to act as a judicial manager if the Minister considers that the public interest so requires, and in such a case the Minister may be heard in support of the Minister’s nomination and, for this purpose, may be represented; | | (g) | despite paragraph (a), where a person is nominated by the Minister and appointed by the Court to act as a judicial manager, that person need not be a licensed insolvency practitioner. |
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(4) When an application for a judicial management order is made to the Court —| (a) | notice of the application must be published in the Gazette and in an English local daily newspaper, and a copy of the notice must be sent to the Registrar of Companies; and | | (b) | notice of the application must be given —| (i) | to the company, in a case where a creditor is the applicant; and | | (ii) | to any person who has appointed, or is or may be entitled to appoint, a receiver and manager of the whole (or substantially the whole) of the company’s property under the terms of any debentures of the company secured by a floating charge, or by a floating charge and one or more fixed charges, that would be valid and enforceable in case of a liquidation of the company. |
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| (5) For the purposes of subsection (4)(b)(ii), in the case of any such floating charge created by an instrument before 15 May 1987, that instrument is deemed to contain a power to appoint a receiver and manager in the event that an application under this section is made for the appointment of a judicial manager, with the result that the holder of that floating charge must, in accordance with subsection (4)(b), be given notice of the application. |
(6) Subject to subsection (10), the Court must dismiss an application for a judicial management order if —| (a) | the making of the order is opposed by a person who has appointed, will appoint or is entitled to appoint, a receiver and manager mentioned in subsection (4)(b)(ii); and | | (b) | the Court is satisfied that the prejudice that would be caused to that person if the order is made is disproportionately greater than the prejudice that would be caused to unsecured creditors of the company if the application is dismissed. |
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| (7) On hearing the application for a judicial management order, the Court may dismiss the application or adjourn the hearing conditionally or unconditionally or make an interim order or any other order that the Court thinks fit. |
(8) A judicial management order must not be made in relation to a company —| (a) | after the company has gone into liquidation; | | (b) | where the company is a banking corporation or is a finance company licensed under the Finance Companies Act; | | (c) | where the company is a licensed insurer licensed under the Insurance Act (Cap. 142); or | | (d) | where the company belongs to such class of companies as the Minister may by order in the Gazette prescribe. |
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| (9) The costs and expenses of any unsuccessful application for a judicial management order made under this section must, unless the Court otherwise orders, be borne by the applicant and, if the Court considers that the application is frivolous or vexatious, the Court may make such orders, as the Court thinks just and equitable, to redress any injustice that may have resulted. |
(10) Nothing in this section precludes a Court —| (a) | from making a judicial management order and appointing a judicial manager, if the Court considers that the public interest so requires; or | | (b) | from appointing, at any time between the making of an application for a judicial management order and the making of the judicial management order or the determination of the application, an interim judicial manager under section 92. |
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| Power of Court to appoint interim judicial manager |
92.—(1) At any time between the making of an application for a judicial management order and the making of the judicial management order or the determination of the application, the Court may, on the application of the person applying for the judicial management order, the company or any creditor of the company, appoint an interim judicial manager to act as such pending the making of a judicial management order.| (2) The Court may, if the Court sees fit, appoint as interim judicial manager, the person nominated in the application for a judicial management order or any other licensed insolvency practitioner. |
| (3) Section 91(3) applies, with the necessary modifications, to the nomination and appointment of a person to act as interim judicial manager. |
| (4) The interim judicial manager so appointed may exercise such functions, powers and duties as the Court may specify in the order. |
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| Restrictions on acts of company pending hearing of judicial management application |
93. At any time during the period between the making of a judicial management application and the determination of the application, the Court may, on the application of any creditor of the company —| (a) | make an order to require or restrict any act of, or the exercise of any powers of, the company pending the determination of the application; or | | (b) | make either or both of the following orders, each of which is to be in force for such part of the period as the Court thinks fit:| (i) | an order restraining the company from disposing of the property of the company other than in good faith and in the ordinary course of the business of the company; | | (ii) | an order restraining the company from transferring any share in, or altering the rights of any member of, the company. |
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| Judicial management by resolution of creditors |
94.—(1) Where a company considers that —| (a) | the company is, or is likely to become, unable to pay its debts; and | | (b) | there is a reasonable probability of achieving one or more of the purposes of judicial management mentioned in section 89(1), |
| the company may, instead of applying to the Court for a judicial management order, obtain under subsection (11) a resolution of the company’s creditors for the company to be placed under the judicial management of a judicial manager in accordance with the requirements in this section. |
(2) A company that proposes to obtain under subsection (11) a resolution of the company’s creditors for the company to be placed under judicial management must give at least 7 days’ written notice in the prescribed form of its intention to appoint an interim judicial manager under subsection (3) —| (a) | to the proposed interim judicial manager; and | | (b) | to any person who has appointed, or is or may be entitled to appoint, a receiver and manager of the whole (or substantially the whole) of the company’s property under the terms of any debentures of the company secured by a floating charge or by a floating charge and one or more fixed charges. |
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(3) A company may appoint an interim judicial manager under this subsection only if all the following conditions are met:| (a) | the appointment is authorised by way of a resolution of the members of the company or, where so authorised by the constitution of the company, by a resolution of its board of directors; | | (b) | the notice period mentioned in subsection (2) has expired; | | (c) | not more than 21 days have elapsed after the date of the notice mentioned in subsection (2); | | (d) | each person to whom the notice mentioned in subsection (2) was given has consented in writing to the appointment of the interim judicial manager; | | (e) | the proposed interim judicial manager has lodged, with the Official Receiver and the Registrar of Companies, a statutory declaration by the proposed interim judicial manager stating that —| (i) | the proposed interim judicial manager is not in a position of conflict of interest; | | (ii) | in the view of the proposed interim judicial manager, one or more purposes of judicial management mentioned in section 89(1) can be achieved; and | | (iii) | the proposed interim judicial manager consents to be appointed as interim judicial manager; |
| | (f) | the company’s directors have lodged with the Registrar of Companies a statutory declaration stating that —| (i) | the company is or is likely to become unable to pay its debts; | | (ii) | the company will summon a meeting of the company’s creditors to be held on a date not later than 30 days after the date of lodgment of the statutory declaration mentioned in paragraph (e); and | | (iii) | the directors believe that one or more of the purposes of judicial management mentioned in section 89(1) is likely to be achieved; |
| | (g) | the proposed interim judicial manager is a licensed insolvency practitioner, and is not the auditor of the company. |
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(4) The interim judicial manager appointed under subsection (3) —| (a) | is an officer of the court; | | (b) | has, and may exercise, all the functions and powers of a judicial manager appointed by a Court under section 91, subject to such limitations and restrictions as may be prescribed by regulations; and | | (c) | must adjudicate any proofs of debt filed by creditors for purposes of voting at the meeting of creditors to be convened under subsection (7). |
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(5) Upon the appointment of the interim judicial manager under subsection (3), the company must —| (a) | within 3 days after the appointment of the interim judicial manager, cause a written notice of the appointment to be lodged in the prescribed form with the Official Receiver and the Registrar of Companies; and | | (b) | within 7 days after the lodgment of the notice under paragraph (a), cause a notice of the appointment to be published in the Gazette and in an English local daily newspaper. |
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(6) The term of the appointment of the interim judicial manager ends on the occurrence of the earlier of the following events:| (a) | the expiry of 30 days after the date of the appointment, or such extension of that period as the Official Receiver may allow in any particular case; | | (b) | the appointment of a judicial manager, or the rejection of the resolution to place the company under judicial management at a meeting of creditors convened under subsection (7). |
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| (7) After the lodgment of the statutory declaration mentioned in subsection (3)(e), the company must convene a meeting of the creditors of the company to be held not later than 30 days after the date of lodgment of the statutory declaration, at a time and place convenient to the majority in value of the creditors, to consider a resolution for the company to be placed under judicial management. |
(8) The company must, in convening the meeting under subsection (7) —| (a) | give to the creditors at least 14 days’ written notice of the meeting, together with —| (i) | a statement showing the names of all creditors and the amounts of their claims; and | | (ii) | a full statement of the company’s affairs showing in respect of the company’s assets or property the method and manner in which the valuation of the assets or property was arrived at; and |
| | (b) | cause notice of the meeting of the creditors to be published at least 10 days before the date of the meeting in an English local daily newspaper. |
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| (9) The directors of the company must appoint at least one of their number to attend the meeting convened under subsection (7). |
| (10) Each director appointed under subsection (9), and the secretary of the company, must attend the meeting convened under subsection (7) and disclose to the meeting the company’s affairs and the circumstances leading up to the proposed judicial management. |
(11) At the meeting convened under subsection (7) —| (a) | the creditors may appoint one of their number, the interim judicial manager, or any director appointed under subsection (9), to be chairperson of the meeting (called in this section the chairperson); | | (b) | the chairperson must determine whether the meeting is being held at a time and place convenient to the majority in value of the creditors, and the chairperson’s decision is final; | | (c) | if the chairperson decides that the meeting is not being held at a time and place convenient to that majority, the meeting lapses and a further meeting must be summoned by the company as soon as is practicable; | | (d) | the company is placed under the judicial management of a judicial manager if a majority in number and value of the creditors present and voting resolve to do so; and | | (e) | where the meeting passes a resolution to place the company under the judicial management of a judicial manager, the meeting must approve, by a majority in number and value of the creditors of the company present and voting, the appointment of a person as judicial manager. |
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| (12) The judicial manager must be a licensed insolvency practitioner who is not the auditor of the company. |
(13) An interim judicial manager or a judicial manager must not be appointed under this section —| (a) | if an application for a judicial management order has been made under section 91(1), and that application has not been withdrawn or decided by the Court; | | (b) | after the company has gone into liquidation; | | (c) | if the company is a banking corporation or is a finance company licensed under the Finance Companies Act; | | (d) | if the company is a licensed insurer licensed under the Insurance Act; or | | (e) | if the company belongs to such class of companies as the Minister may by order in the Gazette prescribe. |
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| (14) Any person who fails to comply with subsection (5), (7) or (8) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000. |
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| Effect of application for judicial management order or filing of written notice of appointment of interim judicial manager |
95.—(1) Subject to subsection (2), in any case where a company makes an application for a judicial management order under section 91, or lodges a written notice of appointment of an interim judicial manager under section 94(5)(a), during the automatic moratorium period —| (a) | no order may be made, and no resolution may be passed, for the winding up of the company; | | (b) | no step may be taken to enforce any security over any property of the company, or to repossess any goods under any hire‑purchase agreement, chattels leasing agreement or retention of title agreement, except with the leave of the Court and subject to such terms as the Court may impose; | | (c) | no other proceedings may be commenced or continued against the company, except with the leave of the Court and subject to such terms as the Court may impose; and | | (d) | no execution or other legal process, may be commenced or continued, and no distress may be levied, against the company or its property, except with the leave of the Court and subject to such terms as the Court may impose. |
(2) Subsection (1) does not apply to a company that makes an application for a judicial management order or lodges a written notice of appointment of an interim judicial manager under section 94(5)(a) if, within the period of 12 months immediately before the date on which that application is made or that written notice is lodged, the company —| (a) | made an earlier application for a judicial management order, to which subsection (1) applied; or | | (b) | lodged an earlier written notice of appointment of an interim judicial manager under section 94(5)(a) to which subsection (1) applied. |
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(3) Subsection (1) does not affect any of the following:| (a) | the exercise of any legal right under any arrangement (including a set‑off arrangement or a netting arrangement) that may be prescribed by regulations; | | (b) | the commencement or continuation of any proceedings that may be prescribed by regulations. |
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(4) In this section, “automatic moratorium period” means —| (a) | in any case where a company makes an application for a judicial management order under section 91, the period starting on the date on which the application is made, and ending on the date on which the application is decided by the Court; or | | (b) | in any case where a company lodges a written notice of appointment of an interim judicial manager under section 94(5)(a), the period starting on the date of lodgment of the written notice and ending on the earliest of the following dates:| (i) | the date of the appointment of a judicial manager; | | (ii) | the date on which the term of appointment of the interim judicial manager ends under section 94(6); | | (iii) | the rejection of the resolution to place the company under judicial management at a meeting of creditors convened under section 94(7). |
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| Effect of company entering judicial management |
96.—(1) When a company enters judicial management —| (a) | any receiver, or receiver and manager, must vacate office; and | | (b) | any application for the winding up of the company must be dismissed. |
(2) Where any receiver, or receiver and manager, has vacated office under subsection (1)(a), the following must be charged on and, subject to subsection (4), paid out of any property which was in the custody or under the control of the receiver, or receiver and manager, at the time the company enters judicial management, in priority to any security held by the person by or on whose behalf the receiver, or receiver and manager, was appointed:| (a) | the remuneration of, and any expenses properly incurred by, the receiver, or receiver and manager; | | (b) | any indemnity to which the receiver, or receiver and manager, is entitled out of the assets or property of the company. |
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| (3) A receiver, or receiver and manager, of a company who vacates office under subsection (1)(a) is not required, on or after so vacating office, to take steps to comply with any duty imposed on the receiver, or receiver and manager, by section 86. |
(4) During the period in which a company is in judicial management —| (a) | no order may be made, and no resolution may be passed, for the winding up of the company; | | (b) | no receiver or manager may be appointed over any property or undertaking of the company; | | (c) | no other proceedings may be commenced or continued against the company, except —| (i) | with the consent of the judicial manager; or | | (ii) | with the leave of the Court and subject to such terms as the Court may impose; |
| | (d) | no execution or other legal process may be commenced or continued, and no distress may be levied, against the company or its property except —| (i) | with the consent of the judicial manager; or | | (ii) | with the leave of the Court and subject to such terms as the Court may impose; |
| | (e) | no step may be taken to enforce any security over any property of the company, or to repossess any goods under any hire‑purchase agreement, chattels leasing agreement or retention of title agreement, except —| (i) | with the consent of the judicial manager; or | | (ii) | with the leave of the Court and subject to such terms as the Court may impose; and |
| | (f) | despite sections 18 and 18A of the Conveyancing and Law of Property Act, no right of re‑entry or forfeiture under any lease in respect of any premises occupied by the company may be enforced, except —| (i) | with the consent of the judicial manager; or | | (ii) | with the leave of the Court and subject to such terms as the Court may impose. |
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(5) Subsection (4) does not affect any of the following:| (a) | the exercise of any legal right under any arrangement (including a set‑off arrangement or a netting arrangement) that may be prescribed by regulations; | | (b) | the commencement or continuation of any proceedings that may be prescribed by regulations. |
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| Notification of judicial management |
97.—(1) During the period in which the company is in judicial management —| (a) | every invoice, order for goods, business letter, order form or other correspondence (whether in hard copy, electronic or any other form) that is issued by or on behalf of the company or the judicial manager, being a document on or in which the name of the company appears; and | | (b) | every Internet website of the company on or in which the name of the company appears, |
| must state, immediately after the name of the company where it first appears in that document or Internet website, that the affairs, business and property of the company are being managed by the judicial manager. |
(2) Where an interim judicial manager has been appointed over a company —| (a) | every invoice, order for goods, business letter, order form or other correspondence (whether in hard copy, electronic or any other form) that is issued by or on behalf of the company or the interim judicial manager, being a document on or in which the name of the company appears; and | | (b) | every Internet website of the company on or in which the name of the company appears, |
| must state, immediately after the name of the company where it first appears in that document or Internet website, that the affairs, business and property of the company are being managed by the interim judicial manager. |
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(3) If there is any default in complying with this section, each of the following shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 and also to a default penalty:| (a) | the company; | | (b) | each of the following persons who knowingly and wilfully authorises or permits the default:| (i) | the judicial manager; | | (ii) | the interim judicial manager; | | (iii) | any officer of the company. |
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| Vacancy in appointment of judicial manager or interim judicial manager |
98.—(1) If a vacancy occurs by death, resignation or otherwise in the office of a judicial manager or interim judicial manager of a company who was appointed by the Court, the Court may, on the application of the company, any creditor of the company, or the Minister, by order fill the vacancy.(2) If a judicial manager of a company, who was appointed under section 94, dies, resigns or otherwise vacates the office of judicial manager —| (a) | the creditors may (by a majority in number and value, voting either in person or by proxy) fill the vacancy; and | | (b) | a meeting of the creditors may be summoned by any 2 of their number for the purpose of filling the vacancy. |
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| General powers and duties of judicial manager |
99.—(1) When a company enters judicial management, the judicial manager must take into the custody or under the control of the judicial manager all the property to which the company is or appears to be entitled.| (2) During the period in which a company is in judicial management, all powers conferred and duties imposed on the directors of the company by this Act or the Companies Act, or by the constitution of the company, must be exercised and performed by the judicial manager and not by the directors, but nothing in this subsection requires the judicial manager to call any meetings of the company. |
(3) The judicial manager of a company —| (a) | has such powers and must do such things as may be necessary for the management of the affairs, business and property of the company; and | | (b) | must do such other things as the Court may by order sanction. |
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| (4) Without limiting subsection (3)(a), the powers conferred by that provision include the powers specified in the First Schedule. |
| (5) The judicial manager of a company may apply to the Court for directions in relation to any particular matter arising in connection with the carrying out of the judicial manager’s functions. |
(6) Nothing in this section authorises the judicial manager of a company to make any payment towards discharging any debt to which the company was subject on the date of the company’s entry into judicial management, unless —| (a) | the making of the payment is sanctioned by the Court or the payment is made pursuant to a compromise or an arrangement so sanctioned; | | (b) | the payment is made towards discharging sums secured by a security or payable under a hire‑purchase agreement, chattels leasing agreement or retention of title agreement to which section 100(2), (5) and (6) applies; | | (c) | such payment is necessary or incidental to the performance of the judicial manager’s functions; or | | (d) | such payment is necessary to assist the achievement of one or more of the purposes of the judicial management mentioned in section 89(1). |
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| (7) The judicial manager of a company may at any time, if the judicial manager thinks fit, and must, if the judicial manager is directed to do so by the Court, summon a meeting of the company’s creditors. |
| (8) Any alteration in the company’s constitution made by virtue of an order under subsection (3)(b) is of the same effect as if duly made by resolution of the company, and the provisions of this Act and the Companies Act apply accordingly to the constitution as so altered. |
| (9) A copy of an order under subsection (3)(b) sanctioning the alteration of the company’s constitution must, within 14 days after the making of the order, be delivered by the judicial manager to the Registrar of Companies. |
| (10) A person dealing with the judicial manager of a company in good faith and for value is not required to inquire whether the judicial manager is acting within the judicial manager’s powers. |
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| Power to deal with charged property, etc. |
100.—(1) The judicial manager of a company may dispose of or otherwise exercise the judicial manager’s powers in relation to any property of the company, which is subject to a security to which this subsection applies, as if the property were not subject to the security.(2) Where, on application by the judicial manager of a company, the Court is satisfied that the disposal (with or without other assets or property) —| (a) | of any property of the company subject to a security to which this subsection applies; or | | (b) | of any goods under a hire-purchase agreement, chattels leasing agreement or retention of title agreement, |
| would be likely to promote one or more of the purposes of judicial management under section 89(1), the Court may by order authorise the judicial manager to dispose of the property, as if the property were not subject to the security, or to dispose of the goods, as if all rights of the owner of the goods under the hire-purchase agreement, chattels leasing agreement or retention of title agreement were vested in the company. |
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| (3) Subsection (1) applies to any security that, as created, was a floating charge, and subsection (2) applies to any other security. |
| (4) Where any property is disposed of under subsection (1), the holder of the security has the same priority, in respect of any property of the company directly or indirectly representing the property disposed of, as the holder would have had in respect of the property subject to the security. |
(5) It is a condition of an order made under subsection (2) that —| (a) | the net proceeds of the disposal must be applied towards discharging the sums secured by the security or payable under the hire-purchase agreement, chattels leasing agreement or retention of title agreement; and | | (b) | where the net proceeds of the disposal are less than the sums secured by the security or payable under any of those agreements, the holder of the security or the owner of the goods (as the case may be) may prove on a winding up for any balance due to the holder or the owner. |
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| (6) Where a condition imposed under subsection (5) relates to 2 or more securities, that condition requires the net proceeds of the disposal to be applied towards discharging the sums secured by those securities in the order of their priorities. |
| (7) The judicial manager must give 7 days’ notice, of an application by the judicial manager to the Court to dispose of property subject to a security under subsection (2), to the holder of the security or to the owner of the goods which are subject to any of the agreements mentioned in that subsection, and the holder or the owner (as the case may be) may oppose the disposal of the property. |
| (8) Where the Court makes an order under subsection (2), the judicial manager must lodge a copy of the order, within 14 days after the making of the order, with the Registrar of Companies. |
| (9) If the judicial manager, without reasonable excuse, fails to comply with subsection (7) or (8), the judicial manager shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 and also to a default penalty. |
| (10) Nothing in this section affects an application to the Court under section 115. |
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| Super priority for rescue financing |
101.—(1) At any time when a company is in judicial management, the Court may, on an application by the judicial manager, make one or more of the following orders:| (a) | an order that if the company is wound up, the debt arising from any rescue financing obtained, or to be obtained, by the company is to be treated as if it were part of the costs and expenses of the winding up mentioned in section 203(1)(b); | | (b) | an order that if the company is wound up, the debt arising from any rescue financing obtained, or to be obtained, by the company is to have priority over all the preferential debts specified in section 203(1)(a) to (i) and all other unsecured debts, if the company would not have been able to obtain the rescue financing from any person unless the debt arising from the rescue financing is given the priority mentioned in this paragraph; | | (c) | an order that the debt arising from any rescue financing to be obtained by the company is to be secured by —| (i) | a security interest on property of the company that is not otherwise subject to any security interest; or | | (ii) | a subordinate security interest on property of the company that is subject to an existing security interest, |
| if the company would not have been able to obtain the rescue financing from any person unless the debt arising from the rescue financing is secured in the manner mentioned in this paragraph; |
| | (d) | an order that the debt arising from any rescue financing to be obtained by the company is to be secured by a security interest, on property of the company that is subject to an existing security interest, of the same priority as or a higher priority than that existing security interest, if —| (i) | the company would not have been able to obtain the rescue financing from any person unless the debt arising from the rescue financing is secured in the manner mentioned in this paragraph; and | | (ii) | there is adequate protection for the interests of the holder of that existing security interest. |
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| (2) A judicial manager that makes an application under subsection (1) must send a notice of the application to each creditor of the company. |
| (3) Any creditor of the company may oppose an application under subsection (1). |
(4) Where a company that has 2 or more super priority debts is wound up, the super priority debts —| (a) | rank equally in priority between themselves; and | | (b) | are to be paid in full or, if the company has insufficient property to meet them, are to abate in equal proportions between themselves. |
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(5) Where a company that has any super priority debt or debts is wound up, the super priority debt or debts constitute one class of debts and, despite section 203 —| (a) | the super priority debt or debts are to be paid in priority to all the preferential debts specified in section 203(1)(a) to (i) and all other unsecured debts; and | | (b) | if the property of the company available for the payment of the super priority debt or debts is insufficient to meet the super priority debt or debts, the super priority debt or debts —| (i) | have priority over the claims of the holders of any debentures of the company secured by a floating charge (which, as created, was a floating charge); and | | (ii) | are to be paid out of any property comprised in or subject to that floating charge. |
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| (6) The reversal or modification on appeal of an order under subsection (1)(c) or (d) does not affect the validity of any debt so incurred, or any security interest that was granted pursuant to the order, or the priority of that security interest, if the rescue financing (from which arose the debt intended to be secured by that security interest) was provided in good faith, whether or not with knowledge of the appeal, unless the order was stayed pending the appeal before the rescue financing was provided. |
(7) For the purposes of subsection (1)(d)(ii), there is adequate protection for the interests of the holder of an existing security interest on the property of a company, if —| (a) | the Court orders the company to make one or more cash payments to the holder, the total amount of which is sufficient to compensate the holder for any decrease in the value of the holder’s existing security interest that may result from the making of the order under subsection (1)(d); | | (b) | the Court orders the company to provide to the holder additional or replacement security of a value sufficient to compensate the holder for any decrease in the value of the holder’s existing security interest that may result from the making of the order under subsection (1)(d); or | | (c) | the Court grants any relief (other than compensation) that will result in the realisation by the holder of the indubitable equivalent of the holder’s existing security interest. |
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| (8) Sections 205, 224, 225 and 228 do not affect any priority conferred, any security interest or relief granted, or any payment made, pursuant to and in accordance with an order made by the Court under subsection (1). |
| (9) The judicial manager must, within 14 days after the date of an order made under subsection (1), lodge a copy of the order with the Registrar of Companies. |
(10) In this section —“rescue financing” means any financing that satisfies one or more of the following conditions:| (a) | the financing is necessary for the survival of a company that obtains the financing, or of the whole or any part of the undertaking of that company, as a going concern; | | (b) | the financing is necessary for the Court’s approval under section 210(4) of the Companies Act or section 71(5) of a compromise or an arrangement mentioned in section 210(1) of the Companies Act or section 71(1) (as the case may be) involving a company that obtains the financing; | | (c) | the financing is necessary to achieve a more advantageous realisation of the assets of a company that obtains the financing, than on a winding up of that company; |
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| “security interest” means any mortgage, charge, pledge, lien or other type of security interest recognised by law; |
| “super priority debt” means a debt, arising from any rescue financing obtained or to be obtained by a company, that is to have priority, pursuant to an order under subsection (1)(b), over all the preferential debts specified in section 203(1)(a) to (i) and all other unsecured debts, if the company is wound up. |
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| Agency and liability for contracts |
102.—(1) The judicial manager of a company —| (a) | is deemed to be the agent of the company; and | | (b) | is entitled to have the judicial manager’s remuneration and expenses defrayed, out of the property of the company that is in the custody or under the control of the judicial manager, in accordance with section 114 and in priority to all other debts except those subject to a security to which section 100(2) or 101(1)(c) or (d) applies. |
| (2) Nothing in this section limits the right of a judicial manager to seek an indemnity from any other person in respect of contracts entered into by the judicial manager that are approved by the Court. |
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| Suspension of requirements to call annual general meeting and to file annual returns and audited accounts |
| 103. During the period in which a company is in judicial management, the judicial manager, the company and any officer of the company (as the case may be) are not required to comply with sections 175, 197 and 201 of the Companies Act. |
| Vacation of office and release |
104.—(1) The judicial manager of a company —| (a) | may at any time be removed from office by order of the Court; and | | (b) | may, with the leave of the Court and subject to such conditions as the Court may impose, resign from the office of judicial manager by giving notice of resignation to the Court. |
(2) The judicial manager of a company must vacate office if —| (a) | being a licensed insolvency practitioner at the time of his or her appointment, the judicial manager ceases to be a licensed insolvency practitioner; or | | (b) | the company is discharged from judicial management. |
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| (3) Where at any time a person ceases to be a judicial manager of a company, whether by virtue of this section or by reason of the person’s death, any remuneration and expenses properly incurred by the person must be charged on and paid out of the property of the company in the custody or under the control of the person in accordance with section 114 and in priority to all other debts, except those subject to a security to which section 100(2) or 101(1)(c) or (d) applies. |
| (4) Where a person ceases to be a judicial manager of a company, from such time as the Court may determine, the person is released from any liability in respect of any act or omission by the person in the management of the company or otherwise in relation to the person’s conduct as a judicial manager, but nothing in this section relieves the person of any of the liabilities mentioned in section 112(5). |
| (5) Where the office of a judicial manager has been vacated, the Court may appoint another licensed insolvency practitioner as judicial manager of the company. |
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| Information to be given by judicial manager |
105.—(1) Where a company enters judicial management, the judicial manager must —| (a) | within 3 days after the company’s entry into judicial management —| (i) | in a case where the judicial manager was appointed by the Court under section 91(1), lodge with the Official Receiver and the Registrar of Companies a copy of the judicial management order; or | | (ii) | in a case where the judicial manager was appointed by the creditors of the company under section 94(11)(e), lodge with the Official Receiver and the Registrar of Companies a written notice of the appointment in the prescribed form; |
| | (b) | within 3 days after the company’s entry into judicial management, send to the company, and publish in the Gazette and in an English local daily newspaper, a notice of the judicial management order or the notice of the appointment of the judicial manager mentioned in paragraph (a)(ii), as the case may be; and | | (c) | within 28 days after the company’s entry into judicial management, unless the Court otherwise directs, send a notice of the judicial management order or the notice of the appointment of the judicial manager mentioned in paragraph (a)(ii) (as the case may be) to every creditor of the company (so far as the judicial manager is aware of the creditor’s address). |
| (2) The Registrar of Companies must enter the copy of the judicial management order mentioned in subsection (1)(a)(i) or the notice of appointment of the judicial manager mentioned in subsection (1)(a)(ii) (as the case may be) in the Registrar’s records of the company. |
| (3) Any judicial manager who, without reasonable excuse, fails to comply with subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 and also to a default penalty. |
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| Company’s statement of affairs |
106.—(1) Where a company enters judicial management, the relevant persons must submit a statement as to the affairs of the company to the judicial manager within 28 days (or such longer period not exceeding 2 months as the judicial manager may allow) after the company receives the judicial manager’s notice mentioned in section 105(1)(b).(2) The statement of affairs mentioned in subsection (1) —| (a) | must show, as at the date that the company entered judicial management —| (i) | the particulars of the company’s assets, debts and liabilities; | | (ii) | the names and addresses of the company’s creditors; | | (iii) | the securities held by each of those creditors; | | (iv) | the dates when each of those securities was given; and | | (v) | such further or other information as may be prescribed by regulations; and |
| | (b) | must be verified by an affidavit of the relevant persons mentioned in subsection (1). |
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(3) For the purposes of subsections (1) and (2), the relevant persons are —| (a) | all of the following persons:| (i) | one or more of the persons who are, at the date of the company’s entry into judicial management, the directors of the company; | | (ii) | the person who is at that date the secretary of the company; or |
| | (b) | if the persons mentioned in paragraph (a) are not able or willing to submit and verify the statement of affairs mentioned in subsection (1), such of the following persons as the judicial manager may require to submit and verify the statement of affairs:| (i) | any person who is or has been an officer of the company; | | (ii) | any person who has taken part in the company’s formation at any time within one year before the date of the company’s entry into judicial management; | | (iii) | any person who is or has been employed by the company, whether under a contract of service or a contract for services, and is in the judicial manager’s opinion capable of giving the information required. |
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| (4) Any person who, without reasonable excuse, fails to comply with this section shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 and also to a default penalty. |
| (5) Any statement of affairs submitted under subsection (1) may be used in evidence against any person making or concurring in making it. |
| (6) The judicial manager must lodge a copy of the company’s statement of affairs with the Registrar of Companies immediately after receiving that statement of affairs. |
| (7) Any person making the statement of affairs mentioned in subsection (1) and the affidavit verifying the statement of affairs must be paid by the judicial manager, out of the judicial manager’s receipts, such costs and expenses incurred in and about the preparation and making of the statement of affairs and the affidavit as the judicial manager may consider reasonable, subject to an appeal to the Court. |
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107.—(1) Where a company enters judicial management, the judicial manager must, within 90 days (or such longer period as may be allowed under subsection (3)) after the company’s entry into judicial management —| (a) | send to the Registrar of Companies and to every creditor (so far as the judicial manager is aware of the creditor’s address) a statement of the judicial manager’s proposals for achieving one or more of the purposes mentioned in section 89(1); and | | (b) | lay a copy of the statement before a meeting of the company’s creditors summoned for the purpose on not less than 14 days’ notice. |
(2) The judicial manager must also, within 90 days (or such longer period as may be allowed under subsection (3)) after the company’s entry into judicial management, either —| (a) | send a copy of the statement to every member of the company (so far as the judicial manager is aware of the member’s address); or | | (b) | publish a notice in an English local daily newspaper stating an address to which members of the company should write for copies of the statement to be sent to them free of charge. |
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(3) A judicial manager may obtain an extension of the period specified in subsection (1) or (2) —| (a) | by making an application at any time to the Court; or | | (b) | subject to subsection (4), by obtaining the approval of a majority in number and value of the creditors of the company (voting either in person or by proxy) —| (i) | in writing; or | | (ii) | at a creditors’ meeting. |
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(4) An extension of time may be obtained under subsection (3)(b) —| (a) | only for a period not exceeding 60 days; | | (b) | only once; | | (c) | only if the period specified in subsection (1) or (2) has not been extended by the Court; and | | (d) | only before the expiry of the period specified in subsection (1) or (2). |
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| Consideration of proposals by creditors’ meeting |
108.—(1) A meeting of creditors, summoned under section 107(1), must decide whether to approve the judicial manager’s proposals.| (2) The meeting must, subject to subsection (3), be conducted in accordance with the regulations. |
| (3) At the meeting, a majority in number and value of the creditors (present and voting either in person or by proxy), whose claims have been accepted by the judicial manager, may approve the proposals with modifications, but must not do so unless the judicial manager consents to each modification. |
(4) The judicial manager must —| (a) | report the result of the meeting to the Court; and | | (b) | give notice of that result to the Registrar of Companies and to such other persons or bodies as the Court may approve. |
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(5) If a report is given to the Court under subsection (4) that the meeting has declined to approve the judicial manager’s proposals (with or without modifications), the Court may —| (a) | by order discharge the company from judicial management, and make such consequential provision as the Court thinks fit; | | (b) | adjourn the hearing conditionally or unconditionally; or | | (c) | make an interim order or any other order that the Court thinks fit. |
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| (6) A copy of every order of the Court made under subsection (5) must be published in an English local daily newspaper. |
| (7) Where the company is discharged under subsection (5) from judicial management, the judicial manager must immediately lodge with the Official Receiver and the Registrar of Companies a copy of the order effecting the discharge. |
| (8) Any judicial manager who, without reasonable excuse, fails to comply with subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 and also to a default penalty. |
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109.—(1) Where a meeting of creditors summoned under section 107(1) has approved the judicial manager’s proposals (with or without modifications), the meeting may, if it thinks fit, establish a committee to exercise the functions conferred on the committee under subsection (2).| (2) If such a committee is established, the committee may require the judicial manager to attend before it and furnish it with such information relating to the carrying out by the judicial manager of the judicial manager’s functions as the committee may reasonably require. |
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| Duty to manage company’s affairs, etc., in accordance with approved proposals |
110.—(1) Where the judicial manager’s proposals have been approved by a meeting of creditors summoned under section 107(1), then, subject to any order under section 115, it is the duty of the judicial manager to manage the affairs, business and property of the company in accordance with the proposals as from time to time revised by the judicial manager.(2) Where the judicial manager proposes to make substantial revisions of the proposals as so approved, the judicial manager —| (a) | must —| (i) | send to the Registrar of Companies and every creditor of the company (so far as the judicial manager is aware of the creditor’s address) a statement of the judicial manager’s proposed revisions; and | | (ii) | lay a copy of the statement before a meeting of the company’s creditors summoned for the purpose on not less than 14 days’ notice; and |
| | (b) | must not make the proposed revisions unless they are approved by the majority in number and value of creditors (present and voting in person or by proxy at the meeting), whose claims have been accepted by the judicial manager. |
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(3) The judicial manager must also either —| (a) | send a copy of the statement to every member of the company (so far as the judicial manager is aware of the member’s address); or | | (b) | publish a notice in an English local daily newspaper stating an address to which members of the company should write for copies of the statement to be sent to them free of charge. |
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| (4) A meeting of creditors summoned under subsection (2) (which must, subject to subsection (2) and this subsection, be conducted in accordance with the regulations) may approve the proposed revisions with modifications but must not do so unless the judicial manager consents to each modification. |
| (5) After the conclusion of a meeting summoned under subsection (2), the judicial manager must give notice of the result of the meeting to the Registrar of Companies or to such other persons or bodies as the Court may approve. |
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| End of judicial management |
111.—(1) A judicial manager appointed by a judicial management order under section 91 is, unless the order specifies otherwise, appointed for a period that expires 180 days after the date of the making of the order, and upon the expiry of that period, the company is discharged from judicial management.| (2) A judicial manager appointed by a meeting of creditors under section 94(11)(e) is appointed for a period that expires 180 days after the date of the approval of the judicial manager’s appointment at the meeting of creditors, and upon the expiry of that period, the company is discharged from judicial management. |
(3) Subject to subsections (4) and (5), a judicial manager may obtain an extension of the judicial manager’s term of office —| (a) | by making an application to the Court; or | | (b) | by obtaining the approval of a majority in number and value of the creditors of the company (voting either in person or by proxy) —| (i) | in writing; or | | (ii) | at a creditors’ meeting. |
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(4) On an application under subsection (3)(a), the Court —| (a) | may extend the term of office of the judicial manager for a specified period; | | (b) | may extend the term of office of a judicial manager even though that term of office has previously been extended by the Court or by approval of the company’s creditors under subsection (3)(b); and | | (c) | may only extend the judicial manager’s term of office before the expiry of that term of office. |
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(5) An extension of the judicial manager’s term of office may be obtained under subsection (3)(b) —| (a) | only for a period not exceeding 6 months; | | (b) | only once; | | (c) | only if the Court has not previously granted or dismissed an application under subsection (3)(a); and | | (d) | only before the expiry of that term of office. |
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| (6) Any creditor who is dissatisfied with an extension of the judicial manager’s term of office under subsection (3)(b) may apply to the Court for an order terminating, or reducing the period of extension of, the appointment of the judicial manager, and the Court on hearing such an application may make such order as the Court thinks fit. |
(7) Where a judicial manager’s term of office has expired or has been extended by the Court or under subsection (3)(b), the judicial manager must file notice of the expiry or extension of the term with —| (a) | the Court (unless the extension was by the Court); | | (b) | the Registrar of Companies; and | | (c) | the Official Receiver. |
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| (8) Any judicial manager who, without reasonable excuse, fails to comply with subsection (7) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 and also to a default penalty. |
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| Duty to apply for discharge from judicial management |
112.—(1) The judicial manager of a company must apply to the Court for the company to be discharged from judicial management if it appears to the judicial manager that —| (a) | one or more of the purposes of judicial management mentioned in section 89(1) has been achieved; or | | (b) | none of the purposes of judicial management mentioned in section 89(1) is capable of achievement. |
(2) On the hearing of an application under this section, the Court may —| (a) | by order discharge the company from judicial management and make such consequential provision as the Court thinks fit; | | (b) | adjourn the hearing conditionally or unconditionally; or | | (c) | make an interim order or any other order the Court thinks fit. |
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| (3) Where the company is discharged from judicial management, the judicial manager must immediately lodge with the Official Receiver and the Registrar of Companies a copy of the order effecting the discharge. |
| (4) Where a company is discharged from judicial management under this Part, or where a person ceases to be a judicial manager pursuant to section 104, the judicial manager or person may apply to the Court to be released, and the Court may, if the Court thinks fit, make an order releasing the judicial manager or person from liability in respect of any act or omission by the judicial manager or person in the management of the company or otherwise in relation to the judicial manager’s or person’s conduct as judicial manager. |
| (5) Any release ordered by the Court under subsection (4) does not relieve the judicial manager or person from liability for any misapplication or retention of any money or property of the company or for which the judicial manager or person has become accountable, or from any law to which the judicial manager or person would be subject in respect of negligence, default, misfeasance, breach of trust or breach of duty in relation to the company. |
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| Application to Court for approval of remuneration and expenses of former judicial manager |
113.—(1) Where a person ceases to be a judicial manager, and the person’s remuneration and expenses as judicial manager were not previously approved by the Court or the committee of creditors before the person’s cessation, the person may apply to the Court for the approval of the person’s remuneration and expenses incurred during the person’s term of office as judicial manager.| (2) On an application for an order under subsection (1), the Court may make an order approving the remuneration and expenses, and may make such other order as the Court thinks fit, including that the remuneration and expenses be charged as an expense of winding up under section 203(1)(b). |
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| Order of priority for expenses of judicial manager and interim judicial manager |
114.—(1) The expenses of a judicial manager are payable in the following order of priority:| (a) | first, any debt arising from rescue financing obtained pursuant to an order under section 101(1)(b); | | (b) | second, any sums payable in respect of any debts or liabilities of the company incurred during judicial management, including any debt arising from rescue financing obtained pursuant to an order under section 101(1)(a); | | (c) | third, any other remuneration or expenses properly incurred by the judicial manager in performing the judicial manager’s functions in the judicial management of the company. |
(2) For the purposes of this section —| (a) | a judicial manager includes an interim judicial manager appointed under section 92 or 94(3); and | | (b) | judicial management includes interim judicial management by an interim judicial manager. |
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| Protection of interests of creditors and members |
115.—(1) At any time when a company is in judicial management or interim judicial management, a creditor or member of the company may apply to the Court for an order under this section on the ground —| (a) | that the company’s affairs, business and property are being or have been managed by the judicial manager or interim judicial manager in a manner that is or was unfairly prejudicial to the interests of —| (i) | its creditors or members generally; | | (ii) | some part of its creditors or members (including at least the applicant); or | | (iii) | a single creditor that represents at least one quarter in value of the claims against the company; |
| | (b) | that any actual or proposed act or omission of the judicial manager or interim judicial manager is or would be prejudicial in the manner mentioned in paragraph (a); | | (c) | in a case of interim judicial management or judicial management under section 94, that the interim judicial management or judicial management of the company should not have been commenced at all; | | (d) | that one or more of the purposes of judicial management mentioned in section 89(1) have been achieved; | | (e) | that none of the purposes of judicial management mentioned in section 89(1) is capable of achievement; or | | (f) | that the judicial manager is not managing the company in accordance with the proposals which had been approved by a meeting of creditors summoned under section 107(1). |
(2) On an application under subsection (1), the Court may —| (a) | make such order as the Court 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 the Court thinks fit. |
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(3) Subject to subsection (4), an order under this section may —| (a) | regulate the future management by the judicial manager or interim judicial manager of the company’s affairs, business and property; | | (b) | require the judicial manager or interim judicial manager —| (i) | to refrain from doing or continuing an act complained of by the applicant; or | | (ii) | to do an act that the applicant has complained the judicial manager or interim judicial manager has 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; or | | (d) | discharge the company from judicial management or interim judicial management, and make such consequential provision as the Court thinks fit. |
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| (4) An order under this section must not prejudice or prevent the implementation of any compromise or arrangement approved under section 210 of the Companies Act or section 71. |
| (5) Where the company is discharged from judicial management or interim judicial management under subsection (3)(d), the judicial manager or interim judicial manager must immediately lodge with the Official Receiver and the Registrar of Companies a copy of the order effecting the discharge. |
| (6) Any judicial manager or interim judicial manager who, without reasonable excuse, fails to comply with subsection (5) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 and also to a default penalty. |
(7) In this section —| “interim judicial management” means the management of a company’s affairs, business and property by an interim judicial manager; |
| “interim judicial manager” means any person appointed as an interim judicial manager under section 92 or 94(3). |
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| Trade union representation on behalf of members who are creditors and employees of company |
116.—(1) Where employees of a company —| (a) | are creditors, by reason that wages or salary are payable to them whether by way of allowance or reimbursement under contracts of employment or any award or agreement regulating conditions of employment or otherwise; and | | (b) | are members of a trade union that is recognised by the company under the Industrial Relations Act (Cap. 136), |
| it is sufficient compliance by the judicial manager with sections 105, 107 and 108 if the notice, statement of proposals and revised proposals mentioned in those sections are sent to the trade union representing the employees. |
(2) A trade union to which subsection (1) applies —| (a) | is entitled to represent any such employees at a meeting of creditors summoned under section 107(1) or, with the leave of the Court, to apply to the Court under section 115 on their behalf; and | | (b) | may make representations to the judicial manager on behalf of those employees, |
| in respect of any matter connected with or arising from the continuation or termination of their contracts of employment, or any matter relating to any award made by the Industrial Arbitration Court under the Industrial Relations Act or any collective agreement certified under that Act that affects those employees. |
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| Application of certain provisions in Companies Act and Part 5 to company under judicial management |
117. At any time when a company is in judicial management —| (a) | section 210 of the Companies Act applies as if —| (i) | the following subsection replaces subsections (1) and (2) of that section:| “(1) Where a compromise or an arrangement is proposed between a company under judicial management and its creditors or any class of those creditors, the Court may, on the application of the judicial manager, order a meeting of the creditors or class of creditors to be summoned in such manner as the Court directs.”; and |
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| | (ii) | the following subsections replace subsections (3), (3AA) and (3AB) of that section:| “(3) A meeting held pursuant to an order under subsection (1) may be adjourned from time to time if the resolution for the adjournment is approved by a majority in number representing three‑fourths in value of the creditors or class of creditors (as the case may be) present and voting either in person or by proxy at the meeting. |
| (3AA) If the conditions set out in subsection (3AB) are satisfied, a compromise or an arrangement is binding on the company, on the judicial manager, and on the creditors or class of creditors, as the case may be. |
(3AB) The conditions mentioned in subsection (3AA) are as follows:| (a) | a majority in number, or such other number as the Court may order, of the creditors or class of creditors (as the case may be) present and voting either in person or by proxy at the meeting or the adjourned meeting agrees to the compromise or arrangement; | | (b) | the majority in number, or other number, of the creditors or class of creditors (as the case may be) mentioned in paragraph (a) represents three‑fourths in value of the creditors or class of creditors (as the case may be) present and voting either in person or by proxy at the meeting or the adjourned meeting; | | (c) | the compromise or arrangement is approved by order of the Court.”; |
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| | (b) | section 68 applies as if —| (i) | the following subsection replaces subsection (1) of that section:“(1) Where the Court orders under section 210(1) of the Companies Act a meeting of the creditors, or a class of creditors, of a company under judicial management to be summoned, the judicial manager must state in every notice mentioned in section 211(1) of that Act summoning the meeting (called in this section the notice summoning the meeting) —| (a) | the manner in which a creditor is to file a proof of debt with the company; and | | (b) | the period within which the proof is to be filed.”; and |
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| | (ii) | the word “company” in subsections (3), (4), (9), (10) and (14)(a) of that section was replaced by the words “judicial manager”; |
| | (c) | section 69 applies as if the following subsection replaces subsection (1) of that section:| “(1) At the hearing of an application for the Court’s approval under section 210(4) of the Companies Act of a compromise or an arrangement between a company under judicial management and its creditors or any class of those creditors, the Court may order the judicial manager to hold another meeting of the creditors or class of creditors (called in this section the further meeting) for the purpose of putting the compromise or arrangement to a re‑vote.”; |
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| | (d) | section 70 applies as if —| (i) | the following subsection replaces subsection (2) of that section:| “(2) Despite section 210(3AA) and (3AB)(a) and (b) of the Companies Act, the Court may, subject to this section and on the application of the judicial manager, or a creditor of the company who has obtained the leave of the Court to make an application under this subsection, approve the compromise or arrangement, and order that the compromise or arrangement be binding on the judicial manager, the company and all classes of creditors meant to be bound by the compromise or arrangement.”; |
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| | (ii) | the following paragraph replaces paragraph (a) of subsection (4) of that section:| “(a) | no creditor in the dissenting class receives, under the terms of the compromise or arrangement, an amount that is lower than what the creditor is estimated by the Court to receive in the most likely scenario if the compromise or arrangement does not become binding on the judicial manager, the company and all classes of creditors meant to be bound by the compromise or arrangement; and”; and |
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| | (iii) | the following subsection replaces subsection (5) of that section:| “(5) The Court may appoint any person of suitable knowledge, qualification or experience to assist the Court in estimating the amount that a creditor is expected to receive in the most likely scenario if the compromise or arrangement does not become binding on the judicial manager, the company and all classes of creditors meant to be bound by the compromise or arrangement.”; and |
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| | (e) | section 71 applies as if —| (i) | the following subsections replace subsections (1) and (2) of that section:| “(1) Despite section 210 of the Companies Act but subject to this section, where a compromise or an arrangement is proposed between a company under judicial management and its creditors or any class of those creditors, the Court may, on an application made by the judicial manager, make an order approving the compromise or arrangement, even though no meeting of the creditors or class of creditors has been ordered under section 210(1) of that Act or held. |
| (2) Subject to subsection (10), if the compromise or arrangement is approved by order of the Court under subsection (1), the compromise or arrangement is binding on the judicial manager, the company and the creditors or class of creditors meant to be bound by the compromise or arrangement.”; |
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| | (ii) | the words “the company has provided” in subsection (3)(a) of that section were replaced by the words “the judicial manager has provided”; and | | (iii) | the word “company” in subsections (3)(b) and (c), (4) and (7) of that section was replaced by the words “judicial manager”. |
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| Transition from judicial management to winding up |
118. Where a judicial manager makes an application to wind up the company —| (a) | despite section 111, the term of office of the judicial manager is extended to the date on which the winding up application is determined or withdrawn; and | | (b) | the company is discharged from judicial management on the date the winding up application is determined or withdrawn. |
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