Insolvency, Restructuring and Dissolution Act 2018

Status:

Published in Acts Supplement
on 07 Nov 2018

PART 14

VOLUNTARY ARRANGEMENTS

Division 1 — Moratorium for insolvent debtor

This Part not applicable to undischarged bankrupts

275. This Part does not apply —

(a)	to any individual debtor who is an undischarged bankrupt; or
(b)	to any firm against which a bankruptcy order has been made and from which bankruptcy the partners in the firm have not been discharged.

Interim order of Court

276.—(1) Subject to subsection (2), any insolvent debtor who intends to make a proposal to the insolvent debtor’s creditors for a composition in satisfaction of the insolvent debtor’s debts or a scheme of arrangement of the insolvent debtor’s affairs (called in this Part a voluntary arrangement) may apply to the Court for an interim order under this Part.

(2) No partner in an insolvent firm may apply to the Court for an interim order in respect of the firm unless all or a majority of the partners in the firm join or intend to join in the making of the proposal for a voluntary arrangement.

(3) During the period for which an interim order is in force —

(a)

where the interim order is in respect of an individual debtor —

(i)	no bankruptcy application may be made or proceeded with against the debtor; and
(ii)	no other proceedings, execution or other legal process may be commenced or continued against the person or property of the debtor without the leave of the Court; and

(b)

where the interim order is in respect of a firm —

(i)	no bankruptcy application may be made or proceeded with against the firm or, except with the leave of the Court, any partner in the firm; and
(ii)	no other proceedings, execution or other legal process may be commenced or continued against the firm or its property or against the person or property of any partner in the firm, without the leave of the Court.

(4) An interim order ceases to have effect 42 days after the making of that interim order unless the Court otherwise directs.

Nominee

277.—(1) Every debtor making a proposal for the purpose of this Part must in such proposal appoint a nominee to act in relation to the voluntary arrangement either as trustee or otherwise for the purpose of supervising its implementation.

(2) No person may be appointed as a nominee unless that person is a licensed insolvency practitioner.

(3) The Minister may make regulations prescribing the scale of fees to be charged by nominees assisting debtors in respect of voluntary arrangements.

Effect of application

278.—(1) At any time when an application under section 276 for an interim order is pending, the Court may stay any action, execution or other legal process against the debtor in respect of whom the application has been made or against the property of such debtor.

(2) Any court in which proceedings are pending against a debtor may, on being satisfied that an application under section 276 for an interim order has been made in respect of the debtor, stay the proceedings or allow them to continue on such terms as the court may think fit.

(3) Where the debtor in respect of whom an application under section 276 for an interim order is pending is a firm, the power of the Court under subsection (1) and of the court under subsection (2) applies to any action, execution or other legal process or proceedings against the person or property of any partner in the firm.

Conditions for making of interim order

279.—(1) The Court must not make an interim order on an application under section 276 unless it is satisfied that —

(a)	the debtor intends to make a proposal for a voluntary arrangement;
(b)	no previous application for an interim order has been made by or in respect of the debtor during the period of 12 months immediately before the date of the application; and
(c)	the nominee appointed by the debtor’s proposal is qualified and willing to act in relation to the proposal.

(2) The Court may make an interim order if it thinks that it would be appropriate to do so for the purpose of facilitating the consideration and implementation of the debtor’s proposal.

Nominee’s report on debtor’s proposal

280.—(1) Where an interim order has been made, the nominee must, before the order ceases to have effect, submit a report to the Court stating —

(a)	whether, in the opinion of the nominee, a meeting of the debtor’s creditors should be summoned to consider the debtor’s proposal; and
(b)	if in the opinion of the nominee such a meeting should be summoned, the date on which, and the time and place at which, the nominee proposes the meeting should be held.

(2) For the purpose of enabling the nominee to prepare the report mentioned in subsection (1), the debtor must submit to the nominee —

(a)

a document setting out the terms of the voluntary arrangement which the debtor is proposing; and

(b)

a statement of the debtor’s affairs containing —

(i)	where the debtor is an individual, such particulars of his or her assets, creditors, debts and other liabilities as may be prescribed;
(ii)	where the debtor is a firm, such particulars of the assets, creditors, debts and other liabilities of the firm and of each partner in the firm, as may be prescribed; and
(iii)	such other information as may be prescribed.

(3) Where the nominee has failed to submit the report required by this section within the time given, the Court may, on an application made by the debtor, do one or both of the following:

(a)	direct that the nominee be replaced by another person qualified to act as a nominee;
(b)	direct that the interim order is to continue, or if it has ceased to have effect be renewed, for such further period as the Court thinks fit.

(4) The Court may, on the application of the nominee, extend the period for which the interim order has effect so as to allow the nominee to have more time to prepare the report mentioned in subsection (1).

(5) If the Court is satisfied on receiving the nominee’s report that a meeting of the debtor’s creditors should be summoned to consider the debtor’s proposal, the Court must direct that the period for which the interim order has effect is extended for such further period as the Court thinks fit, for the purposes of enabling the debtor’s proposal to be considered by the debtor’s creditors, and the nominee to report to the Court the results of the meeting of the debtor’s creditors, in accordance with sections 281 to 283.

(6) The Court may discharge the interim order if it is satisfied, on the application of the nominee —

(a)	that the debtor has failed to comply with subsection (2); or
(b)	that for any other reason it would be inappropriate for a meeting of the debtor’s creditors to be summoned to consider the debtor’s proposal.

Summoning of creditors’ meeting

281.—(1) Where a nominee has reported to the Court under section 280 that a meeting of the debtor’s creditors should be summoned, the nominee must, unless the Court otherwise directs, summon that meeting in accordance with the nominee’s report.

(2) The nominee must summon to the meeting every of the debtor’s creditors of whose claim and address the nominee is aware.

Division 2 — Consideration and implementation of
debtor’s proposal

Decision of creditors’ meeting

282.—(1) A creditors’ meeting summoned under section 281 may, if the meeting thinks fit, by special resolution resolve to approve the proposed voluntary arrangement, whether with or without modification.

(2) The creditors’ meeting must not approve the proposed voluntary arrangement with any modification unless the debtor has consented to such modification.

(3) For the purpose of this section, a modification subject to which a proposed voluntary arrangement may be approved by a creditors’ meeting may confer the functions proposed to be conferred on the nominee on another person qualified to act as a nominee.

(4) No modification under subsection (3) may alter the proposal to such an extent that it ceases to be a proposal for a voluntary arrangement by the debtor.

(5) The creditors’ meeting must not approve any proposal or any modification to the proposal which affects the right of a secured creditor of the debtor to enforce the secured creditor’s security, except with the concurrence of the secured creditor.

(6) The creditors’ meeting must not, without the concurrence of the preferential creditor in question, approve any proposal or any modification of the proposal under which —

(a)	any debt of the debtor, not being a preferential debt, is to be paid in priority to any preferential debt of the debtor; or
(b)	the priority of payment of any preferential debt of the debtor, in relation to any other preferential debt of the debtor, is not in accordance with section 352.

(7) Every creditors’ meeting must be conducted in accordance with the prescribed regulations.

(8) Any debtor who makes any false representation or commits any other fraud for the purpose of obtaining the approval of the debtor’s creditors to a proposal for a voluntary arrangement shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 3 years or to both.

Report of decisions to Court

283.—(1) After the conclusion of the creditors’ meeting summoned under section 281, the nominee must report the result of the meeting to the Court and serve a copy of the report on such persons as may be prescribed.

(2) Where the creditors’ meeting has declined to approve the debtor’s proposal, the Court may discharge any interim order which is in force in relation to the debtor.

Effect of approval

284.—(1) Where the creditors’ meeting summoned under section 281 has approved the proposed voluntary arrangement, with or without modifications, the approved arrangement —

(a)	takes effect as if made by the debtor at the meeting; and
(b)	binds every person who had notice of and was entitled to vote at the meeting, whether or not the person was present or represented at the meeting, as if the person were a party to the arrangement.

(2) Subject to section 285, the interim order in force in relation to the debtor ceases to have effect at the end of 28 days after the date the report was made to the Court under section 283.

(3) Where proceedings on a bankruptcy application have been stayed by an interim order which ceases to have effect under subsection (2), that application is, unless the Court otherwise orders, deemed to have been dismissed.

Review of decision of creditors’ meeting

285.—(1) Any debtor, nominee or person entitled to vote at a creditors’ meeting summoned under section 281 may apply to the Court for a review of the decision of the meeting on the ground that —

(a)	the voluntary arrangement approved by the meeting unfairly prejudices the interests of the debtor or any of the debtor’s creditors; or
(b)	there has been some material irregularity at or in relation to the meeting.

(2) Upon hearing an application under subsection (1), the Court may, if it thinks fit, do one or both of the following:

(a)	revoke or suspend any approval given by the creditors’ meeting;
(b)	direct any person to summon a further meeting of the debtor’s creditors to consider any revised proposal the debtor may make or, in a case falling within subsection (1)(b), to reconsider the original proposal of the debtor.

(3) No application under this section may be made after the end of 28 days after the date the report was made to the Court under section 283.

(4) Where at any time after giving a direction under subsection (2)(b) for the summoning of a further meeting to consider a revised proposal, the Court is satisfied that the debtor does not intend to submit such a proposal, the Court must revoke the direction and revoke or suspend any approval given at the previous meeting.

(5) Upon giving a direction under subsection (2)(b), the Court may, if it thinks just, extend the validity of any interim order in relation to the debtor for such period as the Court thinks fit.

(6) Upon giving a direction or revoking or suspending an approval under this section, the Court may give such supplemental directions as the Court thinks fit and, in particular, directions with respect to —

(a)	things done since the meeting under any voluntary arrangement approved by the meeting; and
(b)	such things done since the meeting as could not have been done if an interim order had been in force in relation to the debtor when they were done.

(7) Except pursuant to this section, no approval given at a creditors’ meeting summoned under section 281 is to be invalidated by reason only of any irregularity at or in relation to the meeting.

Implementation and supervision of approved voluntary arrangement

286.—(1) Where a voluntary arrangement approved by a creditors’ meeting summoned under section 281 has taken effect, the nominee must supervise the implementation of the voluntary arrangement.

(2) If the debtor or any of the debtor’s creditors is dissatisfied by any act, omission or decision of the nominee in the nominee’s supervision of the implementation of the voluntary arrangement, the debtor or creditor may apply to the Court to review that act, omission or decision.

(3) On hearing an application under subsection (2), the Court may —

(a)	confirm, reverse or modify any act or decision of the nominee; or
(b)	give such directions to the nominee or make such order as the Court thinks fit.

(4) The nominee may apply to the Court for directions in relation to any particular matter arising under the voluntary arrangement.

(5) The Court may, whenever —

(a)	it is expedient to appoint a person to carry out the functions of the nominee; and
(b)	it is inexpedient, difficult or impracticable for such an appointment to be made without the assistance of the Court,

make an order appointing a person who is qualified to act as a nominee, either in substitution for the existing nominee or to fill a vacancy.

Consequence of failure by debtor to comply with voluntary arrangement

287. Where a debtor fails to comply with any of the debtor’s obligations under a voluntary arrangement, the nominee or any creditor bound by the voluntary arrangement may make a bankruptcy application against the debtor in accordance with Part 16.

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