Insolvency Act 1986

Making etc. of administration orderE+W+S

8 Power of court to make order.E+W+S

(1)Subject to this section, if the court—

(a)is satisfied that a company is or is likely to become unable to pay its debts (within the meaning given to that expression by section 123 of this Act), and

(b)considers that the making of an order under this section would be likely to achieve one or more of the purposes mentioned below.

the court may make an administration order in relation to the company.

[F1(1A)For the purposes of a petition presented by the Financial Services Authority alone or together with any other party, an authorised deposit taker who defaults in an obligation to pay any sum due and payable in respect of a relevant deposit is deemed to be unable to pay its debts as mentioned in subsection (1).

(1B)In subsection (1A)—

(a)“authorised deposit taker" means a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits, but excludes a person who has such permission only for the purpose of carrying on another regulated activity in accordance with that permission; and

(b)“relevant deposit" must be read with—

(i)section 22 of the Financial Services and Markets Act 2000,

(ii)any relevant order under that section, and

(iii)Schedule 2 to that Act,

but any restriction on the meaning of deposit which arises from the identity of the person making it is to be disregarded.]

(2)An administration order is an order directing that, during the period for which the order is in force, the affairs, business and property of the company shall be managed by a person (“the administrator") appointed for the purpose by the court.

(3)The purposes for whose achievement an administration order may be made are—

(a)the survival of the company, and the whole or any part of its undertaking, as a going concern;

(b)the approval of a voluntary arrangement under Part 1;

(c)the sanctioning under section 425 of the Companies Act of a compromise or arrangement between the company and any such persons as are mentioned in that section; and

(d)a more advantageous realisation of the company’s assets than would be effected on a winding up;

and the order shall specify the purpose or purposes for which it is made.

[F2(4)An administration order shall not be made in relation to a company after it has gone into liquidation.

(5)An administration order shall not be made against a company if—

(a)it has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance in the United Kingdom;

(b)it continues to have a liability in respect of a deposit which was held by it in accordance with the Banking Act 1979 or the Banking Act 1987.

(6)Subsection (5)(a) must be read with—

(a)section 22 of the Financial Services and Markets Act 2000;

(b)any relevant order under that section; and

(c)Schedule 2 to that Act.]

[F3(7)In this Part a reference to a company includes a reference to a company in relation to which an administration order may be made by virtue of Article 3 of the EC Regulation.]

9 Application for order.E+W+S

(1)An application to the court for an administration order shall be by petition presented either by the company or the directors, or by a creditor or creditors (including any contingent or prospective creditor or creditors), [F4or by the clerk of a magistrates’ court in the exercise of the power conferred by section 87A of the Magistrates’ Courts Act 1980 (enforcement of fines imposed on companies)] or by all or any of those parties, together or separately.

(2)Where a petition is presented to the court—

(a)notice of the petition shall be given forthwith to any person who has appointed, or is or may be entitled to appoint, an administrative receiver of the company, and to such other persons as may be prescribed, and

(b)the petition shall not be withdrawn except with the leave of the court.

(3)Where the court is satisfied that there is an administrative receiver of the company, the court shall dismiss the petition unless it is also satisfied either—

(a)that the person by whom or on whose behalf the receiver was appointed has consented to the making of the order, or

(b)that, if an administration order were made, any security by virtue of which the receiver was appointed would—

[F5(i)be void against the administrator to any extent by virtue of the provisions of Part XII of the Companies Act 1985 (registration of company charges),]

[F5(i)(ii)]be liable to be released or discharged under sections 238 to 240 in Part VI (transactions at an undervalue and preferences),

[F5(ii)(iii)]be avoided under section 245 in that Part (avoidance of floating charges), or

[F5(iii)(iv)]be challengeable under section 242 (gratuitous alienations) or 243 (unfair preferences) in that Part, or under any rule of law in Scotland.

(4)Subject to subsection (3), on hearing a petition the court may dismiss it, or adjourn the hearing conditionally or unconditionally, or make an interim order or any other order that it thinks fit.

(5)Without prejudice to the generality of subsection (4), an interim order under that subsection may restrict the exercise of any powers of the directors or of the company (whether by reference to the consent of the court or of a person qualified to act as an insolvency practitioner in relation to the company, or otherwise).

10 Effect of application.E+W+S

(1)During the period beginning with the presentation of a petition for an administration order and ending with the making of such an order or the dismissal of the petition—

(a)no resolution may be passed or order made for the winding up of the company;

[F6(aa)no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the leave of the court and subject to such terms as the court may impose]

(b)no steps may be taken to enforce any security over the company’s property, or to repossess goods in the company’s possession under any hire-purchase agreement, except with the leave of the court and subject to such terms as the court may impose; and

(c)no other proceedings and 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 aforesaid.

(2)Nothing in subsection (1) requires the leave of the court—

(a)for the presentation of a petition for the winding up of the company,

(b)for the appointment of an administrative receiver of the company, or

(c)for the carrying out by such a receiver (whenever appointed) of any of his functions.

(3)Where—

(a)a petition for an administration order is presented at a time when there is an administrative receiver of the company, and

(b)the person by or on whose behalf the receiver was appointed has not consented to the making of the order,

the period mentioned in subsection (1) is deemed not begin unless and until that person so consents.

(4)References in this section and the next to hire-purchase agreements include conditional sale agreements, chattel leasing agreements and retention of title agreements.

(5)In the application of this section and the next to Scotland, references to execution being commenced or continued include references to diligence being carried out or continued, and references to distress being levied shall be omitted.

11 Effect of order.E+W+S

(1)On the making of an administration order—

(a)any petition for the winding up of the company shall be dismissed, and

(b)any administrative receiver of the company shall vacate office.

(2)Where an administration order has been made, any receiver of part of the company’s property shall vacate office on being required to do so by the administrator.

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

(a)no resolution may be passed or order made for the winding up of the company;

(b)no administrative receiver of the company may be appointed;

[F7(ba)no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose]

(c)no other steps may be taken to enforce any security over the company’s property, or to repossess goods in the company’s possession under any hire-purchase agreement, except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as the court may impose; and

(d)no other proceedings and 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 consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as aforesaid.

(4)Where at any time an administrative receiver of the company has vacated office under subsection (1)(b), or a receiver of part of the company’s property has vacated office under subsection (2)—

(a)his remuneration and any expenses properly incurred by him, and

(b)any indemnity to which he is entitled out of the assets of the company.

shall be charged on and (subject to subsection (3) above) paid out of any property of the company which was in his custody or under his control at that time in priority to any security held by the person by or on whose behalf he was appointed.

(5)Neither an administrative receiver who vacates office under subsection (1)(b) nor a receiver who vacates office under subsection (2) is required on or after so vacating office to take any steps for the purpose of complying with any duty imposed on him by section 40 or 59 of this Act (duty to pay preferential creditors).

12 Notification of order.E+W+S

(1)Every invoice, order for goods or business letter which, at a time when an administration order is in force in relation to a company, is issued by or on behalf of the company or the administrator, being a document on or in which the company’s name appears, shall also contain the administrator’s name and a statement that the affairs, business and property of the company are being managed by the administrator.

(2)If default is made in complying with this section, the company and any of the following persons who without reasonable excuse authorises or permits the default, namely, the administrator and any officer of the company, is liable to a fine.