ARRANGEMENT OF SECTIONS
1. Short title
3. Application of this Act
ADMINISTRATION OF THIS ACT
4. Director of Insolvency
5. Official Receiver
6. Office and name of Official Receiver
7. Vacation of office of Official Receiver
8. Register of insolvency practitioners
9. Conduct and performance of insolvency practitioners
10. Director may make application to Court
11. Disclosure to, and consultation with, Director
12. Other registers to be kept by Director
13. Meaning of company in reorganization
14. Objective of company reorganization
15. Administrator to be an officer of the Court
16. Appointment of an administrator
17. Conditions for making reorganization order
18. Who may bring application
19. Powers of Court
20. Application by holder of qualifying security interest
21. Intervention by holder of a qualifying security interest
22. Application for reorganization order where company in liquidation
23. Effect of receivership
24. Dismissal of pending winding-up petition
25. Dismissal of receiver
26. Moratorium on insolvency proceedings
27. Moratorium on other legal processes
28. Interim moratorium
30. Announcement of administrator’s appointment
31. Statement of company’s affairs
32. Prescribed period for submission of statement of affairs
33. Administrator’s proposals
34. Creditors’ meeting
35. Requirement for initial creditors’ meeting
36. Business and result of initial creditors’ meeting
37. Substantial revision after approval
38. Failure to obtain approval of administrator’s proposals
39. Further creditors’ meetings
40. Creditors’ committee
41. Correspondence instead of creditors’ meeting
42. General powers of administrator
44. General duties of administrator
45. Administrator as agent of the company
46. Secured property: qualifying security interest
47. Secured property: non-qualifying security interest
48. Protection for secured or preferential creditor
49. Challenge to administrator’s conduct of company
51. Automatic end of company reorganization
52. Court ending company reorganization on application of administrator
53. Termination of company reorganization where objective achieved
54. Court ending company reorganization on application of creditor
55. Public interest winding-up
56. Moving from company reorganization to creditors’ voluntary winding-up
57. Moving from company reorganization to dissolution
58. Discharge of company reorganization order where company reorganization ends
59. Notice to Registrar of Companies where company reorganization ends
60. Resignation of administrator
61. Removal of administrator from office
62. Administrator ceasing to be qualified
63. Vacancy in office of administrator
64. Vacation of office: discharge from liability
65. Vacation of office: charges and liabilities
66. Multiple appointments
67. Joint administrators
68. Concurrent administrators
69. Joint or concurrent administrators
70. Presumption of validity
71. Majority decision of directors
72. Extension of time limit
73. Variation of period
74. Extended period
75. Appointment of receiver
76. Qualification of receiver
77. Appointment of receiver under instrument
78. Appointment of receiver by Court
79. Notice of appointment of receiver
80. Notice of receivership
81. Vacancy in office of receiver
82. Powers of receiver
83. Execution of documents
84. Obligations of company and directors
85. Validity of act of receiver
86. Consent of mortgagee to sale of property
87. General duties of receiver
88. First report by receiver
89. Further report by receiver
90. Extension of time for preparing reports
91. Persons entitled to receive reports
92. Duty to notify breaches of Acts
93. Notice of end of receivership
94. Preferential claims
95. Powers of receiver on liquidation
96. Liability of receiver
97. Relief from liability
98. Court supervision of receiver
99. Court may terminate or limit receivership
100. Order to enforce receiver’s duties
101. Order for protection of property in receivership
102. Refusal to provide essential service
WINDING-UP OF COMPANIES
Division I—Winding-Up of Other Bodies Corporate and External Companies
103. Winding-up of other bodies corporate
104. Winding-up of external companies
Division II—Winding-Up Generally
105. Modes of winding-up
106. Commencement of winding-up
Division III—Winding-Up by Court
107. Petition for winding-up
108. Preliminary costs
109. Power of Court on petition for winding-up
110. Proceedings against company
111. Property of company
112. Lodging and service of order
113. Appointment of provisional liquidator
114. Custody and vesting of company’s property
115. Statement of company’s affairs
116. Liquidator’s report
117. Principal duty of liquidator
118. Liquidator not required to act in certain cases
119. Other duties of liquidator
120. Powers of liquidator
121. Power of liquidator relating to documents and information
122. Document in possession of receiver
123. Document creating charge over property
124. Power of Court
125. Release of liquidator and dissolution of company
126. Liquidation committee in winding-up by Court
127. List of members
128. Liabilities of present and past shareholders
129. Death of member
130. Bankruptcy of member
131. Payment of debt due by contributory
132. Special manager
133. Receiver for secured creditors
134. Creditor’s claim
135. Power of arrest
136. Foreign companies
137. Pooling of assets of related companies
138. Guidelines for orders
139. Duty to identify and deliver property
140. Refusal to supply essential service
Division IV—Voluntary Winding-Up
141. Circumstances for voluntary winding-up
142. Effect of voluntary winding-up
143. Declaration of solvency
144. Liquidator in voluntary winding-up
145. Insolvency of company
146. Creditor’s meeting
147. Liquidator in creditors’ winding-up
148. Liquidation committee in voluntary winding-up
149. Property and proceedings
150. Distribution of property
151. Appointment and removal of liquidator
152. Powers and duties of liquidator in voluntary winding-up
153. Sale of company’s property
154. Annual meeting of shareholders and creditors
155. Final meeting and dissolution in voluntary winding-up
156. Arrangement binding on creditors
PROVISIONS APPLICABLE TO EVERY WINDING-UP
158. Effect of liquidation
159. Application to Court
160. Powers of Official Receiver
161. Notice of appointment and address of liquidator
162. Payment into bank by liquidator
163. Liquidator’s accounts
164. Default by liquidator
165. Notification of liquidation
166. Books of company
167. Investment of surplus funds
168. Unclaimed assets
169. Expenses of winding-up where assets are insufficient
170. Resolution at adjourned meeting of creditors and members
171. Meeting to ascertain wishes of creditors or members
172. Completion of liquidation
173. Court may terminate liquidation
174. Right of creditor to complete execution, distraint or attachment
175. Duties of sheriff in execution process
176. Consent to appoint and validity of act of liquidator
177. Vacancy in office of liquidator
178. Court supervision of liquidation
179. Order to enforce or relieve liquidator from compliance
180. Prohibition order
181. Meaning of "failure to comply"
182. Meaning of "inability to pay debts"
183. Evidence of inability
184. Statutory demand
185. Court may set aside statutory demand
186. Fraudulent trading
187. Wrongful trading
BANKRUPTCY AND ALTERNATIVES
Division I—Bankruptcy Process
189. Creditor’s petition
190. Statutory demand
191. Overstatement in a statutory demand
192. Failure to comply with statutory demand
193. Adjournment of petition or refusal to adjudicate
194. Judgement under appeal
195. Underlying debt not determined
196. Court’s power where more than one petition or more than one debtor
197. Order on disposition of property or proposal
198. Substitution of creditor
199. Debtor’s petition
200. Order on debtor’s petition
201. Report of the Director
202. Debtor’s joint petition
203. Summary administration
Division II—Interim Receiver
204. Appointment of Official Receiver as interim receiver
Division III—Effect of Adjudication
205. Date of adjudication and disqualification of bankrupt
206. Procedure following adjudication
207. Stay of proceedings
208. Execution process after adjudication
209. Statement of affairs
210. Meeting of creditors
211. Appointment of expert and inspection of documents
212. Bankrupt’s death after adjudication
Division IV—Bankrupt’s Estate
213. Bankrupt’s estate
214. Vesting in Official Receiver
215. Property acquired after adjudication
216. Transaction in good faith and for value
217. Rights under execution or attachment
218. Duties of Sheriff as to seized goods
219. Bona fide transaction without notice
220. Immovable property
221. Transfer of shares and other securities
222. Second bankruptcy
Division V—Duties of Bankrupt
223. General duties of bankrupt
224. Financial information
Division VI—Control over Bankrupt
225. Contribution to payment of debts
226. Bankrupt entering business
227. Search and seizure of property
228. Vacation of property
229. Right to inspect documents
230. Recovery, release or discharge of property
231. Defeating beneficial interest
232. Bank accounts
233. Allowance to bankrupt
234. Examination of bankrupt and others
235. Public examination of bankrupt
236. Documents and other records
Division VII—Powers and Duties of Official Receiver
237. Official Receiver’s powers
238. Bank account and investment
239. Official Receiver’s discretion
Division VIII—End of Bankruptcy
240. Automatic discharge
241. Application for discharge
242. Official Receiver’s report
243. Notice of opposition to discharge
244. Grant or refusal of discharge
246. Reversal of order of discharge
247. Powers of the Court where conditions of discharge too onerous
248. Release from debts
249. Other effects of discharge
Division IX—Annulment of Adjudication
251. Effect of annulment
Division X—Voluntary Arrangements for Individual Debtors
252. Interim order of Court
253. Application for interim order
254. Effect of application
255. Cases in which interim order can be made
256. Nominee’s report on debtor’s proposal
257. Debtor’s proposal and nominee’s report
258. Summoning of creditors’ meeting
259. Decision of creditors’ meeting
260. Report of decisions to Court
261. Effect of approval
262. Additional effect on undischarged bankrupt
263. Challenge of creditors’ meeting’s decision
264. False representations
265. Prosecution of delinquent debtors
266. Arrangements coming to an end prematurely
267. Implementation and supervision of approved voluntary arrangement
268. Availability of fast-track voluntary arrangement
270. Report of Official Receiver to Court on proposed voluntary arrangement
271. Approval of voluntary arrangement
272. Implementation of a voluntary arrangement approved by a creditors’ meeting
PROVISIONS THAT APPLY TO ALL DEBTORS
275. Definition of debtor
276. Provable debt and proof of debt
277. Procedure for proving debts
278. Uncertain proof
279. Proof of debt payable six months or more after adjudication or winding-up
280. Mutual credit and set-off
281. Interest on claims
282. Voidable preference
283. Voidable security interest
284. Security interest or security for new consideration
285. Presumption that debtor unable to pay due debts
286. Security for unpaid purchase price given after sale of property
287. Appropriation of payment by debtor to security interest holder
288. Alienation of property with intent to defraud a creditor
289. Voidable gift
290. Procedure for setting aside voidable transaction
291. Court may order re-transfer or payment
292. Limits on recovery
293. Transaction with debtor for inadequate or excessive consideration
294. Court may order recipient to pay value
295. Court’s power in relation to debtor’s contribution
296. Use of repayment of debtor’s contribution to property
297. Preferential claims
298. Priority of payments for distribution of debtor’s assets
299. Right of personal creditors of partners
300. Right of creditor who has proved debt late
301. Final dividend
302. Definition of undistributed money
303. Undistributed money
304. Application of general fund
INSOLVENCY PRACTITIONERS AND THEIR QUALIFICATIONS
305. Disqualification for appointment
306. Control of liquidator by Official Receiver
307. Remuneration of insolvency practitioner
308. Acting as insolvency practitioner
309. Qualifications of an insolvency practitioner
310. Authority and further qualification to act as insolvency practitioner
311. Recognition of bodies or persons and qualifications
312. Application to competent authority
313. Grant or refusal of application
314. Notice of authorization
315. Written representations where application refused
CROSS BORDER INSOLVENCY
Division I—General Provisions
316. Purpose of this Part
317. Scope of application
319. International obligations of Malawi
320. Competent court
321. Authorization of insolvency practitioner to act in a foreign state
322. Public policy exception
323. Additional assistance under other laws
324. Factors to consider in the interpretation of this Part
Division II—Access of Foreign Representatives and Creditors to Courts in Malawi
325. Right of direct access
326. Limited jurisdiction
327. Application by a foreign representative to commence proceeding
328. Participation of a foreign representative in a proceeding under this Act
329. Access of foreign creditors to a proceeding under this Act
330. Notification to foreign creditors of a proceeding under this Act
Division III—Recognition of a Foreign Proceeding and Relief
331. Application for recognition of a foreign proceeding
332. Presumptions concerning recognition
333. Decision to recognize a foreign proceeding
334. Subsequent information
335. Relief that may be granted upon application for recognition of a foreign proceeding
336. Effects of recognition of a foreign main proceeding
337. Relief that may be granted upon recognition of a foreign proceeding
338. Protection of creditors and other interested persons
339. Actions to avoid acts detrimental to creditors
340. Intervention by a foreign representative in proceedings in Malawi
Division IV—Cooperation with Foreign Courts and Foreign Representatives
341. Cooperation between the Court and foreign courts or foreign representatives
342. Cooperation between insolvency practitioner and foreign courts or foreign representatives
343. Forms of cooperation
Division V—Concurrent Proceedings
344. Commencement of proceedings under this Act after recognition of foreign main proceeding
345. Coordination of a proceeding under this Act and a foreign proceeding
346. Coordination of more than one foreign proceeding
347. Presumption of insolvency based on recognition of a foreign main proceeding
348. Rule of payment in concurrent proceedings
349. General offence and penalty
350. Compounding offences
352. Rules of Court
353. Maximum penalty for offences under subsidiary legislation
354. Repeal and savings
355. Transitional provisions
9 of 2016
An Act to regulate matters relating to insolvency and bankruptcy; to make provision for the procedures and processes for bankruptcy; to make provisions for administration of insolvency and to provide for matters incidental thereto and connected therewith
[20TH MAY, 2016]
This Act may be cited as the Insolvency Act.
In this Act, unless the context otherwise requires—
"administrator" means a person appointed under this Act to manage the affairs, business and property of a company under reorganization and where the context requires, includes reference to a former administrator;
"bankrupt" means a natural person who has been adjudicated bankrupt, and includes a partnership, sole proprietorship or other body corporate which cannot be wound-up under the provisions of Part V;
"company" means a company incorporated under the Companies Act and includes any other company not registered in Malawi which has its affairs dealt with under the provisions of this Act;
"company reorganization order" means an order appointing a person as the administrator of a company;
"contributory" has the meaning assigned thereto in the Companies Act;
"correspondence" includes correspondence by telephonic or other electronic means;
"Court" means the High Court of Malawi established under the Constitution;
"declaration of solvency" means a declaration by or on behalf of a company that the company’s assets exceed its liabilities and that the company is able to pay its debts as they fall due;
"Director" means the Director of Insolvency referred to in section 4 (1);
(a) in relation to a bankruptcy order, the removal of the impediment of bankruptcy; and
(b) in relation to a company reorganization order, the setting aside or discontinuance of a company reorganization order by the Court;
"financial institution" has the meaning ascribed thereto in the Financial Services Act;
"financial service law" has the meaning ascribed thereto in the Financial Services Act;
"immovable property" means land whether covered by water or not, any estate or interest in, or over, land, or arising out of, or relating to, land, and anything permanently attached to the earth, or permanently fastened to anything so attached;
"insolvency practitioner" means a duly qualified natural person who is entitled to practice as such in terms of Part X;
"insolvency proceeding" means a collective judicial or administrative proceeding, including an interim proceeding, pursuant to a law relating to insolvency whether personal or corporate in which the assets and affairs of a debtor are subject to control or supervision by a judicial or other authority competent to control or supervise that proceeding, for the purpose of reorganization or liquidation;
"liquidator" means a liquidator appointed in terms of the provisions of this Act, and includes a provisional liquidator;
"market value" means the amount which would be realized on a sale of property in the open market by a willing vendor;
"Official Receiver" means the person or office designated a Official Receiver under section 5;
"partnership" has the meaning ascribed thereto in the Partnership Act;
"qualifications" in relation to an insolvency practitioner, means those qualifications that would entitle a person to act as a qualified auditor or a licensed legal practitioner in Malawi, or such other qualifications as may be prescribed by the Minister in accordance with section 311 (1) (b);
"qualifying security interest" means—
(a) a valid security interest;
(b) a number of valid security interests; or
(c) valid security interests and other forms of security,
over the whole or substantially the whole of the property of a company, partnership or sole proprietorship in terms of the provisions of the Personal Property Security Act;
"receiver" means a receiver duly appointed under the provisions of Part IV;
"Registrar of Companies" means the public officer for the time being holding the office of Registrar of Companies established by section 3 of the Companies Act, and includes a Deputy or Assistant Registrar;
"related person", in relation to a natural person, means—
(a) his parent, spouse, child, brother, or sister;
(b) the parent, child, brother or sister of his spouse; or
(c) a nominee or trustee of the person specified in paragraphs (a) and (b);
"Rules" means the Rules promulgated in terms of this Act;
"secured creditor" means a creditor with valid and enforceable security amounting to—
(a) a security interest over movable property in terms of the provisions of the Personal Property Security Act; and
(b) a valid mortgage over immovable property;
"statutory demand" means, in relation to—
(a) a company being wound-up in terms of this Act, a statutory demand described in section 184; and
(b) a bankrupt, a statutory demand as described in section 190;
"the purpose of company reorganization" means an objective specified in section 14 (1).
This Act shall not apply to financial institutions unless provided otherwise in the Financial Services Act.
ADMINISTRATION OF THIS ACT
(1) The Secretary responsible for industry and trade or such other person as the Minister may appoint, shall be the Director of Insolvency (hereinafter referred to as "Director"), who shall be responsible for the effective administration and application of this Act.
(2) Without derogating from the generality of subsection (1), the functions of the Director shall be to—
(a) keep under review the law and practice relating to the insolvency of individuals, partnerships, sole proprietorships, companies and other corporate bodies in Malawi and make recommendations to the Minister on any changes considered to be necessary;
(b) have an overview of the administration of insolvency in Malawi and in particular the administration of insolvency under this Act;
(c) receive reports from the Official Receiver on the administration of insolvencies, monitor the performance of the Official Receiver and report to the Minister on any resourcing or other needs in relation to the effective performance of the Official Receiver’s functions;
(d) monitor the performance of insolvency practitioners and, where required, make an application to the Court for the discipline or removal of an insolvency practitioner;
(e) set rules and provide guidance governing the performance and conduct of insolvency practitioners in consultation with the relevant professional bodies;
(f) foster the development of training and in-service seminars to enhance the skills and encourage improved standards of performance on the part of insolvency practitioners in consultation with all relevant professional bodies;
(g) carry out research, commission studies, disseminate information and provide public education in the area of insolvency administration;
(h) establish and maintain communication and liaise with international agencies, in the area of international insolvencies and insolvency administration; and
(i) advise the Minister generally on any matter relating to the law and practice of insolvency and insolvency administration.
(3) The Director shall have a seal and such seal shall bear the words "Director of Insolvency, Malawi".
(4) In the performance of his duties under this Act, the Director shall be subject to—
(a) the general and special directions of the Minister, not inconsistent with the provisions of this Act; and
(b) for avoidance of doubt, the provisions of the Public Service Act.
(1) The Minister shall designate a suitable person or office to be the Official Receiver.
(2) The Chief Justice shall by Rules prescribe a mandatory threshold including the procedure for small individual bankruptcies and individual voluntary arrangements to be adjudicated upon and administered by courts of the Chief Resident Magistrate summarily notwithstanding anything to the contrary.
(1) The Official Receiver shall have legal personality and may sue and be sued as the Official Receiver of the property of bankrupt, or of the company which is the subject of a winding-up order, and may do all acts necessary or expedient to be done in the execution of his office.
(2) The Official Receiver may administer oaths and take declarations and may appear in Court and examine a bankrupt or the directors of a company who are the subject of a winding-up order or any other person who appears in proceedings under this Act.
(3) The Official Receiver may execute all documents, signing his private name under the official name, and may affix a seal to any document:
Provided that nothing in this subsection shall prevent the Official Receiver from affixing the seal of his office to any document.
(1) A person shall not act or continue to act as Official Receiver in relation to the estate of any debtor of which he is a creditor (not being a creditor in the capacity of Official Receiver in the property of any other bankrupt or the liquidator of any company) if the creditors declare by resolution that they do not wish him to act as Official Receiver.
(2) In any case where a disqualification under subsection (1) occurs, the Minister shall appoint a suitable person to act as the Official Receiver of the estate referred to in subsection (1).
(1) The Director shall keep and maintain a register of insolvency practitioners in which there shall be entered the name, address and qualifications of every insolvency practitioner.
(2) An insolvency practitioner shall, within the prescribed period of the date of his appointment, give notice to the Director in the prescribed form.
(3) An insolvency practitioner who for a period of six months has ceased to hold office as an insolvency practitioner shall give notice of that fact to the Director within the prescribed period.
(4) An insolvency practitioner who is suspended or removed from the practice of accountancy or law or the practice of a company secretary by the relevant professional body in Malawi, or by a comparable professional body outside Malawi, shall give notice of that fact to the Director within the prescribed period of the insolvency practitioner receiving notice of the suspension or removal from practice.
(5) Where the Director receives notice under subsection (4), or is otherwise advised by the professional body concerned, or has reasonable grounds to suspect that an insolvency practitioner has been suspended from the practice of accountancy or law or the practice of a company secretary, the Director may, where he has reasonable ground to suspect that the person may be unfit to continue to act as an insolvency practitioner, after providing the insolvency practitioner with an opportunity to be heard, suspend the insolvency practitioner from continuing in office as an insolvency practitioner pending the making of further inquiries and the making of an application to the Court under section 9, and the issuance by the Court of a prohibition order pursuant to section 100 or section 180.
(6) The Director shall enter against the name of a person concerned in the register of insolvency practitioners any of the following matters that may affect the person—
(b) where the Director has received notice to that effect from the professional body or from the person concerned that the person has been suspended or removed from the practice of accountancy or law or the practice of a company secretary by any professional body in Malawi, or by any comparable body outside Malawi;
(c) that the person has died; or
(d) that the person has ceased to practice as an insolvency practitioner and has requested the Director to remove his name from the register.
(1) The Director shall keep under review the conduct and performance of persons appointed to be insolvency practitioners and may require any document or information concerning an insolvency practitioner to be provided to the Director by the Official Receiver, the Court, the Minister, any other insolvency practitioner or any person who is or has been an auditor of a company in which the insolvency practitioner has held office.
(2) The Director may receive representations from any person on the conduct and performance of an insolvency practitioner and shall within the prescribed period of receiving any such representation disclose the substance of the representation to the insolvency practitioner and seek comment on it.
(3) Any representation made to the Director under subsection (2) and any communication of the terms of the representation made in confidence shall be protected by absolute privilege.
(4) Where the Director has reasonable ground to suspect that an insolvency practitioner has—
(a) failed to comply with a provision of this Act in a manner which has or may materially affect creditors, contributories or persons dealing in good faith with a debtor; or
(b) been suspended or removed from the practice of accountancy or law or the practice of a company secretary by a professional body in Malawi, or by a comparable body outside Malawi,
the Director may inquire into the conduct of the insolvency practitioner.
(5) For the purposes of an inquiry under subsection (4), the Director may, by notice in writing, require a director, shareholder, a company or any other person, including the secretary of any relevant professional body to deliver to the Director such books, records or documents of the company in that person’s possession or under that person’s control that are relevant to the subject matter of the inquiry as the Director requires.
(6) The Director may, for the purposes of an inquiry under subsection (4), by notice in writing require—
(a) a director or former director of a company;
(b) a shareholder of a company;
(c) a person who was involved in the promotion of formation of a company;
(d) a person who is, or has been, an employee of a company;
(e) a receiver, liquidator, administrator, accountant, auditor, bank officer or other person having knowledge of the affairs of a company; or
(f) a person who is acting or who has at any time acted as a legal practitioner for a company,
to do any of the things specified in subsection (7).
(7) A person referred to in subsection (6) may be required to—
(a) appear before the Director at such reasonable time and at such place as may be specified in a request;
(b) provide the Director with such information about the business, accounts, or affairs of the company as the Director requests;
(c) be examined on oath by the Director or by a legal practitioner acting on behalf of the Director on any matter relating to the business, accounts or affairs of the company; or
(d) assist the Director to the best of the person’s ability.
(8) The Director may pay to a person referred to in subsection (6) (c), (d) or (f), not being an employee of the company, reasonable travelling and other expenses in complying with a requirement of the Director under subsection (7).
(9) No action or proceeding (including disciplinary proceedings by any professional tribunal, body or authority having jurisdiction in respect of professional conduct) shall lie against any person arising from disclosure in good faith of information to the Director pursuant to this section.
(1) Where the Director, as a result of the outcome of an inquiry under section 9 or otherwise, considers that there is reasonable ground to believe that the insolvency practitioner is unfit to act as such by reason of—
(a) persistent failure to comply with this Act;
(b) the seriousness of the failure to comply with this Act; or
(c) misconduct or serious incompetence on the part of the insolvency practitioner,
(2) Where the Court makes a prohibition order pursuant to subsection (1), that fact shall be entered in the register kept under section 12 and in the register of prohibited persons kept pursuant to section 180 (5).
(1) Every person who holds or at any time has held office as an agent for, or trustee of, holders of any security issued by a company, or who has been an auditor of a public company, shall disclose to the Director information relating to the affairs of the company obtained in the course of holding that office where, in the opinion of the person—
(a) the company is insolvent, is likely to become insolvent or is in serious financial difficulties; or
(b) the company has breached, or is likely to breach in a significant respect—
(i) the terms of the agency deed or trust deed for secured parties;
(ii) the terms of the offer of any securities; or
(iii) the disclosure of the information is likely to assist, or be relevant to, the exercise of any power conferred on the Director or the Court under this Part.
(2) Every auditor of, or agent or trustee for, secured parties in a secured transaction shall, before disclosing any information to the Director under subsection (1), take reasonable steps to inform the company concerned of his intention to disclose the information and the nature of the information.
(3) The agent, trustee or auditor who has made disclosure to the Director under subsection (1), may on his own initiative, consult with the Director or may be required by the Director to consult with him on the position of the company and the way in which the difficulties of the company may be addressed .
(4) The Director may, for the purpose of addressing the difficulties of a company identified by a consultation under subsection (3), give advice and assistance in connexion with any scheme for resolving the difficulties of the company, and may appoint an independent advisor to work with the company to address such difficulties and report to the Director.
(5) No action or proceedings including disciplinary proceedings by any professional tribunal, body or authority having jurisdiction in respect of professional conduct, shall lie against any agent, trustee or auditor arising from the disclosure in good faith of information to the Director pursuant to subsection (1).
(1) The Director shall keep and maintain—
(a) a public register of discharged and undischarged bankrupts; and
(b) a public register of persons who are subject to an individual voluntary arrangement.
(2) The registers shall be maintained in accordance with the Rules.
(1) For the purposes of this Part—
(a) a company is "in company reorganization" while the appointment of an administrator of the company has effect;
(b) a company "enters company reorganization" when the appointment of an administrator takes effect;
(c) a company ceases to be in company reorganization when the appointment of an administrator of the company ceases to have effect in accordance with this Act;
(d) a company shall not cease to be in company reorganization merely because an administrator vacates office whether by reason of resignation, death or otherwise or is removed from office;
(f) the provisions of section 136 shall apply mutatis mutandis, to a company or companies "in company reorganization".
(2) A person may be appointed as administrator by a company reorganization order of the Court under section 19.
(3) The provisions of this Part shall apply, in so far as they may be conveniently applied, to a case of a business reorganization carried on by a partnership or a sole proprietorship.
(1) The administrator shall perform his functions with the objective of—
(a) rescuing the company as a going concern; restoring the company to solvency and thereby preserving the company and its business operations as a going concern; or
(b) achieving a better result for the company’s creditors as a whole than would be likely if the company were wound-up without first being in company reorganization, which may include a sale or a transfer of any business of the company as a going concern; or
(c) realizing property in order to make a distribution to one or more secured or preferential creditors.
(2) Subject to subsection (4), the administrator shall perform his functions in the interests of the company’s creditors as a whole.
(3) The administrator shall perform his functions with the objective specified in subsection (1) (a) unless he thinks that—
(a) it is not reasonably practicable to achieve the objective; or
(b) the objective specified in subsection (1) (b) would achieve a better result for the company’s creditors as a whole.
(4) The administrator may perform his functions with the objective specified in subsection (1) (c) only if—
(a) he determines that it is not reasonably practicable to achieve the objectives specified in subsection (1) (a) or (b); and
(b) the performance of his functions would not unnecessarily harm the interests of the creditors of the company as a whole.
(5) The administrator shall perform his functions as quickly and efficiently as is reasonably practicable.
An administrator shall be an officer of the Court.
A person may be appointed as administrator only if he is qualified to act as an insolvency practitioner in relation to the company.
The Court shall make a company reorganization order in relation to a company only if satisfied—
(a) that the company is or is likely to become unable to pay its debts as they fall due; and
(b) that the company reorganization order is reasonably likely to achieve the objective set out in section 14.
(1) An application to the Court for a company reorganization order in respect of a company (a "company reorganization application") may be made only by—
(a) the company;
(b) the directors of the company;
(c) one or more creditors of the company; or
(d) a combination of persons listed in paragraphs (a), (b) and (c).
(2) As soon as is reasonably practicable after the making of a company reorganization application, the applicant shall notify—
(a) any person who has appointed a receiver of the company under Part IV;
(b) any person who is or may be entitled to appoint a receiver of the company under Part IV; and
(c) such other persons as may be prescribed.
(3) A company reorganization application shall not be withdrawn without the order of the Court.
(4) In subsection (1), "creditor" includes a contingent creditor and a prospective creditor.
(1) On hearing a company reorganization application, the Court may—
(a) make the company reorganization order sought;
(b) dismiss the application;
(c) adjourn the hearing conditionally or unconditionally;
(d) make an interim order;
(e) treat the application as a winding-up petition and make any order which the Court could make under section 109; and
(f) make any other order which the Court thinks appropriate.
(2) The appointment of an administrator by company reorganization order shall take effect—
(a) at a time appointed by the order; or
(b) where no time is appointed by the order, when the order is made.
(3) An interim order under subsection (1) (d) may, in particular—
(a) restrict the exercise of a power of the directors or the company;
(b) make provision conferring discretion on the Court or on a person qualified to act as an insolvency practitioner in relation to the company.
This section, shall apply where a company reorganization application—
(a) is made by a holder of a qualifying security interest; and
(b) includes a statement that the application is made in reliance on this section.
(1) This section shall apply where—
(a) a company reorganization application in respect of a company is made by a person who is not the holder of a qualifying security interest; and
(b) the holder of a qualifying security interest applies to the Court to have a specified person other than the person specified by the company reorganization applicant appointed as Administrator.
(2) The holder of a qualifying security interest may, make a company reorganization application.
(3) The Court shall grant an application under subsection (1) (b) unless the Court determines it right to refuse the application because of the particular circumstances of the case.
(1) The holder of the qualifying security interest may make a company reorganization application.
(2) This section shall apply where the holder of a qualifying security interest cannot apply for a company reorganization order due to the fact that the company is already in liquidation by virtue of a winding-up order by the Court.
(3) The liquidator of a company may make a company reorganization application.
(4) If the Court makes a company reorganization order on hearing an application under subsection (3)—
(a) the Court shall discharge any winding-up order in respect of the company;
(b) the Court shall make orders for such matters as may be prescribed;
(c) the Court may make other consequential orders;
(d) the Court shall specify which of the powers under this Act are to be exercisable by the administrator; and
(e) this Act shall have effect with such modifications as the Court may specify.
(5) If the Court makes a company reorganization order on hearing an application made under subsection (1)—
(a) the Court shall discharge the winding-up order;
(b) the Court shall make orders for such matters as may be prescribed;
(c) the Court may make such other consequential orders;
(d) the Court shall specify which of the powers under this Act are to be exercisable by the administrator; and
(e) this Act shall have effect with such modifications as the Court may specify.
(a) Where an application for a company reorganization order is made after a receiver of a company has been appointed under the provisions of Part IV, the Court shall dismiss the application in respect of the company, unless the person by whom or on behalf of whom the receiver was appointed, or the receiver himself when he has the necessary authority to do so, consents to the making of the company reorganization order; or
(b) the Court considers that the security by virtue of which the receiver was appointed would be liable to be released, discharged or challenged under Part VIII.
A petition for the winding-up of a company shall be dismissed on the making of a company reorganization order in respect of the company.
(1) A receiver of a company shall vacate office when a company reorganization order takes effect in respect of the company.
(2) Where a company is in company reorganization, any receiver of part of the company’s property shall vacate office if the administrator requires him to.
(3) Where a receiver vacates office under subsection (1) or (2), his remuneration shall be charged on and paid out of any property of the company which was in his custody or under his control immediately before he vacated office.
(4) In the application of subsection (3)—
(a) "remuneration" includes expenses properly incurred and any indemnity to which the receiver is entitled out of the assets of the company;
(b) the costs so imposed shall take priority over any security interests; and
(c) the provision for payment shall be subject to section 27.
(1) This section shall apply to a company in company reorganization.
(2) Where a company is in company reorganization—
(a) a resolution may not be passed for the winding-up of the company; and
(b) an order may not be made for the winding-up of the company.
(1) No steps shall be taken to create, perfect or enforce any security interests over the company’s property except with—
(a) the consent of the administrator; or
(b) the permission of the Court.
(2) A landlord shall not exercise a right of forfeiture by peaceable re-entry in relation to premises let to the company except with—
(a) the consent of the administrator; or
(b) the permission of the Court.
(3) No legal process, including legal proceedings, execution or distress may be instituted or continued against the company or property of the company except with—
(a) the consent of the administrator; or
(b) the permission of the Court.
(4) Where the Court gives permission under this section, it may impose any condition or requirement as it sees fit.
(5) In this section, "landlord" includes a person to whom rent is payable.
(1) This section shall apply where a company reorganization application in respect of a company has been made and the application has—
(a) not yet been granted or dismissed; or
(b) been granted, but the company reorganization order has not yet taken effect.
(3) If there is a receiver of the company when the company reorganization application is made, the provisions of sections 26 and 27 shall not apply by virtue of this section until the person by or on behalf of whom the receiver was appointed consents to the making of the company reorganization order.
(1) While a company is in company reorganization, every document issued by or on behalf of the company or the administrator shall state—
(a) the name of the administrator; and
(b) that the affairs, business and property of the company are being managed by him.
(2) Any of the following persons commits an offence if without reasonable excuse, he authorizes or permits a contravention of subsection (1)—
(a) the administrator;
(b) an officer of the company; and
(c) the company.
(1) This section shall apply where a person becomes the administrator.
(2) As soon as is reasonably practicable, the administrator shall—
(a) send a notice of his appointment to the company; and
(b) publish a notice of his appointment in the prescribed manner.
(3) As soon as is reasonably practicable, the administrator shall—
(a) obtain a list of the company’s creditors; and
(b) send a notice of his appointment to each creditor of whose claim and address he is aware of.
(4) The administrator shall send a notice of his appointment to the Director and the Registrar of Companies within the prescribed period, beginning with the date of the order.
(5) The administrator shall send a notice of his appointment to such other persons as may be prescribed before the end of the prescribed period, beginning with the date of the order.
(6) The Court may direct that subsection (3) (b) or subsection (5)—
(a) shall not apply; or
(b) shall apply with the substitution of a different period.
(7) A notice under this section shall—
(a) contain the prescribed information; and
(b) be in the prescribed form.
(1) Within the prescribed period after appointment, the administrator shall by notice in the prescribed form require one or more relevant persons to provide the administrator with a statement of the affairs of the company.
(2) The statement shall—
(a) be verified by a statutory declaration in accordance with the Oaths, Affirmations and Declarations Act;
(b) be in the prescribed form;
(c) give particulars of the company, debts and liabilities;
(d) give the names and addresses of the company’s creditors;
(e) specify the security interests held by each creditor;
(f) give the date on which each security interest was perfected; and
(g) contain such other information as may be prescribed.
(3) In subsection (1), "relevant person" means—
(a) a person who is or has been an officer of the company;
(b) a person who took part in the formation of the company during the period of one year ending with the date on which the company enters company reorganization;
(c) a person employed by the company during the period referred to in paragraph (b); and
(d) a person who is or has been during that period an officer or employee of a company which is, or has been during that year an officer of the company.
(4) For the purposes of subsection (3), a reference to employment is a reference to employment through a contract of employment or a contract for services.
(1) A person required to submit a statement of affairs shall do so within the prescribed period, beginning with the date on which he receives notice of the requirement.
(2) The administrator may—
(a) revoke a requirement under section 31 (1); or
(b) extend the period specified in subsection (1), whether before or after the expiry of such period.
(3) If the administrator refuses a request to act under subsection (2)—
(a) the person whose request is refused may apply to the Court; and
(b) the Court may take action of a kind specified in subsection (2).
(1) The administrator shall make a statement setting out proposals for achieving the purpose of company reorganization.
(2) A statement under subsection (1) shall, in particular—
(a) deal with such matters as may be prescribed; and
(b) where applicable, explain why the administrator thinks that the objective mentioned in section 14 (1) (a) or (b) cannot be achieved.
(3) Proposals under this section may include a proposal for an arrangement to be sanctioned under the provisions of section 156.
(4) The administrator shall send a copy of the statement of his proposals to—
(a) the Registrar of Companies;
(b) the Director;
(c) every creditor of the company of whose claim and address he is aware of; and
(d) every member of the company of whose claim and address he is aware of.
(5) The administrator shall comply with subsection (4)—
(a) as soon as is reasonably practicable after the company enters company reorganization; and
(b) in any event, before the end of the prescribed period beginning with the day on which the company enters company reorganization.
(6) The administrator shall be taken to comply with subsection (4) (d) if he publishes in the prescribed manner a notice undertaking to provide a copy of the statement of proposals free of charge to any member of the company who applies in writing to a specified address.
(1) In this Act, "creditors’ meeting" means a meeting of creditors of a company summoned by the administrator—
(a) in the prescribed manner; and
(b) giving the prescribed period of notice to every creditor of the company of whose claim and address he is aware of.
(2) A period prescribed under subsection (1) (b) may be varied in accordance with the Rules.
(3) A creditors’ meeting shall be conducted in accordance with the Rules.
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