The Insolvent Partnerships Order 1994

Made: 13th September 1994

Laid before Parliament: 16th September 1994

Coming into force: 1st December 1994

The Lord Chancellor, in exercise of the powers conferred on him by section 420(1) and (2) of the Insolvency Act 1986[^f00001] and section 21(2) of the Company Directors Disqualification Act 1986[^f00002] and of all other powers enabling him in that behalf, with the concurrence of the Secretary of State, hereby makes the following Order:—

PART I — GENERAL

Citation, commencement and extent

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• (1) This Order may be cited as the Insolvent Partnerships Order 1994 and shall come into force on 1st December 1994.

• (2) This Order—

• (a) in the case of insolvency proceedings in relation to companies and partnerships, relates to companies and partnerships which the courts in England and Wales have jurisdiction to wind up; and

• (b) in the case of insolvency proceedings in relation to individuals, extends to England and Wales only.

• (3) In paragraph (2) the term “insolvency proceedings” has the meaning ascribed to it by article 2 below.

Interpretation: definitions

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• (1) In this Order, except in so far as the context otherwise requires—

• “the Act” means the Insolvency Act 1986;

• “agricultural charge” has the same meaning as in the Agricultural Credits Act 1928[^f00003];

• “agricultural receiver” means a receiver appointed under an agricultural charge;

• “corporate member” means an insolvent member which is a company;

• “the court”, in relation to an insolvent partnership, means the court which has jurisdiction to wind up the partnership;

• “individual member” means an insolvent member who is an individual;

• “insolvency order” means—in the case of an insolvent partnership or a corporate member, a winding-up order; andin the case of an individual member, a bankruptcy order;

• “insolvency petition” means, in the case of a petition presented to the court—against a corporate member, a petition for its winding up by the court;against an individual member, a petition for a bankruptcy order to be made against that individual,where the petition is presented in conjunction with a petition for the winding up of the partnership by the court as an unregistered company under the Act;

• “insolvency proceedings” means any proceedings under the Act, this Order or the Insolvency Rules 1986[^f00004]

• “insolvent member” means a member of an insolvent partnership, against whom an insolvency petition is being or has been presented;

• “joint bankruptcy petition” means a petition by virtue of article 11 of this Order;

• “joint debt” means a debt of an insolvent partnership in respect of which an order is made by virtue of Part IV or V of this Order;

• “joint estate” means the partnership property of an insolvent partnership in respect of which an order is made by virtue of Part IV or V of this Order;

• “joint expenses” means expenses incurred in the winding up of an insolvent partnership or in the winding up of the business of an insolvent partnership and the administration of its property;

• “limited partner” has the same meaning as in the Limited Partnerships Act 1907[^f00005];

• “member” means a member of a partnership and any person who is liable as a partner within the meaning of section 14 of the Partnership Act 1890[^f00006];

• “officer”, in relation to an insolvent partnership, means—a member; ora person who has management or control of the partnership business;

• “partnership property” has the same meaning as in the Partnership Act 1890;

• “postponed debt” means a debt the payment of which is postponed by or under any provision of the Act or of any other enactment;

• “responsible insolvency practitioner” means—in winding up, the liquidator of an insolvent partnership or corporate member; andin bankruptcy, the trustee of the estate of an individual member,and in either case includes the official receiver when so acting;

• “separate debt” means a debt for which a member of a partnership is liable, other than a joint debt;

• “separate estate” means the property of an insolvent member against whom an insolvency order has been made;

• “separate expenses” means expenses incurred in the winding up of a corporate member, or in the bankruptcy of an individual member; and

• “trustee of the partnership” means a person authorised by order made by virtue of article 11 of this Order to wind up the business of an insolvent partnership and to administer its property.

• (2) The definitions in paragraph (1), other than the first definition, shall be added to those in section 436 of the Act.

• (3) References in provisions of the Act applied by this Order to any provision of the Act so applied shall, unless the context otherwise requires, be construed as references to the provision as so applied.

• (4) Where, in any Schedule to this Order, all or any of the provisions of two or more sections of the Act are expressed to be modified by a single paragraph of the Schedule, the modification includes the combination of the provisions of those sections into the one or more sections set out in that paragraph.

Interpretation: expressions appropriate to companies

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• (1) This article applies for the interpretation in relation to insolvent partnerships of expressions appropriate to companies in provisions of the Act and of the Company Directors Disqualification Act 1986 applied by this Order, unless the contrary intention appears.

• (2) References to companies shall be construed as references to insolvent partnerships and all references to the registrar of companies shall be omitted.

• (3) References to shares of a company shall be construed—

• (a) in relation to an insolvent partnership with capital, as references to rights to share in that capital; and

• (b) in relation to an insolvent partnership without capital, as references to interests—

• (i) conferring any right to share in the profits or liability to contribute to the losses of the partnership, or

• (ii) giving rise to an obligation to contribute to the debts or expenses of the partnership in the event of a winding up.

• (4) Other expressions appropriate to companies shall be construed, in relation to an insolvent partnership, as references to the corresponding persons, officers, documents or organs (as the case may be) appropriate to a partnership.

PART II — VOLUNTARY ARRANGEMENTS

Voluntary arrangement of insolvent partnership

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• (1) The provisions of Part I of, and Schedule A1 to, the Act shall apply in relation to an insolvent partnership, certain of those provisions being modified in such manner that, after modification, they are as set out in Schedule 1 to this Order.

• (2) For the purposes of the provisions of the Act applied by paragraph (1), the provisions of the Act specified in paragraph (3) below, insofar as they relate to company voluntary arrangements, shall also apply in relation to insolvent partnerships.

• (3) The provisions referred to in paragraph (2) are—

• (a) section 233 and section 233A in Part VI,

• (b) Part VII, with the exception of section 250,

• (c) Part XII,

• (d) Part XIII,

• (e) sections 411, 413, 414 and 419 in Part XV, and

• (f) Parts XVI to XIX.

Voluntary arrangements of members of insolvent partnership

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• (1) Where insolvency orders are made against an insolvent partnership and an insolvent member of that partnership in his capacity as such, Part I of the Act shall apply to corporate members and Part VIII to individual members of that partnership, with the modification that any reference to the creditors of the company or of the debtor, as the case may be, includes a reference to the creditors of the partnership.

• (2) Paragraph (1) is not to be construed as preventing the application of Part I or (as the case may be) Part VIII of the Act to any person who is a member of an insolvent partnership (whether or not a winding-up order has been made against that partnership) and against whom an insolvency order has not been made under this Order or under the Act.

PART III — ADMINISTRATION

Administration in relation to insolvent partnership

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• (1) The provisions of Part II of, and Schedule B1 to, the Act shall apply in relation to an insolvent partnership, certain of those provisions being modified in such manner that, after modification, they are as set out in Schedule 2 to this Order.

• (2) In its application to insolvent partnerships, Part II of, and Schedule B1 to, the Act (as modified as set out in Schedule 2 to this Order) shall be read subject to paragraph (3).

• (3) For every reference to—

• (a) “administrative receiver” there shall be substituted “agricultural receiver”; and

• (b) “floating charge” there shall be substituted “agricultural floating charge”.

• (4) For the purposes of the provisions of the Act applied by paragraph (1), the provisions of the Act specified in paragraph (5) below, insofar as they relate to the appointment of an administrator, shall also apply in relation to insolvent partnerships.

• (5) The provisions referred to in paragraph (4) are—

• (a) Part VI,

• (b) Part VII (with the exception of section 250),

• (c) Part XII,

• (d) Part XIII,

• (e) sections 411, 413, 414 and 419 in Part XV, and

• (f) Parts XVI to XIX.

• (6) For the purposes of this Article and the provisions of the Act applied by paragraph (1), “agricultural floating charge” shall be construed as a reference to a floating charge created under section 5 of the Agricultural Credits Act 1928.

PART IV — CREDITORS' ETC. WINDING-UP PETITIONS

Winding up of insolvent partnership as unregistered company on petition of creditor etc. where no concurrent petition presented against member

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• (1) Subject to paragraph (2) below, the provisions of Part V of the Act shall apply in relation to the winding up of an insolvent partnership as an unregistered company on the petition of a creditor, of a liquidator (within the meaning of Article 2(b) of the EC Regulation) appointed in proceedings by virtue of Article 3(1) of the EC Regulation, of a temporary administrator (within the meaning of Article 38 of the EC Regulation), of a responsible insolvency practitioner , of the Secretary of State or of any other person other than a member, where no insolvency petition is presented by the petitioner against a member or former member of that partnership in his capacity as such.

• (2) Certain of the provisions referred to in paragraph (1) are modified in their application in relation to insolvent partnerships which are being wound up by virtue of that paragraph in such manner that, after modification, they are as set out in Part I of Schedule 3 to this Order.

• (3) The provisions of the Act specified in Part II of Schedule 3 to this Order shall apply as set out in that Part for the purposes of section 221(5) of the Act, as modified by Part I of that Schedule.

Winding up of insolvent partnership as unregistered company on the petition of creditor etc. where concurrent petitions presented against one or more members

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• (1) Subject to paragraph (2) below, the provisions of Part V of the Act (other than sections 223 and 224), shall apply in relation to the winding up of an insolvent partnership as an unregistered company on the petition of a creditor, of a liquidator (within the meaning of Article 2(b) of the EC Regulation) appointed in proceedings by virtue of Article 3(1) of the EC Regulation, or of a temporary administrator (within the meaning of Article 38 of the EC Regulation) where insolvency petitions are presented by the petitioner against the partnership and against one or more members or former members of the partnership in their capacity as such.

• (2) Certain of the provisions referred to in paragraph (1) are modified in their application in relation to insolvent partnerships which are being wound up by virtue of that paragraph in such manner that, after modification, they are as set out in Part I of Schedule 4 to this Order.

• (3) The provisions of the Act specified in Part II of Schedule 4 to this Order shall apply as set out in that Part for the purposes of section 221(5) of the Act, as modified by Part I of that Schedule.

• (4) The provisions of the Act specified in paragraph (5) below, insofar as they relate to winding up of companies by the court in England and Wales on a creditor’s petition, shall apply in relation to the winding up of a corporate member or former corporate member (in its capacity as such) of an insolvent partnership which is being wound up by virtue of paragraph (1).

• (5) The provisions referred to in paragraph (4) are—

• (a) Part IV ...,

• (b) Part VI,

• (c) Part VII, and

• (d) Parts XII to XIX.

• (6) The provisions of the Act specified in paragraph (7) below, insofar as they relate to the bankruptcy of individuals in England and Wales on a petition presented by a creditor, shall apply in relation to the bankruptcy of an individual member or former individual member (in his capacity as such) of an insolvent partnership which is being wound up by virtue of paragraph (1).

• (7) The provisions referred to in paragraph (6) are—

• (a) Part IX (other than sections 269, 270, 287 and 297), and

• (b) Parts X to XIX.

• (8) Certain of the provisions referred to in paragraphs (4) and (6) are modified in their application in relation to the corporate or individual members or former corporate or individual members of insolvent partnerships in such manner that, after modification, they are as set out in Part II of Schedule 4 to this Order.

• (9) The provisions of the Act applied by this Article shall further be modified so that references to a corporate or individual member include any former such member against whom an insolvency petition is being or has been presented by virtue of this Article.

PART V — MEMBERS' PETITIONS

Winding up of insolvent partnership as unregistered company on member’s petition where no concurrent petition presented against member

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The following provisions of the Act shall apply in relation to the winding up of an insolvent partnership as an unregistered company on the petition of a member where no insolvency petition is presented by the petitioner against a member of that partnership in his capacity as such—

• (a) sections 117 and 221, modified in such manner that, after modification, they are as set out in Schedule 5 to this Order; and

• (b) the other provisions of Part V of the Act, certain of those provisions being modified in such manner that, after modification, they are as set out in Part I of Schedule 3 to this Order.

Winding up of insolvent partnership as unregistered company on member’s petition where concurrent petitions presented against all members

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• (1) The following provisions of the Act shall apply in relation to the winding up of an insolvent partnership as an unregistered company on a member’s petition where insolvency petitions are presented by the petitioner against the partnership and against all its members in their capacity as such—

• (a) sections 117, 124, 125, 221, 264, 265, 271 and 272 of the Act, modified in such manner that, after modification, they are as set out in Schedule 6 to this Order; and

• (b) sections 220, 225 and 227 to 229 in Part V of the Act, section 220 being modified in such manner that, after modification, it is as set out in Part I of Schedule 4 to this Order.

• (2) The provisions of the Act specified in paragraph (3) below, insofar as they relate to winding up of companies by the court in England and Wales on a member’s petition, shall apply in relation to the winding up of a corporate member (in its capacity as such) of an insolvent partnership which is wound up by virtue of paragraph (1).

• (3) The provisions referred to in paragraph (2) are—

• (a) Part IV ...,

• (b) Part VI,

• (c) Part VII, and

• (d) Parts XII to XIX.

• (4) The provisions of the Act specified in paragraph (5) below, insofar as they relate to the bankruptcy of individuals in England and Wales where a bankruptcy application is made by a debtor, shall apply in relation to the bankruptcy of an individual member (in his capacity as such) of an insolvent partnership which is being wound up by virtue of paragraph (1).

• (5) The provisions referred to in paragraph (4) are—

• (a) Part IX (other than sections ... 287 and 297), and

• (b) Parts X to XIX.

• (6) Certain of the provisions referred to in paragraphs (2) and (4) are modified in their application in relation to the corporate or individual members of insolvent partnerships in such manner that, after modification, they are as set out in Part II of Schedule 4 to this Order.

Insolvency proceedings not involving winding up of insolvent partnership as unregistered company where individual members present joint bankruptcy petition

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• (1) The provisions of the Act specified in paragraph (2) below shall apply in relation to the bankruptcy of the individual members of an insolvent partnership where those members jointly present a petition to the court for orders to be made for the bankruptcy of each of them in his capacity as a member of the partnership, and the winding up of the partnership business and administration of its property, without the partnership being wound up as an unregistered company under Part V of the Act.

• (2) The provisions referred to in paragraph (1) are—

• (a) Part IX (other than section 287), and

• (b) Parts X to XIX,

insofar as they relate to the insolvency of individuals in England and Wales where a bankruptcy application is made by a debtor.

• (3) Certain of the provisions referred to in paragraph (1) are modified in their application in relation to the individual members of insolvent partnerships in such manner that, after modification, they are as set out in Schedule 7 to this Order.

PART VI — PROVISIONS APPLYING IN INSOLVENCY PROCEEDINGS IN RELATION TO INSOLVENT PARTNERSHIPS

Winding up of unregistered company which is a member of insolvent partnership being wound up by virtue of this Order

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Where an insolvent partnership or other body which may be wound up under Part V of the Act as an unregistered company is itself a member of an insolvent partnership being so wound up, articles 8 and 10 above shall apply in relation to the latter insolvent partnership as though the former body were a corporate member of that partnership.

Deposit on petitions

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• (1) Where an order under section 414(4) or 415(3) of the Act (security for fees) provides for any sum to be deposited on presentation of a winding-up or bankruptcy petition, that sum shall, in the case of petitions presented by virtue of articles 8 and 10 above, only be required to be deposited in respect of the petition for winding up the partnership, but shall be treated as a deposit in respect of all those petitions.

• (2) Production of evidence as to the sum deposited on presentation of the petition for winding up the partnership shall suffice for the filing in court of an insolvency petition against an insolvent member.

Supplemental powers of court

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• (1) At the end of section 168 of the Act there shall be inserted the following subsections:—

(5A) Where at any time after a winding-up petition has been presented to the court against any person (including an insolvent partnership or other body which may be wound up under Part V of the Act as an unregistered company), whether by virtue of the provisions of the Insolvent Partnerships Order 1994[^f00007] or not, the attention of the court is drawn to the fact that the person in question is a member of an insolvent partnership, the court may make an order as to the future conduct of the insolvency proceedings and any such order may apply any provisions of that Order with any necessary modifications. (5B) Any order or directions under subsection (5A) may be made or given on the application of the official receiver, any responsible insolvency practitioner, the trustee of the partnership or any other interested person and may include provisions as to the administration of the joint estate of the partnership, and in particular how it and the separate estate of any member are to be administered. (5C) Where the court makes an order under section 72(1)(a) of the Financial Services Act 1986[^f00008] or section 92(1)(a) of the Banking Act 1987[^f00009] for the winding up of an insolvent partnership, the court may make an order as to the future conduct of the winding-up proceedings, and any such order may apply any provisions of the Insolvent Partnerships Order 1994 with any necessary modifications.

• (2) At the end of section 303 of the Act there shall be inserted the following subsections:—

(2A) Where at any time after a bankruptcy petition has been presented to the court against any person, whether under the provisions of the Insolvent Partnerships Order 1994 or not, the attention of the court is drawn to the fact that the person in question is a member of an insolvent partnership, the court may make an order as to the future conduct of the insolvency proceedings and any such order may apply any provisions of that Order with any necessary modifications. (2B) Where a bankruptcy petition has been presented against more than one individual in the circumstances mentioned in subsection (2A) above, the court may give such directions for consolidating the proceedings, or any of them, as it thinks just. (2C) Any order or directions under subsection (2A) or (2B) may be made or given on the application of the official receiver, any responsible insolvency practitioner, the trustee of the partnership or any other interested person and may include provisions as to the administration of the joint estate of the partnership, and in particular how it and the separate estate of any member are to be administered.

Meaning of “act as insolvency practitioner”

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• (1) After section 388(2) of the Act there shall be inserted the following—

(2A) A person acts as an insolvency practitioner in relation to an insolvent partnership by acting— (a) as its liquidator, provisional liquidator or administrator, or (b) as trustee of the partnership under article 11 of the Insolvent Partnerships Order 1994, or (c) as supervisor of a voluntary arrangement approved in relation to it under Part I of this Act.

• (2) In section 388(3) the words “to a partnership and” shall be omitted.

PART VII — DISQUALIFICATION

Application of Company Directors Disqualification Act 1986

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Where an insolvent partnership is wound up as an unregistered company under Part V of the Act, the provisions of sections 1, 1A, 6 to 10, 13 to 15, 17, 19(c) and 20 of, and Schedule 1[^f00011] to, the Company Directors Disqualification Act 1986 shall apply, certain of those provisions being modified in such manner that, after modification, they are as set out in Schedule 8 to this Order.

PART VIII — MISCELLANEOUS

Forms

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• (1) The forms contained in Schedule 9 to this Order shall be used in and in connection with proceedings by virtue of this Order, whether in the High Court or a county court.

• (2) The forms shall be used with such variations, if any, as the circumstances may require.

Application of subordinate legislation

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• (1) The subordinate legislation specified in Schedule 10 to this Order shall apply as from time to time in force and with such modifications as the context requires for the purpose of giving effect to the provisions of the Act and of the Company Directors Disqualification Act 1986 which are applied by this Order.

• (2) In the case of any conflict between any provision of the subordinate legislation applied by paragraph (1) and any provision of this Order, the latter provision shall prevail.

Supplemental and transitional provisions

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• (1) This Order does not apply in relation to any case in which a winding-up or a bankruptcy order was made under the Insolvent Partnerships Order 1986[^f00012] in relation to a partnership or an insolvent member of a partnership, and where this Order does not apply the law in force immediately before this Order came into force continues to have effect.

• (2) Where winding-up or bankruptcy proceedings commenced under the provisions of the Insolvent Partnerships Order 1986 were pending in relation to a partnership or an insolvent member of a partnership immediately before this Order came into force, either—

• (a) those proceedings shall be continued, after the coming into force of this Order, in accordance with the provisions of this Order, or

• (b) if the court so directs, they shall be continued under the provisions of the 1986 Order, in which case the law in force immediately before this Order came into force continues to have effect.

• (3) For the purpose of paragraph (2) above, winding-up or bankruptcy proceedings are pending if a statutory or written demand has been served or a winding-up or bankruptcy petition has been presented.

• (4) Nothing in this Order is to be taken as preventing a petition being presented against an insolvent partnership under section 367 of the Financial Services and Markets Act 2000, or any other enactment except where paragraph 12 of Schedule A1 to the Act, as applied by this Order, has the effect of preventing a petition being so presented.

• (5) Nothing in this Order is to be taken as preventing any creditor or creditors owed one or more debts by an insolvent partnership from presenting a petition under the Act against one or more members of the partnership liable for that debt or those debts (as the case may be) without including the others and without presenting a petition for the winding up of the partnership as an unregistered company.

• (6) Bankruptcy proceedings may be consolidated by virtue of article 14(2) above irrespective of whether they were commenced under the Bankruptcy Act 1914[^f00014] or the Insolvency Act 1986 or by virtue of the Insolvent Partnerships Order 1986 or this Order, and the court shall, in the case of proceedings commenced under or by virtue of different enactments, make provision for the manner in which the consolidated proceedings are to be conducted.

Revocation

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The Insolvent Partnerships Order 1986 is hereby revoked.

SCHEDULE 1 — MODIFIED PROVISIONS OF PART I OF, AND SCHEDULE A1 TO, THE ACT (COMPANY VOLUNTARY ARRANGEMENTS) AS APPLIED BY ARTICLE 4

PART I — Modified Provisions of Sections 1 to 7B of the Act

For sections 1 to 7B of the Act there shall be substituted:—

(1) (1) The members of an insolvent partnership (other than one which is in administration, or which is being wound up as an unregistered company, or in respect of which an order has been made by virtue of article 11 of the Insolvent Partnerships Order 1994) may make a proposal under this Part to the partnership’s creditors for a composition in satisfaction of the debts of the partnership or a scheme of arrangement of its affairs (from here on referred to, in either case, as a “voluntary arrangement”). (2) A proposal under this Part is one which provides for some person (“the nominee”) to act in relation to the voluntary arrangement either as trustee or otherwise for the purpose of supervising its implementation; and the nominee must be a person who is qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement. (3) Such a proposal may also be made— (a) where the partnership is in administration, by the administrator, (b) where the partnership is being wound up as an unregistered company, by the liquidator, and (c) where an order has been made by virtue of article 11 of the Insolvent Partnerships Order 1994, by the trustee of the partnership. (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1A) (1) Where the members of an eligible insolvent partnership intend to make a proposal for a voluntary arrangement, they may take steps to obtain a moratorium for the insolvent partnership. (2) Subject to subsections (3), (4), (5), (6) and (7), the provisions of Schedule A1 to this Act have effect with respect to— (a) insolvent partnerships eligible for a moratorium under this section, (b) the procedure for obtaining such a moratorium, (c) the effects of such a moratorium, and (d) the procedure applicable (in place of sections 2 to 6 and 7) in relation to the approval and implementation of a voluntary arrangement where such a moratorium is or has been in force. (3) Certain of the provisions applied in relation to insolvent partnerships by virtue of subsection (2) are modified in their application in relation to insolvent partnerships in such manner that, after modification, they are as set out in Part II of Schedule 1 to the Insolvent Partnerships Order 1994. (4) Paragraphs 4A, 4B, 4C, 4D, 4E, 4F, 4G, 4H, 4I, 4J, 4K, 5, 7(4), 8(8), 32(7), 34(2), 41(5) and 45 of Schedule A1 to this Act shall not apply. (5) An insolvent partnership is not liable to a fine under paragraphs 16(2), 17(3), 18(3), 19(3), 22 or 23(1) of Schedule A1 to the Act. (6) Notwithstanding subsection (5) an officer of an insolvent partnership may be liable to imprisonment or a fine under the paragraphs referred to in that subsection in the same manner as an officer of a company. (7) In the application of Schedule A1, and the application of the entries in Schedule 10 relating to offences under Schedule A1, to insolvent partnerships— (a) references to the directors or members of a company shall be construed as references to the members of an insolvent partnership, (b) references to officers of a company shall be construed as references to the officers of an insolvent partnership, (c) references to a meeting of a company shall be construed as references to a meeting of the members of an insolvent partnership, and (d) references to a floating charge shall be construed as references to a floating charge created under section 5 of the Agricultural Credits Act 1928. (2) (1) This section applies where the nominee under section 1 is not the liquidator, administrator or trustee of the insolvent partnership and the members of the partnership do not propose to take steps to obtain a moratorium under section 1A for the insolvent partnership. (2) The nominee shall, within 28 days (or such longer period as the court may allow) after he is given notice of the proposal for a voluntary arrangement, submit a report to the court stating— (a) whether, in his opinion, the proposed voluntary arrangement has a reasonable prospect of being approved and implemented, (b) whether, in his opinion, meetings of the members of the partnership and of the partnership’s creditors should be summoned to consider the proposal, and (c) if in his opinion such meetings should be summoned, the date on which, and time and place at which, he proposes the meetings should be held. (3) The nominee shall also state in his report whether there are in existence any insolvency proceedings in respect of the insolvent partnership or any of its members. (4) For the purposes of enabling the nominee to prepare his report, the person intending to make the proposal shall submit to the nominee— (a) a document setting out the terms of the proposed voluntary arrangement, and (b) a statement of the partnership’s affairs containing— (i) such particulars of the partnership’s creditors and of the partnership’s debts and other liabilities and of the partnership property as may be prescribed, and (ii) such other information as may be prescribed. (5) The court may— (a) on an application made by the person intending to make the proposal, in a case where the nominee has failed to submit the report required by this section or has died, or (b) on an application made by that person or the nominee, in a case where it is impracticable or inappropriate for the nominee to continue to act as such, direct that the nominee be replaced as such by another person qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement. (3) (1) Where the nominee under section 1 is not the liquidator, administrator or trustee of the insolvent partnership, and it has been reported to the court that such meetings as are mentioned in section 2(2) should be summoned, the person making the report shall (unless the court otherwise directs) summon those meetings for the time, date and place proposed in the report. (2) Where the nominee is the liquidator, administrator or trustee of the insolvent partnership, he shall summon meetings of the members of the partnership and of the partnership’s creditors to consider the proposal for such a time, date and place as he thinks fit. (3) The persons to be summoned to a creditors' meeting under this section are every creditor of the partnership of whose claim and address the person summoning the meeting is aware. (4) But they shall not include any modification by virtue of which the proposal ceases to be a proposal such as is mentioned in section 1. (1) The meetings under section 3 shall decide whether to approve the proposed voluntary arrangement (with or without modifications). (2) The modifications may include one conferring the functions proposed to be conferred on the nominee on another person qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement. (3) A meeting so summoned shall not approve any proposal or modification which affects the right of a secured creditor of the partnership to enforce his security, except with the concurrence of the creditor concerned. (4) Subject as follows, a meeting so summoned shall not approve any proposal or modification under which— (a) any preferential debt of the partnership is to be paid otherwise than in priority to such of its debts as are not preferential debts, ... (aa) any ordinary preferential debt of the partnership is to be paid otherwise than in priority to any secondary preferential debts that it may have, (b) a preferential creditor of the partnership is to be paid an amount in respect of an ordinary preferential debt that bears to that debt a smaller proportion than is borne to another ordinary preferential debt by the amount that is to be paid in respect of that other debt or (c) a preferential creditor of the partnership is to be paid an amount in respect of a secondary preferential debt that bears to that debt a smaller proportion than is borne to another secondary preferential debt by the amount that is to be paid in respect of that other debt. However, the meeting may approve such a proposal or modification with the concurrence of the preferential creditor concerned. (5) Subject as above, each of the meetings shall be conducted in accordance with the rules. (6) After the conclusion of either meeting in accordance with the rules, the chairman of the meeting shall report the result of the meeting to the court, and, immediately after reporting to the court, shall give notice of the result of the meeting to all those who were sent notice of the meeting in accordance with the rules. (7) References in this section to preferential debts , ordinary preferential debts, secondary preferential debts and preferential creditors are to be read in accordance with section 386 in Part XII of this Act. (4A) (1) This section applies to a decision, under section 4, with respect to the approval of a proposed voluntary arrangement. (2) The decision has effect if, in accordance with the rules— (a) it has been taken by both meetings summoned under section 3, or (b) (subject to any order made under subsection (6)) it has been taken by the creditors' meeting summoned under that section. (3) If the decision taken by the creditors' meeting differs from that taken by the meeting of the members of the partnership, a member of the partnership may apply to court. (4) An application under subsection (3) shall not be made after the end of the period of 28 days beginning with— (a) the day on which the decision was taken by the creditors' meeting, or (b) where the decision of the meeting of the members of the partnership was taken on a later day, that day. (5) Where a member of an insolvent partnership which is regulated applies to the court under subsection (3), the appropriate regulator is entitled to be heard on the application. (5A) “The appropriate regulator” means— (a) where the partnership is a PRA-regulated partnership, the Prudential Regulation Authority and the Financial Conduct Authority; (b) in any other case the Financial Conduct Authority. (5B) For the purposes of subsection (5A), a “PRA-regulated partnership” means a partnership which— (a) is or has been, a PRA–authorised person (within the meaning of the Financial Services and Markets Act 2000), (b) is, or has been, an appointed representative within the meaning given by section 39 of that Act, whose principal (or one of whose principals) is, or was, a PRA-authorised person, or (c) is carrying on, or has carried on, a PRA-regulated activity (within the meaning of that Act) in contravention of the general prohibition under section 19 of that Act. (6) On an application under subsection (3), the court may— (a) order the decision of the meeting of the members of the partnership to have effect instead of the decision of the creditors' meeting, or (b) make such other order as it thinks fit. (7) In this section “regulated” in relation to an insolvent partnership means a person who— (a) is, or has been, an authorised person within the meaning given by section 31 of the Financial Services and Markets Act 2000, (b) is, or has been, an appointed representative within the meaning given by section 39 of that Act, or (c) is carrying on, or has carried on, a regulated activity, within the meaning given by section 22 of that Act, in contravention of the general prohibition within the meaning given by section 19 of that Act. (5) (1) This section applies where a decision approving a voluntary arrangement has effect under section 4A. (2) The voluntary arrangement— (a) takes effect as if made by the members of the partnership at the creditors' meeting, and (b) binds every person who in accordance with the rules— (i) was entitled to vote at that meeting (whether or not he was present or represented at it), or (ii) would have been so entitled if he had had notice of it, as if he were a party to the voluntary arrangement. (2A) If— (a) when the arrangement ceases to have effect any amount payable under the arrangement to a person bound by virtue of subsection 2(b)(ii) has not been paid, and (b) the arrangement did not come to an end prematurely, the insolvent partnership shall at that time become liable to pay to that person the amount payable under the arrangement. (3) Subject as follows, if the partnership is being wound up as an unregistered company, or is in administration or an order by virtue of article 11 of the Insolvent Partnerships Order 1994 is in force, the court may do one or both of the following, namely— (a) by order— (i) stay all proceedings in the winding up or in the proceedings under the order made by virtue of the said article 11 (as the case may be), including any related insolvency proceedings of a member of the partnership in his capacity as such, or (ii) provide for the appointment of the administrator to cease to have effect; (b) give such directions as it thinks appropriate for facilitating the implementation of the voluntary arrangement with respect to— (i) the conduct of the winding up, the proceedings by virtue of the said article 11 or the administration (as the case may be), and (ii) the conduct of any related insolvency proceedings as referred to in paragraph (a)(i) above. (4) The court shall not make an order under subsection (3)(a)— (a) at any time before the end of the period of 28 days beginning with the first day on which each of the reports required by section 4(6) has been made to the court, or (b) at any time when an application under the next section or an appeal in respect of such an application is pending, or at any time in the period within which such an appeal may be brought. (6) (1) Subject to this section, an application to the court may be made, by any of the persons specified below, on one or both of the following grounds, namely— (a) that a voluntary arrangement which has effect under section 4A unfairly prejudices the interests of a creditor, member or contributory of the partnership; (b) that there has been some material irregularity at or in relation to either of the meetings. (2) The persons who may apply under this section are— (a) a person entitled, in accordance with the rules, to vote at either of the meetings; (b) a person who would have been entitled, in accordance with the rules, to vote at the creditors' meeting if he had had notice of it; (c) the nominee or any person who has replaced him under section 2(5) or 4(2); and (d) if the partnership is being wound up as an unregistered company or is in administration or an order by virtue of article 11 of the Insolvent Partnerships Order 1994 is in force, the liquidator, administrator or trustee of the partnership. (3) An application under this section shall not be made— (a) after the end of the period of 28 days beginning with the first day on which each of the reports required by section 4(6) has been made to the court, or (b) in the case of a person who was not given notice of the creditors' meeting, after the end of the period of 28 days beginning with the day on which he became aware that the meeting had taken place, but (subject to that) an application made by a person within subsection (2)(b) on the ground that the voluntary arrangement prejudices his interests may be made after the voluntary arrangement has ceased to have effect, unless it came to an end prematurely. (4) Where on such an application the court is satisfied as to either of the grounds mentioned in subsection (1), it may do one or both of the following, namely— (a) revoke or suspend any decision approving the voluntary arrangement which has effect under section 4A or, in a case falling within subsection (1)(b), any decision taken by the meeting in question which has effect under that section; (b) give a direction to any person for the summoning of further meetings to consider any revised proposal the person who made the original proposal may make or, in a case falling within subsection (1)(b), a further meeting of the members of the partnership or (as the case may be) of the partnership’s creditors to reconsider the original proposal. (5) Where at any time after giving a direction under subsection (4)(b) for the summoning of meetings to consider a revised proposal the court is satisfied that the person who made the original proposal does not intend to submit a revised proposal, the court shall revoke the direction and revoke or suspend any decision approving the voluntary arrangement which has effect under section 4A. (6) In a case where the court, on an application under this section with respect to any meeting— (a) gives a direction under subsection (4)(b), or (b) revokes or suspends an approval under subsection (4)(a) or (5), the court may give such supplemental directions as it thinks fit, and, in particular, directions with respect to things done under the voluntary arrangement since it took effect. (7) Except in pursuance of the preceding provisions of this section, a decision taken at a meeting summoned under section 3 is not invalidated by any irregularity at or in relation to the meeting. (6A) (1) If, for the purpose of obtaining the approval of the members or creditors of an insolvent partnership or of the members or creditors of any of its members to a proposal for a voluntary arrangement in relation to the partnership or any of its members, a person who is an officer of the partnership or an officer (which for this purpose includes a shadow director) of a corporate member in relation to which a voluntary arrangement is proposed— (a) makes a false representation, or (b) fraudulently does, or omits to do, anything, he commits an offence. (2) Subsection (1) applies even if the proposal is not approved. (3) A person guilty of an offence under this section is liable to imprisonment or a fine, or both. (7) (1) This section applies where a voluntary arrangement has effect under section 4A. (2) The person who is for the time being carrying out in relation to the voluntary arrangement the functions conferred— (a) on the nominee by virtue of the approval given at one or both of the meetings summoned under section 3, or (b) by virtue of section 2(5) or 4(2) on a person other than the nominee, shall be known as the supervisor of the voluntary arrangement. (3) If any of the partnership’s creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the court; and on the application the court may— (a) confirm, reverse or modify any act or decision of the supervisor, (b) give him directions, or (c) make such other order as it thinks fit. (4) The supervisor— (a) may apply to the court for directions in relation to any particular matter arising under the voluntary arrangement, and (b) is included among the persons who may apply to the court for the winding up of the partnership as an unregistered company or for an administration order to be made in relation to it. (5) The court may, whenever— (a) it is expedient to appoint a person to carry out the functions of the supervisor, and (b) it is inexpedient, difficult or impracticable for an appointment to be made without the assistance of the court, make an order appointing a person who is qualified to act as an insolvency practitioner ... in relation to the voluntary arrangement, either in substitution for the existing supervisor or to fill a vacancy. (6) The power conferred by subsection (5) is exercisable so as to increase the number of persons exercising the functions of supervisor or, where there is more than one person exercising those functions, so as to replace one or more of those persons. (7A) (1) This section applies where a moratorium under section 1A has been obtained for an insolvent partnership or the approval of a voluntary arrangement in relation to an insolvent partnership has taken effect under section 4A or paragraph 36 of Schedule A1. (2) If it appears to the nominee or supervisor that any past or present officer of the insolvent partnership has been guilty of any offence in connection with the moratorium or, as the case may be, voluntary arrangement for which such officer is criminally liable, the nominee or supervisor shall forthwith— (a) report the matter to the Secretary of State, and (b) provide the Secretary of State with such information and give him such access to and facilities for inspecting and taking copies of documents (being information or documents in the possession or under the control of the nominee or supervisor and relating to the matter in question) as the Secretary of State requires. (3) Where a prosecuting authority institutes criminal proceedings following any report under subsection (2), the nominee or supervisor, and every officer and agent of the insolvent partnership past or present (other than the defendant), shall give the authority all assistance in connection with the prosecution which he is reasonably able to give. - For this purpose— - “agent” includes any banker or solicitor of the insolvent partnership and any person employed by the insolvent partnership as auditor, whether that person is or is not an officer of the insolvent partnership, - “prosecuting authority” means the Director of Public Prosecutions or the Secretary of State. (4) The court may, on the application of the prosecuting authority, direct any person referred to in subsection (3) to comply with that subsection if he has failed to do so. (7B) For the purposes of this Part, a voluntary arrangement the approval of which has taken effect under section 4A or paragraph 36 of Schedule A1 comes to an end prematurely if, when it ceases to have effect, it has not been fully implemented in respect of all persons bound by the arrangement by virtue of section 5(2)(b)(i) or, as the case may be, paragraph 37(2)(b)(i) of Schedule A1

PART II — Modified Provisions of Schedule A1 to the Act

The following provisions of Schedule A1 to the Act are modified so as to read as follows:

(3) (1) An insolvent partnership meets the requirements of this paragraph if the qualifying conditions are met— (a) in the year ending with the date of filing, or (b) in the tax year of the insolvent partnership which ended last before that date. (2) For the purposes of sub-paragraph (1) the qualifying conditions are met by an insolvent partnership in a period if, in that period, it satisfies two or more of the requirements set out in sub-paragraph (3). (3) The qualifying conditions referred to in this paragraph are— (a) turnover of not more than £5.6 million, (b) assets of not more than £2.8 million, and (c) no more than 50 employees. (4) For the purposes of sub-paragraph (3)— (a) the total of turnover is the amount which is or would be, as the case may be, entered as turnover in the partnership’s tax return, (b) the total of assets is the amount which— (i) in the case of the period referred to in paragraph 3(1)(a), is entered in the partnership’s statement of affairs which must be filed with the court under paragraph 7(1)(b), or (ii) in the case of the period referred to in paragraph 3(1)(b), would be entered in the partnership’s statement of affairs had it prepared such a statement on the last day of the period to which the amount for turnover is calculated for the purposes of paragraph 3(4)(a), (c) the number of employees is the average number of persons employed by the insolvent partnership— (i) in the case of the period referred to in paragraph 3(1)(a), in the period ending with the date of filing, (ii) in the case of the period referred to in paragraph 3(1)(b), in the period to which the amount for turnover is calculated for the purposes of paragraph 3(4)(a). (5) Where the period covered by the qualifying conditions in respect of the insolvent partnership is not a year the total of turnover referred to in paragraph 3(3)(a) shall be proportionately adjusted. (6) The average number of persons employed by the insolvent partnership shall be calculated as follows— (a) by ascertaining the number of persons employed by it under contracts of service for each month of the year (whether throughout the month or not), (b) by adding those figures together, and (c) by dividing the resulting figure by the number of months during which persons were so employed by it during the year. (7) In this paragraph— - “tax return” means a return under section 12AA of the Taxes Management Act 1970, - “tax year” means the 12 months beginning with 6th April in any year. (4) (1) An insolvent partnership is excluded from being eligible for a moratorium if, on the date of filing— (a) the partnership is in administration, (b) the insolvent partnership is being wound up as an unregistered company, (c) there is an agricultural receiver of the insolvent partnership, (d) a voluntary arrangement has effect in relation to the insolvent partnership, (e) there is a provisional liquidator of the insolvent partnership, (f) a moratorium has been in force for the insolvent partnership at any time during the period of 12 months ending with the date of filing and— (i) no voluntary arrangement had effect at the time at which the moratorium came to an end, or (ii) a voluntary arrangement which had effect at any time in that period has come to an end prematurely, (g) a voluntary arrangement in relation to the insolvent partnership which had effect in pursuance of a proposal under section 1(3) has come to an end prematurely and, during the period of 12 months ending with the date of filing, an order under section 5(3)(a) has been made, or (h) an order has been made by virtue of article 11 of the Insolvent Partnerships Order 1994. (2) Sub-paragraph (1)(b) does not apply to an insolvent partnership which, by reason of a winding-up order made after the date of filing, is treated as being wound up on that date. (12) (1) During the period for which a moratorium is in force for an insolvent partnership— (a) no petition may be presented for the winding-up of the insolvent partnership as an unregistered company, (b) no meeting of the members of the partnership may be called or requisitioned except with the consent of the nominee or the leave of the court and subject (where the court gives leave) to such terms as the court may impose, (c) no order may be made for the winding-up of the insolvent partnership as an unregistered company, (d) no administration application may be made in respect of the partnership, (da) no administrator of the partnership may be appointed under paragraph 14 or 22 of Schedule B1, (e) no agricultural receiver of the partnership may be appointed except with the leave of the court and subject to such terms as the court may impose, (f) no landlord or other person to whom rent is payable may exercise any rights of forfeiture by peaceable re-entry in relation to premises forming part of the partnership property or let to one or more officers of the partnership in their capacity as such in respect of a failure by the partnership or one or more officers of the partnership to comply with any term or condition of the tenancy of such premises, except with the leave of the court and subject to such terms as the court may impose, (g) no other steps may be taken to enforce any security over the partnership property, or to repossess goods in the possession, under any hire-purchase agreement, of one or more officers of the partnership in their capacity as such, except with the leave of the court and subject to such terms as the court may impose, (h) no other proceedings and no execution or other legal process may be commenced or continued, and no distress may be levied, against the insolvent partnership or the partnership property except with the leave of the court and subject to such terms as the court may impose, (i) no petition may be presented, and no order may be made, by virtue of article 11 of the Insolvent Partnerships Order 1994, and (j) no application or order may be made under section 35 of the Partnership Act 1890 in respect of the insolvent partnership. (2) Where a petition, other than an excepted petition, for the winding-up of the insolvent partnership has been presented before the beginning of the moratorium, section 127 shall not apply in relation to any disposition of partnership property, any transfer of an interest in the insolvent partnership or alteration in status of a member of the partnership made during the moratorium or at a time mentioned in paragraph 37(5)(a). (3) Paragraph (a) of sub-paragraph (1) does not apply to an excepted petition and, where such a petition has been presented before the beginning of the moratorium or is presented during the moratorium, paragraphs (b) and (c) of that sub-paragraph do not apply in relation to proceedings on the petition. (4) For the purposes of this paragraph, “excepted petition” means a petition under— (a) article 7(1) of the Insolvent Partnerships Order 1994 presented by the Secretary of State on the grounds mentioned in subsections (b), (c) and (d) of section 124A of this Act, (b) section 72 of the Financial Services Act 1986 on the ground mentioned in subsection (1)(b) of that section, (c) section 92 of the Banking Act 1987 on the ground mentioned in subsection (1)(b) of that section, or (d) section 367 of the Financial Services and Markets Act 2000 on the ground mentioned in subsection (3)(b) of that section. (20) (1) This paragraph applies where— (a) any partnership property of the insolvent partnership is subject to a security, or (b) any goods are in possession of one or more officers of the partnership in their capacity as such under a hire-purchase agreement. (2) If the holder of the security consents, or the court gives leave, the insolvent partnership may dispose of the property as if it were not subject to the security. (3) If the owner of the goods consents, or the court gives leave, the insolvent partnership may dispose of the goods as if all rights of the owner under the hire-purchase agreement were vested in the members of the partnership. (4) Where property subject to a security which, as created, was a floating charge is disposed of under sub-paragraph (2), the holder of the security has the same priority in respect of any partnership property directly or indirectly representing the property disposed of as he would have had in respect of the property subject to the security. (5) Sub-paragraph (6) applies to the disposal under sub-paragraph (2) or (as the case may be) sub-paragraph (3) of— (a) any property subject to a security other than a security which, as created, was a floating charge, or (b) any goods in the possession of one or more officers of the partnership in their capacity as such under a hire-purchase agreement. (6) It shall be a condition of any consent or leave under sub-paragraph (2) or (as the case may be) sub-paragraph (3) that— (a) the net proceeds of the disposal, and (b) where those proceeds are less than such amount as may be agreed, or determined by the court, to be the net amount which would be realised on a sale of the property or goods in the open market by a willing vendor, such sums as may be required to make good the deficiency, shall be applied towards discharging the sums secured by the security or payable under the hire-purchase agreement. (7) Where a condition imposed in pursuance of sub-paragraph (6) relates to two or more securities, that condition requires— (a) the net proceeds of the disposal, and (b) where paragraph (b) of sub-paragraph (6) applies, the sums mentioned in that paragraph, to be applied towards discharging the sums secured by those securities in the order of their priorities. (8) In this paragraph “floating charge” means a floating charge created under section 5 of the Agricultural Credits Act 1928. (37) (1) This paragraph applies where a decision approving a voluntary arrangement has effect under paragraph 36. (2) The approved voluntary arrangement— (a) takes effect as if made by the members of the partnership at the creditors' meeting, and (b) binds every person who in accordance with the rules— (i) was entitled to vote at that meeting (whether or not he was present or represented at it), or (ii) would have been so entitled if he had had notice of it, as if he were a party to the voluntary arrangement. (3) If— (a) when the arrangement ceases to have effect any amount payable under the arrangement to a person bound by virtue of sub-paragraph (2)(b)(ii) has not been paid, and (b) the arrangement did not come to an end prematurely, the insolvent partnership shall at that time become liable to pay to that person the amount payable under the arrangement. (4) Where a petition for the winding-up of the insolvent partnership as an unregistered company or a petition by virtue of article 11 of the Insolvent Partnerships Order 1994, other than an excepted petition within the meaning of paragraph 12, was presented before the beginning of the moratorium, the court shall dismiss the petition. (5) The court shall not dismiss a petition under sub-paragraph (4)— (a) at any time before the end of the period of 28 days beginning with the first day on which each of the reports of the meetings required by paragraph 30(3) has been made to the court, or (b) at any time when an application under paragraph 38 or an appeal in respect of such an application is pending, or at any time in the period within which such an appeal may be brought. (40) (1) This paragraph applies in relation to acts or omissions of the officers of a partnership during a moratorium. (2) A creditor or member of the insolvent partnership may apply to the court for an order under this paragraph on the ground— (a) that the partnership’s affairs and business and partnership property are being or have been managed by the officers of the partnership in a manner which is unfairly prejudicial to the interests of its creditors or members generally, or of some part of its creditors or members (including at least the petitioner), or (b) that any actual or proposed act or omission of the officers of the partnership is or would be so prejudicial. (3) An application for an order under this paragraph may be made during or after the moratorium. (4) On an application for an order under this paragraph the court may— (a) make such order as it thinks fit for giving relief in respect of the matters complained of, (b) adjourn the hearing conditionally or unconditionally, or (c) make an interim order or any other order that it thinks fit. (5) An order under this paragraph may in particular— (a) regulate the management by the officers of the partnership of the partnership’s affairs and business and partnership property during the remainder of the moratorium, (b) require the officers of the partnership to refrain from doing or continuing an act complained of by the petitioner, or to do an act which the petitioner has complained they have omitted to do, (c) require the summoning of a meeting of creditors or members of the partnership for the purpose of considering such matters as the court may direct, (d) bring the moratorium to an end and make such consequential provision as the court thinks fit. (6) In making an order under this paragraph the court shall have regard to the need to safeguard the interests of persons who have dealt with the insolvent partnership in good faith and for value. (7) Sub-paragraph (8) applies where— (a) the appointment of an administrator has effect in relation to the insolvent partnership and the appointment took effect before the moratorium came into force, or (b) the insolvent partnership is being wound up as an unregistered company or an order by virtue of article 11 of the Insolvent Partnerships Order 1994 has been made, in pursuance of a petition presented before the moratorium came into force. (8) No application for an order under this paragraph may be made by a creditor or member of the insolvent partnership; but such an application may be made instead by the administrator (or as the case may be) the liquidator. (42) (1) If, for the purpose of obtaining a moratorium, or an extension of a moratorium, for an insolvent partnership or any of its members (a moratorium meaning in the case of an individual the effect of an application for, or the making of, an interim order under Part VIII of the Act), a person who is an officer of an insolvent partnership or an officer (which for this purpose includes a shadow director) of a corporate member in relation to which a voluntary arrangement is proposed— (a) makes any false representation, or (b) fraudulently does, or omits to do, anything, he commits an offence. (2) Sub-paragraph (1) applies even if no moratorium or extension is obtained. (3) A person guilty of an offence under this paragraph is liable to imprisonment or a fine, or both.

SCHEDULE 2 — MODIFIED PROVISIONS OF PART II OF, AND SCHEDULE B1 TO, THE ACT (ADMINISTRATION) AS APPLIED BY ARTICLE 6

1

The following provisions of Schedule B1 and Schedule 1 to the Act are modified as follows.

2

Paragraph 2 is modified so as to read as follows—

(2) A person may be appointed as administrator of a partnership— (a) by administration order of the court under paragraph 10, (b) by the holder of an agricultural floating charge under paragraph 14, or (c) by the members of the insolvent partnership in their capacity as such under paragraph 22.

3

Paragraph 7 is modified so as to read as follows—

(7) A person may not be appointed as administrator of a partnership which is in administration (subject to the provisions of paragraphs 90 to 93, 95 to 97, and 100 to 103 about replacement and additional administrators).

4

Paragraph 8 is modified so as to read as follows—

(8) (1) A person may not be appointed as administrator of a partnership after— (a) an order has been made in relation to it by virtue of Article 11 of the Insolvent Partnerships Order 1994; or (b) an order has been made for it to be wound up by the court as an unregistered company. (2) Sub-paragraph (1)(a) is subject to paragraph 38. (3) Sub-paragraph (1)(b) is subject to paragraphs 37 and 38.

5

Paragraph 11 is modified so as to read as follows—

(11) The court may make an administration order in relation to a partnership only if satisfied— (a) that the partnership is unable to pay its debts, and (b) that the administration order is reasonably likely to achieve the purpose of administration.

6

Paragraph 12 is modified so as to read as follows—

(12) (1) An application to the court for an administration order in respect of a partnership (“an administration application”) shall be by application in Form 1 in Schedule 9 to the Insolvent Partnerships Order 1994 and may be made only by— (a) the members of the insolvent partnership in their capacity as such; (b) one or more creditors of the partnership; or (c) a combination of persons listed in paragraphs (a) and (b). (2) As soon as is reasonably practicable after the making of an administration application the applicant shall notify— (a) any person who has appointed an agricultural receiver of the partnership; (b) any person who is or may be entitled to appoint an agricultural receiver of the partnership; (c) any person who is or may be entitled to appoint an administrator of the partnership under paragraph 14; and (d) such other persons as may be prescribed. (3) An administration application may not be withdrawn without the permission of the court. (4) In sub-paragraph (1) “creditor” includes a contingent creditor and a prospective creditor. (5) Sub-paragraph (1) is without prejudice to section 7(4)(b).

7

Paragraph 14 is modified so as to read as follows—

(14) (1) The holder of a qualifying agricultural floating charge in respect of partnership property may appoint an administrator of the partnership. (2) For the purposes of sub-paragraph (1) an agricultural floating charge qualifies if created by an instrument which— (a) states that this paragraph applies to the agricultural floating charge, (b) purports to empower the holder of the agricultural floating charge to appoint an administrator of the partnership, or (c) purports to empower the holder of the agricultural floating charge to make an appointment which would be the appointment of an agricultural receiver. (3) For the purposes of sub-paragraph (1) a person is the holder of a qualifying agricultural floating charge in respect of partnership property if he holds one or more charges of the partnership secured— (a) by a qualifying agricultural floating charge which relates to the whole or substantially the whole of the partnership property, (b) by a number of qualifying agricultural floating charges which together relate to the whole or substantially the whole of the partnership property, or (c) by charges and other forms of security which together relate to the whole or substantially the whole of the partnership property and at least one of which is a qualifying agricultural floating charge.

8

Paragraph 15 is modified so as to read as follows—

(15) (1) A person may not appoint an administrator under paragraph 14 unless— (a) he has given at least two business days' written notice to the holder of any prior agricultural floating charge which satisfies paragraph 14(2); or (b) the holder of any prior agricultural floating charge which satisfies paragraph 14(2) has consented in writing to the making of the appointment. (2) For the purposes of this paragraph, one agricultural floating charge is prior to another in accordance with the provisions of section 8(2) of the Agricultural Credits Act 1928

9

Paragraph 22 is modified so as to read as follows—

(22) The members of the insolvent partnership may appoint an administrator.

10

Paragraph 23 is modified so as to read as follows—

(23) (1) This paragraph applies where an administrator of a partnership is appointed— (a) under paragraph 22, or (b) on an administration application made by the members of the partnership. (2) An administrator of the partnership may not be appointed under paragraph 22 during the period of 12 months beginning with the date on which the appointment referred to in sub-paragraph (1) ceases to have effect.

11

Paragraph 26 is modified so as to read as follows—

(26) (1) A person who proposes to make an appointment under paragraph 22 shall give at least five business days' written notice to— (a) any person who is or may be entitled to appoint an agricultural receiver of the partnership, and (b) any person who is or may be entitled to appoint an administrator of the partnership under paragraph 14. (2) A person who proposes to make an appointment under paragraph 22 shall also give such notice as may be prescribed to such other persons as may be prescribed. (3) A notice under this paragraph must— (a) identify the proposed administrator, and (b) be in Form 1A in Schedule 9 to the Insolvent Partnerships Order 1994.

12

Paragraph 27 is modified so as to read as follows—

(27) (1) A person who gives notice of intention to appoint under paragraph 26 shall file with the court as soon as is reasonably practicable a copy of— (a) the notice, and (b) any document accompanying it. (2) The copy filed under sub-paragraph (1) must be accompanied by a statutory declaration made by or on behalf of the person who proposes to make the appointment— (a) that the partnership is unable to pay its debts, (b) that the partnership is not in liquidation, and (c) that, so far as the person making the statement is able to ascertain, the appointment is not prevented by paragraphs 23 to 25, and (d) to such additional effect, and giving such information, as may be prescribed. (3) A statutory declaration under sub-paragraph (2) must— (a) be in the prescribed form, and (b) be made during the prescribed period. (4) A person commits an offence if in a statutory declaration under sub-paragraph (2) he makes a statement— (a) which is false, and (b) which he does not reasonably believe to be true.

13

Paragraph 29 is modified so as to read as follows—

(29) (1) A person who appoints an administrator of a partnership under paragraph 22 shall file with the court— (a) a notice of appointment, and (b) such other documents as may be prescribed. (2) The notice of appointment must include a statutory declaration by or on behalf of the person who makes the appointment—- (a) that the person is entitled to make an appointment under paragraph 22, (b) that the appointment is in accordance with this Schedule, and (c) that, so far as the person making the statement is able to ascertain, the statements made, and information given in the statutory declaration filed with the notice of intention to appoint remain accurate. (3) The notice of appointment must identify the administrator and must be accompanied by a statement by the administrator— (a) that he consents to the appointment, (b) that in his opinion the purpose of administration is reasonably likely to be achieved, and (c) giving such other information and opinions as may be prescribed. (4) For the purpose of a statement under sub-paragraph (3) an administrator may rely on information supplied by members of the partnership (unless he has reason to doubt its accuracy). (5) The notice of appointment must be in Form 1B in Schedule 9 to the Insolvent Partnerships Order 1994 and any document accompanying it must be in the prescribed form. (6) A statutory declaration under sub-paragraph (2) must be made during the prescribed period. (7) A person commits an offence if in a statutory declaration under sub-paragraph (2) he makes a statement— (a) which is false, and (b) which he does not reasonably believe to be true.

14

Paragraph 35 is modified so as to read as follows—

(35) (1) This paragraph applies where an administration application in respect of a partnership— (a) is made by the holder of a qualifying agricultural floating charge in respect of the partnership property, and (b) includes a statement that the application is made in reliance on this paragraph. (2) The court may make an administration order— (a) whether or not satisfied that the partnership is unable to pay its debts; but (b) only if satisfied that the applicant could appoint an administrator under paragraph 14.

15

Paragraph 39 is modified so as to read as follows—

(39) (1) Where there is an agricultural receiver of a partnership the court must dismiss an administration application in respect of the partnership unless— (a) the person by or on behalf of whom the agricultural receiver was appointed consents to the making of the administration order, (b) the court thinks that the security by virtue of which the agricultural receiver was appointed would be liable to be released or discharged under sections 238 to 240 (transaction at undervalue and preference) if an administration order were made, or (c) the court thinks that the security by virtue of which the agricultural receiver was appointed would be avoided under section 245 (avoidance of floating charge) if an administration order were made. (2) Sub-paragraph (1) applies whether the agricultural receiver is appointed before or after the making of the administration application.

16

Paragraph 41 is modified so as to read as follows—

(41) (1) When an administration order takes effect in respect of a partnership any agricultural receiver of the partnership shall vacate office. (2) Where a partnership is in administration, any receiver of part of the partnership property shall vacate office if the administrator requires him to. (3) Where an agricultural receiver vacates office under sub-paragraph (1) or (2), his remuneration shall be charged on and paid out of any partnership property which was in his custody or under his control immediately before he vacated office. (4) In the application of sub-paragraph (3)— (a) “remuneration” includes expenses properly incurred and any indemnity to which the agricultural receiver is entitled out of the partnership property, (b) the charge imposed takes priority over security held by the person by whom or on whose behalf the agricultural receiver was appointed, and (c) the provision for payment is subject to paragraph 43.

17

Paragraph 42 is modified so as to read as follows—

(42) (1) This paragraph applies to a partnership in administration. (2) No order may be made for the winding up of the partnership. (3) No order may be made by virtue of Article 11 of the Insolvent Partnerships Order 1994 in respect of the partnership. (4) No order may be made under section 35 of the Partnership Act 1890 in respect of the partnership. (5) Sub-paragraph (2) does not apply to an order made on a petition presented under— (a) section 124A(public interest); or (b) section 367 of the Financial Services and Markets Act 2000 (c. 8) (winding-up petitions). (6) If a petition presented under a provision referred to in sub-paragraph (5) comes to the attention of the administrator, he shall apply to the court for directions under paragraph 63.

18

Paragraph 43 is modified so as to read as follows—

(43) (1) This paragraph applies to a partnership in administration. (2) No step may be taken to enforce security over the partnership property except— (a) with the consent of the administrator, or (b) with the permission of the court. (3) No step may be taken to repossess goods in the partnership’s possession under a hire-purchase agreement except— (a) with the consent of the administrator, or (b) with the permission of the court. (4) A landlord may not exercise a right of forfeiture by peaceable re-entry in relation to premises forming part of the partnership property or let to one or more officers of the partnership in their capacity as such except— (a) with the consent of the administrator, or (b) with the permission of the court. (5) No legal process (including legal proceedings, execution, distress and diligence) may be instituted or continued against the partnership or partnership property except— (a) with the consent of the administrator, or (b) with the permission of the court. (6) An agricultural receiver of the partnership may not be appointed. (7) Where the court gives permission for a transaction under this paragraph it may impose a condition on or a requirement in connection with the transaction. (8) In this paragraph “landlord” includes a person to whom rent is payable.

19

Paragraph 47 is modified so as to read as follows—

(47) (1) As soon as is reasonably practicable after appointment the administrator of a partnership 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 partnership. (2) The statement must— (a) be verified by a statement of truth in accordance with Civil Procedure Rules, (b) be in the prescribed form, (c) give particulars of the partnership property, debts and liabilities, (d) give the names and addresses of the creditors of the partnership, (e) specify the security held by each creditor, (f) give the date on which each security was granted, and (g) contain such other information as may be prescribed. (3) In sub-paragraph (1) “relevant person” means— (a) a person who is or has been an officer of the partnership, (b) a person who took part in the formation of the partnership during the period of one year ending with the date on which the partnership enters administration, (c) a person employed by the partnership during that period, and (d) a person who is or has been during that period an officer or employee of a partnership which is or has been during that year an officer of the partnership. (4) For the purpose of sub-paragraph (3) a reference to employment is a reference to employment through a contract of employment or a contract for services.

20

Paragraph 49 is modified so as to read as follows—

(49) (1) The administrator of a partnership shall make a statement setting out proposals for achieving the purpose of administration. (2) A statement under sub-paragraph (1) must, 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 paragraph 3(1)(a) or (b) cannot be achieved. (3) Proposals under this paragraph may include a proposal for a voluntary arrangement under Part I of this Act (although this paragraph is without prejudice to section 4(3)). (4) The administrator shall send a copy of the statement of his proposals— (a) to the court, (b) to every creditor of the partnership of whose claim and address he is aware, and (c) to every member of the partnership of whose address he is aware. (5) The administrator shall comply with sub-paragraph (4)— (a) as soon as is reasonably practicable after the partnership enters administration, and (b) in any event, before the end of the period of eight weeks beginning with the day on which the partnership enters administration. (6) The administrator shall be taken to comply with sub-paragraph (4)(c) 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 partnership who applies in writing to a specified address. (7) An administrator commits an offence if he fails without reasonable excuse to comply with sub-paragraph (5). (8) A period specified in this paragraph may be varied in accordance with paragraph 107.

21

Paragraph 52 is modified so as to read as follows—

(52) (1) Paragraph 51(1) shall not apply where the statement of proposals states that the administrator thinks— (a) that the partnership has sufficient property to enable each creditor of the partnership to be paid in full, (b) that the partnership has insufficient property to enable a distribution to be made to unsecured creditors, or (c) that neither of the objectives specified in paragraph 3(1)(a) and (b) can be achieved. (2) But the administrator shall summon an initial creditors' meeting if it is requested— (a) by creditors of the partnership whose debts amount to at least 10 per cent of the total debts of the partnership, (b) in the prescribed manner, and (c) in the prescribed period. (3) A meeting requested under sub-paragraph (2) must be summoned for a date in the prescribed period. (4) The period prescribed under sub-paragraph (3) may be varied in accordance with paragraph 107.

22

Paragraph 61 is modified so as to read as follows—

(61) The administrator of a partnership— (a) may prevent any person from taking part in the management of the partnership business, and (b) may appoint any person to be a manager of that business.

23

Paragraph 65 is modified so as to read as follows—

(65) (1) The administrator of a partnership may make a distribution to a creditor of the partnership. (2) Section 175(1) and (2)(a) shall apply in relation to a distribution under this paragraph as it applies in relation to a winding up. (3) A payment may not be made by way of distribution under this paragraph to a creditor of the partnership who is neither secured nor preferential unless the court gives permission.

24

Paragraph 69 is modified so as to read as follows:—

(69) (1) Subject to sub-paragraph (2) below, in exercising his function under this Schedule the administrator of a partnership acts as the agent of the members of the partnership in their capacity as such. (2) An officer of the partnership shall not, unless he otherwise consents, be personally liable for the debts and obligations of the partnership incurred during the period when the partnership is in administration.

25

Paragraph 73 is modified so as to read as follows—

(73) (1) An administrator’s statement of proposals under paragraph 49 may not include any action which— (a) affects the right of a secured creditor of the partnership to enforce his security, (b) would result in a preferential debt of the partnership being paid otherwise than in priority to its non-preferential debts, ... (bb) would result in an ordinary preferential debt of the partnership being paid otherwise than in priority to any secondary preferential debts that it may have, (c) would result in one preferential creditor of the partnership being paid a smaller proportion of an ordinary preferential debt than another or (d) would result in one preferential creditor of the partnership being paid a smaller proportion of a secondary preferential debt than another. (2) Sub-paragraph (1) does not apply to— (a) action to which the relevant creditor consents, or (b) a proposal for a voluntary arrangement under Part I of this Act (although this sub-paragraph is without prejudice to section 4(3)). (3) The reference to a statement of proposals in sub-paragraph (1) includes a reference to a statement as revised or modified.

26

Paragraph 74 is modified so as to read as follows—

(74) (1) A creditor or member of a partnership in administration may apply to the court claiming that— (a) the administrator is acting or has acted so as unfairly to harm the interests of the applicant (whether alone or in common with some or all other members or creditors), or (b) the administrator proposes to act in a way which would unfairly harm the interests of the applicant (whether alone or in common with some or all other members or creditors). (2) A creditor or member of a partnership in administration may apply to the court claiming that the administrator is not performing his functions as quickly or as efficiently as is reasonably practicable. (3) The court may— (a) grant relief; (b) dismiss the application; (c) adjourn the hearing conditionally or unconditionally; (d) make an interim order; (e) make any other order it thinks appropriate. (4) In particular, an order under this paragraph may— (a) regulate the administrator’s exercise of his functions; (b) require the administrator to do or not do a specified thing; (c) require a creditors' meeting to be held for a specified purpose; (d) provide for the appointment of an administrator to cease to have effect; (e) make consequential provision. (5) An order may be made on a claim under sub-paragraph (1) whether or not the action complained of— (a) is within the administrator’s powers under that Schedule; (b) was taken in reliance on an order under paragraph 71 or 72. (6) An order may not be made under this paragraph if it would impede or prevent the implementation of— (a) a voluntary arrangement approved under Part I, or (b) proposals or a revision approved under paragraph 53 or 54 more than 28 days before the day on which the application for the order under this paragraph is made.

27

Omit paragraph 83.

28

Paragraph 84 is modified so as to read as follows—

(84) (1) If the administrator of a partnership thinks that the partnership has no property which might permit a distribution to its creditors, he shall file a notice to that effect with the court. (2) The court may on the application of the administrator of a partnership disapply sub-paragraph (1) in respect of the partnership. (3) On the filing of a notice in respect of a partnership under sub-paragraph (1) the appointment of an administrator of the partnership shall cease to have effect. (4) If an administrator files a notice under sub-paragraph (1) he shall as soon as is reasonably practicable send a copy of the notice to each creditor of whose claim and address he is aware. (5) At the end of the period of three months beginning with the date of filing of a notice in respect of a partnership under sub-paragraph (1) the partnership is deemed to be dissolved. (6) On an application in respect of a partnership by the administrator or another interested person the court may— (a) extend the period specified in sub-paragraph (5); (b) suspend that period; or (c) disapply sub-paragraph (5). (7) An administrator commits an offence if he fails without reasonable excuse to comply with sub-paragraph (4).

29

Paragraph 87 is modified to read as follows—

(87) (1) An administrator may resign only in prescribed circumstances. (2) Where an administrator may resign he may do so only— (a) in the case of an administrator appointed by administration order, by notice in writing to the court, (b) in the case of an administrator appointed under paragraph 14, by notice in writing to the holder of the agricultural floating charge by virtue of which the appointment was made, or (c) in the case of an administrator appointed under paragraph 22, by notice in writing to the members of the insolvent partnership.

30

Paragraph 89 is modified so as to read as follows—

(89) (1) The administrator of a partnership shall vacate office if he ceases to be qualified to act as an insolvency practitioner in relation to the partnership. (2) Where an administrator vacates office by virtue of sub-paragraph (1) he shall give notice in writing— (a) in the case of an administrator appointed by administration order, to the court, (b) in the case of an administrator appointed under paragraph 14, to the holder of the agricultural floating charge by virtue of which the appointment was made, or (c) in the case of an administrator appointed under paragraph 22, to the members of the insolvent partnership. (3) An administrator who fails without reasonable excuse to comply with sub-paragraph (2) commits an offence.

31

Paragraph 90 is modified so as to read as follows—

(90) Paragraphs 91 to 93 and 95 apply where an administrator— (a) dies (b) resigns (c) is removed from office under paragraph 88, or (d) vacates office under paragraph 89.

32

Paragraph 91 is modified so as to read as follows—

(91) (1) Where the administrator was appointed by administration order, the court may replace the administrator on an application under this sub-paragraph made by— (a) a creditors' committee of the partnership, (b) the members of the partnership, (c) one or more creditors of the partnership, or (d) where more than one person was appointed to act jointly or concurrently as the administrator, any of those persons who remains in office. (2) But an application may be made in reliance on sub-paragraph (1)(b) and (c) only where— (a) there is no creditors' committee of the partnership, (b) the court is satisfied that the creditors' committee or a remaining administrator is not taking reasonable steps to make a replacement, or (c) the court is satisfied that for another reason it is right for the application to be made.

33

Paragraph 93 is modified so as to read as follows—

(93) (1) Where the administrator was appointed under paragraph 22 by the members of the partnership they may replace the administrator. (2) A replacement under this paragraph may be made only— (a) with the consent of each person who is the holder of a qualifying agricultural floating charge in respect of the partnership property, or (b) where consent is withheld, with the permission of the court.

34

Omit paragraph 94.

35

Paragraph 95 is modified so as to read as follows—