Produced by the
Revised January 25th 2008
TABLE OF
CONTENTS FOR STANDARD CONDITIONS
PART
I: INTERPRETATION Page
1
Definitions 4
2 The
Conditions 5
PART II: THE START, EFFECT
AND DURATION OF THE ARRANGEMENT
3 When the
arrangement will start 6
4 The nature
and effect of the arrangement 6
5 How long
the arrangement will last 7
6 Completing
the arrangement 7
7
Substantial compliance 8
PART III: THE DEBTOR’S
DUTIES AND OBLIGATIONS
8 Your
duties in relation to the supervisor 9
PART IV: BREACH OR
NON-COMPLIANCE BY THE DEBTOR
9(1) If you breach the arrangement 10
9(2) If you fail to comply 11
9(3) Procedure following breach 11
9(4) Remedy of breach 11
9(5) Failure to remedy breach 12
PART V: THE SUPERVISOR’S
FUNCTIONS, POWERS ETC
10
Supervisor’s duties 13
11 Removing
the supervisor from office 14
12 When the
supervisor leaves office 14
13 Vacancy in
the office of supervisor 15
PART VI: ARRANGEMENT ASSETS
14 After
acquired assets 16
15 Holding
arrangement assets in trust 16
16 In the
event of your death 16
Page
PART VII DIVIDENDS AND
CLAIMS
17 Dividends
and claims 17
PART VIII: CREDITORS WHO DO
NOT HAVE NOTICE
18 Creditors
who do not have notice 18
PART IX: MEETING OF
CREDITORS
19 Power to
call or requisition meetings of creditors
19
PART X: CONDITIONS WHERE TAX
AUTHORITIES ARE CREDITORS
20 HM Revenue
& Customs (“HMRC”) claims 20
21 Income
beginning after approval 20
22
Post-approval statutory returns and payments 20
23 Overdue
accounts and returns 20
24 Funds to
be paid to supervisor 20
25
Restriction on payment of dividend 21
26 Set-off of
repayments 21
PART XI: MISCELLANEOUS
PROVISIONS
27 Tax
liabilities arising on realisations 22
28
Invalidity or illegality 22
29 Joint
liabilities 22
30 Surplus 22
INTERPRETATION
In the arrangement, except where the
context requires a different meaning:
(a)
“the Act” means the Insolvency Act 1986
as amended;
(b)
“the arrangement” means the proposal and
the conditions read together;
(c)
“you” or “the debtor” means the person who makes the proposal;
(d)
“dividend” means a distribution to
creditors;
(e)
“excluded assets” are those assets that
are excluded from a debtor’s estate in bankruptcy and any other assets
identified in the proposal as being excluded from the arrangement;
(f)
“after acquired assets” means any asset, windfall or inheritance with a value
of more than £500, other than excluded assets that you acquire or receive
between the date the arrangement starts and the date it ends or is completed,
if this asset could have been an asset of the arrangement had it belonged to or
been vested in you at the start of the arrangement;
(g)
“the effective date” is the date when the arrangement is approved at a creditors
meeting to consider the arrangement;
(h)
“the proposal” is the annexed document
with modifications and documents incorporated, and is a proposal under Part
VIII of the Act;
(i)
“the Rules“ means the Insolvency Rules
1986 (as amended);
(j)
an “unsecured
creditor” is any creditor, except a secured creditor, who is your creditor
for any reason that originated or occurred on or before the time and date of
approval of the arrangement;
(k) any
term of gender (like ‘he’, ‘she’ or ‘it’) includes any gender.
The
conditions are part of the arrangement. If any ambiguity or conflict arises
between the conditions and the proposal and any modifications to it, then the
proposal (whether modified or not) will prevail.
DURATION
OF THE ARRANGEMENT
The
arrangement will begin when it is approved by the creditors under the Act and
Rules. This is its effective date.
4(1) The
arrangement is a proposal under Part VIII of the Act for a scheme to manage
your affairs, or in full and final settlement of your debts.
4(2) The
arrangement may be interpreted as bringing about a settlement or satisfying a
debt owed by someone other than you only if the debt is owed jointly by you and
the proposal states that it does so.
4(3) After the
arrangement has begun, no creditor may, in respect of any debt to which the
arrangement applies:
(i) take any action against
your property or person;
(ii) start or continue any action or other
legal proceeding against you.
4(4) Nothing in
these conditions affects the following rights in any way:
(i)
the
right of any secured creditor to enforce their security, unless they
agree;
(ii)
the
right of the supervisor or any creditor to present a bankruptcy petition under
section 264(1)(c) of the Act if you fail to keep to the arrangement;
(iii)
the
right of any creditor to bring or continue legal proceedings against you and to
obtain a judgment against you for the full amount of their debt for the sole
purpose of making a claim against your insurer under the Third Party (Rights
Against Insurers) Act 1930.
5(1) Unless
extended under these conditions, the arrangement will continue until the end of
the period stated in the proposal.
5(2) The
supervisor may, if he/she thinks fit for the purposes of fulfilling the
arrangement, extend the arrangement by sending a notice saying so (“an
extension notice”) to you and to all creditors. This may be done either once or
twice: first for up to 6 months and next for up to 3 months.
5(3) The
supervisor must send any extension
notice at least 7 days before the arrangement is due to expire and must state
the reasons for the extension.
5(4) Where an
extension notice is sent, the arrangement will continue for the period stated
in the notice, or for the maximum allowable period for that extension (6 months
for a first extension and 3 months for a second extension), whichever is
shorter. The extension will start on the date immediately after the day the
arrangement would have expired.
5(5) If the
supervisor has called a creditors meeting for a date after the arrangement
would otherwise have expired, then the arrangement will be extended to the date
of that meeting and of any adjournment to the meeting.
5(7) Any extension for a period longer than
allowed under paragraph 5(2) must be approved by a variation.
6(1) When the
arrangement ends, and if you have complied with your obligations under the
arrangement, the supervisor will issue a certificate (“the completion
certificate”) stating that you have fully complied with it.
6(2) Except as set out in paragraph 4(4), when the supervisor has issued a completion certificate, you will be released from all debts that are subject to the arrangement.
7(1) The
supervisor may, if he/she thinks fit, issue a completion certificate even if
you have not complied with all your obligations under the arrangement, provided
that you have:
(i)
made
all payments required of you under the arrangement;
(ii)
fully
explained any breach of the arrangement, as required by the
supervisor;
(iii)
paid
the supervisor any sum that he/she has reasonably requested to
compensate the creditors for any reduction in
dividend caused by your
breach of the arrangement.
7(2) If the
supervisor issues a completion certificate under paragraph 7(1), the
arrangement will be treated as fully complied with and you will be released
from all your debts as provided in paragraph 6(2).
8(1) While
the arrangement is in force, you promise as the supervisor reasonably requires
to carry out his/her functions and duties under the arrangement to:
(i) give
the supervisor such information about your assets, liabilities and other
affairs;
(ii) meet
the supervisor, his/her agents, representatives or nominees at such times;
(iii) keep the supervisor informed of your
current residential address and employment details; and
(iv) do
all such other things as the supervisor reasonably requires.
8(2) You
promise to give the supervisor whatever type of accounts or details (or both)
of your income and expenditure relating to your affairs, for whatever date and
period, as the supervisor may reasonably require.
8(3) If
at any time during the arrangement you acquire or are left with “after-acquired
assets” as described in paragraph 14, or where your income increases and you
have to make contributions out of income, you must as soon as reasonably
possible tell the supervisor about the asset or increase in income.
8(4) You
must get the supervisor’s written consent before you sell, charge or otherwise
dispose of any interest you may have in any asset subject to the arrangement.
9(1) You will be regarded as in breach of the
arrangement if:
(i)
you
have at any time arrears of contributions equivalent to 3 months or more of the
contributions proposed in the proposal.
If you are in breach in this way but later repay all or some of the
arrears, you will be in breach again if the same level of arrears recurs;
(ii)
your
debts and liabilities exceed by 15% or more the figure you have estimated for
such debts and liabilities for the purposes of the proposal (and if such breach
occurs the supervisor will – without affecting any other alternative available
to them – ask the creditors what they wish to do in the context of the
arrangement overall);
(iii)
information
that was false or misleading in any significant detail or contains any
significant omissions:
a) was contained in any statement of
affairs or other document that you supplied under Part VIII of the Act to any
person; or
b) was otherwise made available by you to
creditors at or in connection with any meeting of creditors held, or any
resolution taken, concerning the arrangement;
(iv)
you fail to do anything that the supervisor
may for the purposes of the arrangement reasonably ask of you; or
(v)
you
fail to comply with any other of your obligations under the
arrangement.
If you do not comply with your obligations
after the supervisor has given you written notice specifying how long you have
to do so, then the supervisor may end the arrangement at his/her
discretion. The supervisor must report to
the creditors when issuing the annual report under Rule 5.31 of the Rules, or
earlier if he/she thinks appropriate, if any of the following occurs:
(i) The
supervisor becomes aware that a bankruptcy petition has been served against you
while the arrangement is in force.
(ii) You
fall more than 3 months into arrears with contributions from income, or fail to
pay the additional sums due in respect of overtime etc.
(iii) You
are in breach of any obligation about the realisation of assets or
after-acquired property.
(iv) You
fail to comply with any other of your obligations set out in the proposal.
Procedure following breach
9(3) Notice of breach
If,
at any time, the supervisor thinks that you are in breach of the arrangement,
then, unless you correct the breach immediately, the supervisor will as soon as
possible send you a notice (“Notice of Breach”) identifying the breach. This
will require you within 1-3 months (at the supervisor’s discretion) of
receiving the notice:
(i)
to
remedy the breach if it can be remedied; and
(ii)
if
the supervisor thinks fit, to fully explain the breach.
9(4) Remedy of breach
If,
within 1 and 3 months as referred to in sub-paragraph 9(3), you
(i)
remedy
your breach of the arrangement; and
(ii)
if so
required in the Notice of Breach, fully explain the breach,
then the supervisor will take no further
action against you, except to report the breach to the creditors when he/she
next sends an annual report to creditors on the progress and effectiveness of
the arrangement, or on the next convenient occasion, if earlier.
9(5) Failure
to remedy breach
If you have not acted as specified in
sub-paragraph 9(4) within the time allowed, the supervisor must report within
28 days to creditors and seek their agreement (voting to be as set out in the
Rules) to do one of the following:
(i) vary the
terms of the arrangement; or
(ii) issue a
certificate (“Certificate of Termination”) ending the arrangement because of
the breach; or
(iii) present a
petition for your bankruptcy.
Supervisors duties
10(1) The
supervisor must supervise your fulfilment of your obligations under the
arrangement and administer the arrangement.
10(2) The supervisor must lodge all funds held for
the purpose of the arrangement in a UK bank or building society account. He/she
may place on deposit any funds he/she holds that in his/her opinion are not
needed for the immediate purposes of the arrangement. The supervisor will arrange for income tax to
be paid at source from any interest earned on the funds he/she holds.
10(3) The
supervisor must pay you (the debtor) any funds he/she holds representing
dividend cheques that are still unpaid 6 months after payment of the final
dividend.
10(4) The supervisor will have the power to do such
things as are necessary or helpful to implement this proposal (without limiting
the powers available to the supervisor in law).
10(5) The supervisor will not be personally liable
for any liabilities incurred by you or otherwise.
10(6) Completion or termination (or both) of the
arrangement will not affect the supervisor’s power to carry out such functions
and to exercise such powers as are necessary for him/her to fulfil his/her
duties, obligations and responsibilities under the arrangement, Act and Rules
and to resolve any matters that arise during the arrangement.
10(7) The supervisor will have no duty to perform
any act or carry out any function except those specified in the arrangement,
Act or Rules.
10(8) The supervisor will have discretion
to allow your contribution to reduce by no more than 15% (relative to the
original proposal) of the forecast monthly contribution. If the reduction is
more than the 15% against the forecasted monthly contribution, the supervisor
must convene a meeting of creditors to request a variation in the monthly
contribution.
10(9) The
supervisor on failure to reach agreement with you in respect of your obligation
under paragraph 8(5) will immediately issue a “certificate of
non-compliance” unless the supervisor believes a further creditors meeting
should be held. Any such creditors meeting should be convened within 30 days of
the supervisor’s review of your annual financial circumstances.
10(10)The supervisor is not
required to retain any funds for the petition of the debtor’s bankruptcy.
10(11)The supervisor is
required to review the debtor’s income and expenditure once in every 12 months
by reference to latest form P60, pay slips and proof of increase in any
expenditure. The debtor will be required to increase his monthly contribution
by 50% of any net surplus one month following such review.
11(1) If a good
reason is given, the supervisor may be removed from office by the court or by a
resolution of a creditors meeting.
11(2) A notice
served by a creditor on the supervisor under paragraph 19.2 (notice
requisitioning meeting) for the purpose of convening a creditors meeting to
remove the supervisor from office must set out the reasons for the removal.
11(3) The notice
sent out by the supervisor to creditors convening such a meeting must state the
reasons for seeking to remove the supervisor. It must be accompanied by a
report on the supervisor’s administration of the arrangement, including an
up-to-date summary of receipts and payments.
12(1) If the creditors resolve to accept the resignation of a supervisor or to
remove a supervisor from office, and another person will take over the office
of supervisor for the time being, then the supervisor who is resigning or being
removed must leave office immediately.
12(2) If the
creditors resolve to accept a supervisor’s resignation or to remove a
supervisor from office, and no other person takes over the office of supervisor
for the time being, then that resignation or removal will not take effect. In
that case the supervisor must not leave office until a creditors meeting or the
court appoints a replacement supervisor.
12(3) The
supervisor must leave office immediately if he/she ceases to be currently
qualified to act as supervisor.
12(4) A supervisor
who, for any reason, leaves office must, as soon as practicable, give the new
supervisor or supervisors all books, records and papers about the arrangement
and the supervisor’s administration of it, and all assets of which he/she is a
trustee under the arrangement.
12(5) Former
supervisors must help the new supervisor of the arrangement from time to time
in whatever way he/she may reasonably require to find out what happened while
the former supervisor held office.
13(1) If, for any
reason, there is a vacancy in the office of supervisor, that vacancy may be
filled by someone appointed at a meeting of creditors or by the court.
13(2) If no
supervisor is in office, such a meeting of creditors may be convened by the
debtor, any creditor, any person who was in the same firm, LLP or company as
the supervisor immediately before the vacancy occurred, or by the former
supervisor’s authorising body.
13(3) If a meeting
of creditors is called when no supervisor is in office, the person who convened
the meeting must act as chairman of that meeting.
14(2) After-acquired
assets must only be sold or realised to the extent necessary to repay the
creditors in full with any interest they are entitled to under the arrangement.
Whilst
the arrangement is in force:
15(1) You
must hold in trust for the purposes of the arrangement any property in your
possession, custody or control that is an asset of the arrangement, until it is
realised (if required) in accordance with the arrangement.
15(2) The supervisor must hold in trust for the purposes of the arrangement
any property in his/her possession, custody or control that is an asset of the
arrangement.
16(1) Should you die during the term of the
arrangement property constituting an
asset of the arrangement in your or the supervisor’s
possession, custody or control shall be held upon trust for the purposes of the
arrangement until it is realised.
Dividends and claims
17(1) The supervisor may
allow for dividend purposes claims submitted by creditors as at the effective
date. If any creditor does not make any claim in writing within 4 months after
the effective date, then that creditor may not participate in any dividend
payment, subject to paragraph 17.2 below.
17(3) Any creditor who makes a late claim
will be entitled to participate (subject to the supervisor accepting that the
creditor has a reasonable explanation as to why any delay occurred) and to receive
their full share of dividends notwithstanding the fact that
some distributions may have been made prior to the submission of the claim.
17(4) The supervisor may ask for any
further details or documents he/she think necessary to establish the amount due
to any person claiming to be a creditor.
Creditors who do not have
notice
18. This voluntary arrangement will be binding on any creditor
whose claim has been omitted from it, but who would have been entitled to vote
if they had been notified of the creditors meeting called to approve it.
19. Power to call or requisition
meetings of creditors
19(1) The supervisor may, if he
or she wishes, summon and conduct meetings of creditors for any purpose
connected with the arrangement in accordance with the Act and the Rules.
19(2) If requested in
writing by you, or by creditors with at least one-quarter in value of the total
amount of debts subject to the arrangement, the supervisor must call a
creditors meeting within 21 days from receiving such request, unless the court
decides he/she need not do so.
19(3) You or the
supervisor may propose variations to the proposal after it has been approved and these may be considered at a creditors
meeting convened by the supervisor for this purpose in accordance with
paragraph 19.5.
19(4) The supervisor is
entitled to make a reasonable charge in connection with any submitted
variation.
19(5) The supervisor must
give at least 28 days’ notice of the meeting to the creditors. Rule 5.23(1) of the Rules will apply to the
creditors meeting in deciding whether the necessary majority has been obtained. If the necessary majority is obtained at the
meeting, then the variation(s) or modification(s) will bind every person who is
subject to the arrangement. Rule 12.4A
of the Rules will apply (quorum at meetings).
Rules 5.18 to 5.22 and 5.24 will also apply (conduct of meeting, voting
rights and adjournment).
20(1) The HMRC
provisional claim in the arrangement will include (i) any tax credit
overpayment; (ii) self-assessment payments on account due for the tax year in
which the arrangement is approved; (iii) PAYE/SC/NIC deductions due to the date
of approval; plus (iv) any other earlier unpaid liabilities.
20(2) The HMRC
final claim in the arrangement will also include the self-assessment balancing
adjustment for the tax year in which the arrangement is approved, due with the
self-assessment return on 31 January of
the following year.
You
will be responsible for payment of self-assessment/NIC on any source of income
that begins after the date of approval of the arrangement.
All
statutory returns and payments due to HMRC following approval must be provided
on or before the date they fall due.
You
must send all statutory accounts and
returns overdue at the date of the creditors’ meeting to HMRC within 3 months
of the approval date, with any other information or explanations required.
From
the date the arrangement is approved to the 5 April ending that tax year, you
must pay your monthly charge for income tax/NIC, as it appears in the income
and expenditure statement, to the supervisor for the benefit of the
arrangement.
No
non-preferential dividend will be made until (i) HMRC has received a
self-assessment return for the tax year in which the arrangement is approved;
or (ii) a VAT or other levy or duty return due to HMRC to the date of the
meeting has been filed; or (iii) an HMRC determination or assessment has been
made and the supervisor has admitted HMRC’s final claims.
26. Set-off of repayments
While
the arrangement is in force, you must offset against HMRC’s claims in the
arrangement any tax/excise/VAT or other repayments that become due to you from
HMRC for periods for which claims may arise under the arrangement. Similarly, you must offset any remaining
surplus against the claims of other government departments before offering them
to the supervisor for the benefit of the arrangement. You must offset any repayments for any later
periods against any post-approval debts due to HMRC. Any remaining surplus will
then be treated as a windfall and offered to the supervisor for the benefit of
the arrangement.
If
you have taxation liabilities arising on the sale or other realisation of any
asset subject to the arrangement, you must meet them out of the proceeds of
that sale, as far as those proceeds are sufficient.
If any part of the arrangement is found to be
contrary to the Act or Rules, illegal, invalid, or contrary to public policy,
this will not affect the validity of the rest of the arrangement; and the part
of the arrangement in question must be interpreted accordingly.
29. Joint liabilities
The
rights of any creditor who has a joint and individual claim against a third
party will not be affected by this proposal.
30. Surplus
All amounts paid into the arrangement are
intended to be used to pay dividends to unsecured creditors (after payment of
the costs of the arrangement). However, if at the end of the arrangement up to
£200 remains in the scheme, the supervisor may choose to return this to you as
surplus.