What Should I Look for in an IVA Agreement

If you have ever wanted to know some of the stuff that goes on in the background with regards to an Individual Voluntary Arrangement (IVA), then this document is worth having a read through. I have highlighted some of the keywords and sections that you may want to be aware of. Keywords: Fees, Bankruptcy, Assets, Property, Terminate (they don’t seem to like the word fail). Excluded, has been included, as it would appear that some things can be excluded from an IVA; I wonder if something with a fair amount of equity such as your property can be excluded form the IVA. If I were a creditor and saw that you had a fair amount of equity in your property, surely the creditor would want your property included in the IVA agreement??

Most people reading this, will not fully understand what this all means……………. So, where do you get good debt advice from……………. that is a problem!

What should I look out for if going into an IVA?

If you are considering going into an Individual Voluntary Arrangement (IVA), then you should read your IVA contract in full! What if your IVA fails? What happens to your property in and IVA? What fees are being charged to administer your IVA? Maybe you are only just thinking about an IVA, then I would suggest that you read the document on this post. Some of the key-points you will need to consider have been highlighted.

If you own a property, make sure it is safe prior to signing the IVA Agreement.
If you don’t have any assets, maybe consider bankruptcy as a better option. It is also worth reading, selling assets at under value.

Produced by the Association of Business Recovery Professionals

TABLE OF CONTENTS

PART I: INTERPRETATION 3
1 Miscellaneous definitions 3
2 The Conditions 3
PART II: COMMENCEMENT, EFFECT, AND DURATION OF ARRANGEMENT 3
3 Commencement of Arrangement 3
4 Nature and effect of the Arrangement 3
5 Existing proceedings against Debtor 3
6 Existing execution against Debtor’s assets 4
7 Mutual credit and set-off 4
8 Duration of Arrangement 4
9 Completion of Arrangement 4
10 Substantial Compliance 5
11 Termination of Arrangement 5
PART III: SUPERVISOR’S FUNCTIONS, POWERS ETC 5
12 Supervisor’s functions 5
13 Supervisor’s powers 5
14 Supervisor’s powers upon completion/termination 5
15 Exercise of Supervisor’s functions and powers 6
16 Restriction upon Supervisor’s duty and liability 6
17 Supervisor’s fees, costs and expenses (Sub paragraph 17(1) deleted) 6
18 Supervisor’s resignation 6
19 Removal of Supervisor from office 6
20 Vacation of Office by Supervisor 7
21 Vacancy in the office of Supervisor 7
PART IV: DEBTOR’S WARRANTY, DUTIES & OBLIGATIONS 7
22 Debtor’s warranty 7
23 Debtor’s duties in relation to Supervisor 7
24 Duty to hand over property to Supervisor 8
25 Further Documents 8
26 Debtor’s acknowledgement 8
PART V: ARRANGEMENT ASSETS 8
27 Arrangement assets 8
28 After-acquired assets 8
29 Trust of Arrangement assets 8
30 Restriction on dispositions 8
PART VI: CLAIMS 9
31 Notice to submit claims 9
32 Submission of claims 9
33 Variation of claims 9
34 Production of documents 9
35 Affidavit substantiating claim 9
36 Supervisor to allow inspection of claims 9
37 Admission and rejection of claims for Dividend 9
38 Appeal against decision on claim 9
39 Debts of uncertain value 9
40 Secured Creditors 9
41 Foreign currency Debts 10
42 Debts payable at future time 10
43 Interest on Debts 10
44 Cost of submitting claims 10
PART VII: PAYMENT OF DIVIDENDS 10
45 Distribution by Dividend 10
46 Notice of intended Dividend (Deleted) 10
47 Notice of declaration (Sub paragraphs (1) to (3) deleted) 10
48 Claim altered after payment of Dividend 10
49 Secured Creditors 11
50 Assignment of Debts or rights to Dividend 11
51 Debts payable at future time 11
52 Debts of unpaid Creditors 11
PART VIII: PRIORITY OF PAYMENTS AND DISTRIBUTIONS 11
53 Costs and Expenses of the Arrangement 11
54 Priority of Debts and application of surplus (Sub paragraphs (4) and (5) deleted) 11
PART IX: THE CREDITORS COMMITTEE & MEETINGS OF CREDITORS 12
55 The Creditors’ Committee 12
56 Power to call/requisition meetings of Creditors 12
57 Calling Creditors’ meetings 12
58 Cost of summoning meetings 12
59 Entitlement to vote 13
60 Admission and rejection of claim 13
61 Majorities required to pass resolutions 13
62 Chairman of meeting as proxy-holder 13
63 Suspension/adjournment of meeting 13
64 Record of proceedings 14
65 Postal resolutions 14
PART X: PROVISIONS FOLLOWING BREACH OF THE ARRANGEMENT 14
66 Breach by the Debtor of the terms of the Arrangement 14
67 Procedure following breach 14
68 Retention of funds by Supervisor 15
PART XI: MISCELLANEOUS PROVISIONS 15
69 Third Party obligations 15
70 Variation of the Arrangement 15
71 Tax liabilities arising on realisations 16
72 Invalidity and/or illegality 16
PART I: INTERPRETATION
1 Miscellaneous definitions
1 In the Arrangement, except where the context otherwise demands:
(a) “the Act” means the Insolvency Act 1986 as amended;
(b) “the Arrangement” means the Proposal and the Conditions read together;
(c) “Associate” shall have the meaning given to it in section 435 of the Act;
(d) “the Conditions” are these Conditions;
(e) “the Court” means any court having jurisdiction in respect of the Arrangement;
(f) “Creditor” is a person bound by the Arrangement to whom a Debt is owed;
(g) “Debt” has the meaning given to it in section 382 of the Act with the modifications necessary to refer to a voluntary
arrangement;
(h) “the Debtor” means the person who makes the Proposal;
(i) “Dividend” means a distribution to Creditors;
(j) “Excluded Assets” are those assets identified in the Proposal as being excluded from the Arrangement;
(k) “Paragraphs” are Paragraphs of these Conditions; and Sub-paragraph shall be construed accordingly;
(l) “Preferential Creditor” is a Creditor with a Debt falling within section 386 of the Act and “Preferential Debt” shall be
construed accordingly;
(m) “Property” has the meaning given to it in section 436 of the Act;
(n) “the Proposal” is the document annexed hereto together with modifications and documents incorporated thereto, being a
proposal under Part VIII of the Act;
(o) “the Rules” means the Insolvency Rules 1986 as amended;
(p) “Security” has the meaning given to it in section 383 of the Act; and “Secured Creditor” shall be construed accordingly;
(q) “the Supervisor” is the person or persons for the time being appointed to supervise the implementation of the Arrangement;
2 The Conditions
2 The Conditions are an integral part of the Arrangement. In the event of any ambiguity or conflict between the Conditions and
the Proposal and any modifications to it, the Proposal as modified shall prevail.
PART II: COMMENCEMENT, EFFECT, AND DURATION OF ARRANGEMENT
3 Commencement of Arrangement
3 The Arrangement shall come into effect upon the approval thereof by the Creditors pursuant to the provisions of the Act and
Rules.
4 Nature and effect of the Arrangement
4(1) [Nature of Arrangement] The Arrangement is a proposal under Part VIII of the Act for a scheme of arrangement of the
Debtor’s affairs or a composition in full and final satisfaction of the Debtor’s Debts.
4(2) [Claims against third parties] Unless the Proposal indicates to the contrary, nothing in the Arrangement shall be construed
as effecting a composition or satisfaction of any Debt owed by a person other than the Debtor, whether that Debt is owed jointly by the
Debtor or otherwise.
4(3) [Restriction on Creditor’s rights] After the commencement of the Arrangement, no Creditor shall, in respect of any Debt
which is subject to the Arrangement:
(a) have any remedy against the property or person of the Debtor;
(b) commence or continue any action or other legal proceeding against the Debtor.
4(4) [Saving for certain rights] Nothing in this Paragraph or elsewhere in the Conditions shall be construed as affecting the
following rights:
(a) the right of any Secured Creditor to enforce his Security, except with the Secured Creditor’s consent;
(b) the right of the Supervisor or any Creditor to present a bankruptcy petition under section 264(1)(c) of the Act for default in
connection with the Arrangement
(c) the right of any Creditor to bring or continue legal proceedings against the Debtor and to obtain a judgement against the
Debtor in the full amount of its Debt for the sole purpose of making a claim against an insurer of the Debtor by virtue of the Third Party
(Rights Against Insurers) Act 1930.
5 Existing proceedings against Debtor
5(1) [Discontinuance of existing proceedings] Legal proceedings against the Debtor in existence at the commencement of the
Arrangement in respect of Debts which are subject to the Arrangement shall, unless they are of a type contemplated by Paragraph
4(4), be discontinued by the Creditor as soon after the commencement of the Arrangement as is practicable.
5(2) [Costs of existing proceedings] Legal costs of a Creditor in proceedings other than bankruptcy referred to in Sub-paragraph
(1) shall be a Debt falling within the Arrangement.
5(3) [Costs of bankruptcy proceedings] Petition costs of a Creditor who presented a bankruptcy petition against the Debtor prior
to the commencement of the Arrangement shall be treated as an expense of the Arrangement to rank after the costs of the Nominee
but before those of the Supervisor.
5(4) [Prior distress] Where any person has distrained on the goods or effects of the Debtor in the period of three months prior
to the making of the interim order, those goods or effects, or the proceeds of their sale, shall be charged with the Preferential Debts of
the Debtor to the extent that the assets of the Arrangement are insufficient for meeting those debts.
6 Existing execution against Debtor’s assets
6(1) [Partly-completed execution] A Creditor who, before the commencement of the Arrangement, has issued execution against
the goods or land of the Debtor in respect of a Debt which is subject to the Arrangement, or has attached a Debt due to the Debtor
from another person in respect of such a Debt shall, unless the execution or attachment was completed before the commencement of
the Arrangement, discontinue the execution or attachment as soon after the commencement of the Arrangement as is practicable.
6(2) [Completion of execution or attachment] For the purposes of Sub-paragraph (1):
(a) an execution against goods is completed by seizure and sale or by the making of a charging order absolute under section 1
of the Charging Orders Act 1979;
(b) an execution against land is completed by seizure, by the appointment of a receiver or by the making of a charging order
absolute under section 1 of the Charging Orders Act 1979;
(c) an attachment of a Debt is completed by the receipt of the Debt.
7 Mutual credit and set-off
7(1) [Application] This Paragraph applies where before the commencement of the Arrangement there have been mutual credits,
mutual Debts or other mutual dealings between the Debtor and any Creditor.
7(2) [Account to be taken] An account shall be taken of what is due from each party to the other in respect of the mutual
dealings and the sums due from one party shall be set-off against the sums due from the other.
7(3) [No account where Creditor has notice] Sums due from the Debtor to another party shall not be included in the account
taken under Sub-paragraph (2) if that other party had notice at the time they became due that a bankruptcy petition relating to the
Debtor was pending or that an interim order was made in relation to the Debtor.
7(4) [Restriction on post-commencement set-off] Other than as provided for in this Paragraph, set-off shall not be available in
respect of any Debt or item of Property.
7(5) [Balance provable or to be paid] Only the balance (if any) of the account taken under Sub-paragraph (2) is provable in the
Arrangement or, as the case may be, to be paid to the Debtor or, if the Proposal so provides, to the Supervisor.
8 Duration of Arrangement
8(1) [General rule] Unless extended under the provisions of these Conditions, the Arrangement shall continue until the end of the
period stated in the Proposal.
8(2) [Extension of duration by Supervisor] The Supervisor may, if he thinks fit for the purposes of finalising the administration of
the Arrangement, extend the duration of the Arrangement by sending a notice to this effect (“an Extension Notice”) to the Debtor and
all Creditors. This may be done on up to 2 occasions: for a period of up to 6 months in the first instance and for a period of up to 3
months in the second instance.
8(3) [Extension Notice] An Extension Notice shall be sent not less than 7 days prior to the date upon which the Arrangement is
otherwise due to complete and must state the reason or reasons for the extension.
8(4) [Effect of extension] In the event of an Extension Notice being sent, the Arrangement shall continue for the period specified
therein, or for the maximum allowable period for that extension (being 6 months for a first extension and 3 months for a second
extension) commencing on the date immediately after that on which the Arrangement would otherwise have completed, whichever is
sooner.
8(5) [Supervening notice calling a meeting of Creditors] In the event that a meeting of Creditors has been called by the
Supervisor for a time after the Arrangement would otherwise have expired, the duration of the Arrangement shall be extended to the
date of that meeting and to any adjournment thereof.
8(6) [Further extension] Any extension for a period longer than that provided for under Paragraph 8(2) shall require approval as a
variation in accordance with Paragraph 70.
9 Completion of Arrangement
9(1) [The Completion Certificate] Upon the expiration of the Arrangement, the Supervisor shall, if the Debtor has complied with
his obligations under the Arrangement, issue a certificate (“the Completion Certificate”) stating that the Proposal has been fully
implemented.
9(2) [Effect of Completion Certificate] Save to the extent provided in Paragraph 4(4), upon the issue by the Supervisor of a
Completion Certificate, the Debtor shall be released from all Debts which are subject to the Arrangement.
9(3) [Notification of issue of Completion Certificate] Copies of the Completion Certificate issued under this Paragraph shall be
sent by the Supervisor to the Debtor, the Creditors, the Secretary of State for Trade and Industry and the Court together with the
Supervisor’s report under Rule 5.29 (completion or termination of Arrangement).
10 Substantial Compliance
10(1) [Issue of certificate where substantial compliance] The Supervisor may, if he thinks fit, issue a Completion Certificate
notwithstanding the fact that the Debtor has not complied with all of his obligations under the Arrangement provided that the Debtor
has:
(a) made all payments required of him under the terms of the Arrangement;
(b) provided a full explanation of any breach of the terms of the Arrangement required by the Supervisor;
(c) paid to the Supervisor such sum (if any) as the Supervisor shall reasonably have required to compensate the Creditors for
any reduction in Dividend caused by the Debtor’s breach of the terms of the Arrangement.
10(2) [Notification to creditors] Where the Supervisor proposes to issue a Completion Certificate under Sub-paragraph 1 he shall
notify the Creditors accordingly and invite them to submit any comments within 21 days from the date of notification.
10(3) [Treatment as full implementation] If the Supervisor issues a Completion Certificate under Sub-paragraph (1), the
Arrangement shall be treated as fully implemented.
11 Termination of Arrangement
11(1) [Termination in certain circumstances] The Arrangement shall terminate upon:
(a) the Supervisor issuing a Certificate of Termination under Paragraph 67;
(b) the making of a bankruptcy order against the Debtor;
(c) the Debtor’s death,
none of which circumstances shall affect the trusts created under Paragraph 29.
11(2) [Notice of termination] The Supervisor shall, on discovering the occurrence of a terminating event, but in any event not more
than 28 days after such discovery, give notice of such termination and the reason therefore to the Debtor (or, if the Debtor has died, his
representative) and Creditors.
PART III: SUPERVISOR’S FUNCTIONS, POWERS ETC
12 Supervisor’s functions
12(1) [Primary function] The Supervisor’s primary function is to supervise the Debtor’s performance of his obligations under the
Arrangement and to administer the Arrangement.
12(2) [Other functions] The Supervisor shall also undertake such functions as are given to him in the Proposal, Act and Rules.
13 Supervisor’s powers
13 Subject to those powers more particularly given to him in the Arrangement, Act and Rules, the Supervisor shall have the
following powers:
(1) [Getting in assets] power to take possession of, collect, get in and hold any or all of the assets which, under the terms of the
Arrangement, he is to hold as trustee;
(2) [Realisation of assets] power to sell or otherwise dispose of any asset referred to in Sub-paragraph (1) in such manner as
may seem to him expedient;
(3) [Putting funds on deposit] power to place money coming into his hands during the course of the Arrangement on deposit
with any established United Kingdom clearing bank or building society;
(4) [Appointing agents] power to engage legal representatives, managers, agents and other persons to assist the Supervisor in
the performance of his functions under the Arrangement;
(5) [Delegation] power to delegate to his firm and any appropriate partner, employee or agent thereof any or all of his duties and
functions under the Arrangement save those which by law he is required to perform personally;
(6) [Insurance] power to effect and maintain insurances in respect of any asset subject to the Arrangement;
(7) [Power to claim] power to prove, rank, claim and draw a Dividend in respect of such Debts owed to the Debtor as fall within
the Arrangement;
(8) [Power to direct Debtor] power, in the event that the Supervisor is unable or it is impracticable for him to do any act or thing
which he is empowered to do himself, to direct the Debtor to do that act or thing on his behalf;
(9) [Ancillary power] power to do any other act or thing which is necessary or expedient for the purposes of exercising the above
powers or for carrying out his functions under the Arrangement.
14 Supervisor’s powers upon completion/termination
14(1) [Exercise of powers after completion/termination] Completion and/or termination of the Arrangement shall not affect the
Supervisor’s power to carry out such of his functions and to exercise such of his powers as are necessary for him to fully carry out his
duties, obligations and responsibilities under the Arrangement, Act and Rules and to resolve such matters as may have arisen during
the course of the Arrangement.
14(2) [Retention of funds by Supervisor] Upon completion and/or termination of the arrangement, the Supervisor shall be
entitled to retain for such period as he reasonably deems necessary from any funds under his control such moneys as he reasonably
thinks fit on account of his fees, costs, charges, liabilities and expenses, and shall advise Creditors and the Debtor in writing of the
quantum of the funds so retained and the reasons why.
15 Exercise of Supervisor’s functions and powers
15(1) [Application of bankruptcy provisions] In the event that the Arrangement does not provide guidance to the Supervisor as
to what action he should take in any given situation, the Supervisor shall apply the provisions of the Act and Rules in so far as they
relate to bankruptcy with necessary modifications.
15(2) [Consultation of Creditors] If the Supervisor is uncertain as to what action he should take in any situation, or wishes to
ascertain the wishes of Creditors on a matter concerning the Arrangement, he may seek the advice and/or direction of the Creditors’
Committee and/or the majority or most material of the Creditors and he may act upon such advice and/or direction.
15(3) [Directions from the Court] This Paragraph is without prejudice to the Supervisor’s right to refer matters concerning the
Arrangement to the Court for guidance and/or directions if, in his discretion, he shall think fit.
16 Restriction upon Supervisor’s duty and liability
16(1) [Supervisor’s duty] The Supervisor shall be under no obligation to perform any act or carry out any function save for those
expressly provided for in the Arrangement, the Act or Rules.
16(2) [Supervisor’s liability] Neither the Supervisor, his firm or any of his agents or employees shall incur any personal liability in
negligence or otherwise for any act or omission carried out by him or any of them in connection with the Arrangement, unless such
act or omission constitutes one of dishonesty or a breach of the Supervisor’s obligations under the Act, Rules or the Arrangement
.
17 Supervisor’s fees, costs and expenses
17(1) [Amount of fees] This paragraph has been deleted because the provisions that it deals with are contained in the proposal.
17(2) [Payment of fees, costs and expenses] The fees, costs, charges and expenses of the Supervisor shall be paid out of the
assets of the Arrangement from time to time as the Supervisor thinks fit. The Supervisor shall provide such information to any
Creditors’ committee appointed in relation to the Arrangement as is reasonably necessary to explain how the fees, costs, charges and
expenses were determined or incurred, as the case may be.
17(3) [Supervisor’s right of recourse to Court] If the Supervisor is dissatisfied with a determination of the Creditors Committee or
a meeting of Creditors on a matter involving his fees, costs, charges and/or expenses, he shall have the right to refer the matter to the
Court, whose decision on the matter shall bind all parties.
18 Supervisor’s resignation
18(1) [Methods of resignation] A Supervisor may resign from office with the approval of a meeting of Creditors or with the leave of
the Court.
18(2) [Grounds of Supervisor’s resignation] The Supervisor may only resign from office on one or more of the following
grounds:
(a) ill health;
(b) cessation of practice as an insolvency practitioner;
(c) change of circumstances rendering it impracticable for him to continue in office;
(d) impracticability to have the present number of persons acting as Supervisor to the Arrangement.
18(3) [Report of Supervisor’s administration] The notice to Creditors convening a meeting for the purpose of receiving his
resignation shall specify the grounds upon which the Supervisor wishes to resign and shall be accompanied by a report of the
Supervisor’s administration of the Arrangement which includes an up to date summary of his receipts and payments.
19 Removal of Supervisor from office
19(1) [Methods of removal] On cause being shown, the Supervisor may be removed from office by the Court or by a resolution of
a meeting of Creditors.
19(2) [Notice of requisitioned meeting] Any notice served by a Creditor upon the Supervisor under Paragraph 56(2) (notice
requisitioning meeting) for the purpose of convening a meeting of Creditors to remove the Supervisor from office must set out the
grounds upon which his removal is sought.
19(3) [Report of Supervisor’s administration] The notice sent out by the Supervisor to Creditors convening such a requisitioned
meeting shall specify the grounds upon which his removal is sought and shall be accompanied by a report of the Supervisor’s
administration of the Arrangement including an up to date summary of his receipts and payments.
20 Vacation of Office by Supervisor
20(1) [Resignation/removal of Supervisor where more than one acting] If the Creditors resolve to accept the resignation of a
Supervisor, or to remove a Supervisor from office, and there will be another person in the office of Supervisor for the time being, the
Supervisor who is resigning or being removed shall vacate office immediately.
20(2) [Resignation/removal of Supervisor where no other acting] If the Creditors resolve to accept a Supervisor’s resignation or
to remove a Supervisor from office, and there is no other person in the office of Supervisor for the time being, that resignation and/or
removal shall not take effect and the Supervisor shall not vacate office unless and until a meeting of Creditors or the Court appoints a
replacement Supervisor.
20(3) [Loss of qualification] The Supervisor shall vacate office immediately if he ceases to be a person who is for the time being
qualified to act as an insolvency practitioner.
20(4) [Notice of vacation of office] A Supervisor who, for any reason, vacates office shall forthwith give notice of that fact to the
Court, the Debtor the Creditors and the Secretary of State for Trade and Industry.
20(5) [Duties of Supervisor upon vacation of office] A Supervisor who, for any reason, vacates office shall, as soon as
practicable, deliver up to his successor Supervisor or Supervisors all books, records and papers relating to the Arrangement and his
administration thereof together with all assets of which he is a trustee under the terms of the Arrangement.
20(6) [Continuing duty of former Supervisor] Former Supervisors shall be obliged to give such assistance to the Supervisor of
the Arrangement from time to time as he may reasonably require for ascertaining what transpired during the tenure of office by the
former Supervisor.
21 Vacancy in the office of Supervisor
21(1) [Meeting of Creditors to fill vacancy] If, for any reason, there is a vacancy in the office of Supervisor, that vacancy may be
filled by a meeting of Creditors or by the Court.
21(2) [Convening a meeting where no Supervisor acting] If no Supervisor is in office, such a meeting of Creditors may be
convened by the Debtor, any Creditor, any person who was in partnership with the Supervisor immediately before the vacancy
occurred, or by the former Supervisor’s authorising body.
21(3) [Chairman where no Supervisor acting] In the event that a meeting of Creditors is called when no Supervisor is in office,
the person who convened the meeting shall act as chairman of that meeting.
PART IV: DEBTOR’S WARRANTY, DUTIES & OBLIGATIONS
22 Debtor’s warranty
22(1) [Disclosure in Proposal] The Debtor warrants that he has disclosed in the Proposal full and complete particulars of all
matters required of him under the Act and Rules including (without prejudice to the generality of the foregoing) particulars of all of his
assets, Debts and liabilities, whether actual, contingent or prospective.
22(2) [Accuracy of Proposal] The Debtor warrants that the contents of the Proposal are true and accurate in all material respects as
at the date of the commencement of the Arrangement, subject only to those qualifications that may be disclosed by the Debtor at the
meeting of Creditors held to approve the arrangement, which qualifications shall be recorded by the Supervisor in his report to the
Court under Rule 5.22 (report of Creditors’ meeting).
22(3) [Disclosure of third party information] The Debtor authorises any creditor to disclose to the Supervisor such information
relating to the Debtor, his dealings or property as may reasonably be required to assist in the implementation of the Arrangement.
23 Debtor’s duties in relation to Supervisor
23(1) [Duty to co-operate with Supervisor] The Debtor undertakes and agrees that during the subsistence of the Arrangement he
will:
(a) give to the Supervisor such information as to his assets, liabilities and other affairs;
(b) attend on the Supervisor, his agents, representatives or nominees at such times; and
(c) do all such other things;
as the Supervisor shall reasonably require for the purpose of carrying out his functions and duties under the Arrangement.
23(2) [Duty to submit accounts] The Debtor undertakes and agrees to furnish the Supervisor with accounts relating to his affairs
of such nature, as at such date and for such period as the Supervisor may reasonably require.
23(3) [Notice of after-acquired assets and increased income] Where at any time during the subsistence of the Arrangement
After-Acquired Property of a description falling within Paragraph 28 is acquired by or devolves upon the Debtor, or there is an increase
in the Debtor’s income if the Debtor is under an obligation to make contributions out of income, the Debtor shall forthwith give the
Supervisor notice of the property or, as the case may be, of the increase.
24 Duty to hand over property to Supervisor
24 Forthwith after the Commencement of the Arrangement, and subject to the provisions of the Proposal, the Debtor shall do all
that is required for putting the Supervisor into possession of the assets included in the Arrangement.
25 Further Documents
25 Without prejudice to the generality of the Debtor’s other duties under the Arrangement, the Debtor shall, at the request of the
Supervisor, execute such Mortgages, Charges, Deeds, Transfers, Trusts, Powers of Attorney or other documents as may reasonably
be required by the Supervisor for the protection and/or realisation of assets, to secure the Debtor’s compliance with his obligations
under the Arrangement, or otherwise to facilitate the implementation of the Arrangement.
26 Debtor’s acknowledgement
26(1) [Agreement to be bound] The Debtor undertakes to carry out the obligations imposed upon him under the Arrangement in
full and at the times provided for.
26(2)[Consequences of breach] The Debtor acknowledges that the likely consequence of his failure to comply with his obligations
hereunder in full and at the times provided for is that the Arrangement will fail and he will be adjudged bankrupt on a petition
presented by the Supervisor.
26(3) [Rule 5.30] The Debtor acknowledges that he commits an offence if he makes any false representation or commits any other
fraud for the purpose of obtaining the approval of his Creditors to the Arrangement.
PART V: ARRANGEMENT ASSETS
27 Arrangement assets
27 Property other than Excluded Assets belonging to or vested in the Debtor at the date of commencement of the Arrangement
which would form part of the Debtor’s estate in a bankruptcy shall be subject to the Arrangement and be an asset thereof.
28 After-acquired assets
28(1) [After-acquired property subject to Arrangement] Subject to the following Sub-paragraphs, the Supervisor may claim as
an asset of the Arrangement any Property acquired by the Debtor between the commencement date of the Arrangement and the date
of its completion and/or termination which would have been capable of being an asset of the Arrangement if it belonged to or was
vested in the Debtor at the date of commencement of the Arrangement (“After-Acquired Assets”). Any such asset shall be subject to
the Arrangement and be an asset thereof.
28(2)[Limit on assets which may be claimed] Sub-paragraph (1) shall not apply to:
(a) such equipment, stock or other effects as are necessary to the debtor for use personally by him in his employment, business
or vocation;
(b) such clothing, bedding, furniture, household equipment and provisions as are necessary for supplying the domestic needs of
the debtor and his family.
28(3) [Proviso for excess assets] After-Acquired Assets shall only be sold or realised to the extent necessary to repay the
Creditors in full together with interest, if any, to which Creditors are entitled pursuant to the Arrangement.
29 Trust of Arrangement assets
29(1) [Assets in the possession of the Debtor] Property constituting an asset of the Arrangement in the possession, custody or
control of the Debtor shall be held by the Debtor upon trust for the purposes of the Arrangement until realisation thereof (if so
provided) in accordance with the Arrangement.
29(2) [Assets in the possession of the Supervisor] Property constituting an asset of the Arrangement in the possession, custody
or control of the Supervisor shall be held by the Supervisor upon trust for the purposes of the Arrangement.
29(3) [Trusts to survive termination of Arrangement] The trusts referred to in Sub-paragraphs (1) and (2) shall not come to an
end upon termination of the Arrangement. Instead those assets shall be got in and realised by the Supervisor, and any proceeds
applied and distributed in accordance with the terms of the Arrangement.
30 Restriction on dispositions
30 The Debtor shall not sell, charge or otherwise dispose of any interest he may have in any asset subject to the Arrangement
without the Supervisor’s written consent.
PART VI: CLAIMS
31 Notice to submit claims
31 As soon as practicable after the commencement of the Arrangement, and provided no application under Section 262 of the
Act (challenge of meeting’s decision) or an appeal under Rule 5.22(3) (appeal from chairman’s decision) is pending, the Supervisor
shall send a notice (“a Notice to Submit Claims”) to every Creditor and other person to whom the Debtor may be indebted of whom he
has notice requiring them to provide such details of their claims as the Supervisor thinks fit.
32 Submission of claims
32 Any Creditor, or other person who wishes and agrees to participate in and be bound by the Arrangement, shall submit his
claim in writing to the Supervisor in the form, if any, required by the Supervisor, or one which is substantially similar.
33 Variation of claims
33 A Creditor’s claim may at any time be withdrawn or varied.
34 Production of documents
34 The Supervisor may call for any document or other evidence to be produced to him, where he thinks it necessary, for the
purpose of substantiating the whole or any part of the claim.
35 Affidavit substantiating claim
35 The Supervisor may, if he thinks it necessary, require a claim to be verified by affidavit.
36 Supervisor to allow inspection of claims
36 The Supervisor shall, so long as claims lodged with him are in his hands, allow them to be inspected, at all reasonable times
on any business day, by:
(a) any Creditor who has submitted his claim (unless that claim has been wholly rejected for the purposes of Dividend or
otherwise); and
(b) the Debtor.
37 Admission and rejection of claims for Dividend
37(1) [Admission] A claim may be admitted for Dividend either for the whole of the amount claimed by the Creditor, or for part of
that amount.
37(2) [Rejection] If the Supervisor rejects a claim in whole or in part, he shall prepare a written statement of his reasons for so
doing and send it to the Creditor.
38 Appeal against decision on claim
38(1) [Application by Creditor] If a Creditor is dissatisfied with the Supervisor’s decision with respect to his claim or its ranking he
may apply to the Court, within 21 days (or such longer period as the Court shall, in the special circumstances, allow) of receiving the
statement sent under Paragraph 37(2) for the decision to be reversed or varied.
38(2) [Application by Debtor or other Creditor] The Debtor or any other Creditor may, if dissatisfied with the Supervisor’s
decision admitting or rejecting the whole or any part of a claim, make such an application within 21 days (or such longer period as the
Court shall, in the special circumstances, allow) of becoming aware of the Supervisor’s decision.
38(3) [Costs of appeal] The Supervisor is not personally liable for the costs incurred by any person in respect of an appeal under
this Paragraph unless the Court so orders.
39 Debts of uncertain value
39(1) [Estimation of Debt or liability] The Supervisor shall estimate the value of any Debt which, by reason of its being subject to
a contingency or for any other reason, does not bear a certain value.
39(2) [Notification to Creditor] The Supervisor shall notify the Creditor in writing of any such estimate. If the Creditor is
dissatisfied with the Supervisor’s decision he may exercise his rights under paragraph 38.
39(3) [Claim of Debts of uncertain value] Where the value of any Debt is estimated by the Supervisor under Sub-paragraph (1),
the amount provable in the Arrangement shall be the amount of the estimate.
40 Secured Creditors
40(1) [Proving for balance of Debt] A Secured Creditor may claim for the balance of his Debt (if any), after deducting the value of
his Security.
40(2) [Voluntary surrender of Security] If a Secured Creditor voluntarily surrenders his Security for the general benefit of the
Creditors, he may claim for his whole Debt, as if it were unsecured.
40(3) [Altering value of Security] A Secured Creditor may, with the agreement of the Supervisor or the leave of the Court, at any
time alter the value which he has, in his claim, put upon his Security.
40(4) [Test of Security’s value] If the Supervisor is dissatisfied with the value which a Secured Creditor puts on his Security
(whether in his claim or by way of re-valuation), he may require the Security to be professionally valued by a person agreed as
between the Creditor and the Supervisor, or in default of such agreement by the Court.
40(5) [Professional valuation treated as amended valuation] Where a professional valuation has been carried out under the
previous Sub-paragraph, that valuation shall be treated as an amended valuation of the Creditor.
40(6) [Realisation of Security] If a Creditor who has valued his Security subsequently realises it:
(a) the Creditor shall forthwith notify the Supervisor and shall give the Supervisor
such information relating thereto as he may reasonably require;
(b) the net amount realised shall be substituted for the value previously put by the Creditor on the Security, and
(c) that amount shall be treated in all respects as an amended valuation by him.
41 Foreign currency Debts
41(1) [Conversion into sterling] For the purpose of claiming for a Debt incurred or payable in a currency other than sterling, the
amount of the Debt shall be converted into sterling at the official exchange rate prevailing on the date of the commencement of the
Arrangement.
41(2) [The official exchange rate] The official exchange rate is the middle market rate at the Bank of England, as published for the
date in question. In the absence of any such published rate, it is such rate as the Supervisor and Creditor agree or, in default of such
agreement, the Court determines.
42 Debts payable at future time
42 Subject to Paragraph 51 (adjustment of Dividend where payment made before time) a Creditor may claim for a Debt of which
payment was not yet due at the date of commencement of the Arrangement.
43 Interest on Debts
43 Where a Debt bears interest, that interest may be claimed as part of the Debt except in so far as it is payable in respect of any
period after the commencement of the Arrangement.
44 Cost of submitting claims
44(1) [Creditor bears cost of submitting claim] Every Creditor bears the cost of submitting his own claim, including such cost as
may be incurred in obtaining valuations, providing documents, affidavits or other evidence to the Supervisor.
44(2) [Supervisor’s costs] Costs incurred by the Supervisor in estimating the value of a Debt of uncertain value shall be an
expense of the Arrangement
PART VII: PAYMENT OF DIVIDENDS
45 Distribution by Dividend
45(1) [Duty to declare and distribute Dividends] At the time or times specified in the Proposal or, if none, whenever the
Supervisor has sufficient funds in hand for the purpose, the Supervisor shall, subject to the retention of such sums as he considers
necessary for payment of the expenses of the Arrangement, declare and distribute Dividends among the Creditors in respect of those
of their claims which have been admitted.
45(2) [Calculation and distribution of Dividend] In the calculation and distribution of a Dividend the Supervisor shall make
provision:
(a) for any Debts which are the subject of claims which have not yet been determined; and
(b) for disputed claims.
46 Notice of intended Dividend (Deleted)
47 Notice of declaration
47(1)Notice to Creditors who have claimed
47(2)Particulars in notice
47(3)Simultaneous distribution
47(4)[Method of payment] Payment of Dividend may be made by post, or arrangements may be made with any Creditor for it to be
paid in another way, or held for his collection.
47(5)[Endorsement in negotiable instrument] Where a Dividend is paid on a bill of exchange or other negotiable instrument, the
amount of the Dividend shall be endorsed on the instrument, or on a certified copy of it, if required to be produced by the holder for
that purpose.
48 Claim altered after payment of Dividend
48(1)[Amount claimed increased] If, after payment of Dividend, the amount claimed by a Creditor is increased, the Creditor is not
entitled to disturb the distribution of the Dividend; but he is entitled to be paid, out of any money for the time being available for the
payment of any further Dividend, any Dividend or Dividends which he has failed to receive before that money is applied to the
payment of any such further Dividend.
48(2)[Claim withdrawn, disallowed, reduced] If, after a Creditor’s claim has been admitted, the claim is withdrawn or disallowed, or
the amount of it is reduced, the Creditor shall repay to the Supervisor any amount overpaid by way of Dividend.
49 Secured Creditors
49(1)[Application of Paragraph] The following applies where a Creditor re-values his Security at a time when a Dividend has been
declared.
49(2)[Reduction in unsecured claim] If the re-valuation results in a reduction of his unsecured claim ranking for Dividend, the
Creditor shall, as soon as practicable, repay to the Supervisor any amount received by him as Dividend in excess of that to which he
would be entitled having regard to the re-valuation of the Security.
49(3)[Increase of unsecured claim] If the re-valuation results in an increase of his unsecured claim, the Creditor is entitled to receive
from the Supervisor, out of any money for the time being available for the payment of a further Dividend, before any such Dividend is
paid, any Dividend or Dividends which he has failed to receive, having regard to the re-valuation of the Security. However, the Creditor
is not entitled to disturb any Dividend declared (whether or not distributed) before the date of the revaluation.
50 Assignment of Debts or rights to Dividend
50(1)[Notice of assignment] If a person entitled to a Dividend gives notice to the Supervisor that he wishes the Dividend to be paid
to another person, or that he has assigned his entitlement or Debt to another person, the Supervisor shall pay the Dividend to that
other person accordingly.
50(2)[Contents of notice] A notice given under this Paragraph must specify the name and address of the person to whom payment is
to be made.
51 Debts payable at future time
51(1)[Entitlement to Dividend] Where a Creditor has claimed for a Debt of which payment is not due at the date of the declaration of
Dividend, he is entitled to Dividend equally with other Creditors, but subject as follows.
51(2)[Calculation of amount of reduction] For the purpose of Dividend (and for no other purpose), the amount of the Creditor’s
admitted claim (or, if a distribution has previously been made to him, the amount remaining outstanding in respect of his admitted
claim) shall be reduced by a percentage calculated as follows:
I x M
12
where I is 5 per cent and M is the number of months (expressed, if need be, as or as including, fractions of months) between the
declaration of Dividend and the date when payment of the Creditor’s Debt would otherwise be due.
52 Debts of unpaid Creditors
51(1)[Creditors not entitled to Dividend] Creditors who do not claim in the Arrangement shall not be entitled to receive any
Dividend.
52(2)[Unclaimed Dividends paid to Debtor] Dividends due to Creditors who have claimed in the Arrangement but who have not
claimed or been paid their Dividends shall, at the end of the Arrangement, be paid to the Debtor.
52(3)[Debtor liable for unclaimed Dividends] Once a Dividend has been paid to the Debtor under the previous Sub-paragraph, the
Creditor must claim it from the Debtor and no other person.
PART VIII: PRIORITY OF PAYMENTS AND DISTRIBUTIONS
53 Costs and Expenses of the Arrangement
53(1)[Expenses to be paid first] Subject to Paragraph 5(3) the fees, costs, charges, expenses and liabilities properly charged or
incurred by or on behalf of the Nominee or the Supervisor are expenses of the Arrangement and shall be paid in priority to all other
charges, expenses, liabilities and Debts.
53(2)[Charge in relation to expenses] The Supervisor shall have a charge on the assets subject to the Arrangement in respect of the
expenses of the Arrangement.
54 Priority of Debts and application of surplus
54(1)[Priority of preferential Debts] In the distribution of sums due to be paid to Creditors under the terms of the Arrangement,
Preferential Debts shall be paid in priority to other Debts.
54(2)[Ranking of preferential Debts] Preferential Debts rank equally between themselves after the expenses of the Arrangement.
54(3)[Ranking of ordinary Debts] Debts other than Preferential Debts rank equally between themselves and, after the Preferential
Debts, shall be paid in full unless the sums due to be paid to Creditors are insufficient for meeting them, in which case they abate in
equal proportions between themselves.
54(4)Surplus after payment
54(5)Interest rate on surplus
PART IX: THE CREDITORS COMMITTEE & MEETINGS OF CREDITORS
55 The Creditors’ Committee
55(1)[Establishment] Any meeting of Creditors may establish a committee (“the Creditors’ Committee”), consisting of not less than 3
and not more than 5 members to represent the interests of the Creditors and to provide such assistance and guidance to the
Supervisor as he may reasonably require.
55(2)[Eligibility] All the members of the Creditors’ Committee must be Creditors of the Debtor; and any Creditor (other than one who
is fully secured) may be a member, so long as:
(a) he has lodged a claim, and
(b) his claim has neither been wholly disallowed for voting purposes, nor wholly rejected for the purposes of distribution or
Dividend.
55(3)[Application of Rules] The Rules relating to the Creditors’ Committee in a bankruptcy contained in Rules 6.151 to 6.163 shall
apply to the Arrangement with the modifications necessary to apply those rules to a voluntary arrangement.
55(4)[Expenses of members] The reasonable travelling expenses directly incurred by any member of the Creditors’ Committee or
their representatives in respect of their attendance at the meetings of the Creditors’ Committee, or otherwise on the Creditors’
Committee’s business, shall rank as an expense of the Arrangement.
56 Power to call/requisition meetings of Creditors
56(1)[Supervisor’s power to call meetings] The Supervisor may, if he thinks it desirable, summon and conduct meetings of
Creditors for any purpose connected with the Arrangement.
56(2)[Power to requisition a meeting] If requested in writing by the Debtor, or by Creditors with not less than one-quarter in value of
the total amount of Debts subject to the Arrangement, the Supervisor shall, unless relieved by the Court from so doing, convene a
meeting of Creditors within 21 days from the receipt of such request.
56(3)[Content of notice requisitioning meeting] A notice served upon the Supervisor under Sub-paragraph (2) shall state the
purpose for which the meeting is to be held.
57 Calling Creditors’ meetings
57(1)[Notice of meeting] Notice of a Creditor’s meeting shall be given by the person convening the meeting to the Debtor and every
Creditor whose address is known to him or identified in the Proposal at least 14 days before the date fixed for the meeting, or such
shorter period as the Court may allow.
57(2)[Contents of notice] The notice to Creditors shall specify the purpose for which the meeting is convened and a time and date
(not earlier than 4.00 p.m. on the business day before the meeting) by which Creditors must lodge proxies and those who have not
already lodged claims must do so, in order to be entitled to vote at the meeting.
57(3)[Forms of proxy] With every notice convening a Creditors’ meeting there shall be sent out forms of proxy.
57(4)[Venue of meeting] In fixing the venue for a meeting of Creditors, the person convening it shall have regard to the convenience
of the parties who may wish to attend.
57(5)[Time of meeting] Meetings of Creditors shall be convened for commencement between the hours of 10.00 and 16.00 on a
business day, unless the Court otherwise directs.
57(6)[Chairman of meeting] Unless Paragraph 21(3) (chairman where no Supervisor acting) applies, the Supervisor, or a person
experienced in insolvency matters and nominated by him, shall be chairman of the meeting.
58 Cost of summoning meetings
58(1)[Security for payment of expenses] Subject to Sub-paragraph (3) below, the cost of summoning and holding a meeting of
Creditors at the instance of the Debtor or Creditors under Paragraph 56(2) shall be paid by that person or persons, who shall deposit
security for their payment with the Supervisor.
58(2)[Appropriate security] The sum to be deposited shall be such as the Supervisor determines to be appropriate; and the
Supervisor shall be under no obligation to act without the deposit having been paid.
58(3)[Vote for cost to be an expense of arrangement] Where a meeting is so summoned, it may vote that the expenses of
convening and holding it shall rank as an expense of the Arrangement.
58(4)[Repayment of deposit] To the extent that any deposit made under this Paragraph is not required for the payment of expenses
of convening and holding the meeting, it shall be repaid to the person who made it.
59 Entitlement to vote
59(1)[Conditions for voting] Subject as follows, at a meeting of Creditors a person is entitled to vote as a Creditor only if:
(a) he has duly lodged his claim by the time and date stated in the notice of the meeting, and
(b) the claim has been admitted under the next Paragraph for the purpose of entitlement to vote, and there has been lodged, by
that time and date, any proxy requisite for that entitlement.
59(2)[Unliquidated and unascertained claims] A Creditor shall not vote in respect of a Debt for an unliquidated amount, or any Debt
whose value is not ascertained, except where the Chairman agrees to put upon the Debt an estimated minimum value for the purpose
of entitlement to vote.
59(3)[Secured Creditors] A Secured Creditor is entitled to vote only in respect of the balance (if any) of his Debt after deducting the
value of his Security as estimated by him.
60 Admission and rejection of claim
60(1)[Chairman’s discretion] The chairman has power to admit or reject a Creditor’s claim for the purpose of his entitlement to vote,
and the power is exercisable with respect to the whole or any part of the claim.
60(2)[Appeal from chairman’s decision] The chairman’s decision on entitlement to vote is subject to appeal to the Court by any
Creditor, or by the Debtor, within 21 days of the meeting of Creditors at which the decision was made, or such longer period as the
Court shall, in the special circumstances, allow.
60(3)[Voting subject to objection] If the chairman is in doubt whether a claim should be admitted or rejected, he shall mark it
objected to and allow the Creditor to vote, subject to his vote being subsequently declared invalid if the objection to the claim is
sustained.
60(4)[Where chairman’s decision reversed] If, on an appeal, the chairman’s decision is reversed or varied, or a Creditor’s vote is
declared invalid, the Court may order another meeting to be summoned, or make such other order as it thinks fit, provided that the
Court considers the matter is such as to give rise to unfair prejudice or a material irregularity.
60(5)[Costs of appeal] The chairman is not personally liable for the costs incurred by any person in respect of an appeal under this
Paragraph unless the Court so orders.
61 Majorities required to pass resolutions
61(1)[Resolutions by majority in value] Subject as follows, at a meeting of Creditors a resolution is passed when a majority in value
of Creditors present and voting, in person or by proxy, have voted in favour of the resolution.
61(2)[Resolutions varying terms of Arrangement] In the case of a resolution varying the terms of the Arrangement, a majority in
excess of three-quarters in value of those present and voting, in person or by proxy, is required to pass the resolution.
61(3)[Votes rendering resolution invalid] Any resolution is invalid if those voting against it include more than half in value of the
Creditors who are not, to the best of the chairman’s belief, Associates of the Debtor.
61(4)[Resolution for the appointment of Supervisor] In the case of a resolution for the appointment of a Supervisor:
(a) if on any vote there are 2 nominees for appointment, the person who obtains the most support is appointed, provided that
such support represents a majority in value of all those present (in person or by proxy) at the meeting and entitled to vote; and
(b) if there are 3 or more nominees, and one of them has a clear majority over both or all of the others together, that one is
appointed; and
(c) in any other case, the chairman shall continue to take votes (disregarding at each vote any nominee who has withdrawn and,
if no nominee has withdrawn, the nominee who obtained the least support last time), until a clear majority is obtained for any one
nominee.
61(5)[Resolution for joint appointment] The chairman may at any time put to the meeting a resolution for the joint appointment of
any 2 or more nominees if he thinks it appropriate.
62 Chairman of meeting as proxy-holder
62 Where the chairman at a meeting holds a proxy for a Creditor which requires him to vote for a particular resolution, and no other
person proposes that resolution, he shall himself propose it
63 Suspension/adjournment of meeting
63(1)[Suspension] Once only in the course of any meeting, the chairman may, in his discretion and without an adjournment, declare
the meeting suspended for any period up to one hour.
63(2)[Adjournment] The chairman at any meeting may, in his discretion, and shall, if the meeting so resolves, adjourn it to such time
and place as seems to him to be appropriate in the circumstances; provided that if the chairman is the Supervisor and a resolution
has been proposed for his removal, the chairman shall not adjourn the meeting without the consent of at least one half in value of the
Creditors present (in person or by proxy) and entitled to vote.
63(3)[Period of adjournment] An adjournment under this Paragraph shall not be for a period of more than 21 days, or such longer
period as the Court may allow.
63(4)[Use of claims and proxies at adjourned meeting] Where a meeting is adjourned under this Paragraph, claims and proxies
may be used if lodged at any time up to 4.00 p.m. on the business day immediately before the adjourned meeting.
64 Record of proceedings
64(1)[Minutes of proceedings] The chairman of any Creditors’ meeting shall cause minutes of the proceedings at the meeting,
signed by him, to be retained as part of the records of the Arrangement.
64(2)[List of Creditors attending] The chairman shall also cause to be made and kept a list of all the Creditors who attended the
meeting either in person or by proxy and the amount of their claims for voting purposes.
64(3)[Record of resolutions] The minutes of the meeting shall include a record of the resolutions which were taken at the meeting
and the decision on each one.
64(4)[List of creditors to be circulated] The list of Creditors referred to in Sub-paragraph (2) shall be sent with the chairman’s report
to Creditors, the Debtor and the Court.
65 Postal resolutions
65(1)[Application of procedure] The following procedure may be utilised by the Supervisor, if he thinks fit, for the purposes of
ascertaining the wishes of Creditors on any matter concerning the Arrangement other than the removal of the Supervisor.
65(2)[Notice of proposed resolution] The Supervisor may send to the Debtor and every Creditor whose address is known to him or
identified in the Proposal a notice containing a copy of any proposed resolution on which a decision is sought, which shall be set out
in a such a way that agreement with or dissent from each separate resolution may be indicated by the recipient on the copy so sent.
65(3)[Contents of notice] The notice must specify a date (“the Last Date for Voting”), not less that 21 days after the date of sending
thereof, by which Creditors must lodge their votes with the Supervisor and those who have not already lodged claims must do so, in
order to be entitled to vote.
65(4)[Creditors requiring meeting] Creditors with one-quarter in value of the total amount of Debts subject to the Arrangement may,
within 14 days from the date upon which the Supervisor sent out the resolution, request the Supervisor in writing to summon a
meeting of Creditors to consider the matters raised by the resolution and, if they so request, the Supervisor shall call a meeting of
Creditors for that purpose.
65(5)[Deemed passing of resolution] In the absence such a request, the resolution is deemed to have been carried at a duly
convened meeting of Creditors, if, of the written votes received by the Supervisor by the end of the Last Date for Voting, a sufficient
majority of Creditors as defined in Paragraph 61 entitled to vote on the resolution have indicated their consent to the resolution in
writing.
65(6)[Application of voting rights and majorities] The provisions of Paragraphs 59 (entitlement to vote), 60 (admission and rejection
of claim) and 61 (majorities required to pass resolutions) shall apply to postal votes as they do to votes at meetings of Creditors.
65(7)[Copy of resolutions] A copy of every resolution taken under this Paragraph, together with copies of the votes of Creditors
received by the Supervisor endorsed by the Supervisor with the date upon which the vote was received by him, shall be kept with the
records of the Arrangement.
PART X: PROVISIONS FOLLOWING BREACH OF THE ARRANGEMENT
66 Breach by the Debtor of the terms of the Arrangement
66 The Debtor shall be regarded as in breach of the Arrangement if:
(a) he fails to comply with any of his obligations under the Arrangement;
(b) information which was false or misleading in any material particular or contains any material omissions:
(i) was contained in any statement of affairs or other document supplied by the Debtor under Part VIII under the Act to any
person, or
(ii) was otherwise made available by the Debtor to his Creditors at or in connection with any meeting of Creditors held, or any
postal resolution taken, in connection with the Arrangement, or
(c) the Debtor fails to do all such things as may for the purposes of the Arrangement have been reasonably required of him by
the Supervisor.
67 Procedure following breach
67(1)[Notice of Breach] If, at any time, it appears to the Supervisor that the Debtor is in breach of the Arrangement, then, unless such
breach is remedied forthwith, he shall as soon as practicable issue to the Debtor a notice (“Notice of Breach”) identifying the breach
and requiring the Debtor within one month of sending the notice:
(a) to remedy the breach if it is capable of being remedied, and, if he thinks fit
(b) to give a full explanation of the breach.
67(2)[Remedy of breach] If, within the one month period referred to in Sub-paragraph (1), or such longer period not exceeding a
further one month as the Supervisor shall reasonably allow, the Debtor:
(a) remedies his breach of the Arrangement;
(b) if so required in the Notice of Breach, provides a full explanation of the breach, and
(c) pays to the Supervisor such sum (if any) as the Supervisor may reasonably require to compensate the Creditors for any
reduction in Dividend caused by the Debtor’s breach,
no further action shall be taken against the Debtor save that the Supervisor shall report the breach to the Creditors when he next
sends his comments to Creditors on the progress and efficacy of the Arrangement under Rule 5.26 (Supervisor’s accounts and
reports), or on the next convenient occasion, if earlier.
67(3)[Certificate of Termination/bankruptcy petition] If the Debtor has not done those things specified in Sub-paragraph (2) by the
time specified or allowed, the Supervisor shall as soon as practicable convene a meeting of Creditors to resolve whether or not to do
the following things:
(i) issue a certificate (“Certificate of Termination”) terminating the Arrangement by reason of the Debtor’s breach;
(ii) present a petition for the Debtor’s bankruptcy;
(iii) vary the terms of the arrangement under Paragraph 70;
(iv) take no action.
67(4)[Supervisor’s duty] If the Creditors resolve to issue a Certificate of Termination and/or to present a bankruptcy petition against
the Debtor, the Supervisor shall do so as soon as practicable.
67(5)[Copies of Certificate of Termination] A copy of any Certificate of Termination issued by the Supervisor shall be sent to the
Debtor and Creditors together with the notice under Paragraph 11.
68 Retention of funds by Supervisor
68 The Supervisor shall, at all times during the course of the Arrangement, retain sufficient of the funds coming into his hands as
represents his best estimate of the costs of petitioning for the Debtor’s bankruptcy should the Creditors so direct under the previous
Paragraph hereof. Such costs shall be provided for in priority to any other costs of the Arrangement.
PART XI: MISCELLANEOUS PROVISIONS
69 Third Party obligations
68(1)[Application of Paragraph] This Paragraph applies where the Proposal includes any obligation on the part of a person other
than the Supervisor or Debtor to pay moneys, transfer assets or do any other thing.
69(2)[Evidence of agreement] The third party shall sign the Proposal or such other document evidencing his agreement to be bound
by the obligation as the Supervisor shall reasonably require.
69(3)[Enforcement of obligation] The obligations of the third party shall be enforceable by the Supervisor, or by the Debtor at the
direction of the Supervisor.
69(4)[Failure a default of arrangement] The failure by the third party to carry out the obligation when due shall constitute a breach of
the arrangement.
70 Variation of the Arrangement
70(1)[Variation with Creditor’s approval] The provisions of this Arrangement may be amended with the approval of a meeting of
Creditors.
70(2)[Consent of Debtor/third party to variation required] No variation of the terms of the Arrangement shall be of any effect unless
made with the consent of the Debtor and any third party affected thereby.
70(3)[Saving for certain rights] No variation which restricts the following rights shall be of effect:
(a) the right of any Secured Creditor to enforce his Security, except with the Secured Creditor’s consent;
(b) the right of any Creditor to present a bankruptcy petition under section 264(1)(c) of the Act for default in connection with
Arrangement;
(c) the right of a Preferential Creditor to be paid in priority to other Creditors, except with that Creditor’s consent;
(d) the right of a Preferential Creditor to be paid pro rata with other Preferential Creditors, except with that Creditor’s consent.
70(4)[Unfair prejudice and material irregularity] No variation shall be of effect if it unfairly prejudices the rights of any Creditor or if
there has been any material irregularity in the operation of the provisions of this Paragraph.
70(5)[Restriction on variation] No variation shall be of effect if it causes the Arrangement to cease to be a voluntary arrangement
within Part VIII of the Act.
71 Tax liabilities arising on realisations
70(1)[Tax to be paid out of proceeds] Taxation liabilities of the Debtor arising on the sale or other realisation of any asset subject to
the Arrangement shall, in so far as those proceeds are sufficient, be discharged out of the sale proceeds of the asset in question.
72 Invalidity and/or illegality
72 If any provision or part of the Arrangement is found to be contrary to the Act or Rules, illegal, invalid or contrary to public
policy, that will not affect the validity of the remainder of the Arrangement and the provision or part of the Arrangement in question
shall be construed accordingly.

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