• Chapter 8 Chapter 8 — Deed of Company Arrangement

    • 73. Effect of creditors' resolution

      (1) This Section applies where, at a meeting convened pursuant to Section 61 (Requirement for initial creditors' meeting) or Section 65(2) (Revision of administrator's proposals), a Company's creditors resolve that the Company execute a Deed of Company Arrangement.
      (2) The administrator of the Company is to be the administrator of the Deed of Company Arrangement unless the creditors, by resolution passed at the meeting, appoint someone else to be administrator of the Deed of Company Arrangement.
      (3) The administrator of the Company must prepare an instrument setting out the terms of the Deed of Company Arrangement.
      (4) The instrument must also specify the following —
      (a) the administrator of the Deed of Company Arrangement;
      (b) the property of the Company (whether or not already owned by the Company when it executes the Deed of Company Arrangement) that is to be available to pay creditors' claims;
      (c) the nature and duration of any moratorium period for which the Deed of Company Arrangement provides;
      (d) to what extent the Company is to be released from its debts;
      (e) the conditions (if any) for the Deed of Company Arrangement to come into operation;
      (f) the conditions (if any) for the Deed of Company Arrangement to continue in operation;
      (g) the circumstances in which the Deed of Company Arrangement terminates;
      (h) the order in which proceeds of realising the property referred to in paragraph (b) are to be distributed among creditors bound by the Deed of Company Arrangement; and
      (i) the day (not later than the day when the administration began) on or before which claims must have arisen if they are to be admissible under the Deed of Company Arrangement.
      (5) The instrument is taken to include the prescribed provisions, except so far as it provides otherwise.

    • 74. Execution of Deed of Company Arrangement

      (1) This Section applies where an instrument is prepared under Section 73 (Effect of creditors' resolution).
      (2) The Company must execute the instrument within —
      (a) fifteen (15) business days after the end of the meeting of creditors; or
      (b) such further period as the Court allows on an application made within those fifteen (15) business days.
      (3) The proposed administrator of the Deed of Company Arrangement must execute the instrument before, or as soon as practicable after, the Company executes it.
      (4) When executed by both the Company and the proposed administrator, the instrument becomes a Deed of Company Arrangement.
      (5) As soon as practicable after a Deed of Company Arrangement is executed, the administrator of the Deed of Company Arrangement must —
      (a) send to each creditor of the Company a written notice of the execution of the Deed of Company Arrangement; and
      (b) send to the Registrar a copy of the Deed of Company Arrangement.
      (6) If a Company contravenes subsection (2), the proposed administrator of the Deed of Company Arrangement must, as soon as practicable thereafter —
      (a) send to the Registrar a notice that the Company has failed to execute the instrument within the required period; and
      (b) send such a notice to the Company's creditors.

    • 75. Creditor etc. not to act inconsistently with deed before its execution

      (1) Where, at a meeting convened pursuant to Section 61 (Requirement for initial creditors meeting) or Section 65(2) (Revision of administrator's proposals), a Company's creditors resolve that the Company execute a Deed of Company Arrangement, this Section applies until —
      (a) the Deed of Company Arrangement is executed by both the Company and the administrator; or
      (b) the period within which Section 74(2) (Execution of Deed of Company Arrangement) requires the Company to execute the Deed of Company Arrangement ends,
      whichever happens sooner.
      (2) In so far as a person would be bound by the Deed of Company Arrangement if it had already been so executed, the person —
      (a) must not do anything inconsistent with the Deed of Company Arrangement, except with the leave of the Court; and
      (b) is subject to Section 78 (Protection of Company's property).

    • 76. Effect of Deed of Company Arrangement on creditors

      (1) A Deed of Company Arrangement binds all creditors of the Company, so far as concerns claims arising on or before the day specified in the Deed of Company Arrangement under Section 73(4)(i) (Effect of creditors' resolution).
      (2) Subsection (1) does not bind a secured creditor or prevent a secured creditor from realising or otherwise dealing with security, except so far as —
      (a) the Deed of Company Arrangement so provides in relation to a secured creditor who voted in favour of the resolution of creditors because of which the Company executed the Deed of Company Arrangement; or
      (b) the Court orders under Section 79(2) (Court may limit rights).
      (3) Subsection (1) does not affect a right that an owner or lessor of property has in relation to that property, except so far as —
      (a) the Deed of Company Arrangement so provides in relation to an owner or lessor of property who voted in favour of the resolution of creditors because of which the Company executed the Deed of Company Arrangement; or
      (b) the Court orders under Section 79(4) (Court may limit rights).
      (4) Section 117 (The members of a company) of the Companies Regulations 2015 does not prevent a creditor of the Company from becoming a member of the Company as a result of the Deed of Company Arrangement requiring the creditor to accept an offer of shares in the Company.

    • 77. Giving priority to preferential creditors

      A Deed of Company Arrangement must contain a provision to the effect that, for the purposes of the application by the administrator of the property of the Company coming under his or her control under the Deed of Company Arrangement, any preferential creditors will be entitled to a priority at least equal to what they would have been entitled if the property were applied in accordance with Section 227 (Preferential Debts).

    • 78. Protection of Company's property

      (1) Until a Deed of Company Arrangement terminates, this Section applies to a person bound by the Deed of Company Arrangement.
      (2) The person cannot —
      (a) make an application for an order to wind up the Company; or
      (b) proceed with such an application made before the Deed of Company Arrangement became binding on the person.
      (3) The person cannot —
      (a) begin or proceed with a proceeding against the Company or in relation to any of its property; or
      (b) begin or proceed with enforcement process in relation to property of the Company;
      except —
      (c) with the leave of the Court; and
      (d) in accordance with such terms (if any) as the Court imposes.
      (4) In subsection (3) —

      "property" of a Company includes any property used or occupied by, or in the possession of the Company.

    • 79. Court may limit rights

      (1) This Section applies where —
      (a) at a meeting convened pursuant to Section 61 (Requirement for initial creditors' meeting) or 65(2) (Revision of administrator's proposals), a Company's creditors have resolved that the Company execute a Deed of Company Arrangement; or
      (b) a Company has executed such a Deed of Company Arrangement.
      (2) The Court may order a secured creditor of the Company not to realise or otherwise deal with his security, except as permitted by the order.
      (3) The Court may only make an order under subsection (2) if satisfied that —
      (a) for the creditor to realise or otherwise deal with the security would have a material adverse effect on achieving the purposes of the Deed of Company Arrangement; and
      (b) having regard to —
      (i) the terms of the Deed of Company Arrangement;
      (ii) the terms of the order; and
      (iii) any other relevant matter,
      the creditor's interests will be adequately protected.
      (4) The Court may order the owner or lessor of property that is used or occupied by, or is in the possession of, the Company not to take possession of the property or otherwise recover it.
      (5) The Court may only make an order under subsection (4) if satisfied that —
      (a) for the owner or lessor to take possession of the property or otherwise recover it would have a material adverse effect on achieving the purposes of the Deed of Company Arrangement; and
      (b) having regard to —
      (i) the terms of the Deed of Company Arrangement;
      (ii) the terms of the order; and
      (iii) any other relevant matter,
      the interests of the owner or lessor will be adequately protected.
      (6) An order under this Section may be made subject to conditions.
      (7) An order under this Section may only be made on the application of —
      (a) if subsection (1)(a) applies, the administrator of the Company; or
      (b) if subsection (1)(b) applies, the Deed of Company Arrangement's administrator.
      (8) For the purposes of subsections (3) and (5), whether an action has a "material adverse effect" on achieving the purposes of the Deed of Company Arrangement shall be assessed in light of all of the circumstances subsisting at the time that the Court comes to consider the issue.

    • 80. Effect of Deed of Company Arrangement on Company, officers and members

      A Deed of Company Arrangement also binds —

      (a) the Company;
      (b) its officers and members; and
      (c) the administrator of the Deed of Company Arrangement.

    • 81. Transfer of shares

      (1) The administrator of a Deed of Company Arrangement may transfer shares in the Company if the administrator has obtained —
      (a) the written consent of the owner of the shares; or
      (b) the leave of the Court.
      (2) A person is not entitled to oppose an application for leave under subsection (1) unless the person is —
      (a) a member of the Company;
      (b) a creditor of the Company;
      (c) any other interested person; or
      (d) the Financial Services Regulator.
      (3) The Court may only give leave under subsection (1) if it is satisfied that the transfer would not unfairly prejudice the interests of members of the Company.

    • 82. Extent of release of Company's debts

      A Deed of Company arrangement releases the Company from a debt only in so far as —

      (a) the Deed of Company Arrangement provides for the release; and
      (b) the creditor concerned is bound by the Deed of Company Arrangement.

    • 83. Guarantees and indemnities

      Section 82 (Extent of release of Company's debts) does not affect a creditor's rights under a guarantee or indemnity from a person other than the Company.

    • 84. Variation of Deed of Company Arrangement by creditors

      A Deed of Company Arrangement may be varied by a resolution passed at a meeting of the creditors of the Company convened under Section 90 (Meeting of creditors to consider variation or termination), but only if the variation is not materially different from a proposed variation set out in the notice of the meeting.

    • 85. Court may cancel variation

      (1) Where a Deed of Company Arrangement is varied under Section 84 (Variation of Deed of Company Arrangement by creditors), a creditor of the Company may apply to the Court for an order cancelling the variation.
      (2) On an application, the Court —
      (a) may make an order cancelling the variation, or confirming it, either wholly or in part, on such conditions (if any) as the order specifies; and
      (b) may make such other orders as it thinks appropriate.

    • 86. When Deed of Company Arrangement terminates

      A Deed of Company Arrangement terminates when —

      (a) the Court makes under Section 88 (When Court may terminate Deed of Company Arrangement) an order terminating the Deed of Company Arrangement;
      (b) subject to Section 87 (When creditors may terminate Deed of Company Arrangement), the Company's creditors pass a resolution terminating the Deed of Company Arrangement at a meeting that was convened under Section 90 (Meeting of creditors to consider variation or termination) by a notice setting out the proposed resolution;
      (c) if the Deed of Company Arrangement specifies circumstances in which it is to terminate, those circumstances exist; or
      (d) the administrator of the Deed of Company Arrangement executes a notice of termination of the Deed of Company Arrangement in accordance with Section 91 (Notice of termination of Deed of Company Arrangement);

      whichever happens first.

    • 87. When creditors may terminate Deed of Company Arrangement

      (1) The creditors are not entitled to pass a resolution under Section 86(b) (When Deed of Company Arrangement terminates) unless —
      (a) there has been a breach of the Deed of Company Arrangement; and
      (b) the breach has not been rectified before the resolution is passed.
      (2) When a Deed of Company Arrangement terminates in accordance with subsection (1), the administrator of the Deed of Company Arrangement must —
      (a) send to the Registrar a notice of the termination; and
      (b) send such a notice to each of the Company's creditors other than opted-out creditors.

    • 88. When Court may terminate Deed of Company Arrangement

      (1) The Court may make an order terminating a Deed of Company Arrangement if satisfied that —
      (a) information about the Company's business, property, affairs or financial circumstances that —
      (i) was false or misleading; and
      (ii) can reasonably be expected to have been material to creditors of the Company in deciding whether to vote in favour of the resolution that the Company execute the Deed of Company Arrangement,
      was given to the administrator of the Company or to such creditors; or
      (b) such information was contained in a report or statement under Section 61(3) (Requirement for initial creditors' meetings) or 65(2) (Revision of administrator's proposals) that accompanied a notice of the meeting at which the resolution was passed; or
      (c) there was an omission from such a report or statement and the omission can reasonably be expected to have been material to such creditors in so deciding; or
      (d) there has been a material breach of the Deed of Company Arrangement by a person bound by the Deed of Company Arrangement; or
      (e) effect cannot be given to the Deed of Company Arrangement without injustice or undue delay; or
      (f) the Deed of Company Arrangement or a provision of it is, an act or omission done or made under the Deed of Company Arrangement was, or an act or omission proposed to be so done or made would be —
      (i) oppressive or unfairly prejudicial to, or unfairly discriminatory against, one or more such creditors; or
      (ii) contrary to the interests of the creditors of the Company as a whole; or
      (g) the Deed of Company Arrangement should be terminated for some other reason.
      (2) An order may be made on the application of —
      (a) a creditor of the Company;
      (b) the Company;
      (c) the Financial Services Regulator; or
      (d) any other interested person.

    • 89. Creditors may terminate Deed of Company Arrangement and resolve that Company be wound up

      Where —

      (a) at a meeting convened under Section 90 (Meeting of creditors to consider variation or termination), the Company's creditors pass a resolution terminating the Deed of Company Arrangement; and
      (b) the notice of the meeting sets out a proposed resolution that the Company be wound up,

      the creditors may also resolve at the meeting that the Company be wound-up.

    • 90. Meeting of creditors to consider variation or termination

      (1) The administrator of a Deed of Company Arrangement —
      (a) may at any time convene a meeting of the Company's creditors; and
      (b) must convene such a meeting if so requested in writing by creditors the value of whose claims against the Company is not less than ten (10)% of the value of all the creditors' claims against the Company.
      (2) The administrator of the Deed of Company Arrangement must convene the meeting by giving written notice of the meeting —
      (a) to as many of the Company's creditors (other than opted-out creditors) as reasonably practicable; and
      (b) at least five (5) business days before the meeting.
      (3) The notice given to a creditor under subsection (2) must —
      (a) set out each resolution (if any) under Section 84 (Variation of Deed of Company Arrangement by creditors) or Section 86(b) (When Deed of Company Arrangement terminates) that the administrator of the Deed of Company Arrangement proposes that the meeting vote on; and
      (b) if the meeting is convened under subsection (1)(b), set out each proposed resolution under Section 84 (Variation of Deed of Company Arrangement by creditors) or Section 86(b) (When Deed of Company Arrangement terminates) that is set out in the request.
      (4) At a meeting convened under this Section, the administrator of the Deed of Company Arrangement is to preside.
      (5) A meeting convened under this Section may be adjourned from time to time.
      (6) The relevant provisions of Schedule 6 (Meetings and Correspondence) shall apply to the convening and conduct of a meeting of creditors convened under this Section, subject to the other provisions of this Chapter.

    • 91. Notice of termination of Deed of Company Arrangement

      (1) If a Company is subject to a Deed of Company Arrangement, and —
      (a) the administrator of the Deed of Company Arrangement has applied all of the proceeds of the realisation of the assets available for the payment of creditors; or
      (b) the administrator of the Deed of Company Arrangement has paid to the creditors —
      (i) the sum of 100 cents in the dollar; or
      (ii) any lesser sum determined by the creditors at a general meeting; or
      (c) all of the following conditions are satisfied —
      (i) the Company's obligations under the Deed of Company Arrangement have been fulfilled;
      (ii) the obligations of any other party to the Deed of Company Arrangement have been fulfilled; and
      (iii) creditors' claims under the Deed of Company Arrangement have been dealt with in accordance with the Deed of Company Arrangement,
      the administrator of the Deed of Company Arrangement must —
      (d) certify to that effect in writing; and
      (e) within twenty-eight (28) days, lodge with the Registrar a notice of termination of the Deed of Company Arrangement.
      (2) The notice of termination must be in the prescribed form.

    • 92. When Court may void or validate Deed of Company Arrangement

      (1) Where there is doubt, on a specific ground, whether a Deed of Company Arrangement was entered into in accordance with this Chapter or complies with this Chapter, the administrator of the Deed of Company Arrangement, a member or creditor of the Company, or the Registrar, may apply to the Court for an order under this Section.
      (2) On an application, the Court may make an order declaring the Deed of Company Arrangement, or a provision of it, to be void or not to be void, as the case requires, on the ground specified in the application or some other ground.
      (3) On an application, the Court may declare the Deed of Company Arrangement, or a provision of it, to be valid, despite a breach of a provision of this Chapter, if the Court is satisfied that —
      (a) the provision was substantially complied with; and
      (b) no injustice will result for anyone bound by the Deed of Company Arrangement if the breach is disregarded.
      (4) Where the Court declares a provision of a Deed of Company Arrangement to be void, the Court may by order vary the Deed of Company Arrangement, but only with the consent of the administrator of the Deed of Company Arrangement.

    • 93. Effect of termination or avoidance

      The termination or avoidance, in whole or in part, of a Deed of Company Arrangement does not affect the previous operation of the Deed of Company Arrangement.

    • 94. Deed progress reports

      (1) The administrator of a Deed of Company Arrangement must, within one month after —
      (a) the end of the 6-month period beginning on the date of his appointment; and
      (b) the end of each subsequent 6-month period during which he is the administrator of the Deed of Company Arrangement;
      publish a progress report that —
      (c) is in the prescribed form;
      (d) is verified by a written statement;
      (e) shows his receipts and payments during the relevant 6-month period; and
      (f) in the case of the second or subsequent progress reports published under this subsection, also shows the aggregate amount of receipts and payments during all preceding 6-month periods since his appointment.
      (2) A person who ceases to be the administrator of a Deed of Company Arrangement must, within one month after the cessation, publish a final progress report that —
      (a) is in the prescribed form;
      (b) is verified by a written statement;
      (c) if he has previously been required to publish a progress report under subsection (1), shows his receipts and payments during the period —
      (i) beginning at the end of the 6-month period to which the most recent progress report under subsection (1) related; and
      (ii) ending at the cessation;
      (d) if he has previously been required to publish a progress report under subsection (1), also shows the aggregate amount of receipts and payments during all previous 6-month periods since his appointment; and
      (e) if he has not previously been required to publish a progress report under subsection (1), shows his receipts and payments during the period beginning on —
      (i) the date of his appointment; and
      (ii) ending at the cessation.
      (3) If a report is published under subsection (1) or (2), the Registrar may cause the progress report to be audited by a registered company auditor.
      (4) The auditor must prepare a report on the progress report.
      (5) For the purposes of the audit under subsection (3), the administrator or former administrator must give the auditor such books and information as the auditor requires.
      (6) If the Registrar causes a progress report to be audited under subsection (3) —
      (a) the Registrar must give the administrator or former administrator a copy of the report by the auditor; and
      (b) Section 470 (Auditor's general right to information) of the Companies Regulations 2015 applies in relation to the report prepared by the auditor as if it were a document required to be published.
      (7) The costs of an audit under this Section are to be fixed by the Registrar, and are payable by the Company.