In force2020 Revised Edition

Contents

Insolvency, Restructuring and Dissolution Act 2018 · 2020 Revised Edition · Part 9 · Provisions Applicable in Judicial Management and Winding Up

228. Extortionate credit transactions

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(1)

This section applies where a company is in judicial management or is being wound up, and the company is or has been a party to a transaction for or involving the provision to that company of credit.

(2)

The Court may, on the application of the judicial manager or liquidator of the company, make an order with respect to the transaction if the transaction is or was extortionate and was entered into within 3 years before the commencement of the judicial management or winding up, as the case may be.

(3)

For the purposes of this section, a transaction is presumed to be extortionate, unless the contrary is proved, if, having regard to the risk accepted by the person providing the credit —

(a)

the terms of it are or were such as to require grossly exorbitant payments to be made (whether unconditionally or in certain contingencies) in respect of the provision of the credit; or

(b)

it is harsh and unconscionable or substantially unfair.

(4)

An order under this section may contain one or more of the following:

(a)

provision setting aside the whole or part of any obligation created by the transaction;

(b)

provision varying the terms of the transaction or varying the terms on which any security for the purposes of the transaction is held;

(c)

provision requiring any person who is or was party to the transaction to pay the company or the liquidator any sums paid to that person, by virtue of the transaction, by the company;

(d)

provision requiring any person to surrender to the company or the liquidator any property held by the person as security for the purposes of the transaction;

(e)

provision directing accounts to be taken between any persons.

Terms defined in this Act

accounts
Defined · s 61
“accounts” has the meaning given by section 4(1) of the Companies Act 1967;
Open s 61
commencement of the judicial management
Defined · s 217
“commencement of the judicial management”, in relation to a company, means —(a)in a case where the judicial manager is appointed by the Court under section 91 — the time when the application for the judicial management order was made; or(b)in a case where the judicial manager is appointed by the creditors of the company under section 94(11)(e) — the time when the copy of the notice of appointment of the interim judicial manager is filed with the Registrar of Companies and the Official Receiver under section 94(5)(a);
Open s 217
company
Defined · s 2
“company” has the meaning given by section 4(1) of the Companies Act 1967;
Open s 2
Court
Defined · s 2
“Court” means the General Division of the High Court;
Open s 2
judicial manager
Defined · s 88
“judicial manager”, in relation to a company, means a person appointed under this Part to manage the company and its affairs, business and property, but does not, unless a contrary intention appears, include an interim judicial manager;
Open s 88
liquidator
Defined · s 2
“liquidator” includes the Official Receiver when acting as the liquidator of a corporation;
Open s 2
property
Defined · s 2
“property” includes —(a)money, goods, things in action, land and every description of property, wherever situated; and(b)obligations and every description of interest, whether present or future or vested or contingent, arising out of or incidental to property;
Open s 2
security
Defined · s 61
“security” means any mortgage, charge, pledge, lien or other security recognised by law;
Open s 61
transaction
Defined · s 2
“transaction” includes any gift, agreement or arrangement, and any reference to entering into a transaction is to be construed accordingly;
Open s 2