Insolvency, Restructuring and Dissolution Act 2018 · 2020 Revised Edition · Part 5A · Simplified Restructuring of Debts
72M. Compromise or arrangement
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A company (in simplified debt restructuring) may, with the consent of its Restructuring Adviser, make a debt restructuring proposal to its creditors that provides for a compromise or an arrangement in satisfaction of the company’s debts.
company (in simplified debt restructuring)
“company (in simplified debt restructuring)” means a company that is accepted by the Official Receiver into the simplified debt restructuring programme under section 72G, and that has not been discharged from the simplified debt restructuring programme under section 72Q;
The Restructuring Adviser must —
summon a meeting of the company and its creditors to consider the debt restructuring proposal at such time, date and place as he or she thinks fit, by giving at least 21 days’ notice of the meeting; and
seek a decision from the company’s creditors as to whether they approve the debt restructuring proposal.
The notice to summon the meeting mentioned in subsection (2)(a) must contain all of the following:
details of the meeting;
a list of assets of the company, including those assets that are subject to a security;
details of the decision to be made or of any resolution on which a decision is sought, including the terms and conditions of the debt restructuring proposal and the compromise or arrangement that is sought;
a statement of the effects of the debt restructuring proposal on creditors’ rights;
the amount proposed to be paid to the Restructuring Adviser by way of fees and expenses;
a comparison of what the creditors would receive in the debt restructuring proposal and in the most likely scenario if the compromise or arrangement pursuant to the debt restructuring proposal does not become binding on the company and its creditors;
such other details of the company’s affairs as may be prescribed by regulations made under section 72V.
The compromise or arrangement pursuant to the debt restructuring proposal (or any modification to the proposal) is approved by the company’s creditors when two-thirds or more (in value of the debts) of those creditors meant to be bound by the compromise or arrangement, and who were present and voting (either in person or by proxy), vote in favour of a decision approving the debt restructuring proposal, including the compromise or arrangement (or the modification of the proposal).
debt
“debt” means any debt, or any liability to pay money, that is unsecured, present, certain, and of an amount that is fixed or liquidated;
The notice in subsection (2)(a) must be given to every creditor of the company whose claim and address are provided by the company to the Restructuring Adviser.
creditor
“creditor”, in relation to a debtor proposing a voluntary arrangement under Part 14, means a creditor to whom the debtor owes a debt provable in bankruptcy;
The company and its creditors may approve the debt restructuring proposal with or without modifications, including the appointment of another qualified person as Restructuring Adviser, except that a modification must not result in a proposal that is significantly different from the debt restructuring proposal mentioned in subsection (3)(c), and any modification made in contravention of this subsection is void.
company
“company” has the meaning given by section 4(1) of the Companies Act 1967;
For the purposes of this section and subject to subsections (9) and (10), creditors meant to be bound by the compromise or arrangement pursuant to the debt restructuring proposal are —
creditors of unsecured debts of the company; and
creditors of preferential debts of the company, if applicable.
Unless specifically excluded by this section, all creditors that are meant to be bound by the compromise or arrangement pursuant to the debt restructuring proposal are entitled to vote at the same meeting held for the purpose of seeking a decision, and are bound by the debt restructuring proposal (if approved) in accordance with and to the extent provided by this section.
The compromise or arrangement pursuant to the debt restructuring proposal is binding on a secured creditor —
secured creditor
“secured creditor”, in relation to a debtor, means a person holding a mortgage, pledge, charge, lien or other security on or against the property of the debtor or any part of such property as security for a debt due to the person from the debtor;
if the value of the creditor’s security interest is less than the value of the creditor’s admissible debts or claims — only to the extent of the difference between the values; and
if the value of the creditor’s security interest is equal to or more than the value of the creditor’s admissible debts or claims — only to the extent that the creditor consents to be bound.
The compromise or arrangement pursuant to the debt restructuring proposal does not prevent a secured creditor from realising or otherwise dealing with the creditor’s security interest, unless —
security
“security” means any mortgage, charge, pledge, lien or other security recognised by law;
the secured creditor has voted in favour of the debt restructuring proposal; and
such proposal prevents the secured creditor from realising or otherwise dealing with the security interest.
The following are not entitled to vote at the meeting referred to in subsection (2):
a creditor of the company that is —
a holding company, an ultimate holding company or a subsidiary of the company;
a director or shareholder of the company; or
a relative or spouse of a director or shareholder of the company;
a creditor of the company that is a subsidiary of another company of which the company is also a subsidiary.
For the purpose of subsection (11)(a)(iii), a creditor (A) is a relative of a director or shareholder of a company (B) if A is B’s brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant, treating —
director
“director” has the meaning given by section 4(1) of the Companies Act 1967;
any relationship of the half-blood as a relationship of the whole blood and the stepchild or adopted child of any person as that person’s child; and
an illegitimate child as the legitimate child of the child’s mother and reputed father.
A reference in subsection (11) to a spouse includes a former spouse and a reputed husband or wife.
The Restructuring Adviser must, within 7 days after the meeting of the creditors mentioned in subsection (2), publish the outcome of the meeting on the designated website.
designated website
“designated website” means the Internet website prescribed by regulations made under section 72V for the purpose of publishing notices to creditors and other persons under this Part;
Where the debt restructuring proposal is approved by the company’s creditors, the Restructuring Adviser must lodge a copy of the approved debt restructuring proposal with the Official Receiver and the Registrar of Companies, and notify every creditor of the company whose claim and address are provided by the company to the Restructuring Adviser and who is to be bound by the debt restructuring proposal, of the lodgment.
Official Receiver
“Official Receiver” means the Official Receiver appointed under section 17(1) and includes a Deputy Official Receiver, a Senior Assistant Official Receiver and an Assistant Official Receiver;
When the debt restructuring proposal is approved by the company’s creditors, the compromise or arrangement as provided by the proposal —
is effective as of the date of lodgment of the copy of the proposal with the Official Receiver and the Registrar of Companies; and
binds all the creditors of the company who are to be bound by the compromise or arrangement in accordance with and to the extent provided by this section.