PART VIII

Receivers

170. —The Principal Act is hereby amended by the substitution for section 315 of the following section—

“315.—(1) None of the following persons shall be qualified for appointment as receiver of the property of a company—

(a) an undischarged bankrupt;

(b) a person who is, or who has within 12 months of the commencement of the receivership been, an officer or servant of the company;

(c) a parent, spouse, brother, sister or child of an officer of the company;

(d) a person who is a partner of or in the employment of an officer or servant of the company;

(e) a person who is not qualified by virtue of this subsection for appointment as receiver of the property of any other body corporate which is that company's subsidiary or holding company or a subsidiary of that company's holding company, or would be so disqualified if the body corporate were a company.

References in this subsection to an officer or servant of the company include references to an auditor.

(2) If a receiver of the property of a company becomes disqualified by virtue of this section, he shall thereupon vacate his office and give notice in writing within 14 days to—

(a) the company;

(b) the registrar of companies;

(c) (i) the debenture-holder, if the receiver was appointed by a debenture-holder, or

(ii) the court, if the receiver was appointed by the court, that he has vacated it by reason of such disqualification.

(3) Subsection (2) is without prejudice to sections 107, 319 (2) and 321.

(4) Nothing in this section shall require a receiver appointed before the commencement of section 170 of the Companies Act, 1990, to vacate the office to which he was so appointed.

(5) Any person who acts as a receiver when disqualified by this section from so doing or who fails to comply with subsection (2), if that subsection applies to him, shall be guilty of an offence and shall be liable—

(a) on summary conviction, to a fine not exceeding £1,000 and, for continued contravention, to a daily default fine not exceeding £50;

(b) on conviction on indictment, to a fine not exceeding £5,000 and, for continued contravention, to a daily default fine not exceeding £250.”.

171. —Section 316 of the Principal Act is hereby amended by the substitution for subsection (1) of the following subsections—

“(1) Where a receiver of the property of a company is appointed under the powers contained in any instrument, any of the following persons may apply to the court for directions in relation to any matter in connection with the performance or otherwise by the receiver of his functions, that is to say—

(a) (i) the receiver;

(ii) an officer of the company;

(iii) a member of the company;

(iv) employees of the company comprising at least half in number of the persons employed in a full-time capacity by the company;

(v) a creditor of the company; and

(b) (i) a liquidator;

(ii) a contributory;

and on any such application, the court may give such directions, or make such order declaring the rights of persons before the court or otherwise, as the court thinks just.

(1A) An application to the court under subsection (1), except an application under paragraph (a) (i) of that subsection, shall be supported by such evidence that the applicant is being unfairly prejudiced by any actual or proposed action or omission of the receiver as the court may require.

(1B) For the purposes of subsection (1), ‘creditor’ means one or more creditors to whom the company is indebted by more, in aggregate, than £10,000.”.

172. —The Principal Act is hereby amended by the insertion after section 316 of the following section—

“316A.—(1) A receiver, in selling property of a company, shall exercise all reasonable care to obtain the best price reasonably obtainable for the property as at the time of sale.

(2) Notwithstanding the provisions of any instrument—

(a) it shall not be a defence to any action or proceeding brought against a receiver in respect of a breach of his duty under subsection (1) that the receiver was acting as the agent of the company or under a power of attorney given by the company; and

(b) notwithstanding anything in section 316 (2), a receiver shall not be entitled to be compensated or indemnified by the company for any liability he may incur as a result of a breach of his duty under this section.

(3) (a) A receiver shall not sell by private contract a non-cash asset of the requisite value to a person who is, or who, within three years prior to the date of appointment of the receiver, has been, an officer of the company unless he has given at least 14 days' notice of his intention to do so to all creditors of the company who are known to him or who have been intimated to him.

(b) In this subsection—

(i) ‘non-cash asset’ and ‘requisite value’ have the meanings assigned to them by section 29 of the Companies Act, 1990, and

(ii) ‘officer’ includes a person connected, within the meaning of section 26 of the Companies Act, 1990, with a director, and a shadow director.”.

173. —Section 320 of the Principal Act is hereby amended by the substitution for subsection (5) of the following subsection—

“(5) If any person to whom subsection (2) applies makes default in complying with the requirements of this section, he shall, unless he can prove to the satisfaction of the court that it was not possible for him to comply with the requirements of the section, be liable—

(a) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding £1,000 or to both; or

(b) on conviction on indictment, to imprisonment for a term not exceeding three years or to a fine not exceeding £5,000 or to both.”.

174. —The Principal Act is hereby amended by the insertion after section 320 of the following section—

“320A.—Where, in contravention of section 319 (1) (b) and section 320, a statement of affairs is not submitted to the receiver as required by those provisions, the court may, on the application of the receiver or any creditor of the company, and notwithstanding the provisions of section 320 (5) (inserted by section 173 of the Companies Act, 1990), make whatever order it thinks fit, including an order compelling compliance with section 319 and section 320.”.

175. —The Principal Act is hereby amended by the insertion after section 322 of the following section—

“322A.—(1) The court may, on cause shown, remove a receiver and appoint another receiver.

(2) Notice of such proceedings shall be served on the receiver and on the person who appointed him not less than 7 days before the hearing of such proceedings and, in any such proceedings, the receiver and the person who appointed him may appear and be heard.”.

176. —The Principal Act is hereby amended by the insertion after section 322 of the following section—

“322B.—(1) On the application of the liquidator of a company that is being wound up (other than by means of a members' voluntary winding up) and in respect of which a receiver has been appointed (whether before or after the commencement of the winding up), the court may—

(a) order that the receiver shall cease to act as such from a date specified by the court, and prohibit the appointment of any other receiver; or

(b) order that the receiver shall, from a date specified by the court, act as such only in respect of certain assets specified by the court.

An order under this subsection may be made on such terms and conditions as the court thinks fit.

(2) The court may from time to time, on an application made either by the liquidator or by the receiver, rescind or amend an order made under subsection (1).

(3) A copy of an application made under this section shall be served on the receiver and on the person who appointed him not less than 7 days before the hearing of the application, and the receiver and any such party may appear before and be heard by the court in respect of the application.

(4) Except as provided in subsection (1), no order made under this section shall affect any security or charge over the undertaking or property of the company.”.

177. —The Principal Act is hereby amended by the insertion after section 322 of the following section—

“322C.—(1) A receiver of the property of a company appointed under the powers contained in any instrument may resign, provided he has given one month's notice thereof to—

(a) the holders of floating charges over all or any part of the property of the company;

(b) the company or its liquidator; and

(c) the holders of any fixed charge over all or any part of the property of the company.

(2) A receiver appointed by the court may resign only with the authority of the court and on such terms and conditions, if any, as may be laid down by the court.

(3) If any person makes default in complying with the requirements of this section, he shall be liable to a fine not exceeding £1,000.”.

178. —The provisions of section 139 shall, with the necessary modifications, apply to a company in receivership as if the references therein to the liquidator and to winding up were construed as references to the receiver and to receivership.

179. —Section 299 (2), (4) and (5) of the Principal Act shall apply, with the necessary modifications, to receivers as it applies to liquidators.