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Section 685 of Insolvency Act CAP 53: Orders under sections 682 and 683: ancillary provisions

    

(1) An order under section 682 or 683 with respect to a transaction or preference entered into or given by a company may, subject to subsection (
2)—
(a) require property transferred as part of the transaction, or in connection with the giving of the preference, to be vested in the company;
(b) require the property to be so vested if it represents the application either of the proceeds of sale of property so transferred or of money so transferred;
(c) release or discharge (in whole or in part) any security given by the company;
(d) require any person to pay, in respect of benefits received from the company, such amounts to the relevant office-holder as the Court may specify;
(e) provide for any surety or guarantor whose obligations to a person were released or discharged (in whole or in part) under the transaction, or by the giving of the preference, to be subject to such new or revived obligations to the person as the Court considers appropriate; (f) provide—
(i) for security to be provided for the discharge of an obligation imposed by or arising under the order;
(ii) for such an obligation to be charged or secured on specified property; and
(iii) for the security or charge to have the same priority as a security or charge released or discharged (in whole or in part) under the transaction or by the giving of the preference; and
(g) provide for the extent to which a person whose property is vested by the order in the company, or on whom obligations are imposed by the order, is to be able to prove in the liquidation of the company for debts or other liabilities that arose from, or were released or discharged (in whole or in part) under or by, the transaction or the giving of the preference.
(3) An order under section 682 or 683 may affect the property of, or impose an obligation on, a person whether or not the person is the one with whom the relevant company entered into the transaction, or the person to whom the preference was given.
(4) In making such an order, the Court shall ensure that the order—
(a) does not detrimentally affect an interest in property that— (i) was acquired from a person other than the company; and
(ii) was acquired in good faith and for value, or detrimentally affect any interest that is derived from such an interest; and
(b) does not require a person who received a benefit from the transaction or preference in good faith and for value to pay an amount to the relevant office-holder, unless—
(i) the person was a party to the transaction; or
(ii) the payment is to be in respect of a preference given to that person at a time when the person was a creditor of the company.
(5) If a person has acquired an interest in property from a person other than the relevant company, or has received a benefit from the transaction or preference and, at the time of the acquisition or receipt, the person—
(a) had notice of the relevant surrounding circumstances and of the relevant proceedings; or
(b) was connected with, or was an associate of, either the relevant company or the person with whom that company entered into the transaction or to whom that company gave the preference,
the interest is, for the purposes of paragraph (a) or paragraph (b) of subsection (4), presumed to have been acquired, or the benefit to have been received, otherwise than in good faith.
(6) For the purposes of subsection (5)(a), the relevant surrounding circumstances, in relation to a company, are—
(a) the fact that the company entered into the transaction at an undervalue; or
(b) the circumstances that amounted to the giving of the preference by that company, and subsections (7) to (9) have effect to determine whether, for those purposes, a person has notice of the relevant proceedings.
(7) If section 682 or 683 applies because a company has entered administration, a person has notice of the relevant proceedings if the person has notice that—
(a) an administration application has been made;
(b) an administration order has been made;
(c) a copy of a notice of intention to appoint an administrator under section 534 or 541 has been lodged with the Court; or
(d) notice of the appointment of an administrator has been lodged under section 537 or 548.
(8) If section 683 or 684 applies because a liquidator had been appointed in respect of the company at the time when the appointment of an administrator of the company ended, a person has notice of the relevant proceedings if the person has notice that—
(a) an administration application has been made;
(b) an administration order has been made;
(c) a copy of a notice of intention to appoint an administrator under section 534 has been lodged with the Court;
(d) notice of the appointment of an administrator has been lodged under section 537 or 548; or (e) the company is in liquidation.
(9) If section 682 or 683 applies because a liquidator has been appointed in respect of the company at any other time, a person has notice of the relevant proceedings if the person has notice— (a) in a case where a liquidation order has been made in respect of the company—
(i) of the fact that an application for the appointment of the liquidator was made; or
(ii) of the fact that the company is in liquidation; and
(b) in any other case, of the fact that the company is in liquidation.
(10) Nothing in this section or sections 682 to 684 affects the availability of any other remedy, even in relation to a transaction or preference that the company had no power to enter into or give.
(11) Nothing in subsection (1) limits the Court's powers under sections 682(4) and 683(3).

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Disclaimer: This document is not to be taken as legal advise.

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