Section 4: Decisions of the company and its creditors., Insolvency Act 1986

This section applies where, under section 3—

a meeting of the company is summoned to consider the proposed voluntary arrangement, and

the company's creditors are asked to decide whether to approve the proposed voluntary arrangement.

The company and its creditors may approve the proposed voluntary arrangement with or without modifications.

Neither the company nor its creditors may approve any proposal or modification which affects the right of a secured creditor of the company to enforce his security, except with the concurrence of the creditor concerned.

Subject as follows, neither the company nor its creditors may approve any proposal or modification under which—

any preferential debt of the company is to be paid otherwise than in priority to such of its debts as are not preferential debts, ...

any ordinary preferential debt of the company is to be paid otherwise than in priority to any secondary preferential debts that it may have,

a preferential creditor of the company is to be paid an amount in respect of an ordinary preferential debt that bears to that debt a smaller proportion than is borne to another ordinary preferential debt by the amount that is to be paid in respect of that other debt , ...

a preferential creditor of the company is to be paid an amount in respect of a secondary preferential debt that bears to that debt a smaller proportion than is borne to another secondary preferential debt by the amount that is to be paid in respect of that other debt. or

in the case of a company which is a relevant financial institution (see section 387A), any non-preferential debt is to be paid otherwise than in accordance with the rules in section 176AZA(2) or (3).

However, ... such a proposal or modification may be approved with the concurrence of the ... creditor concerned.

Subject to subsection (4B), where the nominee's report under section 2(2) is submitted to the court before the end of the period of 12 weeks beginning with the day after the end of any moratorium for the company under Part A1, neither the company nor its creditors may approve any proposal or modification under which the following are to be paid otherwise than in full—

moratorium debts (within the meaning given by section 174A);

priority pre-moratorium debts (within the meaning given by section 174A).

Subsection (4A) does not prevent the approval of such a proposal or modification with the concurrence of the creditor concerned.

Subject as above, the meeting of the company and the qualifying decision procedure shall be conducted in accordance with the rules.

After the conclusion of the company meeting in accordance with the rules, the chairman of the meeting shall report the result of the meeting to the court, and, immediately after reporting to the court, shall give notice of the result of the meeting to such persons as may be prescribed.

After the company's creditors have decided whether to approve the proposed voluntary arrangement the person who sought the decision must—

report the creditors' decision to the court, and

immediately after reporting to the court, give notice of the creditors' decision to such persons as may be prescribed.

References in this section to preferential debts , ordinary preferential debts, secondary preferential debts and preferential creditors are to be read in accordance with section 386 in Part XII of this Act.

Section 4: Decisions of the company and its creditors.

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