1.5.2 Terms used in these Rules (other than terms defined in Schedule 4) have the same meanings as they have, from time to time, in the AIFC Insolvency Regulations, or the relevant provisions of those Regulations, unless the contrary intention appears.

Note: For definitions in the AIFC Insolvency Regulations applying to these Rules, see Schedule 3 of those Regulations. The definitions in that Schedule relevant to these Rules include the following:

· Administrative Receiver, in relation to a Company

· Administrator, in relation to a Company

· AFSA

· AIFC

· AIFC Regulations

· AIFC Rules

· AIFCA

· Company

· Contravention

· Court

· Creditors Voluntary Winding Up, in relation to a Company

· Document

· Exercise

· Fail

· Function

· Goes into Liquidation

· Insolvency, in relation to a Company

· Insolvency Practitioner

· Liquidator, in relation to a Company

· Members Voluntary Winding Up, in relation to a Company

· Nominee, in relation to a proposed Voluntary Arrangement for a Company

· Official Liquidator

· Person

· Provisional Liquidator, in relation to a Company

· Receiver, in relation to a Company

· Registrar of Companies (or Registrar)

· Supervisor, in relation to a Voluntary Arrangement for a Company

· Unable to Pay its Debts, in relation to a Company or Recognised Company

· Voluntary Arrangement

· Voluntary Winding Up

· Writing.

1.5.3 Subject to subrule 1.5.2, terms used in these Rules (other than terms defined in Schedule 4 or the AIFC Insolvency Regulations) have the same meanings as they have, from time to time, in the AIFC Companies Regulations or the AIFC Companies Rules, or the relevant provisions of those Regulations, unless the contrary intention appears.

Note: For definitions in the AIFC Companies Regulations applying to these Rules, see Schedule 1 of those Regulations. The definitions in that Schedule relevant to these Rules include the following:

· Acting Law of the AIFC

· Articles of Association

· Share

· Shareholder.

Note: For definitions in the AIFC Companies Rules applying to these Rules, see Schedule 4 of those Rules. The definitions in that Schedule relevant to these Rules include the following:

· Cell

· Cell Receiver

· Cell Receivership Order

· Cell Shares

· Cell Transfer Order

· Cellular Assets

· Protected Cell Company

· Non-Cellular Assets.

1.6. Administration of these Rules

These Rules are administered by the Registrar of Companies.

PART 2: VOLUNTARY ARRANGEMENTS

2.1. Preparation of proposal etc.

2.1.1 If the Directors of a Company wish to propose a Voluntary Arrangement under section 8 (Company arrangements) of the AIFC Insolvency Regulations, the Directors must appoint an Insolvency Practitioner under that section as the Nominee and prepare and give to the Nominee a proposal that includes the following matters:

(a) an estimate of the value of the Company’s assets (other than assets that are Excluded Property);

(b) a statement of the extent (if any) to which those assets are secured in favour of the Company’s creditors;

(c) a statement of the extent (if any) to which particular assets of the Company are to be excluded from the arrangement;

(d) particulars of any property, other than assets of the Company itself, that is proposed to be included in the arrangement, the source of the property, and the terms on which it is to be made available for inclusion;

(e) a statement of the nature and amount of the Company’s liabilities (other than liabilities in relation to Excluded Property) and, so far as it is within the Directors’ immediate knowledge, how those liabilities are proposed to be met, modified, postponed or otherwise dealt with under the arrangement, and, in particular:

(і) how it is proposed to deal with Preferential Creditors and creditors of the Company who are, or claim to be, secured; and

(ii) how Persons connected with the Company who are creditors are proposed to be treated under the arrangement; and

(iii) whether there are, to the Directors’ knowledge, any circumstances giving rise to the possibility that, if the Company were to go into liquidation, claims may be made under section 96 (Transactions at undervalue), 97 (Preferences) or 99 (Invalid security interests) of the AIFC Insolvency Regulations and, if any such circumstances exist, whether and, if so how, it is proposed under the arrangement to make provision for completely or partly indemnifying the Company in relation to the claims;

(f) for Excluded Property of the Company—the information mentioned in paragraphs (a), (b),

(d) and (e);

(g) a statement of whether any, and, if so, what, guarantees have been given of the Company’s debts by other Persons, and, if there are any such guarantees, which of the guarantors are Persons connected with the Company;

(h) a statement of the proposed duration of the arrangement;

(і) information about the proposed dates of distributions to creditors and estimates of the amounts of the distributions;

(j) a statement of how it is proposed to deal with the claims of any Persons who do not consent to the arrangement;

(k) a statement of the amount proposed to be paid to the Nominee for remuneration and expenses;

(l) a statement of how it is proposed that the Supervisor of the arrangement should be remunerated and the Supervisor’s expenses defrayed;

(m) a statement of whether, for the purposes of the arrangement, any guarantees are to be offered by Directors, or other Persons and, if so, whether any Security Interest is to be given or sought;

(n) a statement of how funds held for the purposes of the arrangement are to be banked, invested, or otherwise dealt with, pending distribution to creditors;

(o) a statement of how funds held for the purpose of payment to creditors, and not paid to creditors on the termination of the arrangement, are to be dealt with;

(p) a statement of how the business of the Company is proposed to be conducted during the course of the arrangement;

(q) details of any further credit facilities that are intended to be arranged for the Company, and a statement of how the debts arising from them are to be paid;

(r) a statement of the Functions to be Exercised by the Supervisor of the arrangement;

(s) a statement of whether it is likely that there will be other proceedings in other jurisdictions.

2.1.2 If the Company is an Authorised Person, the Directors must obtain the consent of the AFSA before giving the proposal to the Nominee.

2.2. Statement of affairs for proposal

2.2.1 The Directors of the Company must, within 7 days after the day their proposal is given to the Nominee under rule 2.1 (Preparation of proposal etc.) or any longer time that the Nominee may allow, give the Nominee a statement of the Company’s affairs (the statement of affairs).

2.2.2 The statement of affairs must include particulars of the matters mentioned in Schedule 3 (Required content for statement of affairs).

2.2.3 The statement of affairs must be made up to a date not earlier than 2 weeks before the day the proposal is given to the Nominee. However, the Nominee may allow an extension of that period to the nearest practicable date (not earlier than 2 months before that day).

2.2.4 Two or more Directors of the Company (or, if the Company has only 1 Director, the Director) must certify that the statement of affairs is correct to the best of the Directors’ (or Director’s) knowledge and belief.

2.3. Nominee may ask for additional information in relation to proposal

The Nominee may ask the Directors of the Company to provide any additional information that the Nominee considers necessary. The Directors must take all reasonable steps to comply with the request.

2.4. Calling meetings for proposed Voluntary Arrangement

2.4.1 Notice of a meeting called by the Nominee under section 10 (Calling of meetings for Voluntary Arrangement proposal) of the AIFC Insolvency Regulations must be accompanied by the following:

(a) a copy of the Directors’ proposal;

(b) a copy of the statement of affairs given to the Nominee under rule 2.2 (Statement of affairs for proposal) or, if the Nominee considers appropriate, a summary of it;

2.4.2 A summary under subrule 2.4.1(b) must include a list of creditors and the amounts of their debts.

2.5. Majority required at creditors meeting for proposed Voluntary Arrangement

At the meeting of the Company’s creditors called under section 10 (Calling of meetings for Voluntary Arrangement proposal) of the AIFC Insolvency Regulations, a resolution approving any proposal or modification is taken to have been passed only if it is passed by a majority of more than three-quarters in value of the creditors present in person or by Proxy and voting on the resolution.

2.6. Handover of property to Supervisor etc.

2.6.1 If an approved Voluntary Arrangement for the Company takes effect under section 12 (Effect of approval of Voluntary Arrangement proposal) of the AIFC Insolvency Regulations, the Directors, and other Persons connected with the Company with power to do so, must immediately do everything necessary to give the Supervisor possession of the assets included in the Voluntary Arrangement and, if applicable, give the Supervisor control of any Excluded Property included in the Voluntary Arrangement.

2.6.2 If the Company is in liquidation, the Supervisor must on taking possession of the assets either discharge any amount due to the Liquidator by way of remuneration or on account of fees, costs, charges and expenses properly incurred and payable under the AIFC Insolvency Regulations or these Rules or, before taking possession, give the Liquidator a written undertaking to discharge any amount due out of the first realisation of assets.

2.6.3 The Supervisor has a Security Interest in the assets (other than any Excluded Property) included in the Voluntary Arrangement for payment of any amount due to the Liquidator, subject only to the deduction from realisations by the Supervisor of the proper costs and expenses of the realisations.

2.6.4 The Supervisor must, from time to time, out of the realisation of assets (other than any Excluded Property) discharge all guarantees properly given by the Liquidator for the benefit of the Company and must pay all of the Liquidator’s expenses.

2.7. Supervisor’s duties in relation to Excluded Property

2.7.1 If the Company’s assets or liabilities include Excluded Property, the Supervisor of the Voluntary Arrangement must comply with any requirements applying to the Company under the AIFC Personal Property Regulations or any AFSA Rules in relation to the Excluded Property.

2.7.2 Without limiting subrule 2.7.1, the Supervisor must comply with any instruction made under section 37 (Right of Transfer against insolvent Investment Intermediary) of the AIFC Personal Property Regulations.

2.8. Supervisor’s accounts and reports

2.8.1 The Supervisor of the Voluntary Arrangement for the Company must keep accounts and records of the Supervisor’s acts and dealings in and in connection with the Voluntary Arrangement, including records of all receipts and payments

2.8.2 The Supervisor must, not less often than once in every 12 months beginning with the date of the Supervisor’s appointment, prepare an abstract of all receipts and payments of the Supervisor in and in connection with the Voluntary Arrangement, and send copies of it, accompanied by the Supervisor’s comments on the progress and efficacy of the arrangement, to the following:

(a) the Court;

(b) the Registrar of Companies;

(d) all of the Company’s creditors who are bound by the arrangement;

(e) the members of the Company who are bound by the arrangement;

(f) if the Company is not in liquidation—the Company’s auditors.

2.8.3 However, if in any12-month period the Supervisor makes no payments, and has no receipts, in or in connection with the Voluntary Arrangement, the Supervisor must at the end of that period send a statement to that effect to all the Persons mentioned in subrule 2.8.2.

2.9. Fees, costs, charges and expenses for Voluntary Arrangement

The fees, costs, charges and expenses that may be incurred for any of the purposes of the Voluntary Arrangement are:

(a) any disbursements made by the Nominee before the arrangement took effect, and any remuneration for the Nominee’s services agreed between the Nominee and the Company (or, as the case may be, the Administrator of the Company); and

(b) any fees, costs, charges or expenses that:

(і) are in accordance with the terms of the arrangement; or

(ii) would be payable, or correspond to those that would be payable, in a winding up.

2.10. Completion or termination of Voluntary Arrangement

2.10.1 Not later than 28 days after the day of the completion or termination of the Voluntary Arrangement, the Supervisor must send to the creditors and members of the Company who were bound by it notice that the Voluntary Arrangement has been fully implemented or has terminated.

2.10.2 The notice must be accompanied by a copy of a report by the Supervisor summarising all receipts and payments made by the Supervisor in or in connection with the Voluntary Arrangement,

explaining in relation to implementation of the arrangement any departure from the arrangement as it took effect, and, if the arrangement has terminated, explaining why the arrangement has terminated.

2.10.3 The Supervisor must, within the 28-day period mentioned in subrule 2.10.1, send a copy of the notice under that subrule and the report under subrule 2.10.2 to the Registrar of Companies and the Court.

2.10.4 The Supervisor may not vacate office until this rule has been complied with.

PART 3: MORATORIUM

3.1. Preparation of proposal by Directors to obtain a moratorium

3.1.1 If the Directors of a Company eligible for a moratorium under section 9 of the AIFC Insolvency Regulations intend to make a proposal for a Voluntary Arrangement and wish to take steps to obtain a moratorium for the Company, the Directors must prepare a proposal for the moratorium. The Document containing the proposal must explain why the Directors consider that a moratorium would be of benefit to creditors. The proposal may be accompanied by the supporting Documents that the Directors consider relevant. The proposal for the Voluntary Arrangement and the proposal for the moratorium may be made in the same Document.

3.1.2 The proposal for the moratorium and the supporting Documents (if any) must be given to the Nominee for the proposed Voluntary Arrangement or to a Person authorised to accept service of Documents on behalf of the Nominee. On receipt of the Documents, the Nominee must immediately acknowledgement receipt of them to the Directors. The acknowledgement must indicate the date the Documents were received by or on behalf of the Nominee.

3.1.3 The Nominee must apply to the Court for a moratorium. The Court may grant the application.

3.2. Advertisement and notice of beginning of moratorium

3.2.1 If the Court grants the Nominee’s application for a moratorium for the Company, the Nominee must, as soon as possible, advertise the coming into force of the moratorium once in the newspaper the Nominee considers most appropriate for ensuring that its coming into force comes to the notice of the Company’s creditors. The advertisement must specify the date the moratorium came into force.

3.2.2 The Nominee must, as soon as possible, also notify the Registrar of Companies, the Company, and any creditor of the Company of whose claim the Nominee is aware, of the coming into force of the moratorium. The notification must specify the date the moratorium came into force.

3.3. Advertisement and notice of end of moratorium

3.3.1 As soon as possible after the moratorium for the Company comes to an end, the Supervisor of the Voluntary Arrangement for the Company must advertise its coming to an end once in the newspaper the Supervisor considers most appropriate for ensuring that its coming to an end comes to the notice of the Company’s creditors. The advertisement must specify the date the moratorium came to an end.

3.3.2 The Supervisor must, as soon as possible, also notify the Registrar of Companies, the Court, the Company, and any creditor of the Company of whose claim the Supervisor is aware, of the moratorium coming to an end. The notification must specify the date the moratorium came to an end.

3.4. Eligibility for moratorium

3.4.1 A Company is eligible for a moratorium under section 9 (Moratorium) of the AIFC Insolvency Regulations unless:

(a) it is an Authorised Person and:

(і) effects or carries out contracts of insurance; or

(ii) accepts deposits; or

(iii) is an Investment Intermediary; or

(iv) holds Money to which any AFSA Rules relating to the holding of client Money apply; or

(b) it is the debtor under a Security Interest of a type prescribed under the AIFC Security Rules for this paragraph; or

(d) it is the subject of any kind of Insolvency Proceedings; or

(e) it has incurred any liability under an agreement of US$20 million or more; or

(f) it is a party to a capital market arrangement.

3.4.2 For subrule 3.4.1, an arrangement is a capital market arrangement if, under the arrangement:

(a) a party to the arrangement has issued securities (within the meaning given by the AIFC Security Regulations); and

(b) any of the following conditions is satisfied:

(і) a Person holds a Security Interest as nominee or agent for a Person who holds the securities;

(ii) at least one party guarantees or provides a Security Interest in relation to the performance of obligations of another party;

(iii) the arrangement involves a Future.

3.5. Effect of moratorium

During the period for which a moratorium is in force for a Company:

(a) no petition may be presented for the winding up of the Company; and

(b) no meeting of the Company may be called or requested, except with the consent of the Supervisor or with the leave of the Court and subject to the terms that the Court may decide; and

(d) no application may be made for the appointment of an Administrator for the Company, and no Administrator of the Company may be appointed; and

(e) no lessor or other Person to whom rent is payable may exercise any right of forfeiture in relation to premises let to the Company for a Failure by the Company to comply with its tenancy of the premises, except with the leave of the Court and subject to the terms that the Court may decide;

and

(f) no other steps may be taken to enforce any Security Interest in the Company’s property, or to repossess goods in the Company’s possession under any hire-purchase agreement, except with the leave of the Court and subject to the terms the Court may decide, and

(g) no other proceedings, and no execution or other legal process, may be commenced or continued, and no distress may be levied, against the Company or its property, except with the leave of the Court and subject to the terms that the Court may decide.

3.6. Security Interests in moratorium

3.6.1 If a moratorium is in force for a Company, a Secured Party under a Security Interest over substantially all of the property of the Company must not take any step to enforce the Security Interest until the moratorium has come to an end.

3.6.2 If a Security Interest is granted by a Company at a time when a moratorium is in force for the Company, the Security Interest may only be enforced if, at that time, there were reasonable grounds for believing that it would benefit the Company.

3.7. Requirements for invoices, obtaining credit etc. in moratorium

3.7.1 This rule applies in relation to a Company if a moratorium is in force for the Company.

3.7.2 Every invoice, order for goods, or business letter, issued by or on behalf of the Company, and on or in which the Company’s name appears, must also contain the Supervisor’s name and a statement that a moratorium is in force for the Company.

3.7.3 The Company must not obtain credit of US$500 or more from a Person who has not been told that a moratorium is in force for the Company.

3.7.4 The reference in subrule 3.7.3 to the Company obtain credit includes a reference to the following cases:

(a) if goods are bailed to the Company under a hire-purchase agreement, or goods are agreed to be sold to the Company under a conditional sale agreement;

(b) if the Company is paid in advance (whether or not in money) for the supply of goods or services.

3.7.5 The Company may only dispose of any of its property otherwise than in the ordinary course of business if:

(a) there are reasonable grounds for believing that the disposal will benefit the Company, and

(b) the disposal is approved by the Supervisor

3.7.6 The Company may only make a payment in relation to any debt or other liability of the Company in existence before the beginning of the moratorium if:

(a) there are reasonable grounds for believing that the payment will benefit the Company, and

(b) the payment is approved by the Supervisor.

3.7.7 Subrule 3.7.6 does not apply to a payment of any fees or costs, or to any reimbursement of expenses, expressly permitted under these Rules.

3.7.8 If any property of the Company is subject to a Security Interest, the Company may dispose of the property free of any interest of the Secured Party if the Secured Party consents or the Court gives leave.

3.7.9 Subrule 3.7.8 does not affect any right that the Secured Party may have in relation to the proceeds of the disposal of the property.

3.7.10 If any goods are in the Company’s possession under a hire-purchase agreement, the Company may dispose of the goods free of any interest of the owner of the goods if the owner consents or the Court gives leave.

3.7.11 A consent or leave under subrule 3.7.8 or 3.7.10 may be given on the condition that:

(a) the net proceeds of the disposal; and

(b) if the net proceeds are less than the amount that may be agreed, or decided by the Court, to be the net amount that would be realised on a sale of the property or goods in the open market by a willing vendor—the amount necessary to make good the difference;

must be applied towards discharging the amount secured by the Security Interest or payable under the hire-purchase agreement.

3.7.12 If the condition under subrule 3.7.11 relates to 2 or more Security Interests, the condition is taken to require the proceeds and amounts mentioned in that subrule to be applied towards discharging the amounts secured by the Security Interests in the order of their priorities.

3.7.13 The Company must not enter into any transaction, or give any Security Interest, subject to the business rules of an Authorised Market Institution.

3.7.14 The fact that the Company enters into a transaction in Contravention of this rule does not:

(a) make the transaction void; or

(b) make it to any extent unenforceable by or against the Company.

PART 4: RECEIVERSHIP

4.1. Types of receivership etc.

The types of receivership and the Functions of Receivers and Administrative Receivers are as set out in section 14 (Appointment and Functions of Receivers and Administrative Receivers) of the AIFC Insolvency Regulations.

4.2. Application of Rules to Company with Administrative Receiver

These Rules apply to a Company in Administration as if:

(a) the Exercise of the Administrative Receiver’s Functions in relation to the Company were the winding up of the Company; and

(b) all other necessary changes were made.

4.3. Notice of appointment etc.

4.3.1 If a Person is appointed as a Receiver or Administrative Receiver for a Company, the Person must publish once, in the newspaper the Person considers most appropriate for ensuring that it comes to the notice of the Company’s creditors, a notice that includes the following information:

(a) the registered name of the Company, as at the date of the appointment, and its registered number;

(b) any other name with which the Company has been registered in the 12 months before that date;

(c) any name under which the Company has traded at any time in those 12 months, if the name is substantially different from its then registered name;

(d) the Person’s name and address, and the date of the Person’s appointment;

(e) the name of the Person by whom the appointment was made;

(f) the date of the instrument appointing the Person, and a brief description the Person’s Functions under the instrument;

(g) if the Person is appointed as a Receiver—a brief description of the property of the Company over which the Person is appointed as a Receiver.

4.3.2 If the Company is an Authorised Person, the Person must also immediately notify the AFSA in Writing of the appointment and must not Exercise any of the Person’s Functions as Receiver or Administrative Receiver unless the AFSA as given its prior Written consent to the Exercise of the Functions.

4.4. Requirement to prepare statement of affairs etc.

4.4.1 An Administrative Receiver of a Company may require a statement of the Company’s affairs (the statement of affairs) to be prepared and given to the Administrative Receiver by the Directors of the Company and by the other Persons that the Administrative Receiver considers should be made responsible for the statement of affairs.

4.4.2 If the Administrative Receiver decides to require the statement of affairs to be prepared, the Administrative Receiver must, by notice given to each Director and other Person mentioned in subrule 4.4.1, require them to prepare the statement of affairs, and give it to the Administrative Receiver, within the period specified in the notice.

4.4.3 The statement of affairs prepared under this rule must include particulars of the matters mentioned in Schedule 3 (Required content for statement of affairs).

4.4.4 A Person making or contributing to the statement of affairs must be allowed, and paid by the Administrative Receiver out of the Administrative Receiver’s receipts, any expenses incurred by the Person in doing so that the Administrative Receiver considers reasonable.

4.5. Creditors committee

If a creditors committee is not established under section 22(1) (Creditors committee) of the AIFC Insolvency Regulations for a Company for which an Administrative Receiver is appointed, the Administrative Receiver may appoint a creditors committee for the Company.

4.6. Disposal of charged property

If the Court makes an order under section 18 (Power of Administrative Receiver to dispose of charged property) of the AIFC Insolvency Regulations in relation to property of a Company that is subject to a Security Interest, the Administrative Receiver of the Company must, as soon as possible, give notice of the order to the Person who is the holder of the Security Interest if the Person was not a party to the proceeding in which the order was made.

4.7. Receiver’s duties in relation to Excluded Property etc.

4.7.1 A Receiver or Administrative Receiver of a Company whose assets or liabilities include Excluded Property must comply with any requirements applying to the Company under the AIFC Personal Property Regulations, or any AFSA Rules, in relation to the Excluded Property.

4.7.2 Without limiting subrule 4.7.1, the Receiver or Administrative Receiver must comply with any instruction made under section 37 (Right of Transfer against insolvent Investment Intermediary) of the AIFC Personal Property Regulations.

4.8. Abstracts of receipts and payments by Administrative Receiver

An Administrative Receiver of a Company must prepare an abstract of all receipts and payments as Administrative Receiver, and send it to the Registrar of Companies, the Company and the Person by whom the Administrative Receiver was appointed:

(a) within 2 months after the end of the period of 12 after the date of the Administrative Receiver’s appointment, and after every subsequent period of 12 months; and

(b) within 2 months after ceasing to be Administrative Receiver.

4.9. Resignation of Receiver or Administrative Receiver

4.9.1 A Receiver or Administrative Receiver of a Company (the receiver) may resign by giving notice of the resignation in accordance with this rule.

4.9.2 The notice must be given to each of the following:

(a) the Person by whom the receiver was appointed;

(b) the Company or, if it is then in liquidation, its Liquidator;

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