Criminal Liability under the Insolvency Rules 1986

Publication Date01 August 1987
Date01 August 1987
AuthorD. W. Fox
DOI10.1177/002201838705100304
SubjectComment
COMMENT
CRIMINAL LIABILITY UNDER THE INSOLVENCY RULES
1986
An analysis
of
the multiplicity
of
criminal offences covered by the
Insolvency Act
1986
(“I.,.”) appears at
51
J.C.L.
197.
In fact,
to
add to the long list
of
offences in the LA., several further offences
appear in the new Insolvency Rules which, along with the I.A.,
became operative on
29
December
1986.
This note therefore
supplements the above-mentioned article, and indicates the
criminal liability aspects
of
the Insolvency Rules
1986
(“I.,.”).
The first
of
these offences is set out in rule
1.30,
viz: “A person
being a past or present officer
of
a company commits an offence if he
makes any false representation
or
commits any other fraud for the
purpose
of
obtaining the approval
of
the company’s members or
creditors to a proposal for a voluntary arrangement under Part I
of
the [LA.].”
A “voluntary arrangement” is a proposal which, by section
1
of
the I.A., the directors (or, in appropriate circumstances,
administrators or liquidators; see I.A.
s.
1(3)),
may, except in
specified situations, make to a
“. .
.
company and to its creditors for
a composition in satisfaction
of
its debts or a scheme
of
arrangement
of
its affairs.
.
.
.
For the purpose
of
this provision “officer” includes “shadow
director”; see ruie
1.30(2);
shadow director means
“.
. .
a person in
accordance with whose directions or instructions the directors
of
the
company are accustomed to act (but
so
that a person is not deemed a
shadow director by reason only that the directors act on advice
given by him in a professional capacity)” (I.A.
s.
251).
The maximum punishment for infringement
of
rule
1.30
is, on
conviction on indictment, seven years imprisonment or a fine
of
unspecified amount, or both, or, on summary conviction,
six
months imprisonment or “the statutory maximum” fine (currently
f2,000;
Magistrates’ Courts Act
1980
and S.I.
1984
No.
447),
or
both (See
I.R.
Sched
5).
The next two offences contained in the I.R. apply respectively to
administrators (r.
2.52(4))
and administrative receivers (r.
3.32(5))
303
.,

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