Liabilities (War-Time Adjustment) Act 1941
| Jurisdiction | UK Non-devolved |
| Citation | 1941 c. 24 |
| Year | 1941 |
Liabilities (War-Time Adjustment) Act, 1941
(4 & 5 Geo. 6.) CHAPTER 24.
An Act to provide for the arrangement or the adjustment and settlement of the affairs of persons financially affected by war circumstances; to amend the Courts (Emergency Powers) Acts, 1939 and 1940, and the Possession of Mortgaged Land (Emergency Provisions) Act, 1939; and for purposes connected with the matters aforesaid.
[12th June 1941]
Be it enacted by the King's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Part I.
Adjustment of Liabilities.
Liabilities Adjustment Officers.
1 Services of liabilities adjustment officers in effecting schemes of arrangement.
(1) Any person who is in serious financial difficulties owing to war circumstances may apply to an officer appointed under this Part of this Act, to be known as a ‘liabilities adjustment officer,’ for advice and assistance in enabling him to arrive at an equitable and reasonable scheme of arrangement with his creditors and, in particular, at such a scheme of arrangement as will enable him, if he carries on a business or would, but for war circumstances, carry on a business, to preserve that business or to recover it when circumstances permit; and the liabilities adjustment officer shall give his services accordingly in any case where he considers that they may be of use.
(2) Where any scheme of arrangement is effected through the services of a liabilities adjustment officer, being a scheme to which the debtor and all the creditors who have provable debts and to whom notice has been given in accordance with rules made under this Part of this Act assent, the officer shall approve the scheme, and, if he is unable to effect a scheme to which the debtor and all the said creditors assent, he may approve any scheme appearing to him to be equitable and reasonable and to which the debtor and a majority in number and in value of such of the said creditors whose debts have been proved assent, and any scheme so approved shall, subject to the following provisions of this section, be binding on all the said creditors, so far as their provable debts are concerned:
Provided that—
(a ) where any of the said creditors has a debt which would be entitled to be paid in priority under subsection (1) of section thirty-three of the Bankruptcy Act, 1914 , if the debtor were bankrupt, a scheme of arrangement shall not be approved under this section unless that creditor assents thereto or the scheme secures the payment of the debt with the like degree of priority;
(b ) a scheme of arrangement, other than a scheme made with the assent of the debtor and all the said creditors, shall not be approved under this section except in a case in which the court would have jurisdiction to make a liabilities adjustment order under this Part of this Act;
(c ) a scheme of arrangement approved under this section shall not, except so far as may be expressly provided by the scheme with the assent of the creditor concerned, release the debtor from any debt or liability from which he would not be released by an order of discharge made under this Part of this Act.
(3) A scheme of arrangement approved under this section may provide for the composition of debts, the postponement of payment of debts, the assignment or charging of any property of the debtor in favour of the creditors, and the management or disposal of the debtor's business (if any) or any other part of his property, and may, with the assent of the other parties thereto, vary the terms of any lease, mortgage or contract to which the debtor is a party.
(4) Subject as hereinafter provided, any scheme of arrangement approved under this section shall be deemed to have been duly made and approved in accordance with the provisions thereof:
Provided that any creditor who has not assented to the scheme may appeal to the court against the approval thereof on the ground that it contravenes the provisions of this section or that it is inequitable or unreasonable, and the court may on any such appeal vary or revoke the scheme, without prejudice to the validity of anything done in the meantime.
(5) Where it appears that any scheme of arrangement approved under this section does not bind any creditor who has a provable debt by reason of the fact that the creditor was not given the prescribed notice, that creditor, or any creditor who is bound by the scheme, or the liabilities adjustment officer, may apply to the court to extend the scheme, with such variations as may be necessary, to the creditor not bound thereby or to revoke the scheme and the court may, if it thinks fit, extend or revoke the scheme accordingly.
(6) Any scheme of arrangement approved under this section may be enforced by the court on the application of any creditor bound thereby, or, in a case where the scheme is being administered by the liabilities adjustment officer, on the application of that officer, and any disobedience of an order of the court made on any such application shall be a contempt of court, and may be punished accordingly.
(7) if the debtor fails to comply with any such scheme of arrangement, or if it appears to the court that the scheme cannot for any sufficient reason proceed without undue delay or without injustice to the creditors or to the debtor, or that the debtor is guilty of any act or omission which would constitute an offence under this Part of this Act or has in any respect failed to act in complete good faith towards his creditors, the court may, if it thinks fit, on the application of the liabilities adjustment officer or of any creditor bound by the scheme or, if the ground is injustice to the debtor, on his application, revoke the scheme, but without prejudice to the validity of anything done in the meantime.
(8) The revocation of a scheme of arrangement by the court under this section shall be without prejudice to the making of a new scheme of arrangement, and the court may give directions to the liabilities adjustment officer with respect to the making of a new scheme.
(9) Where any scheme of arrangement is approved under this section, the liabilities adjustment officer shall signify his approval in writing on the instrument effecting the scheme, and every scheme so approved shall be registered in the prescribed manner.
(10) Nothing in the Deeds of Arrangement Act, 1914 , shall apply to a scheme approved under this section.
2 Appointment, services, salaries and staff of liabilities adjustment officers.
(1) The Lord Chancellor shall appoint at least one liabilities adjustment officer for every county court district in which it appears to him that the services of such an officer are needed, and shall appoint such subordinate officers and servants as appear to him to be necessary; and the Lord Chancellor may dismiss any liabilities adjustment officer and any such subordinate officer or servant.
(2) The services of liabilities adjustment officers under this Part of this Act shall be such as may be prescribed, and may include assistance in arranging and providing facilities for meetings of creditors, and presiding at such meetings; and if any scheme of arrangement approved under the last foregoing section provides for the administration thereof by the liabilities adjustment officer, the services of that officer shall be available for the purpose to such extent as may be prescribed.
(3) There shall be paid to liabilities adjustment officers and to any such subordinate officers and servants such salaries or remuneration as the Treasury may determine and the salaries or remuneration and the expenses of any such officers and servants shall be defrayed out of moneys provided by Parliament.
Liabilities Adjustment Proceedings.
3 Application for adjustment of debtor's affairs.
(1) An application may be made to the court for the adjustment and settlement under this Part of this Act of the affairs of any person, on the ground that, owing to war circumstances,—
(a ) he is unable to pay his accrued debts or will be unable, after payment of his accrued debts (if any), to meet, as they fall due, any future liabilities in respect of obligations already incurred; or
(b ) is in such a position that, if he were required to pay his accrued debts and to meet, as they fall due, any such future liabilities as aforesaid, he would have no reasonable prospect of preserving or recovering his business, or would otherwise lose his means of livelihood:
and any such application may be made—
(i) by the debtor;
(ii) by any creditor who is prevented, by reason of the provisions of Regulation four or paragraph (2) of Regulation six of the Defence (Evacuated Areas) Regulations, 1940, from commencing or prosecuting any proceedings or exercising any remedy in respect of a debt which would be a provable debt; or
(iii) in a case where the debtor has been granted and is still enjoying relief under section one of the Courts (Emergency Powers) Act, 1939 , by any creditor who has a debt which would be a provable debt.
(2) Where it appears to the court that a prima facie case has been made out as to the matters specified in paragraph (a ) or paragraph (b ) of the last foregoing subsection, the court may make an order, to be known as a ‘protection order’, and, while any such order is in force,—
(a ) any proceedings against the debtor or his property in respect of any provable debt and any proceedings against the debtor for the recovery of possession of land or of goods let under a...
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