Part 2 Board of entity may agree to enter into BDH

Schedule 13 Part 2: inserted, on 16 May 2020, by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act 2020 (2020 No 13).

5 Board of entity may agree to entity entering into BDH

(1)

The board of an entity may agree to the entity entering into BDH if,—

(a)

as at 31 December 2019, the entity was able to pay its debts as they became due in the normal course of business; and

(b)

at least 80% of the directors of the entity vote in favour of a resolution for the entity to enter into BDH; and

(c)

each director who votes in favour of the resolution has signed a certificate that—

(i)

states that, as at 31 December 2019, the entity was able to pay its debts as they became due in the normal course of business; and

(ii)

includes statements about the matters set out in subclause (2); and

(iii)

sets out the grounds for the opinions referred to in that subclause; and

(d)

each of the directors who vote in favour of the resolution are acting in good faith.

(2)

For the purposes of subclause (1)(c)(ii), the director must state that, in good faith, the director is of the opinion that,—

(a)

the entity has, or in the next 6 months is likely to have, significant liquidity problems; and

(b)

the liquidity problems are, or will be, a result of the effects of COVID-19 on the entity, its debtors, or its creditors; and

(c)

it is more likely than not that the entity will be able to pay its due debts on and after the date in subclause (3).

(3)

For the purposes of subclause (2)(c), the date is—

(a)

30 September 2021; or

(b)

any later date prescribed by the regulations.

(4)

For the purposes of the opinion required by subclause (2)(c), the director may have regard to—

(a)

the likelihood of trading conditions improving:

(b)

the likelihood of a proposed arrangement being approved by its creditors under this schedule (or of the entity reaching a compromise or other arrangement with its creditors):

(c)

any other matters they consider to be relevant.

(5)

Subclause (1)(a) and (c)(i) does not apply to an entity that was formed or established on or after 1 January 2020 but before 3 April 2020.

Schedule 13 clause 5: inserted, on 16 May 2020, by section 3 of the COVID-19 Response (Further Management Measures) Legislation Act 2020 (2020 No 13).

Schedule 13 clause 5(2)(c): 31 July 2022 is the date prescribed for the purposes of clause 5(2)(c) of Schedule 13, on 24 December 2020, by regulation 5 of the Companies (COVID-19—Business Debt Hibernation) Regulations 2020 (LI 2020/294).