Provisions the documents cite: Insolvency Act 1986 s.233B(1)–(10) and Schedule 4ZZA (exclusions); Corporate Insolvency and Governance Act 2020 s.14 (insertion; s.14(4) application) and s.15 (temporary exclusion for small suppliers, relevant period ended 30 June 2021); application to LLPs by the Limited Liability Partnerships Regulations 2001 reg 5 and Schedule 4; application to partnerships by the Insolvent Partnerships Order 1994 arts 4(3)(a), 6(5)(a), 8(5)(b) and 10(3)(b); CIGA 2020 Sch 12 paras 2–8 (consequential amendments)
What it requires
s.233B applies when a company becomes subject to a relevant insolvency procedure: a Part A1 moratorium comes into force; it enters administration; an administrative receiver is appointed (other than in succession); a Part 1 company voluntary arrangement takes effect; it goes into liquidation; a provisional liquidator is appointed (other than in succession); or a court order is made under Companies Act 2006 s.901C(1) summoning a meeting about a compromise or arrangement (s.233B(1)–(2)). A provision of a contract for the supply of goods or services to the company ceases to have effect when the company becomes subject to the procedure, if and to the extent that under it the contract or supply would terminate, or any other thing would take place, or the supplier would be entitled to terminate the contract or supply or do any other thing, because the company becomes subject to the procedure (s.233B(3)). Where the supplier is entitled to terminate because of an event occurring before the start of the insolvency period, and the entitlement arose before that period, it may not be exercised during the period (s.233B(4)). The supplier may nevertheless terminate the contract if the office-holder consents (administration, administrative receivership, liquidation or provisional liquidation), the company consents (any other procedure), or the court is satisfied that continuing the contract would cause the supplier hardship and grants permission (s.233B(5)); the same applies on a further procedure (s.233B(6)). The supplier must not make it a condition of supply after the procedure starts, or do anything having that effect, that outstanding charges for earlier supplies are paid (s.233B(7)). The insolvency period runs from the start of the procedure to the end defined for each procedure in s.233B(8). Schedule 4ZZA excludes, among others, essential supplies covered by s.233A in administration or a voluntary arrangement, contracts where the company or the supplier is an insurer, bank, electronic money institution, investment bank or firm, payment institution, payment system operator or infrastructure provider, recognised exchange, clearing house or CSD, or securitisation company (or does such things overseas), and financial contracts such as lending, financial leasing and guarantees. For a contractor or subcontractor supplying goods or services to a company, a term allowing termination because that company enters one of these procedures stops having effect when it does. s.233B was inserted on 26 June 2020 and applies where a company becomes subject to a procedure on or after that day, to contracts entered into before as well as after it (CIGA 2020 s.14(4)). Temporary exclusion — CIGA 2020 s.15 disapplied s.233B where the company became subject to the procedure during the relevant period, which ended with 30 June 2021 (s.15(2)(b) as substituted by S.I. 2021/375), and the supplier was then a small entity (at least two of: turnover not more than £10.2 million; balance sheet total not more than £5.1 million; not more than 50 employees); it does not apply to procedures starting after 30 June 2021. Extent shown by legislation.gov.uk: England, Wales and Scotland; CIGA 2020 ss.14 and 15 are headed "Great Britain". Who s.233B reaches, by kind of customer and procedure. Companies (England, Wales and Scotland): every procedure in s.233B(2) — Part A1 moratorium, administration, administrative receivership, company voluntary arrangement, liquidation, provisional liquidation and a Companies Act 2006 s.901C(1) meeting order — subject to the Schedule 4ZZA exclusions. Limited liability partnerships: the Limited Liability Partnerships Regulations 2001 reg 5(1)(a) applies Parts A1, I, II, III, IV, VI and VII of the Act to LLPs, reading references to a company as including an LLP (reg 5(2)(a)); Part VI contains s.233B and Schedule 3 makes no modification to it, so s.233B reaches an LLP entering a moratorium, a voluntary arrangement, administration, administrative receivership, liquidation or provisional liquidation. In Scotland the 2001 Regulations do not apply s.233B so far as it applies on the appointment of an administrative receiver (reg 5(3) and Schedule 4, entry inserted by CIGA 2020 Sch 12 para 6); CIGA Sch 12 para 7 makes the same entry in the Limited Liability Partnerships (Scotland) Regulations 2001, which were not read. Whether the s.233B(2)(g) Companies Act 2006 s.901C(1) route is available for an LLP was not established. Partnerships (England and Wales, Insolvent Partnerships Order 1994): partnership voluntary arrangement — s.233B and Schedule 4ZZA are applied expressly (art 4(3)(a), as amended by CIGA 2020 Sch 12 para 5); partnership administration — Part VI of the Act, which contains s.233B, is applied so far as it relates to the appointment of an administrator (art 6(5)(a)), but s.233B is not named; winding up of the partnership — Part VI is applied only to the winding up of a corporate member (arts 8(5)(b), 10(3)(b)), and s.233B is not applied to the partnership itself by name. For a partnership in administration or winding up, treat the protection as not stated expressly and take advice. Not applied: CIGA 2020 Sch 12 paras 2–4 and 8 provide that s.233B does not apply to building societies, friendly societies (winding up) or credit unions.
The instrument itself: https://www.legislation.gov.uk/ukpga/1986/45/section/233B. The summary above is our plain-English reading, not the text of the instrument — always work from the source.
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