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350. (a) Where a compromise or arrangement are
proposed between a company and its creditors or shareholders, or between a
company and any particular class of creditors or shareholders, the court may, on
the application of the company, of a creditor or of a shareholder, or of a
liquidator if the company is in liquidation, order the convening of a meeting of
such creditors or shareholders, as the case may be, in such manner as the court
shall order.
(b) The court to which
the application for a compromise or arrangement is submitted as referred to in
subsection (a) (in this Chapter “the plan”) may, if it is convinced that this
would assist in drawing up or approving a plan aimed at reviving the company,
grant an order stating that for a period that shall not exceed nine months, it
shall not be possible to continue with or commence any proceedings against the
company, other than with the permission of the court, and on conditions that it
may determine (in this Chapter “a stay of proceedings order”).
(c) A stay of proceedings
order may be granted in the presence of the applicant alone, if the court is
convinced that the circumstances of the case so require, provided that notice of
issue of the stay of proceedings order be published and be delivered to whomever
might be prejudiced thereby, as the court may order.
(d) A person prejudiced
by a stay of proceedings order granted in the presence of the applicant alone
may apply to the court that gave the order to revoke it; the court shall deal
with any such application for revocation submitted on the same date to be fixed
for that purpose, provided that the hearing take place within thirty days of the
date of grant of the order as aforesaid.
(e) The court may, for
special reasons that it shall specify in writing, deal with an application by a
creditor to revoke a stay of proceedings order even if the date laid down in
subsection (d) has passed, if it is of the opinion that a significant change has
taken place in the circumstances which may substantially prejudice the rights of
the creditor.
(f) Where a stay
of proceedings order is granted, the court shall permit:
(1) on the application of
a secured creditor – the realization of assets mortgaged to him;
(2) on the application of
a creditor who is the holder of a floating charge – the crystallization thereof;
(3) on the application of
a creditor who is the holder of a floating charge that has crystallized – the
realization of one or more such assets; provided the court is of the opinion
that no proper protection of the rights of the creditor in the asset has been
secured or that the realization of the mortgage or the crystallization of the
floating charge will not prejudice consolidation and approval of the plan.
(g) The period in which
proceedings are stayed under this section shall not be included in counting the
periods prescribed under the Companies Ordinance to the extent that the staying
of proceedings affects such periods, nor in reckoning the periods prescribed
under the Prescription Law, 5718-195813,
unless the court orders otherwise.
(h) In subsections (b) to
(g), “proceedings” – shall include a proceeding under the Execution Law
5727-196714, but shall
not include proceedings completed immediately prior to the grant of the order
even if the money received in respect of such proceeding has not yet been
transferred.
(i) If, in a meeting
referred to in subsection (a), the majority in number of the persons present and
voting together holding three quarters of the value represented at the vote
agree to the compromise or arrangement, and the court approves the compromise or
arrangement, they shall bind the company and all the creditors or shareholders,
or any class of them, as the case may be, and if the company is in liquidation,
the liquidator and any contributory.
(j) An order granted
under subsection (b) shall not be valid until a certified copy thereof is
submitted to the Registrar of Companies; a copy of the order shall be attached
to all copies of the articles of association of the company issued after the
granting of the order, and if the company does not have articles of association,
to every copy of the document under which the company is incorporated and
pursuant to which it acts, issued as aforesaid.
(k) For the purposes of
this section: “company” – any company that may be subject to winding up under
the Companies Ordinance; “settlement” – including reorganization of the share
capital by amalgamation of shares of different classes or by division of shares
into various classes, or by both such ways.
(l) The Minister may make
provisions regarding the implementation of this section, including provisions
regarding claims for debt and convening of meetings.
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