3.1. Preparation of proposal by Directors to obtain a moratorium

3.1.1 If the Directors of a Company eligible for a moratorium under section 9 of the AIFC Insolvency Regulations intend to make a proposal for a Voluntary Arrangement and wish to take steps to obtain a moratorium for the Company, the Directors must prepare a proposal for the moratorium. The Document containing the proposal must explain why the Directors consider that a moratorium would be of benefit to creditors. The proposal may be accompanied by the supporting Documents that the Directors consider relevant. The proposal for the Voluntary Arrangement and the proposal for the moratorium may be made in the same Document.

3.1.2 The proposal for the moratorium and the supporting Documents (if any) must be given to the Nominee for the proposed Voluntary Arrangement or to a Person authorised to accept service of Documents on behalf of the Nominee. On receipt of the Documents, the Nominee must immediately acknowledgement receipt of them to the Directors. The acknowledgement must indicate the date the Documents were received by or on behalf of the Nominee.

3.1.3 The Nominee must apply to the Court for a moratorium. The Court may grant the application.

3.2. Advertisement and notice of beginning of moratorium

3.2.1 If the Court grants the Nominee’s application for a moratorium for the Company, the Nominee must, as soon as possible, advertise the coming into force of the moratorium once in the newspaper the Nominee considers most appropriate for ensuring that its coming into force comes to the notice of the Company’s creditors. The advertisement must specify the date the moratorium came into force.

3.2.2 The Nominee must, as soon as possible, also notify the Registrar of Companies, the Company, and any creditor of the Company of whose claim the Nominee is aware, of the coming into force of the moratorium. The notification must specify the date the moratorium came into force.

3.3. Advertisement and notice of end of moratorium

3.3.1 As soon as possible after the moratorium for the Company comes to an end, the Supervisor of the Voluntary Arrangement for the Company must advertise its coming to an end once in the newspaper the Supervisor considers most appropriate for ensuring that its coming to an end comes to the notice of the Company’s creditors. The advertisement must specify the date the moratorium came to an end.

3.3.2 The Supervisor must, as soon as possible, also notify the Registrar of Companies, the Court, the Company, and any creditor of the Company of whose claim the Supervisor is aware, of the moratorium coming to an end. The notification must specify the date the moratorium came to an end.

3.4. Eligibility for moratorium

3.4.1 A Company is eligible for a moratorium under section 9 (Moratorium) of the AIFC Insolvency Regulations unless:

• (a) it is an Authorised Person and:

(i) effects or carries out contracts of insurance; or

(ii) accepts deposits; or

(iii) is an Investment Intermediary; or

(iv) holds Money to which any AFSA Rules relating to the holding of client Money apply; or

• (b) it is the debtor under a Security Interest of a type prescribed under the AIFC Security Rules for this paragraph; or
• (c) it or any of its property is subject to the business rules of an Authorised Market Institution; or
• (d) it is the subject of any kind of Insolvency Proceedings; or
• (e) it has incurred any liability under an agreement of US$20 million or more; or
• (f) it is a party to a capital market arrangement.

3.4.2 For subrule 3.4.1, an arrangement is a capital market arrangement if, under the arrangement:

• (a) a party to the arrangement has issued securities (within the meaning given by the AIFC Security Regulations); and
• (b) any of the following conditions is satisfied:

(i) a Person holds a Security Interest as nominee or agent for a Person who holds the securities;

(ii) at least one party guarantees or provides a Security Interest in relation to the performance of obligations of another party;

(iii) the arrangement involves a Future.

3.5. Effect of moratorium

During the period for which a moratorium is in force for a Company:

• (a) no petition may be presented for the winding up of the Company; and
• (b) no meeting of the Company may be called or requested, except with the consent of the Supervisor or with the leave of the Court and subject to the terms that the Court may decide; and
• (c) no resolution may be passed or order made for the winding up of the Company; and
• (d) no application may be made for the appointment of an Administrator for the Company, and no Administrator of the Company may be appointed; and
• (e) no lessor or other Person to whom rent is payable may exercise any right of forfeiture in relation to premises let to the Company for a Failure by the Company to comply with its tenancy of the premises, except with the leave of the Court and subject to the terms that the Court may decide; and
• (f) no other steps may be taken to enforce any Security Interest in the Company’s property, or to repossess goods in the Company’s possession under any hire-purchase agreement, except with the leave of the Court and subject to the terms the Court may decide, and
• (g) no other proceedings, and no execution or other legal process, may be commenced or continued, and no distress may be levied, against the Company or its property, except with the leave of the Court and subject to the terms that the Court may decide.

3.6. Security Interests in moratorium

3.6.1 If a moratorium is in force for a Company, a Secured Party under a Security Interest over substantially all of the property of the Company must not take any step to enforce the Security Interest until the moratorium has come to an end.

3.6.2 If a Security Interest is granted by a Company at a time when a moratorium is in force for the Company, the Security Interest may only be enforced if, at that time, there were reasonable grounds for believing that it would benefit the Company.

3.7. Requirements for invoices, obtaining credit etc. in moratorium

3.7.1 This rule applies in relation to a Company if a moratorium is in force for the Company.

3.7.2 Every invoice, order for goods, or business letter, issued by or on behalf of the Company, and on or in which the Company’s name appears, must also contain the Supervisor’s name and a statement that a moratorium is in force for the Company.

3.7.3 The Company must not obtain credit of US$500 or more from a Person who has not been told that a moratorium is in force for the Company.

3.7.4 The reference in subrule 3.7.3 to the Company obtain credit includes a reference to the following cases:

• (a) if goods are bailed to the Company under a hire-purchase agreement, or goods are agreed to be sold to the Company under a conditional sale agreement;
• (b) if the Company is paid in advance (whether or not in money) for the supply of goods or services.

3.7.5 The Company may only dispose of any of its property otherwise than in the ordinary course of business if:

• (a) there are reasonable grounds for believing that the disposal will benefit the Company, and
• (b) the disposal is approved by the Supervisor

3.7.6 The Company may only make a payment in relation to any debt or other liability of the Company in existence before the beginning of the moratorium if:

• (a) there are reasonable grounds for believing that the payment will benefit the Company, and
• (b) the payment is approved by the Supervisor.

3.7.7 Subrule 3.7.6 does not apply to a payment of any fees or costs, or to any reimbursement of expenses, expressly permitted under these Rules.

3.7.8 If any property of the Company is subject to a Security Interest, the Company may dispose of the property free of any interest of the Secured Party if the Secured Party consents or the Court gives leave.

3.7.9 Subrule 3.7.8 does not affect any right that the Secured Party may have in relation to the proceeds of the disposal of the property.

3.7.10 If any goods are in the Company’s possession under a hire-purchase agreement, the Company may dispose of the goods free of any interest of the owner of the goods if the owner consents or the Court gives leave.

3.7.11 A consent or leave under subrule 3.7.8 or 3.7.10 may be given on the condition that:

• (a) the net proceeds of the disposal; and
• (b) if the net proceeds are less than the amount that may be agreed, or decided by the Court, to be the net amount that would be realised on a sale of the property or goods in the open market by a willing vendor—the amount necessary to make good the difference; must be applied towards discharging the amount secured by the Security Interest or payable under the hire-purchase agreement.

3.7.12 If the condition under subrule 3.7.11 relates to 2 or more Security Interests, the condition is taken to require the proceeds and amounts mentioned in that subrule to be applied towards discharging the amounts secured by the Security Interests in the order of their priorities.

3.7.13 The Company must not enter into any transaction, or give any Security Interest, subject to the business rules of an Authorised Market Institution.

3.7.14 The fact that the Company enters into a transaction in Contravention of this rule does not:

• (a) make the transaction void; or
• (b) make it to any extent unenforceable by or against the Company.