Companies Act 2014 section 1164

Protection of creditors and allocation of liabilities

Section 1164 protects creditors of companies involved in a division and sets out how unallocated liabilities of the transferor company are to be dealt with.

• A creditor who can credibly demonstrate that a proposed division would put their debt or claim at risk, and who has not received adequate safeguards, may object to the court's confirmation of the division.
• The court may draw up a list of objecting creditors and, where a listed creditor does not consent to the division, may dispense with that consent provided payment of the debt or claim is secured by the company or a successor company.
• Where a liability of the transferor company is not allocated in the common draft terms of division and its allocation cannot be determined from those terms, it becomes the joint and several liability of all successor companies.
• Any liability incurred by the transferor company on or after the date of the common draft terms, and not provided for in those terms, also becomes the joint and several liability of the successor companies, unless the court directs otherwise.