Companies Act 2014 section 549

Enforcement by creditor of liability: restrictions in that regard unless certain procedure employed to the benefit of third person

Section 549 restricts a creditor from enforcing a guarantee against a third party (the guarantor) unless the creditor first offers that guarantor the right to vote on any proposed scheme of arrangement relating to the company's debt.

• A creditor wishing to enforce a guarantee must first serve a written notice on the guarantor offering to transfer their voting rights on any proposed scheme of arrangement — this must be done at least 14 days before the creditors' meeting, or within 48 hours of receiving notice if less than 14 days' notice of the meeting is given
• If the guarantor accepts the offer, they simply present a copy of it to the examiner at the meeting and confirm acceptance — no formal assignment or other legal documentation is needed for the transfer to take effect
• Transferring the voting rights to the guarantor does not affect the creditor's separate right to object to the proposals before the court
• If the creditor fails to make the required offer, they lose the right to enforce the guarantee — unless no scheme of arrangement comes into effect and the creditor obtains court permission to proceed against the guarantor

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