Banking Act 2009

Process

141Bank administration order

(1)A bank administration order is an order appointing a person as the bank administrator of a bank.

(2)A person is eligible for appointment as a bank administrator if qualified to act as an insolvency practitioner.

(3)An appointment may be made only if the person has consented to act.

(4)A bank administration order takes effect in accordance with its terms; and—

(a)the process of a bank administration order having effect may be described as “bank administration” in relation to the bank, and

(b)while the order has effect the bank may be described as being “in bank administration”.

142Application

(1)An application for a bank administration order may be made to the court by the Bank of England.

(2)An application must nominate a person to be appointed as the bank administrator.

(3)The bank must be given notice of an application, in accordance with rules under section 411 of the Insolvency Act 1986 (as applied by section 160 below).

143Grounds for applying

(1)The Bank of England may apply for a bank administration order in respect of a bank if the following conditions are met.

(2)Condition 1 is that the Bank of England has made or intends to make a property transfer instrument in respect of the bank in accordance with section 11(2) or 12(2).

(3)Condition 2 is that the Bank of England is satisfied that the residual bank—

(a)is unable to pay its debts, or

(b)is likely to become unable to pay its debts as a result of the property transfer instrument which the Bank intends to make.

144Grounds for making

(1)The court may make a bank administration order if satisfied that the conditions in section 143 were met.

(2)On an application for a bank administration order the court may—

(a)grant the application,

(b)adjourn the application (generally or to a specified date), or

(c)dismiss the application.

145General powers, duties and effect

(1)A bank administrator may do anything necessary or expedient for the pursuit of the Objectives in section 137.

(2)The following provisions of this section provide for—

(a)general powers and duties of bank administrators (by application of provisions about administrators), and

(b)the general process and effects of bank administration (by application of provisions about administration).

(3)The provisions set out in the Tables apply in relation to bank administration as in relation to administration, with—

(a)the modifications set out in subsection (4),

(b)any other modification specified in the Tables, and

(c)any other necessary modification.

(4)The modifications are that—

(a)a reference to the administrator is a reference to the bank administrator,

(b)a reference to administration is a reference to bank administration,

(c)a reference to an administration order is a reference to a bank administration order,

(d)a reference to a company is a reference to the bank,

(e)a reference to the purpose of administration is a reference to the Objectives in section 137, and

(f)in relation to provisions of the Insolvency Act 1986 other than Schedule B1, the modifications in section 103 above apply (but converting references into references to bank administration or administrators rather than to bank insolvency or liquidators).

(5)Powers conferred by this Act, by the Insolvency Act 1986 (as applied) and the Companies Acts are in addition to, and not in restriction of, any existing powers of instituting proceedings against a contributory or debtor of a bank, or the estate of any contributory or debtor, for the recovery of any call or other sum.

(6)A reference in an enactment or other document to anything done under a provision applied by this Part includes a reference to the provision as applied.

TABLE 1 OF APPLIED PROVISIONS
SCHEDULE B1 TO THE INSOLVENCY ACT 1986
Provision of Schedule B1SubjectModification or comment
Para. 40(1)(a)Dismissal of pending winding-up petition
Para. 41Dismissal of administrative or other receiver
Para. 42Moratorium on insolvency proceedingsIgnore sub-paras. (4) and (5).
Para. 43Moratorium on other legal process
(a)

In the case of bank administration following transfer to a bridge bank, unless the Bank of England has given an Objective 1 Achievement Notice consent of the bank administrator may not be given for the purposes of para. 43 without the approval of the Bank of England.

(b)

In the case of bank administration following transfer to a bridge bank, unless the Bank of England has given an Objective 1 Achievement Notice, in considering whether to give permission under sub-para. (6) to a winding-up the court must have regard to the Objectives in section 137.

(c)

In considering whether to give permission for the purposes of para. 43 the court must have regard to the Objectives in section 137.

Para. 44(1)(a) and (5)Interim moratorium
Para. 46Announcement of appointmentIgnore sub-para. (6)(b) and (c).
Paras. 47 & 48Statement of affairs
Para. 49Administrator’s proposals
(a)

Para. 49 does not apply unless the Bank of England has given an Objective 1 Achievement Notice; for bank administrator’s proposals before the Bank of England has given an Objective 1 Achievement Notice, see section 147.

(b)

Treat the reference in sub-para. (1) to the purpose of administration as a reference to Objective 2.

(c)

Before making proposals under sub-para. (1) in the case of bank administration following transfer to a bridge bank, the bank administrator must consult the Bank of England about the chances of a payment to the residual bank from a scheme established by resolution fund order under section 49(3).

(d)

Treat the reference in sub-para. (2)(b) to the objective mentioned in para. 3(1)(a) or (b) as a reference to Objective 2(a).

(e)

Ignore sub-para.(3)(b).

(f)

Treat references in sub-para. (5) to the company’s entering administration as references to satisfaction of the condition in para. (a) above.

Paras. 50–58Creditors' meeting
(a)

Treat references in para. 51(2) to the company’s entering administration as references to the giving of an Objective 1 Achievement Notice.

(b)

The bank administrator may comply with a request under para. 56(1)(a) only if satisfied that it will not prejudice pursuit of Objective 1 in section 137.

(c)

A creditors' meeting may not establish a creditors' committee in reliance on para. 57 until the Bank of England has given an Objective 1 Achievement Notice.

(d)

Until that time the Bank of England shall have the functions of the creditors' committee.

Para. 59General powersA bank administrator may not rely on para. 59 (or subsection (1) above) for the purpose of recovering property transferred by property transfer instrument.
Para. 60 and Schedule 1General powers
(a)

The exercise of powers under Schedule 1 is subject to section 137(2).

(b)

In the case of bank administration following transfer to a bridge bank, until the Bank of England has given an Objective 1 Achievement Notice powers under the following paragraphs of Schedule 1 may be exercised only with the Bank of England’s consent: 2, 3, 11, 14, 15, 16, 17, 18 and 21.

Para. 61Directors
Para. 62Power to call meetings of creditors
Para. 63Application to court for directions
(a)

Before the Bank of England has given an Objective 1 Achievement Notice, the bank administrator may apply for directions if unsure whether a proposed action would prejudice the pursuit of Objective 1; and before making an application in reliance on this paragraph the bank administrator must give notice to the Bank of England, which shall be entitled to participate in the proceedings.

(b)

In making directions the court must have regard to the Objectives in section 137.

Para. 64.Management powers.
Para. 65Distribution to creditors
(a)

In the case of bank administration following transfer to a bridge bank, until the Bank of England has given an Objective 1 Achievement Notice a bank administrator may make a distribution only with the Bank of England’s consent.

(b)

Ignore sub para. (3).

Para. 66Payments
Para. 67Taking custody of property
Para. 68ManagementBefore the approval of proposals under para. 53 a bank administrator shall manage the bank’s affairs, business and property in accordance with principles agreed between the bank administrator and the Bank of England.
Para. 69Agency
Para. 70Floating chargesThe bank administrator may take action only if satisfied that it will not prejudice pursuit of Objective 1 in section 137.
Para. 71Fixed chargesThe court may make an order only if satisfied that it will not prejudice pursuit of Objective 1 in section 137.
Para. 72Hire-purchase propertyIn the case of administration following transfer to a bridge bank, until the Bank of England has given an Objective 1 Achievement Notice an application may be made only with the Bank of England’s consent.
Para. 73Protection for secured and preferential creditors
(a)

Treat a reference to proposals as including a reference to the principles specified in the modification of para. 68 set out above.

(b)

Para. 73(1)(a) does not apply until the Bank of England has given an Objective 1 Achievement Notice.

Para. 74Challenge to administrator’s conduct
(a)

The Bank of England may make an application to the court, on any grounds, including grounds of insufficient pursuit of Objective 1 in section 137 (in addition to applications that may anyway be made under para. 74).

(b)

Until the Bank of England has given an Objective 1 Achievement Notice, an order may be made on the application of a creditor only if the court is satisfied that it would not prejudice pursuit of Objective 1 in section 137.

Para. 75MisfeasanceIn addition to applications that may anyway be made under para. 75, an application may be made by the bank administrator or the Bank of England.
Para. 80Termination: successful rescue

See section 153.

Para. 84Termination: no more assets for distribution

See section 154.

Para. 85Discharge of administration order
Para. 86Notice to Companies Registrar of end of administration

See section 153.

Para. 87Resignation

A bank administrator may resign only by notice in writing—

(a)

to the court, copied to the Bank of England, or

(b)

in the case of a bank administrator appointed by the creditors' committee under para. 90, to the creditors' committee.

Para. 88RemovalUntil the Bank of England has given an Objective 1 Achievement Notice, an application for an order may be made only with the Bank of England’s consent.
Para. 89DisqualificationThe notice under sub-para. (2) must be given to the Bank of England.
Paras. 90 & 91Replacement
(a)

Until an Objective 1 Notice has been given, the Bank of England, and nobody else, may make an application under para. 91(1).

(b)

After that, either the Bank of England or a creditors' committee may apply.

(c)

Ignore para. 91(1)(b) to (e) and (2).

Para. 96Substitution of floating charge-holder

Para. 96 applies to a bank administrator, but—

(a)

only after an Objective 1 Achievement Notice has been given, and

(b)

ignoring references to priority of charges.

Para. 98Discharge

Discharge takes effect—

(a)

where the person ceases to be bank administrator before an Objective 1 Achievement Notice has been given, at a time determined by the Bank of England, and

(b)

otherwise, at a time determined by resolution of the creditors' committee (for which purpose ignore sub-para. (3)).

Para. 99Vacation of office: charges and liabilities

In the application of sub-para. (3), payments may be made only—

(a)

in accordance with directions of the Bank of England, and

(b)

if the Bank is satisfied that they will not prejudice Objective 1 in section 137.

Paras. 100-103Joint administratorsUntil an Objective 1 Achievement Notice has been given, an application under para. 103 may be made only by the Bank of England.
Para. 104Validity
Para. 106 (and section 430 and Schedule 10)Fines
Paras. 107–109Extension of time limits
(a)

Until an Objective 1 Achievement Notice has been given, an application under para. 107 may be made only with the Bank of England’s consent.

(b)

In considering an application under para. 107 the court must have regard to Objective 1 in section 137.

(c)

In para. 108(1) “consent” means consent of the Bank of England.

Para. 110Amendment of provisions about timeAn order under para. 110 may amend a provision of the Schedule as it applies by virtue of this section (whether or not in the same way as it amends the provision as it applies otherwise).
Para. 111Interpretation
Paras. 112–116Scotland
TABLE 2 OF APPLIED PROVISIONS
OTHER PROVISIONS OF THE INSOLVENCY ACT 1986
SectionSubjectModification or comment
Section 135Provisional appointment
(a)

Treat the reference to the presentation of a winding-up petition as a reference to the making of an application for a bank administration order.

(b)

Subsection (2) applies in relation to England and Wales and Scotland (and subsection (3) does not apply).

(c)

Ignore the reference to the official receiver.

(d)

Only a person who is qualified to act as an insolvency practitioner and who consents to act may be appointed.

(e)

The court may only confer on a provisional bank administrator functions in connection with the pursuance of Objective 1; and section 138(2)(a) does not apply before a bank administration order is made.

(f)

A provisional bank administrator may not pursue Objective 2.

(g)

The appointment of a provisional bank administrator lapses on the appointment of a bank administrator.

(h)

Section 172(1), (2) and (5) apply to a provisional bank administrator.

Section 168(4) (and para. 13 of Schedule 4)Discretion in managing and distributing assets

In the case of bank administration following transfer to a bridge bank, until the Bank of England has given an Objective 1 Achievement Notice distribution may be made only—

(a)

with the Bank of England’s consent, or

(b)

out of assets which have been designated as realisable by agreement between the bank administrator and the Bank of England.

Section 176AUnsecured creditors

In the case of bank administration following transfer to a bridge bank, until the Bank of England has given an Objective 1 Achievement Notice distribution may be made in reliance on s. 176A only—

(a)

with the Bank of England’s consent, or

(b)

out of assets which have been designated as realisable by agreement between the bank administrator and the Bank of England.

Section 178Disclaimer of onerous propertyIn the case of bank administration following transfer to a bridge bank, until the Bank of England has given an Objective 1 Achievement Notice notice of disclaimer may be given only with the Bank of England’s consent.
Section 179Disclaimer of leaseholds
Section 180Land subject to rentcharge
Section 181Disclaimer: powers of court
Section 182Leaseholds
Section 188Publicity
Section 213Fraudulent trading
Section 214Wrongful tradingIgnore subsection (6).
Section 233Utilities
Section 234Getting in company’s property
Section 235Co-operation with liquidator
Section 236Inquiry into company’s dealings
Section 237Section 236: enforcement by court
Section 238Transactions at undervalue (England and Wales)
Section 239Preferences (England and Wales)
Section 240Ss. 238 & 239: relevant time
Section 241Orders under ss. 238 & 239
(a)

In considering making an order in reliance on section 241 the court must have regard to Objective 1 of section 137.

(b)

Ignore subsections (2A)(a) and (3) to (3C).

Section 242Gratuitous alienations (Scotland)
Section 243Unfair preferences (Scotland)In considering the grant of a decree under subsection (5) the court must have regard to Objective 1 of section 137.
Section 244Extortionate credit transactions
Section 245Avoidance of floating charges
Section 246Unenforceability of liens
Sections 386 & 387, and Schedule 6 (and Schedule 4 to the Pension Schemes Act 1993)Preferential debts
Section 389Offence of acting without being qualifiedTreat references to acting as an insolvency practitioner as references to acting as a bank administrator.
Section 390Persons not qualified to actTreat references to acting as an insolvency practitioner as references to acting as a bank administrator.
Section 391Recognised professional bodiesAn order under section 391 has effect in relation to any provision applied for the purposes of bank administration.
Sections 423–425Transactions defrauding creditors
(a)

In considering granting leave under section 424(1) the court must have regard to Objective 1 of section 137.

(b)

In considering making an order in reliance on section 425 the court must have regard to Objective 1 of section 137.

Sections 430–432 & Schedule 10Offences
Section 433Statements: admissibilityFor section 433(1)(a) and (b) substitute a reference to a statement prepared for the purposes of a provision of this Part.

146Status of bank administrator

A bank administrator is an officer of the court.

147Administrator’s proposals

(1)This section applies before the giving of an Objective 1 Achievement Notice (at which point paragraph 49 of Schedule B1 to the Insolvency Act 1986 applies in accordance with section 145).

(2)The bank administrator must as soon as is reasonably practicable after appointment make a statement setting out proposals for achieving the Objectives in section 137.

(3)The statement must say whether the bank administrator proposes to pursue Objective 2(a) or 2(b) in section 140.

(4)The statement must have been agreed with the Bank of England.

(5)But a bank administrator who is unable to agree a statement with the Bank of England may apply to the court for directions under paragraph 63 of Schedule B1 to the Insolvency Act 1986 (as applied by section 145); and the court may make any order, including dispensing with the need for the Bank of England’s agreement.

(6)The bank administrator must send the statement to the FSA.

(7)The bank administrator may revise the statement (and subsections (4) to (6) apply to a revised statement as to the original).

(8)The statement shall be treated in the same way (subject to this section) as a statement under paragraph 49 of Schedule B1 to the Insolvency Act 1986.

148Sharing information

(1)This section applies to bank administration following transfer to a bridge bank.

(2)Within the period of 5 days beginning with the day on which the bank administrator is appointed, the Bank of England must give the bank administrator information about the financial positions of the residual bank and the bridge bank.

(3)While the residual bank is in bank administration the bridge bank must give the bank administrator on request information about the financial position of the bridge bank that the bank administrator requires for the purposes of pursuing Objective 1 in section 137.

(4)Until the Bank of England has given an Objective 1 Achievement Notice, the bank administrator must—

(a)give the Bank of England information on request,

(b)allow the Bank of England access to records on request,

(c)give the bridge bank information on request,

(d)allow the bridge bank access to records on request,

(e)keep the Bank of England informed about, and allow the Bank to participate in, any discussions between the bank administrator and another person which relate to, or are likely to affect, pursuit of Objective 1 in section 137, and

(f)keep the bridge bank informed about, and allow the bridge bank to participate in, any discussions between the bank administrator and another person which relate to, or are likely to affect, pursuit of Objective 1 in section 137.

(5)The Treasury shall by regulations prescribe—

(a)the classes of information that must be provided under subsections (2) to (4), and

(b)the classes of record to which access must be allowed under subsection (4).

(6)Regulations under subsection (5)—

(a)shall be made by statutory instrument, and

(b)shall be subject to annulment in pursuance of a resolution of either House of Parliament.