C1C5C3C4Part 2Bank Insolvency

Annotations:
Modifications etc. (not altering text)
C1

Pt. 2 applied (with modifications) by 1986 c. 53, s. 90C (as inserted (29.3.2009) by Building Societies (Insolvency and Special Administration) Order 2009 (S.I. 2009/805), art. 2)

Process of bank liquidation

I1C2103General powers, duties and effect

1

A bank liquidator may do anything necessary or expedient for the pursuit of the Objectives in section 99.

2

The following provisions of this section provide for—

a

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

b

the general process and effects of bank insolvency (by application of provisions about winding up).

3

The provisions set out in the Table apply in relation to bank insolvency as in relation to winding up, with—

a

the modifications set out in subsection (4),

b

any other modification specified in the Table, and

c

any other necessary modification.

4

The modifications are that—

a

a reference to the liquidator is a reference to the bank liquidator,

b

a reference to winding up is a reference to bank insolvency,

c

a reference to winding up by the court is a reference to the imposition of bank insolvency by order of the court,

d

a reference to being wound up under Part IV or V of the Insolvency Act 1986 is a reference to being made the subject of a bank insolvency order,

e

a reference to the commencement of winding up is a reference to the commencement of bank insolvency,

f

a reference to going into liquidation is a reference to entering bank insolvency,

g

a reference to a winding-up order is a reference to a bank insolvency order, and

h

F10except where otherwise specified in the Table, a reference to a company is a reference to the bank.

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.

F117

In the Table “Schedule 9 to the 2015 Act” means Schedule 9 to the Small Business, Enterprise and Employment Act 2015 (further amendments relating to the abolition of requirements to hold meetings: company insolvency).

TABLE OF APPLIED PROVISIONS

Provision of Insolvency Act 1986

Subject

Modification or comment

Section 127

Avoidance of property dispositions

Ignore section 127(2).

Section 128

Avoidance of attachment, &c.

Section 130

Consequences of winding-up order

Ignore section 130(4).

Section 131

Company's statement of affairs

a

Treat references to the official receiver as references to the bank liquidator.

b

A creditor or contributory of the bank is entitled to receive a copy of a statement under section 131 on request to the bank liquidator.

Section 135

Provisional 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 insolvency 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 F4in relation to the bank and who consents to act may be appointed.

e

A provisional bank liquidator may not pay dividends to creditors.

f

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

Section 141

Liquidation Committee (England and Wales)

F12Ignore the amendment made by paragraph 36 of Schedule 9 to the 2015 Act. The application of section 141 is subject to—

  1. a

    sections 100, 101 and 109 of this Act,

  2. b

    rules under section 411 (as applied by section 125 of this Act) which may, in particular, adapt section 141 to reflect (i) the fact that the bank liquidator is appointed by the court and (ii) the possibility of calling creditors' meetings under other provisions, and

  3. c

    the omission of references to the official receiver.

Section 142

Liquidation Committee (Scotland)

F13Ignore the amendments made by paragraph 37 of Schedule 9 to the 2015 Act. The application of section 142 is subject to—

  1. a

    sections 100, 101 and 109 of this Act,

  2. b

    rules under section 411 (as applied by section 125 of this Act) which may, in particular, adapt section 142 to reflect (i) the fact that the bank liquidator is appointed by the court and (ii) the possibility of calling creditors' meetings under other provisions, and

  3. c

    the omission of references to the official receiver.

Section 143

General functions of liquidator

a

Section 143(1) is subject to Objective 1 in section 99 above.

b

Ignore section 143(2).

Section 144

Custody of property

Section 145

Vesting of property

Section 146

Duty to summon final meeting

Section 146 is not applied–but section 115 below makes similar provision.

Section 147

Power to stay or sist proceedings

An application may be made only by—

  1. a

    the bank liquidator,

  2. b

    the F1PRA,

  3. c

    the Bank of England,

  4. d

    the FSCS, or

  5. e

    a creditor or contributory (but only if the liquidation committee has passed a full payment resolution).

Section 148

List of contributories and application of assets

By virtue of the Insolvency Rules the functions under this section are largely delegated to the liquidator–rules by virtue of section 125 may achieve a similar delegation to the bank liquidator.

Section 149

Debts due from contributories

Section 150

Power to make calls

Section 152

Order on contributory: evidence

Section 153

Exclusion of creditors

Section 154

Adjustment of rights of contributories

Section 155

Inspection of books by creditors

In making or considering whether to make an order under section 155 the court shall have regard to Objective 1 in section 99 above.

Section 156

Payment of expenses of winding up

Section 157

Attendance at company meetings (Scotland)

Section 158

Power to arrest absconding contributory

Section 159

Powers to be cumulative

Section 159 is not applied–but subsection (5) above makes similar provision.

Section 160

Delegation of powers to liquidator (England and Wales)

F14Ignore the amendment made by paragraph 39 of Schedule 9 to the 2015 Act.

Section 161

Orders for calls on contributories (Scotland)

Section 162

Appeals from orders (Scotland)

An appeal may be brought only if the liquidation committee has passed a full payment resolution.

Section 167 and Schedule 4

General powers of liquidator

  1. a

    An application to the court may not be made under section 167(3) unless the liquidation committee has passed a full payment resolution (although a creditor or contributory may apply to the court with respect to any action (or inaction) of the liquidation committee, under section 101(3) above).

  2. b

    In exercising or considering whether to exercise a power under Schedule 4 the bank liquidator shall have regard to Objective 1 in section 99.

  3. c

    A reference to the liquidation committee is to the liquidation committee established by section 100.

  4. d

    The power in paragraph 4 of Schedule 4 includes the power to submit matters to arbitration.

Some additional general powers are conferred by section 104 below.

Section 168

Supplementary powers of liquidator

F15za

Ignore the amendment made by paragraph 41 of Schedule 9 to the 2015 Act.

a

A direction or request under section 168(2) has no effect unless the liquidation committee has passed a full payment resolution.

b

Section 168(5) also applies in the case of the imposition of bank insolvency by order of the Court of Session.

c

An application to the court may not be made under section 168(5) unless the liquidation committee has passed a full payment resolution (except as provided in section 100 or 102 above).

Section 169

Supplementary powers (Scotland)

F5a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b

Powers of the bank liquidator by virtue of section 169(2) are subject to Objective 1 in section 99 above.

Section 170

Liquidator's duty to make returns

The liquidation committee is added to the list of persons able to apply under section 170(2).

Section 172

Removal of liquidator

Section 172 is not applied to a bank liquidator–but section 108 makes similar provision.

Section 172(1), (2) and (5) are applied to a provisional bank liquidator.

Section 174

Release of liquidator

Section 174 is not applied–but section 115 makes similar provision.

Section 175

Preferential debts

Section 176

Preferential charge on goods restrained

F20Section 176AZA

Non-preferential debts of financial institutions

Section 176ZA

Expenses of winding up

F6Section 176ZB

Application of proceeds of office-holder claims

Section 176A

Share of assets for unsecured creditors

Section 177

Appointment of special manager

Section 178

Power to disclaim onerous property

Section 179

Disclaimer of leaseholds

Section 180

Land subject to rentcharge

Section 181

Disclaimer: powers of court

Section 182

Leaseholds

Section 183

Effect of execution or attachment (England and Wales)

Section 184

Execution of writs (England and Wales)

Section 185

Effect of diligence (Scotland)

In the application of F3section 24(1) and (2) of the Bankruptcy (Scotland) Act 2016 the reference to an order of the court awarding winding up is a reference to the making of the bank insolvency order.

Section 186

Rescission of contracts by court

Section 187

Transfer of assets to employees

Section 188

Publicity

Section 189

Interest on debts

Section 190

Exemption from stamp duty

Section 191

Company's books as evidence

Section 192

Information about pending liquidations

Section 193

Unclaimed dividends (Scotland)

Section 194

Resolutions passed at adjourned meetings

F16Section 194 applies as it applied before its repeal by paragraph 46 of Schedule 9 to the 2015 Act.

Section 195

Meetings to ascertain wishes of creditors or contributories

F17a

Ignore the amendments made by paragraph 47 of Schedule 9 to the 2015 Act.

F18b

The power to have regard to the wishes of creditors and contributories is subject to Objective 1 in section 99.

Section 196

Judicial notice of court documents

Section 197

Commission for receiving evidence

Section 198

Court order for examination of persons (Scotland)

Section 199

Costs of application for leave to proceed (Scotland)

Section 200

Affidavits

Section 206

Fraud in anticipation of winding up

Section 207

Transactions in fraud of creditors

Section 208

Misconduct in course of winding up

F19Ignore the amendment made by paragraph 52 of Schedule 9 to the 2015 Act.

Section 209

Falsification of company's books

Section 210

Material omissions

Section 211

False representations to creditors

Section 212

Summary remedy against directors, &c.

Section 213

Fraudulent trading

F7Section 214

Wrongful trading

(a) Treat the reference in subsection (2)(b) to entering insolvent administration as a reference to entering bank administration under Part 3 of this Act at a time when the bank’s assets are insufficient for the payment of its debts and other liabilities and the expenses of the administration.

(b) Ignore subsection (6A).

Section 215

Sections 213 & 214: procedure

Section 216

Restriction on re-use of company names

Section 217

Personal liability for debts

Section 218

Prosecution of officers and members of company

a

Ignore subsections (4) and (6).

b

In subsection (3), treat the second reference to the official receiver as a reference to the Secretary of State.

c

In subsection (5) treat the reference to subsection (4) as a reference to subsection (3).

Section 219

Obligations under section 218

Section 231

Appointment of 2 or more persons

Section 232

Validity of acts

Section 233

Utilities

Section 234

Getting in company's property

Section 235

Co-operation with liquidator

Ignore references to the official receiver

Section 236

Inquiry into company's dealings

Ignore references to the official receiver

Section 237

Section 236: enforcement by court

Section 238

Transactions at undervalue (England and Wales)

Anything done by the bank in connection with the exercise of a stabilisation power under Part 1 of this Act is not a transaction at an undervalue for the purposes of section 238.

Section 239

Preferences (England and Wales)

Action taken by the bank in connection with the exercise of a stabilisation power under Part 1 of this Act does not amount to giving a preference for the purpose of section 239.

Section 240

Sections 238 & 239: relevant time

Section 241

Orders under sections 238 & 239

Having notice of the relevant proceedings means having notice of—

  1. a

    an application by the Bank of England, the F2PRA or the Secretary of State for a bank insolvency order, or

  2. b

    notice under section 120 below.

Section 242

Gratuitous alienations (Scotland)

Anything done by the bank in connection with the exercise of a stabilisation power under Part 1 of this Act is not a gratuitous alienation for the purpose of section 242 or any other rule of law.

Section 243

Unfair preferences (Scotland)

Action taken by the bank in connection with the exercise of a stabilisation power under Part 1 of this Act does not amount to an unfair preference for the purpose of section 243 or any other rule of law.

Section 244

Extortionate credit transactions

Section 245

Avoidance of floating charges

Section 246

Unenforceability of liens

F8Section 246ZD

Power to assign certain causes of action

Sections 386 & 387, and Schedule 6 (and Schedule 4 to the Pension Schemes Act 1993)

Preferential debts

F21Section 387A

Financial institutions and their non-preferential debts

Section 389

Offence of acting without being qualified

Treat references to acting as an insolvency practitioner as references to acting as a bank liquidator.

F9Sections 390 to 391T

Authorisation and regulation of insolvency practitioners

(a) In section 390 treat references to acting as an insolvency practitioner as references to acting as a bank liquidator.

(b) Read subsection (2) of that section (as so modified) as if after “authorised” there were inserted “to act as an insolvency practitioner”.

(c) An order under section 391 has effect in relation to any provision applied for the purposes of bank insolvency.

(d) In sections 390A, 390B(1) and (3), 391O(1)(b) and 391R(3)(b), in a reference to authorisation or permission to act as an insolvency practitioner in relation to (or only in relation to) companies the reference to companies has effect without the modification in subsection (4)(h) of this section.

(e) In sections 391Q(2)(b) and 391S(3)(e) the reference to a company has effect without the modification in subsection (4)(h) of this section.

Sections 423–425

Transactions defrauding creditors

Anything done by the bank in connection with the exercise of a stabilisation power under Part 1 of this Act is not a transaction at an undervalue for the purposes of section 423.

Sections 430 to 432and Schedule 10

Offences

Section 433

Statements: admissibility

For section 433(1)(a) and (b) substitute a reference to a statement prepared for the purposes of a provision of this Part.