Part 2Bank Insolvency
Other processes
120Notice to FSA of preliminary steps
1
An application for an administration order in respect of a bank may not be determined unless the conditions below are satisfied.
2
A petition for a winding up order in respect of a bank may not be determined unless the conditions below are satisfied.
3
A resolution for voluntary winding up of a bank may not be made unless the conditions below are satisfied.
4
An administrator of a bank may not be appointed unless the conditions below are satisfied.
5
Condition 1 is that the FSA has been notified—
a
by the applicant for an administration order, that the application has been made,
b
by the petitioner for a winding up order, that the petition has been presented,
c
by the bank, that a resolution for voluntary winding up may be made, or
d
by the person proposing to appoint an administrator, of the proposed appointment.
6
Condition 2 is that a copy of the notice complying with Condition 1 has been filed with the court (and made available for public inspection by the court).
7
Condition 3 is that—
a
the period of 2 weeks, beginning with the day on which the notice is received, has ended, or
b
both—
i
the FSA has informed the person who gave the notice that it does not intend to apply for a bank insolvency order, and
ii
the Bank of England has informed the person who gave the notice that it does not intend to apply for a bank insolvency order or to exercise a stabilisation power under Part 1.
8
Condition 4 is that no application for a bank insolvency order is pending.
9
Arranging for the giving of notice in order to satisfy Condition 1 can be a step with a view to minimising the potential loss to a bank’s creditors for the purpose of section 214 of the Insolvency Act 1986 (wrongful trading).
10
Where the FSA receives notice under Condition 1—
a
the FSA shall inform the Bank of England,
b
the FSA shall inform the person who gave the notice, within the period in Condition 3(a), whether it intends to apply for a bank insolvency order, and
c
if the Bank of England decides to apply for a bank insolvency order or to exercise a stabilisation power under Part 1, the Bank shall inform the person who gave the notice, within the period in Condition 3(a).