The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020

Amendment of the Insolvency Act 1986

Introduction

109.  The Insolvency Act 1986 is modified in accordance with regulations 110 to 114.

Non-preferential debts in company voluntary arrangements

110.  Section 4 (decisions of the company and its creditors)(1) applies as if in subsection (4)(d) for “or (3)” there were substituted “, (3) or (3A)”.

Non-preferential debts in winding up of companies

111.  Section 176AZA (non-preferential debts of financial institutions)(2) applies as if after subsection (3) there were inserted—

“(3A) The company’s tertiary non-preferential debts shall be paid in priority to its quaternary non-preferential debts.”.

Non-preferential debts in bankruptcy proceedings

112.  Section 328 (priority of debts)(3) applies as if in subsection (3A)—

(a) in paragraph (c), the “and” were omitted;

(b) after paragraph (d), there were inserted—

“and

(e) the bankrupt’s tertiary non-preferential debts shall be paid in priority to the bankrupt’s quaternary non-preferential debts.”.

Interpretation

113.  Section 387A (financial institutions and their non-preferential debts)(4) applies as if in subsection (3)—

(a) in paragraph (a), for “neither secondary non-preferential debts nor tertiary non-preferential debts” there were substituted “not secondary non-preferential debts, tertiary non-preferential debts or quaternary non-preferential debts”;

(b) in paragraph (b), the final “and” were omitted;

(c) for paragraph (c) there were substituted—

“(c) “tertiary non-preferential debts” means subordinated debts that are not quaternary non-preferential debts, and

(d) “quaternary non-preferential debts” means debts under instruments the whole or part of which constitute Common Equity Tier 1 instruments, Additional Tier 1 instruments or Tier 2 instruments (all within the meaning of Part 1 of the Banking Act 2009).”.

Administration

114.  Schedule B1 (administration)(5) applies as if in paragraph 73(1)(e) (protection for priority creditor) for “or (3)” there were substituted “, (3) or (3A)”.

(1)

Section 4 was amended by the Insolvency Act 2000 (c.39), Schedule 2, paragraphs 1 and 4, the Deregulation Act 2015 (c. 20) Schedule 6(6) paragraph 20(2)(c), the Small Business, Enterprise and Employment Act 2015 (c. 26) Schedule 9(1) paragraph 4, S.I. 2014/3486 and S.I. 2018/1244.

(2)

Section 176AZA was inserted by S.I. 2018/1244.

(3)

Section 328 was amended by S.I. 2014/3486 and S.I. 2018/1244.

(4)

Section 387A was inserted by S.I. 2018/1244.

(5)

Schedule B1 was inserted by the Enterprise Act 2002 (c. 40) Schedule 16 paragraph 1; paragraph 73 was amended by S.I. 2014/3486 and S.I. 2018/1244; there are other amending instruments but none is relevant.