C1C6C3C5Part 2Bank Insolvency
Pt. 2 modified (29.3.2009) by Building Societies (Insolvency and Special Administration) Order 2009 (S.I. 2009/805), Sch. 1 para. 1 (as amended (7.4.2010) by Building Societies (Insolvency and Special Administration) (Amendment) Order 2010 (S.I. 2010/1189), arts. 1(2), 2 and amended (7.4.2017) by The Deregulation Act 2015, the Small Business, Enterprise and Employment Act 2015 and the Insolvency (Amendment) Act (Northern Ireland) 2016 (Consequential Amendments and Transitional Provisions) Regulations 2017 (S.I. 2017/400), regs. 1(2), 8)
Pt. 2 restricted (7.1.2010) by Banking Act 2009 (Exclusion of Insurers) Order 2010 (S.I. 2010/35), arts. 1, 2
Pt. 2 applied (with modifications) (8.2.2011) by The Investment Bank Special Administration Regulations 2011 (S.I. 2011/245), reg. 1, Sch. 1 paras. 6, 7
Miscellaneous
I6123Role of FSCS
1
For the purpose of co-operating in the pursuit of Objective 1 in section 99 the FSCS—
a
may make or arrange for payments to or in respect of eligible depositors of the bank, and
b
may make money available to facilitate the transfer of accounts of eligible depositors of the bank.
2
The FSCS may include provision about expenditure under this section; and, in particular—
a
money may be raised through the imposition of a levy under Part 15 of the Financial Services and Markets Act in respect of expenditure or possible expenditure under this section, and
b
sums raised in connection with the scheme (whether or not under paragraph (a)) may be expended under this section.
3
In section 220(3)(a) of the Financial Services and Markets Act 2000 (Compensation Scheme: information) after “liquidator” insert “
, bank liquidator
”
.
4
The FSCS is entitled to participate in proceedings for or in respect of a bank insolvency order.
5
A bank liquidator must—
a
comply with a request of the FSCS for the provision of information, and
b
provide the FSCS with any other information which the bank liquidator thinks might be useful for the purpose of co-operating in the pursuit of Objective 1.
6
A bank liquidator may enter into an agreement under section 221A of the Financial Services and Markets Act 2000 (Compensation Scheme: delegation of functions) for the bank liquidator to exercise functions of the scheme manager for the purpose of facilitating the pursuit of Objective 1.
7
Where a bank insolvency order is made in respect of a bank, the fact that it later ceases to be an authorised person does not prevent the operation of the compensation scheme in respect of it; and for that purpose the bank is a relevant person within the meaning of section 213(9) of the Financial Services and Markets Act 2000 despite the lapse of authorisation.
I7124Transfer of accounts
1
This section applies where a bank liquidator arranges, in pursuit of Objective 1 in section 99, for the transfer of eligible depositors' accounts from the bank to another financial institution.
2
The arrangements may disapply, or provide that they shall have effect despite, any restriction arising by virtue of contract or legislation or in any other way.
3
In subsection (2) “restriction” includes—
a
any restriction, inability or incapacity affecting what can and cannot be assigned or transferred (whether generally or by a particular person), and
b
a requirement for consent (by any name).
4
In making the arrangements mentioned in subsection (1) the bank liquidator must ensure that eligible depositors will be able to remove money from transferred accounts as soon as is reasonably practicable after transfer.
I8125Rules
1
Section 411 of the Insolvency Act 1986 (company insolvency rules) is amended as follows.
2
After subsection (1) insert—
1A
Rules may also be made for the purpose of giving effect to Part 2 of the Banking Act 2009 (bank insolvency orders); and rules for that purpose shall be made—
a
in relation to England and Wales, by the Lord Chancellor with the concurrence of—
i
the Treasury, and
ii
in the case of rules that affect court procedure, the Lord Chief Justice, or
b
in relation to Scotland, by the Treasury.
3
In subsection (2)—
a
after “subsection (1),” insert “
(1A)
”
;
b
in paragraph (b), after “Secretary of State” insert “
or the Treasury
”
.
4
After subsection (2B) insert—
2C
For the purposes of subsection (2), a reference in Schedule 8 to this Act to doing anything under or for the purposes of a provision of this Act includes a reference to doing anything under or for the purposes of Part 2 of the Banking Act 2009.
5
In subsection (3)—
a
after “provisional liquidator” insert “
or bank liquidator
”
, and
b
after “Parts I to VII of this Act” insert “
or Part 2 of the Banking Act 2009
”
.
6
In subsection (5), after “the Secretary of State” insert “
or the Treasury
”
.
7
In paragraph 27 of Schedule 8 to the Insolvency Act 1986 (provisions capable of inclusion in company insolvency rules), after “Secretary of State” insert “
or the Treasury
”
.
8
Section 413(2) of the Insolvency Act 1986 (rules: duty to consult Insolvency Rules Committee) shall not apply to the first set of rules which is made in reliance on this section.
I9126Fees
After section 414(8) of the Insolvency Act 1986 (fees orders) insert—
8A
This section applies in relation to Part 2 of the Banking Act 2009 (bank insolvency) as in relation to Parts I to VII of this Act.
I10127Insolvency Services Account
A bank liquidator who obtains money by realising assets in the course of the bank insolvency must pay it into the Insolvency Services Account (kept by the Secretary of State).
I11128Evidence
In section 433(1) of the Insolvency Act 1986 (admissibility of statements of affairs) after paragraph (a) insert (before the “and”)—
aa
a statement made in pursuance of a requirement imposed by or under Part 2 of the Banking Act 2009 (bank insolvency),
I12129Co-operation between courts
1
Provisions of or by virtue of this Part are “insolvency law” for the purposes of section 426 of the Insolvency Act 1986(co-operation between courts).
2
At the end of that section add—
13
Section 129 of the Banking Act 2009 provides for provisions of that Act about bank insolvency to be “insolvency law” for the purposes of this section.
129AF1Banks not regulated by PRA
1
In the application of this Part to an FCA-regulated bank the modifications specified in the Table apply.
2
In this section—
“FCA-regulated bank” means a bank which does not carry on any activity which is a PRA-regulated activity for the purposes of the Financial Services and Markets Act 2000;
“immediate group” has the meaning given by section 421ZA of the Financial Services and Markets Act 2000;
“PRA-authorised person” has the meaning given by section 2B(5) of that Act.
Provision | Modification |
|---|---|
Section 95 | Treat the reference to the PRA in subsection (1) as a reference to the FCA. |
Section 96 |
|
Section 97 | Treat the reference to the PRA in subsection (1) as a reference to the FCA. |
Section 98 | Treat the references to the PRA in subsection (2) as references to the FCA. |
Section 100 |
|
Section 101 | Ignore the reference to the PRA in subsection (7). |
Section 103 | In the Table, in the entries relating to sections 147 and 241 of the Insolvency Act 1986, treat the reference to the PRA as a reference to the FCA. |
Section 108 | |
Section 109 | Ignore the reference to the PRA in subsection (4). |
Section 113 | Ignore subsection (2)(b)(i). |
Section 115 | Ignore subsection (2)(b)(i). |
Section 117 |
|
Section 120 |
|
I14I1130Building societies
1
The Treasury may by order provide for this Part to apply to building societies (within the meaning of section 119 of the Building Societies Act 1986) as it applies to banks, subject to modifications set out in the order.
2
An order may—
a
amend the Building Societies Act 1986 or any other enactment which relates, or in so far as it relates, to building societies;
b
amend an enactment amended by this Part;
c
replicate, with or without modifications, any provision of this Part;
d
apply a provision made under or by virtue of this Part, with or without modifications, to this Part as it applies to building societies.
3
An order—
a
shall be made by statutory instrument, and
b
may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.
4
Provision made under or by virtue of this Part may make special provision in relation to the application of this Part to building societies.
I15I2131Credit unions
1
The Treasury may by order provide for this Part to apply to credit unions (within the meaning of section 31 of the Credit Unions Act 1979) as it applies to banks, subject to modifications set out in the order.
2
An order may—
a
amend the Credit Unions Act 1979, the Industrial and Providential Societies Act 1965 or any other enactment which relates, or in so far as it relates, to credit unions;
b
amend an enactment amended by this Part;
c
replicate, with or without modifications, any provision of this Part;
d
apply a provision made under or by virtue of this Part, with or without modifications, to this Part as it applies to credit unions.
3
An order—
a
shall be made by statutory instrument, and
b
may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.
4
Provision made under or by virtue of this Part may make special provision in relation to the application of this Part to credit unions.
I3132Partnerships
C41
The Lord Chancellor may, by order made with the concurrence of the Secretary of State and the Lord Chief Justice, modify provisions of this Part in their application to partnerships.
2
For procedural purposes an order under subsection (1) shall be treated in the same way as an order under section 420 of the Insolvency Act 1986 (partnerships).
3
This section does not apply in relation to partnerships constituted under the law of Scotland.
I16I4133Scottish partnerships
1
The Secretary of State may by order modify provisions of this Part in their application to partnerships constituted under the law of Scotland.
2
An order—
a
shall be made by statutory instrument, and
b
shall be subject to annulment in pursuance of a resolution of either House of Parliament.
I13C2134Northern Ireland
In the application of this Part to Northern Ireland—
a
a reference to an enactment is to be treated as a reference to the equivalent enactment having effect in relation to Northern Ireland,
b
where this Part amends an enactment an equivalent amendment (incorporating any necessary modification) is made to the equivalent enactment having effect in relation to Northern Ireland,
c
references to the Secretary of State, except in section 122, are to be treated as references to the Department of Enterprise, Trade and Investment,
d
a reference to the Insolvency Services Account is to be treated as a reference to the Insolvency Account,
e
a reference to section 31 of the Credit Unions Act 1979 is to be treated as a reference to Article 2 of the Credit Unions (Northern Ireland) Order 1985,
f
the Judgments Enforcement (Northern Ireland) Order 1981 has effect in place of sections 183 and 184 of the Insolvency Act 1986 (applied by section 103 above), and
g
the reference in section 132 to the Lord Chief Justice is a reference to the Lord Chief Justice in Northern Ireland.
I17I5135Consequential provision
1
The Treasury may by order make provision in consequence of this Part.
2
An order may, in particular, amend or modify the effect of an enactment (including a fiscal enactment) passed before the commencement of this Part.
3
An order—
a
shall be made by statutory instrument, and
b
may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.
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)