The Insurers (Reorganisation and Winding Up) Regulations 2003

Voluntary arrangements: treatment of insurance debts

33.—(1) The modifications made by paragraph 2 apply where a voluntary arrangement is proposed under section 1 of the 1986 Act or Article 14 of the 1989 Order in relation to a UK insurer, and that arrangement includes—

(a) a composition in satisfaction of any insurance debts; and

(b) a distribution to creditors of some or all of the assets of that insurer in the course of, or with a view to terminating the whole or any part of the business of that insurer.

(2) Section 4 of the 1986 Act (decisions of meetings) has effect as if—

(a) after subsection (4) there were inserted—

“(4A) A meeting so summoned and taking place on or after 20th April 2003 shall not approve any proposal or modification under which any insurance debt of the company is to be paid otherwise than in priority to such of its debts as are not insurance debts or preferential debts.

(4B) Paragraph (4A) does not apply where—

(a) a winding up order made before 20th April 2003 is in force; or

(b) a relevant insolvency appointment made before 20th April has effect, in relation to the company.”;

(b) for subsection (7) there were substituted—

“(7) References in this section to preferential debts mean debts falling into any of categories 1 to 5 of the debts listed in Schedule 6 to the 1986 Act, and references to preferential creditors are to be construed accordingly.”; and

(c) after subsection (7) there were inserted—

“(8) For the purposes of this section—

(a) “insurance debt” has the meaning it has in the Insurers (Reorganisation and Winding up) Regulations 2003 and

(b) “relevant insolvency measure” means—

(i) the appointment of a provisional liquidator, or

(ii) the appointment of an administrator,

where an effect of the appointment will be, or is intended to be, a realisation of some or all of the assets of the insurer and the distribution of the proceeds to creditors, with a view to terminating the whole or any part of the business of that insurer.”.

(3) Article 17 of the 1989 Order (decisions of meetings) has effect as if—

(a) after paragraph (4) there were inserted—

“(4A) A meeting so summoned and taking place on or after 20th April 2003 shall not approve any proposal or modification under which any insurance debt of the company is to be paid otherwise than in priority to such of its debts as are not insurance debts or preferential debts.

(4B) Paragraph (4A) does not apply where—

(a) a winding up order made before 20th April 2003 is in force; or

(b) a relevant insolvency appointment made before 20th April has effect,

in relation to the company.”;

(b) for paragraph (7) there were substituted—

“(7) References in this Article to preferential debts mean debts falling into any of categories 1 to 5 of the debts listed in Schedule 4 to the 1989 Order, and references to preferential creditors are to be construed accordingly.”; and

(c) after paragraph (7) there were inserted—

“(8) For the purposes of this section—

(a) “insurance debt” has the meaning it has in the Insurers (Reorganisation and Winding Up) Regulations 2003 and

(b) “relevant insolvency measure” means—

(i) the appointment of a provisional liquidator, or

(ii) the appointment of an administrator,

where an effect of the appointment will be, or is intended to be, a realisation of some or all of the assets of the insurer and the distribution of the proceeds to creditors, with a view to terminating the whole or any part of the business of that insurer.”.