The Investment Bank Special Administration (England and Wales) Rules 2011

EXPLANATORY NOTE

(This note is not part of the Rules)

These Rules set out the procedure for the Investment Bank Special Administration process under the Investment Bank Special Administration Regulations 2011(1) (“the Regulations”).

The main features of Investment Bank Special Administration are that:

(a) the investment bank enters the procedure by court order;

(b) the order appoints an administrator;

(c) the administrator is to pursue the special administration objectives in accordance with the statement of proposals approved by the meeting of creditors and clients and, in certain circumstances, the FSA; and

(d) in other respects the procedure is similar to administration under Schedule B1 of the Insolvency Act 1986(2).

Where the investment bank is also a deposit-taking bank, the Rules also apply in relation to the Special Administration (Bank Insolvency) and Special Administration (Bank Administration) processes under Schedules 1 and 2 of the Regulations.

Part 2 of the Rules sets out the procedure for applying for a special administration order, a special administration (bank insolvency) order or a special administration (bank administration order).

Part 3 of the Rules sets out the process of the special administration.

Part 4 of the Rules provides for the expenses of the special administration.

Part 5 of the Rules provides for the pursuit of Objective 1.

Part 6 of the Rules provides for distributions to creditors.

Part 7 of the Rules sets out rules concerning the administrator.

Part 8 of the Rules provides for the end of the special administration.

Part 9 of the Rules sets out court procedure and practice.

Part 10 of the Rules provides for the application of section 216 of the Insolvency Act 1986 (prohibited names).

Part 11 of the Rules contains provisions of general effect.

Part 12 of the Rules provides for general interpretation and application.

The Rules apply to investment banks incorporated as companies and also to investment banks that are:

(e) limited liability partnerships by virtue of paragraph 6 of Schedule 3 of the Regulations which applies the Rules with such modifications as the context requires for giving effect to the Regulations; or

(f) partnerships by virtue of paragraph 5 of Schedule 4 to the Regulations which applies Article 18 of and Schedule 10 to the Insolvent Partnerships Order 1994 (S.I. 1994/ 2421, amended by S.I. 2005/1516) with modifications.

An Impact Assessment on the effect of these Rules has been prepared and may be obtained from the Financial Regulatory Strategy team, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ. It is also available on HM Treasury’s website (www.hm-treasury.gov.uk).

(1)

S.I. 2011/245.

(2)

1986 c.45: Schedule B1 was inserted by the Enterprise Act 2002 (c. 40) section 248, Schedule 16.