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

CHAPTER 2 Application for a special administration (bank insolvency) order

Filing of application

17.—(1) The application for a special administration (bank insolvency) order, verified by witness statement in accordance with rule 21, shall be filed in court.

(2) There shall be filed with the application—

(a) a copy for service on the investment bank;

(b) a copy to be attached to the proof of service; and

(c) further copies to be sent to the persons under rule 20.

(3) The court shall fix the venue, date and time for the hearing of the application and in doing so shall have regard to—

(a) the desirability of the application being heard as soon as is reasonably practicable; and

(b) the need to give the investment bank a reasonable opportunity to attend.

(4) Each of the copies issued to the applicant shall be sealed and be endorsed with the venue, date and time for the hearing.

(5) Any application filed in relation to an investment bank in respect of which there is in force a voluntary arrangement under Part 1 of the 1986 Act shall be filed in accordance with this rule, but a copy of that application shall also be sent to the court to which the nominee’s report was submitted, if that is not the same court.

Service of application

18.—(1) The applicant shall serve the investment bank with a sealed copy of the application.

(2) The application shall be served on the investment bank by personal service at its registered office.

(3) In paragraph (2), “registered office” means—

(a) the place which is specified, in the investment bank’s statement delivered under section 9 of the 2006 Act as the intended situation of its registered office on incorporation; or

(b) if notice has been given by the investment bank to the registrar of companies under section 87 of the 2006 Act, the place specified in that notice or, as the case may be, in the last such notice.

(4) Service of the application at the registered office may be effected in any of the following ways—

(a) it may be handed to a person who there and then acknowledges that they are, or to the best of the server’s knowledge, information and belief are, a director or other officer, or employee, of the investment bank; or

(b) it may be handed to a person who there and then acknowledges that they are authorised to accept service of documents on the investment bank’s behalf; or

(c) in the absence of such person as is mentioned in sub-paragraphs (a) and (b), it may be deposited at or about the registered office in such a way that it is likely to come to the notice of a person attending the office.

(5) If for any reason it is impracticable to effect service as provided by paragraph (2) or (4), the application may be served in such other manner as the court may approve or direct.

(6) Application for permission of the court under paragraph (5) may be made without notice to the investment bank, stating in a witness statement what steps have been taken to comply with paragraph (2) or (4), and the reasons why it is impracticable to effect service as there provided.

(7) If the investment bank or its legal representatives fail to attend the hearing, the court may make the bank insolvency order in its absence if satisfied that the application has been served in accordance with this rule.

Proof of service

19.—(1) Service of the application must be proved by a certificate of service.

(2) The certificate of service must be sufficient to identify the application served and must specify—

(a) the name and registered number of the investment bank;

(b) the address of the registered office of the investment bank;

(c) whether the applicant is the Bank of England or the FSA;

(d) the address of the Bank of England;

(e) whether the copy served was a sealed copy;

(f) the date on which service was effected; and

(g) the manner in which service was effected.

(3) Where substituted service has been ordered under rule 18(5), the certificate of service must have attached to it a sealed copy of the order.

(4) The certificate of service must be filed in court as soon as reasonably practicable after service.

Other persons to receive copy of application

20.—(1) The applicant shall send 2 sealed copies of the application to—

(a) the proposed administrator;

(b) the Bank of England, (if not the applicant);

(c) the FSA, (if not the applicant);

(d) the FSCS;

(e) any person who has given notice to the FSA in respect of the investment bank under section 120 of the 2009 Act; and

(f) if there is in force for the investment bank a voluntary arrangement under Part 1 of the 1986 Act, the supervisor of that arrangement,

in accordance with paragraph (2).

(2) One copy shall be sent electronically as soon as practicable and the other (a sealed copy) shall be sent by first class post on the business day on which the application is served on the investment bank.

(3) Any of the persons in paragraph (1) will have the right to attend and be heard at the hearing of the application.

Verification of application

21.—(1) This rule applies where an application has been filed at the court under rule 17 above.

(2) A witness statement shall be attached to the application to state that the statements in the application are true, or are true to the best of the applicant’s knowledge, information and belief.

(3) The witness statement shall identify the person making the statement and shall include the capacity in which that person makes the statement and the basis for that person’s knowledge of the matters set out in the application.

Persons entitled to copy of application

22.—(1) Every contributory or creditor or client of the investment bank is entitled to a copy of the application on request from the applicant.

(2) The applicant shall respond to any request for a copy of the application as soon as reasonably practicable after the application has been made on payment of the appropriate fee.

Certificate of compliance

23.—(1) The applicant or the applicant’s solicitor shall, as soon as reasonably practicable before the hearing of the application, file in court a certificate of compliance with the rules relating to service.

(2) The certificate shall show—

(a) the date of the application;

(b) the date fixed for the hearing; and

(c) the date or dates when the application was served and that notice of it was given in compliance with the Rules.

(3) A witness statement made by the proposed administrator to the effect that—

(a) the person is qualified to act as an insolvency practitioner in accordance with section 390 of the 1986 Act(1); and

(b) the person consents to act as the administrator,

shall be filed in court with the certificate.

Leave for the applicant to withdraw

24.—(1) The applicant may withdraw the application for a special administration (bank insolvency) order at any time before the hearing with the permission of the court.

(2) An application for permission under paragraph (1) may be made without notice.

(3) The court may grant permission on such terms as the court thinks fit.

Witness statement in opposition

25.—(1) If the investment bank intends to oppose an application, it may (but need not) file a witness statement in opposition in court.

(2) A statement under paragraph (1) must be filed before the hearing of the application and a copy must be served on the applicant, before the hearing.

(3) The statement may be served on the applicant by personal service or by electronic means.

(4) The statement should also be sent to the persons in rule 20(1) before the hearing by personal service or by electronic means.

(5) The fact that the investment bank has not filed a statement under this rule shall not prevent it being heard at the hearing.

Making, transmission and advertisement of order

26.—(1) The court shall not make a special administration (bank insolvency) order unless the person nominated to be appointed as the administrator in the application for the order has filed in court a witness statement under rule 23.

(2) When the order has been made, the court shall immediately send 5 sealed copies (or such larger number as the administrator may have requested) to the administrator.

(3) The court shall also, if practicable, immediately send a copy of the order to the administrator electronically.

(4) The administrator shall serve a sealed copy of the order on the investment bank at its registered office and, where the bank liquidator knows the investment bank’s email address, will send an electronic copy to the investment bank.

(5) The administrator shall send 2 copies of the order—

(a) to the Bank of England, the FSA and the FSCS; and

(b) if there is in force for the investment bank a voluntary arrangement under Part 1 of the 1986 Act, the supervisor of that arrangement,

in accordance with paragraph (6).

(6) One copy shall be sent electronically as soon as reasonably practicable and the other (a sealed copy) shall be sent by first class post on the business day on which the order is served on the investment bank.

Special administration (bank insolvency) order

27.  If the court makes a special administration (bank insolvency) order, the order shall state—

(a) the name and address of the applicant;

(b) the name, registered address and registered number of the investment bank to which the order refers;

(c) details of any other parties appearing at the hearing;

(d) the name and business address of any administrator appointed by the order;

(e) the date and time from which their appointment shall take effect;

(f) the terms for costs of the application; and

(g) any further particulars that the court thinks fit.

Authentication of administrator’s appointment

28.  A sealed copy of the court’s order may in any proceedings be adduced as proof that the person appointed is duly authorised to exercise the powers and perform the duties of the administrator in the special administration (bank insolvency).

Duties of Objective A committee

29.—(1) This rule applies where a special administration (bank insolvency) order has been made.

(2) As soon as reasonably practicable after the making of a special administration (bank insolvency) order, the Objective A committee shall meet the administrator for the purpose of discussing which of the objectives, or combination of objectives, mentioned in section 102(1) of the 2009 Act (as applied by paragraph 6 of Schedule 1 to the Regulations), the committee should recommend the administrator to pursue.

(3) If the administrator and every individual on the Objective A committee agree, the meeting may be held by audio or video conference.

(4) The Objective A committee shall make its recommendation to the administrator at the meeting.

(5) The Bank of England shall confirm the Objective A committee’s recommendation in writing as soon as practicable after the meeting.

(6) As soon as practicable after the making of a special administration (bank insolvency) order, the Objective A committee shall also pass a resolution as to the terms on which, in accordance with rule 196, the administrator is to be remunerated in respect of—

(a) work done by the administrator in pursuit of Objective A; and

(b) work done by the administrator in pursuit of Objectives 2 and 3 of the special administration objectives.

(7) The Objective A committee—

(a) shall take decisions and pass resolutions by a simple majority; and

(b) for the purpose of taking decisions and passing resolutions, may communicate by any means that its members consider convenient.

Appointment of person under section 135

30.—(1) An application to the court for the appointment of a person under section 135 of the 1986 Act (as applied by paragraph 8 of Schedule 1 to the Regulations) may be made—

(a) by the Bank of England; or

(b) by the FSA (with the consent of the Bank of England).

(2) The application must be supported by a witness statement stating—

(a) the grounds upon which it is proposed that the person should be appointed;

(b) that the person to be appointed has consented to act;

(c) that the person to be appointed is qualified to act as an insolvency practitioner;

(d) whether to the applicant’s knowledge there has been proposed or is in force for the investment bank a company voluntary arrangement under Part 1 of the 1986 Act;

(e) the applicant’s estimate of the value of the assets in respect of which the person is to be appointed; and

(f) the functions the applicant wishes to be carried out by the person appointed under this rule in relation to the investment bank’s affairs.

(3) The court may on the application, if satisfied that an application has been made for a special administration (bank insolvency) order and that sufficient grounds are shown for the appointment, make it on such terms as it thinks fit.

Notice of appointment

31.—(1) Where a person has been appointed under rule 30, the court shall notify the applicant and the person appointed.

(2) Unless the court otherwise directs, on receipt of the notification under paragraph (1) the person appointed shall give notice of that appointment as soon as reasonably practicable. Such notice—

(a) shall be gazetted; and

(b) may be advertised in such other manner as the person appointed thinks fit.

Order of appointment

32.—(1) The order of appointment shall specify the functions to be carried out by the person appointed under rule 30 in relation to the investment bank’s affairs.

(2) The court shall, immediately after the order is made, send 4 sealed copies of the order (or such larger number as the person appointed may have requested), to the person appointed.

(3) The court shall also, if practicable, immediately send a copy of the order to the person appointed electronically.

(4) The person appointed shall serve a sealed copy of the order on the investment bank at its registered office and, where they know the investment bank’s email address, will send an electronic copy to the investment bank.

(5) The person appointed shall send 2 copies of the order—

(a) to the Bank of England, the FSA, and the FSCS; and

(b) if there is in force for the investment bank a voluntary arrangement under Part 1 of the 1986 Act, the supervisor of that arrangement,

in accordance with paragraph (6).

(6) One copy shall be sent electronically as soon as reasonably practicable and the other (a sealed copy) shall be sent by first class post of the business day on which the order is served on the investment bank.

(7) The person appointed shall also send notice of the appointment to the registrar of companies.

Security

33.—(1) The following applies where a person is appointed under rule 30.

(2) The cost of providing the security required by the 1986 Act shall be paid in the first instance by the person so appointed; but—

(a) if the special administration (bank insolvency) order is not made, the person so appointed is entitled to be reimbursed out of the estate of the investment bank, and the court may make an order on the investment bank accordingly; and

(b) if the special administration (bank insolvency) order is made, the person so appointed is entitled to be reimbursed as an expense of the administration in the prescribed order of priority.

Failure to give or keep up security

34.—(1) If the person appointed under rule 30 fails to give or keep up their security, that person may be removed by the court and the court make such order as it thinks just as to costs.

(2) If an order is made under this rule, the court shall give directions as to the steps to be taken for the appointment of another person under rule 30.

(3) Where another person is appointed under rule 30, that person shall send notice of their appointment to the registrar of companies.

Remuneration

35.—(1) The remuneration of the person appointed under rule 30 shall be fixed by the court from time to time on that person’s application.

(2) In fixing the remuneration, the court shall take into account—

(a) the time properly given by the person appointed;

(b) the complexity (or otherwise) of the case;

(c) any respects in which, in connection with the investment bank’s affairs, there falls on the person appointed any responsibility of an exceptional kind or degree;

(d) the effectiveness with which the person appointed appears to be carrying out, or has carried out, their duties; and

(e) the value and nature of the property with which the person appointed has to deal.

(3) Without prejudice to any order the court may make as to costs, the person appointed’s remuneration shall be paid to that person and the amount of any expenses incurred by that person shall be reimbursed—

(a) if the special administration (bank insolvency) order is not made, out of the estate of the investment bank;

(b) if the special administration (bank insolvency) order is made, as an expense of the administration, in the prescribed order of priority.

(4) Unless the court otherwise directs, in a case falling within paragraph (3)(a), the person appointed may retain out of the investment bank’s estate such sums or property as are, or may be, required for meeting their remuneration and expenses.

Termination of appointment

36.—(1) The appointment of the person appointed under rule 30 may be terminated—

(a) by the court on that person’s application; or

(b) on the application of any of the persons specified in rule 30(1).

(2) The appointment of the person so appointed will be automatically terminated on the making of the special administration (bank insolvency) order.

(3) On the termination of the appointment, the court may give such directions as it thinks fit with respect to the account of that person’s administration or any other matters which it thinks appropriate.

(4) Unless the court directs otherwise, where the appointment is terminated, the person who was appointed under rule 30 shall give notice of the termination. Such notice—

(a) shall be gazetted; and

(b) may be advertised in such other manner as that person thinks fit.

(5) The person who was appointed under rule 30 shall send notice of the termination of their appointment to the registrar of companies.

(1)

Section 390 has been amended by the Adults with Incapacity (Scotland) Act 2000 (asp 4) section 88(2), Schedule 5 paragraph 18; by the Enterprise Act 2002 (c.40) section 257(3) Schedule 21 paragraph 4; by the Mental Capacity Act 2005 (c. 9) section 67(1) (2), Schedule 6 paragraph 31(1), (3)(b), (3)(c), Schedule 7; by the Tribunals, Courts and Enforcement Act 2007 (c.15) section 108(3), Schedule 20 paragraphs 1, 6(1) to (3); by S.S.I 2005/465; S.I. 2005/2078; S.I. 2009/1941 and S.I. 2009/3081.