The Industrial and Provident Societies and Credit Unions (Arrangements, Reconstructions and Administration) Order 2014

EXPLANATORY NOTE

(This note is not part of the Order)

This Order applies Part 1 (company voluntary arrangements) and Part 2 (administration) of the Insolvency Act 1986 (c. 45) (“the 1986 Act”) and Part 26 (arrangements and reconstructions) of the Companies Act 2006 (c. 46) (“the 2006 Act”) to relevant societies. A relevant society is a society registered under the Industrial and Provident Societies Act 1965 (c. 12) (“the 1965 Act”) other than a society which is a private registered provider of social housing or is registered as a social landlord. A society registered under the 1965 Act is a co-operative society, a community benefit society or a credit union.

Article 2(1) and (2) applies Parts 1 and 2 of the 1986 Act with the modifications in Schedule 1. Part 1 of Schedule 1 sets out general modifications. Part 2 of Schedule 1 further modifies provisions made for voluntary arrangements, including Schedule A1 to the 1986 Act which provides for obtaining a moratorium. Part 3 of Schedule 1 further modifies provisions made for administration, which are in Schedule B1 to the 1986 Act. Part 4 modifies the powers of an administrator in Schedule 1 to the 1986 Act.

Article 2(3) applies Part 26 of the 2006 Act with the modifications set out in Schedule 2.

Articles 3 to 21 make provision which is in consequence of or incidental to the application of law about company arrangements and administration.

Article 3 applies section 176A of the 1986 Act (share of assets for unsecured creditors) with modifications to relevant societies which are in administration.

Article 4 and Schedule 3 apply other provisions of the 1986 Act with modifications for the purpose of relevant society voluntary arrangements and administration.

Articles 5 to 10 apply (with modifications) provisions of the Financial Services and Markets Act 2000 (c. 8) which concern the rights in insolvency proceedings of the Financial Conduct Authority, the Prudential Regulation Authority and the manager of the Financial Services Compensation Scheme.

Article 11 and Schedule 4 apply the Insolvency Rules 1986 and the Insolvency (Scotland) Rules 1986 with modifications for the purpose of relevant society voluntary arrangements and administration.

Article 12 and Schedule 5 provide for the application of other subordinate legislation (with modifications) to relevant societies.

Articles 13 to 16 apply sections 50 to 52 and 59 of the 1965 Act with modifications to relevant societies in administration. Sections 50 to 52 provide for amalgamation, transfer of engagements and conversion into companies. Section 59 provides that where a society is to be dissolved or a society’s engagements are transferred, the society may not be dissolved and its registration may not be cancelled until its property has been conveyed or transferred to the persons entitled to it.

Article 17 amends the 1965 Act in consequence of applying Part 2 of the 1986 Act to a relevant society whose registered office is in England and Wales. The amendment prohibits the appointment of an administrative receiver by the holder of a floating charge who is entitled to appoint an administrator. The holder of a floating charge given by a society whose registered office is in Scotland is not competent to appoint a receiver.

A full impact assessment has not been produced for this instrument as no significant impact on the costs of business or the voluntary sector is foreseen.