C8C9C13C12C10Part XII Preferential F15and non-preferential debts in Company and Individual Insolvency

Annotations:
Amendments (Textual)
Modifications etc. (not altering text)
C9

Third Group of Parts (Pts. 12-19) applied to limited liability partnerships (with modifications) (E.W.S.) (6.4.2001) by S.I. 2001/1090, reg. 5, Schs. 3, 4 (as amended (4.3.2004) by S.I. 2004/355, art. 10 and (1.10.2005) by S.I. 2005/1989, reg. 3, Sch. 2 (with reg. 4) and (8.12.2017) by The Insolvency (Miscellaneous Amendments) Regulations 2017 (S.I. 2017/1119), reg. 1(1), Sch. 1 Pts. 2, 3)

C1C2C3386 Categories of preferential debts.

1

A reference in this Act to the preferential debts of a company or an individual is to the debts listed in Schedule 6 to this Act F1(contributions to occupational pension schemes; remuneration, &c. of employees; levies on coal and steel production F13; debts owed to the Financial Services Compensation SchemeF9; deposits covered by Financial Services Compensation SchemeF11; other deposits F19; certain HMRC debts); and references to preferential creditors are to be read accordingly.

F101A

A reference in this Act to the “ordinary preferential debts” of a company or an individual is to the preferential debts listed in any of paragraphs 8 to 15B of Schedule 6 to this Act.

1B

A reference in this Act to the “secondary preferential debts” of a company or an individual is to the preferential debts listed in paragraph 15BA F20, 15BB or 15D of Schedule 6 to this Act.

2

In F12Schedule 6 “the debtor” means the company or the individual concerned.

3

Schedule 6 is to be read with F2Schedule 4 to the Pension Schemes Act 1993 (occupational pension scheme contributions).

C4C5C6387“The relevant date”.

C71

This section explains references in Schedule 6 to the relevant date (being the date which determines the existence and amount of a preferential debt).

2

For the purposes of section 4 in Part I (F17consideration of company voluntary arrangement), the relevant date in relation to a company which is not being wound up is—

F3a

if the company is in administration, the date on which it entered administration, and

b

if the company is not in administration, the date on which the voluntary arrangement takes effect.

F182A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

In relation to a company which is being wound up, the following applies—

a

if the winding up is by the court, and the winding-up order was made immediately upon the discharge of an administration order, the relevant date is F4the date on which the company entered administration;

F21aa

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F21ab

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b

if the case does not fall within paragraph (a) F22... and the company—

i

is being wound up by the court, and

ii

had not commenced to be wound up voluntarily before the date of the making of the winding-up order,

the relevant date is the date of the appointment (or first appointment) of a provisional liquidator or, if no such appointment has been made, the date of the winding-up order;

F5ba

if the case does not fall within paragraph (a) F23... or (b) and the company is being wound up following administration pursuant to paragraph 83 of Schedule B1, the relevant date is the date on which the company entered administration;

c

if the case does not fall within F6paragraph (a) F24..., (b) or (ba), the relevant date is the date of the passing of the resolution for the winding up of the company.

F73A

In relation to a company which is in administration (and to which no other provision of this section applies) the relevant date is the date on which the company enters administration.

4

In relation to a company in receivership (where section 40 or, as the case may be, section 59 applies), the relevant date is—

a

in England and Wales, the date of the appointment of the receiver by debenture-holders, and

b

in Scotland, the date of the appointment of the receiver under section 53(6) or (as the case may be) 54(5).

C75

For the purposes of section 258 in Part VIII (individual voluntary arrangements), the relevant date is, in relation to a debtor who is not an undischarged bankrupt

F8a

where an interim order has been made under section 252 with respect to his proposal, the date of that order, and

b

in any other case, the date on which the voluntary arrangement takes effect.

C76

In relation to a bankrupt, the following applies—

a

where at the time the bankruptcy order was made there was an interim receiver appointed under section 286, the relevant date is the date on which the interim receiver was first appointed after F14the making of the bankruptcy application or (as the case may be) the presentation of the bankruptcy petition;

b

otherwise, the relevant date is the date of the making of the bankruptcy order.

C14387AC11F16Financial institutions and their non-preferential debts

1

In this Act “relevant financial institution” means any of the following—

a

a credit institution,

b

an investment firm,

c

a financial holding company,

d

a mixed financial holding company,

e

a financial institution which is—

i

a subsidiary of an entity referred to in sub-paragraphs (a) to (d), and

ii

covered by the supervision of that entity on a consolidated basis in accordance with Articles 6 to 17 of Regulation (EU) No 575/2013, or

f

a mixed-activity holding company.

2

The definitions in Article 4 of Regulation (EU) No. 575/2013 apply for the purposes of subsection (1).

3

In this Act, in relation to a relevant financial institution—

a

“ordinary non-preferential debts” means non-preferential debts which are neither secondary non-preferential debts nor tertiary non-preferential debts;

b

“secondary non-preferential debts” means non-preferential debts issued under an instrument where—

i

the original contractual maturity of the instrument is of at least one year,

ii

the instrument is not a derivative and contains no embedded derivative, and

iii

the relevant contractual documentation and where applicable the prospectus related to the issue of the debts explain the priority of the debts under this Act, and

c

“tertiary non-preferential debts” means all subordinated debts, including (but not limited to) debts under Common Equity Tier 1 instruments, Additional Tier 1 instruments and Tier 2 instruments (all within the meaning of Part 1 of the Banking Act 2009).

4

In subsection (3)(b), “derivative” has the same meaning as in Article 2(5) of Regulation (EU) No 648/2012.

5

For the purposes of subsection (3)(b)(ii) an instrument does not contain an embedded derivative merely because—

a

it provides for a variable interest rate derived from a broadly used reference rate, or

b

it is not denominated in the domestic currency of the person issuing the debt (provided that the principal, repayment and interest are denominated in the same currency).