Banking Act 2009

Process of bank liquidationU.K.

99ObjectivesU.K.

(1)A bank liquidator has two objectives.

(2)Objective 1 is to work with the FSCS so as to ensure that as soon as is reasonably practicable each eligible depositor—

(a)has the relevant account transferred to another financial institution, or

(b)receives payment from (or on behalf of) the FSCS.

(3)Objective 2 is to wind up the affairs of the bank so as to achieve the best result for the bank's creditors as a whole.

(4)Objective 1 takes precedence over Objective 2 (but the bank liquidator is obliged to begin working towards both objectives immediately upon appointment).

100Liquidation committeeU.K.

(1)Following a bank insolvency order a liquidation committee must be established, for the purpose of ensuring that the bank liquidator properly exercises the functions under this Part.

[F1(2)The liquidation committee is to consist initially of—

(a)two individuals nominated by the Bank of England,

(b)one individual nominated by the PRA,

(c)one individual nominated by the FCA, and

(d)one individual nominated by the FSCS.]

(3)The bank liquidator must report to the liquidation committee about any matter—

(a)on request, or

(b)which the bank liquidator thinks is likely to be of interest to the liquidation committee.

(4)In particular, the bank liquidator—

(a)must keep the liquidation committee informed of progress towards Objective 1 in section 99, and

(b)must notify the liquidation committee when in the bank liquidator's opinion Objective 1 in section 99 has been achieved entirely or so far as is reasonably practicable.

(5)As soon as is reasonably practicable after receiving notice under subsection (4)(b) the liquidation committee must either—

(a)resolve that Objective 1 in section 99 has been achieved entirely or so far as is reasonably practicable (a “full payment resolution”), or

(b)apply to the court under section 168(5) of the Insolvency Act 1986 (as applied by section 103 below).

(6)Where a liquidation committee passes a full payment resolution—

(a)the bank liquidator must summon a meeting of creditors,

(b)the meeting may elect 2 or 4 individuals as new members of the liquidation committee,

(c)those individuals replace the members nominated by the Bank of England[F2, the PRA and the FCA],

(d)the FSCS may resign from the liquidation committee (in which case 3 or 5 new members may be elected under paragraph (b)), and

(e)if no individuals are elected under paragraph (b), or the resulting committee would have fewer than 3 members or an even number of members, the liquidation committee ceases to exist at the end of the meeting.

(7)Subject to provisions of this section, rules under section 411 of the Insolvency Act 1986 (as amended by section 125 below) may make provision about—

(a)the establishment of liquidation committees,

(b)the membership of liquidation committees,

(c)the functions of liquidation committees, and

(d)the proceedings of liquidation committees.

101Liquidation committee: supplementalU.K.

(1)A meeting of the liquidation committee may be summoned—

(a)by any of the members, or

(b)by the bank liquidator.

(2)While the liquidation committee consists of the initial members (or their nominated replacements) a meeting is quorate only if all the members are present.

(3)A person aggrieved by any action of the liquidation committee before it has passed a full payment resolution may apply to the court, which may make any order (including an order for the repayment of money).

(4)The court may (whether on an application under subsection (3), on the application of a bank liquidator or otherwise) make an order that the liquidation committee is to be treated as having passed a full payment resolution.

(5)If a liquidation committee fails to comply with section 100(5) the bank liquidator must apply to the court—

(a)for an order under subsection (4) above, or

(b)for directions under or by virtue of section 168(3) or 169(2) of the Insolvency Act 1986 as applied by section 103 below.

(6)A nominating body under section 100(2) may replace its nominee at any time.

(7)After the removal of the nominated members under section 100(6)(c) the [F3PRA, the FCA] and the Bank of England—

(a)may attend meetings of the liquidation committee,

(b)are entitled to copies of documents relating to the liquidation committee's business,

(c)may make representations to the liquidation committee, and

(d)may participate in legal proceedings relating to the bank insolvency.

(8)Where a liquidation committee ceases to exist by virtue of section 100(6)(e)—

(a)it may be re-formed by a creditors' meeting summoned by the bank liquidator for the purpose, and

(b)the bank liquidator must summon a meeting for the purpose if requested to do so by one-tenth in value of the bank's creditors.

(9)Where a liquidation committee ceases to exist by virtue of section 100(6)(e) and has not been re-formed under subsection (8) above or under section 141(2) or 142(2) of the Insolvency Act 1986 (as applied by section 103 below)—

(a)ignore a reference in this Part to the liquidation committee,

(b)for section 113(2) to (4) substitute requirements for the bank liquidator, before making a proposal—

(i)to produce a final report,

(ii)to send copies in accordance with section 113(2)(b),

(iii)to make it available in accordance with section 113(2)(c), and

(iv)to be satisfied as specified in section 113(4)(b),

(c)ignore Condition 2 in section 114, and

(d)for section 115(1) to (5) substitute a power for the bank liquidator to apply to the Secretary of State or Accountant of Court for release and requirements that before making an application the bank liquidator must—

(i)produce a final report,

(ii)send copies in accordance with section 115(2)(b),

(iii)make it available in accordance with section 115(2)(c), and

(iv)notify the court and the registrar of companies of the intention to vacate office and to apply for release.

102Objective 1: (a) or (b)?U.K.

(1)As soon as is reasonably practicable, a liquidation committee must recommend the bank liquidator to pursue—

(a)Objective 1(a) in section 99,

(b)Objective 1(b) in section 99, or

(c)Objective 1(a) for one specified class of case and Objective 1(b) for another.

(2)In making a recommendation the liquidation committee must consider—

(a)the desirability of achieving Objective 1 as quickly as possible, and

(b)Objective 2 in section 99.

(3)If the liquidation committee thinks that the bank liquidator is failing to comply with their recommendation, they must apply to the court for directions under section 168(5) of the Insolvency Act 1986 (as applied by section 103 below).

(4)Where the liquidation committee has not made a recommendation the bank liquidator may apply to the court under section 101(3); and the court may, in particular, make a direction in lieu of a recommendation if the liquidation committee fail to make one within a period set by the court.

103General powers, duties and effectU.K.

(1)A bank liquidator may do anything necessary or expedient for the pursuit of the Objectives in section 99.

(2)The following provisions of this section provide for—

(a)general powers and duties of bank liquidators (by application of provisions about liquidators), and

(b)the general process and effects of bank insolvency (by application of provisions about winding up).

(3)The provisions set out in the Table apply in relation to bank insolvency as in relation to winding up, with—

(a)the modifications set out in subsection (4),

(b)any other modification specified in the Table, and

(c)any other necessary modification.

(4)The modifications are that—

(a)a reference to the liquidator is a reference to the bank liquidator,

(b)a reference to winding up is a reference to bank insolvency,

(c)a reference to winding up by the court is a reference to the imposition of bank insolvency by order of the court,

(d)a reference to being wound up under Part IV or V of the Insolvency Act 1986 is a reference to being made the subject of a bank insolvency order,

(e)a reference to the commencement of winding up is a reference to the commencement of bank insolvency,

(f)a reference to going into liquidation is a reference to entering bank insolvency,

(g)a reference to a winding-up order is a reference to a bank insolvency order, and

(h)[F4except where otherwise specified in the Table,] a reference to a company is a reference to the bank.

(5)Powers conferred by this Act, by the Insolvency Act 1986 (as applied) and the Companies Acts are in addition to, and not in restriction of, any existing powers of instituting proceedings against a contributory or debtor of a bank, or the estate of any contributory or debtor, for the recovery of any call or other sum.

(6)A reference in an enactment or other document to anything done under a provision applied by this Part includes a reference to the provision as applied.

[F5(7)In the Table “Schedule 9 to the 2015 Act” means Schedule 9 to the Small Business, Enterprise and Employment Act 2015 (further amendments relating to the abolition of requirements to hold meetings: company insolvency).]

104Additional general powersU.K.

(1)A bank liquidator has the following powers.

(2)Power to effect and maintain insurances in respect of the business and property of the bank.

(3)Power to do all such things (including the carrying out of works) as may be necessary for the realisation of the property of the bank.

(4)Power to make any payment which is necessary or incidental to the performance of the bank liquidator's functions.

105Status of bank liquidatorU.K.

A bank liquidator is an officer of the court.