C2C1C3C8C7Part 3Bank Administration

Annotations:
Modifications etc. (not altering text)
C3

Pt. 3 applied (with modifications) by Building Societies Act 1986 (c. 53), s. 90C (as inserted (29.3.2009) by Building Societies (Insolvency and Special Administration) Order 2009 (S.I. 2009/805), art. 2)

Introduction

I11136Overview

1

This Part provides for a procedure to be known as bank administration.

2

The main features of bank administration are that—

a

it is used where part of the business of a bank is sold to a commercial purchaser in accordance with section 11 or transferred to a F17resolution company in accordance with section 12 F18or 12ZA (and it can also be used in certain cases of multiple transfers under Part 1),

b

the court appoints a bank administrator on the application of the Bank of England,

c

the bank administrator is able and required to ensure that the non-sold or non-transferred part of the bank (“the residual bank”) provides services or facilities required to enable the commercial purchaser (“the private sector purchaser”) or the transferee (“the F17resolution company ”) to operate effectively, and

d

in other respects the process is the same as for normal administration under the Insolvency Act 1986, subject to specified modifications.

3

The Table describes the provisions of this Part.

Sections

Topic

Sections 136 to 140

Introduction

Sections 141 to 148

Process

Sections 149 to F9152A

Multiple transfers

Sections 153 and 154

Termination

Sections 155 to 168

Miscellaneous

I12137Objectives

1

A bank administrator has two objectives—

a

Objective 1: support for commercial purchaser or F32resolution company (see section 138), and

b

Objective 2: “normal” administration (see section 140).

2

Objective 1 takes priority over Objective 2 (but a bank administrator is obliged to begin working towards both objectives immediately upon appointment).

I13138Objective 1: supporting private sector purchaser or F15resolution company

1

Objective 1 is to ensure the supply to the private sector purchaser or F12resolution company of such services and facilities as are required to enable it, in the opinion of the Bank of England, to operate effectively.

2

For the purposes of Objective 1—

a

the reference to services and facilities includes a reference to acting as transferor or transferee under a supplemental or reverse property transfer instrument F14(including a bridge bank supplemental property transfer instrument or bridge bank supplemental reverse property transfer instrument), and

b

the reference to “supply” includes a reference to supply by persons other than the residual bank.

3

In the case of bank administration following a private sector purchase the bank administrator must co-operate with any request of the Bank of England to enter into an agreement for the residual bank to provide services or facilities to the private sector purchaser; and—

a

in pursuing Objective 1 the bank administrator must have regard to the terms of that or any other agreement entered into between the residual bank and the private sector purchaser,

b

in particular, the bank administrator must avoid action that is likely to prejudice performance by the residual bank of its obligations in accordance with those terms,

c

if in doubt about the effect of those terms the bank administrator may apply to the court for directions under paragraph 63 of Schedule B1 to the Insolvency Act 1986 (applied by section 145 below), and

d

the private sector purchaser may refer to the court a dispute about any agreement with the residual bank, by applying for directions under paragraph 63 of Schedule B1.

4

In the case of bank administration following transfer to a F13resolution company, the bank administrator must co-operate with any request of the Bank of England to enter into an agreement for the residual bank to provide services or facilities to the F13resolution company; and—

a

the bank administrator must avoid action that is likely to prejudice performance by the residual bank of its obligations in accordance with an agreement,

b

the bank administrator must ensure that so far as is reasonably practicable an agreement entered into includes provision for consideration at market rate,

c

paragraph (b) does not prevent the bank administrator from entering into an agreement on any terms that the bank administrator thinks necessary in pursuit of Objective 1, and

d

this subsection does not apply after Objective 1 ceases.

5

Where a bank administrator requires the Bank of England's consent or approval to any action in accordance with this Part, the Bank may withhold consent or approval only on the grounds that the action might prejudice the achievement of Objective 1.

I14139Objective 1: duration

1

Objective 1 ceases if the Bank of England notifies the bank administrator that the residual bank is no longer required in connection with the private sector purchaser or F33resolution company.

2

A bank administrator who thinks that Objective 1 is no longer required may apply to the court for directions under paragraph 63 of Schedule B1 to the Insolvency Act 1986 (applied by section 145 below); and the court may direct the Bank of England to consider whether to give notice under subsection (1) above.

3

If immediately upon the making of a bank administration order the Bank of England thinks that the residual bank is not required in connection with the private sector purchaser or F33resolution company, the Bank of England may give a notice under subsection (1).

4

A notice under subsection (1) is referred to in this Part as an “Objective 1 Achievement Notice”.

I15140Objective 2: “normal” administration

1

Objective 2 is to—

a

rescue the residual bank as a going concern (“Objective 2(a)”), or

b

achieve a better result for the residual bank's creditors as a whole than would be likely if the residual bank were wound up without first being in bank administration (“Objective 2(b)”).

2

In pursuing Objective 2 a bank administrator must aim to achieve Objective 2(a) unless of the opinion either—

a

that it is not reasonably practicable to achieve it, or

b

that Objective 2(b) would achieve a better result for the residual bank's creditors as a whole.

3

In pursuing Objective 2(b) in bank administration following transfer to a F34resolution company, the bank administrator may not realise any asset unless—

a

the asset is on a list of realisable assets agreed between the bank administrator and the Bank of England, or

b

the Bank of England has given an Objective 1 Achievement Notice.

Process

I16141Bank administration order

1

A bank administration order is an order appointing a person as the bank administrator of a bank.

2

A person is eligible for appointment as a bank administrator if qualified to act as an insolvency practitioner F46in relation to the bank.

3

An appointment may be made only if the person has consented to act.

4

A bank administration order takes effect in accordance with its terms; and—

a

the process of a bank administration order having effect may be described as “bank administration” in relation to the bank, and

b

while the order has effect the bank may be described as being “in bank administration”.

I17142Application

1

An application for a bank administration order may be made to the court by the Bank of England.

2

An application must nominate a person to be appointed as the bank administrator.

3

The bank must be given notice of an application, in accordance with rules under section 411 of the Insolvency Act 1986 (as applied by section 160 below).

I18143Grounds for applying

1

The Bank of England may apply for a bank administration order in respect of a bank if the following conditions are met.

2

Condition 1 is that the Bank of England has made or intends to make a property transfer instrument in respect of the bank in accordance with section 11(2) F35, 12(2) or 12ZA(3).

3

Condition 2 is that the Bank of England is satisfied that the residual bank—

a

is unable to pay its debts, or

b

is likely to become unable to pay its debts as a result of the property transfer instrument which the Bank intends to make.

I19144Grounds for making

1

The court may make a bank administration order if satisfied that the conditions in section 143 were met.

2

On an application for a bank administration order the court may—

a

grant the application,

b

adjourn the application (generally or to a specified date), or

c

dismiss the application.

I20C4145General powers, duties and effect

1

A bank administrator may do anything necessary or expedient for the pursuit of the Objectives in section 137.

2

The following provisions of this section provide for—

a

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

b

the general process and effects of bank administration (by application of provisions about administration).

3

The provisions set out in the Tables apply in relation to bank administration as in relation to administration, with—

a

the modifications set out in subsection (4),

b

any other modification specified in the Tables, and

c

any other necessary modification.

4

The modifications are that—

a

a reference to the administrator is a reference to the bank administrator,

b

a reference to administration is a reference to bank administration,

c

a reference to an administration order is a reference to a bank administration order,

d

F44except where otherwise specified in Table 2, a reference to a company is a reference to the bank,

e

a reference to the purpose of administration is a reference to the Objectives in section 137, and

f

in relation to provisions of the Insolvency Act 1986 other than Schedule B1 F45and section 246ZB, the modifications in section 103 above apply (but converting references into references to bank administration or administrators rather than to bank insolvency or liquidators).

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.

F517

In the Tables “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).

TABLE 1 OF APPLIED PROVISIONSSCHEDULE B1 TO THE INSOLVENCY ACT 1986

Provision of Schedule B1

Subject

Modification or comment

Para. 40(1)(a)

Dismissal of pending winding-up petition

Para. 41

Dismissal of administrative or other receiver

Para. 42

Moratorium on insolvency proceedings

Ignore sub-paras. (4) and (5).

Para. 43

Moratorium on other legal process

a

In the case of bank administration following transfer to a F22resolution company, unless the Bank of England has given an Objective 1 Achievement Notice consent of the bank administrator may not be given for the purposes of para. 43 without the approval of the Bank of England.

b

In the case of bank administration following transfer to a F22resolution company, unless the Bank of England has given an Objective 1 Achievement Notice, in considering whether to give permission under sub-para. (6) to a winding-up the court must have regard to the Objectives in section 137.

c

In considering whether to give permission for the purposes of para. 43 the court must have regard to the Objectives in section 137.

Para. 44(1)(a) and (5)

Interim moratorium

Para. 46

Announcement of appointment

Ignore sub-para. (6)(b) and (c).

Paras. 47 & 48

Statement of affairs

Para. 49

Administrator's proposals

a

Para. 49 does not apply unless the Bank of England has given an Objective 1 Achievement Notice; for bank administrator's proposals before the Bank of England has given an Objective 1 Achievement Notice, see section 147.

b

Treat the reference in sub-para. (1) to the purpose of administration as a reference to Objective 2.

c

Before making proposals under sub-para. (1) in the case of bank administration following transfer to a F22resolution company, the bank administrator must consult the Bank of England about the chances of a payment to the residual bank from a scheme established by resolution fund order under section 49(3).

d

Treat the reference in sub-para. (2)(b) to the objective mentioned in para. 3(1)(a) or (b) as a reference to Objective 2(a).

e

Ignore sub-para.(3)(b).

F52ea

Ignore the amendment made by paragraph 10(2) of Schedule 9 to the 2015 Act.

f

Treat references in sub-para. (5) to the company's entering administration as references to satisfaction of the condition in para. (a) above.

Paras. 50–58

Creditors' meeting

F53za

Ignore the repeal of Paras 50 and 58 by paragraph 10(3) and (22) of Schedule 9 to the 2015 Act.

zb

Ignore the amendments of Paras 51 to 57 made by paragraph 10(4) to (21) of Schedule 9 to the 2015 Act.

a

Treat references in para. 51(2) to the company's entering administration as references to the giving of an Objective 1 Achievement Notice.

b

The bank administrator may comply with a request under para. 56(1)(a) only if satisfied that it will not prejudice pursuit of Objective 1 in section 137.

c

A creditors' meeting may not establish a creditors' committee in reliance on para. 57 until the Bank of England has given an Objective 1 Achievement Notice.

d

Until that time the Bank of England shall have the functions of the creditors' committee.

Para. 59

General powers

A bank administrator may not rely on para. 59 (or subsection (1) above) for the purpose of recovering property transferred by property transfer instrument.

Para. 60 and Schedule 1

General powers

a

The exercise of powers under Schedule 1 is subject to section 137(2).

b

In the case of bank administration following transfer to a F22resolution company, until the Bank of England has given an Objective 1 Achievement Notice powers under the following paragraphs of Schedule 1 may be exercised only with the Bank of England's consent: 2, 3, 11, 14, 15, 16, 17, 18 and 21.

Para. 61

Directors

Para. 62

Power to call meetings of creditors

F54Ignore the amendment made by paragraph 10(23) of Schedule 9 to the 2015 Act.

Para. 63

Application to court for directions

a

Before the Bank of England has given an Objective 1 Achievement Notice, the bank administrator may apply for directions if unsure whether a proposed action would prejudice the pursuit of Objective 1; and before making an application in reliance on this paragraph the bank administrator must give notice to the Bank of England, which shall be entitled to participate in the proceedings.

b

In making directions the court must have regard to the Objectives in section 137.

Para. 64.

Management powers.

Para. 65

Distribution to creditors

a

In the case of bank administration following transfer to a F22resolution company, until the Bank of England has given an Objective 1 Achievement Notice a bank administrator may make a distribution only with the Bank of England's consent.

F37b

Where paragraph (a) applies, ignore sub-para (3).

Para. 66

Payments

Para. 67

Taking custody of property

Para. 68

Management

Before the approval of proposals under para. 53 a bank administrator shall manage the bank's affairs, business and property in accordance with principles agreed between the bank administrator and the Bank of England.

Para. 69

Agency

Para. 70

Floating charges

The bank administrator may take action only if satisfied that it will not prejudice pursuit of Objective 1 in section 137.

Para. 71

Fixed charges

The court may make an order only if satisfied that it will not prejudice pursuit of Objective 1 in section 137.

Para. 72

Hire-purchase property

In the case of administration following transfer to a F22resolution company, until the Bank of England has given an Objective 1 Achievement Notice an application may be made only with the Bank of England's consent.

Para. 73

Protection for secured and preferential creditors

a

Treat a reference to proposals as including a reference to the principles specified in the modification of para. 68 set out above.

b

Para. 73(1)(a) does not apply until the Bank of England has given an Objective 1 Achievement Notice.

Para. 74

Challenge to administrator's conduct

F55za

Ignore the amendment made by paragraph 10(24) of Schedule 9 to the 2015 Act.

a

The Bank of England may make an application to the court, on any grounds, including grounds of insufficient pursuit of Objective 1 in section 137 (in addition to applications that may anyway be made under para. 74).

b

Until the Bank of England has given an Objective 1 Achievement Notice, an order may be made on the application of a creditor only if the court is satisfied that it would not prejudice pursuit of Objective 1 in section 137.

Para. 75

Misfeasance

In addition to applications that may anyway be made under para. 75, an application may be made by the bank administrator or the Bank of England.

F1Para. 79

F1Termination: successful rescue

F1a

Ignore sub-para. (2).

b

See section 153.

Para. 84

Termination: no more assets for distribution

See section 154.

Para. 85

Discharge of administration order

Para. 86

Notice to Companies Registrar of end of administration

See section 153.

Para. 87

Resignation

A bank administrator may resign only by notice in writing—

  1. a

    to the court, copied to the Bank of England, or

  2. b

    in the case of a bank administrator appointed by the creditors' committee under para. 90, to the creditors' committee.

Para. 88

Removal

Until the Bank of England has given an Objective 1 Achievement Notice, an application for an order may be made only with the Bank of England's consent.

Para. 89

Disqualification

The notice under sub-para. (2) must be given to the Bank of England.

Paras. 90 & 91

Replacement

a

Until an Objective 1 Notice has been given, the Bank of England, and nobody else, may make an application under para. 91(1).

b

After that, either the Bank of England or a creditors' committee may apply.

c

Ignore para. 91(1)(b) to (e) and (2).

Para. 96

Substitution of floating charge-holder

Para. 96 applies to a bank administrator, but—

  1. a

    only after an Objective 1 Achievement Notice has been given, and

  2. b

    ignoring references to priority of charges.

Para. 98

Discharge

F56Ignore the amendments made by paragraph 10(36) to (38) of Schedule 9 to the 2015 Act.

Discharge takes effect—

  1. a

    where the person ceases to be bank administrator before an Objective 1 Achievement Notice has been given, at a time determined by the Bank of England, and

  2. b

    otherwise, at a time determined by resolution of the creditors' committee (for which purpose ignore sub-para. (3)).

Para. 99

Vacation of office: charges and liabilities

In the application of sub-para. (3), payments may be made only—

  1. a

    in accordance with directions of the Bank of England, and

  2. b

    if the Bank is satisfied that they will not prejudice Objective 1 in section 137.

Paras. 100-103

Joint administrators

Until an Objective 1 Achievement Notice has been given, an application under para. 103 may be made only by the Bank of England.

Para. 104

Validity

Para. 106 (and section 430 and Schedule 10)

Fines

F57Ignore the amendments made by paragraph 11 of Schedule 9 to the 2015 Act.

Paras. 107–109

Extension of time limits

a

Until an Objective 1 Achievement Notice has been given, an application under para. 107 may be made only with the Bank of England's consent.

b

In considering an application under para. 107 the court must have regard to Objective 1 in section 137.

F58ba

Ignore the amendments of Para 108 made by paragraph 10(39) to (43) of Schedule 9 to the 2015 Act.

c

In para. 108(1) “consent” means consent of the Bank of England.

Para. 110

Amendment of provisions about time

An order under para. 110 may amend a provision of the Schedule as it applies by virtue of this section (whether or not in the same way as it amends the provision as it applies otherwise).

Para. 111

Interpretation

F59Ignore the amendment made by paragraph 10(44) of Schedule 9 to the 2015 Act.

F38Paras 112 to 114

Scotland:miscellaneous

Para 115

Scotland: floating charges

(a) In Scotland, on the giving by the Bank of England of consent as provided for in Para 65 (as applied by this section), any floating charge granted by the bank attaches to the property which is subject to the charge, unless it has already so attached, but only if the distribution concerned is to be made to creditors of the residual bank who are neither secured creditors nor preferential creditors and otherwise than by virtue of section 176A(2)(a) (as applied by this section).

(b) Where paragraph (a) applies, ignore sub-paras (1A) and (1B).

Para 116

Scotland: payment to holder of floating charge subject to rights

TABLE 2 OF APPLIED PROVISIONSOTHER PROVISIONS OF THE INSOLVENCY ACT 1986

Section

Subject

Modification or comment

Section 135

Provisional appointment

a

Treat the reference to the presentation of a winding-up petition as a reference to the making of an application for a bank administration order.

b

Subsection (2) applies in relation to England and Wales and Scotland (and subsection (3) does not apply).

c

Ignore the reference to the official receiver.

d

Only a person who is qualified to act as an insolvency practitioner F39in relation to the bank and who consents to act may be appointed.

e

The court may only confer on a provisional bank administrator functions in connection with the pursuance of Objective 1; and section 138(2)(a) does not apply before a bank administration order is made.

f

A provisional bank administrator may not pursue Objective 2.

g

The appointment of a provisional bank administrator lapses on the appointment of a bank administrator.

h

Section 172(1), (2) and (5) apply to a provisional bank administrator.

Section 168(4) (and para. 13 of Schedule 4)

Discretion in managing and distributing assets

In the case of bank administration following transfer to a F23resolution company, until the Bank of England has given an Objective 1 Achievement Notice distribution may be made only—

  1. a

    with the Bank of England's consent, or

  2. b

    out of assets which have been designated as realisable by agreement between the bank administrator and the Bank of England.

F40Section 176ZB

Application of proceeds of office-holder claims

Section 176A

Unsecured creditors

In the case of bank administration following transfer to a F23resolution company, until the Bank of England has given an Objective 1 Achievement Notice distribution may be made in reliance on s. 176A only—

  1. a

    with the Bank of England's consent, or

  2. b

    out of assets which have been designated as realisable by agreement between the bank administrator and the Bank of England.

Section 178

Disclaimer of onerous property

In the case of bank administration following transfer to a F23resolution company, until the Bank of England has given an Objective 1 Achievement Notice notice of disclaimer may be given only with the Bank of England's consent.

Section 179

Disclaimer of leaseholds

Section 180

Land subject to rentcharge

Section 181

Disclaimer: powers of court

Section 182

Leaseholds

Section 188

Publicity

F41. . .

F41. . .

F41. . .

F41. . .

F41. . .

Section 233

Utilities

F11Section 233A

Further protection of utilities

Section 234

Getting in company's property

Section 235

Co-operation with liquidator

Section 236

Inquiry into company's dealings

Section 237

Section 236: enforcement by court

Section 238

Transactions at undervalue (England and Wales)

Section 239

Preferences (England and Wales)

Section 240

Ss. 238 & 239: relevant time

Section 241

Orders under ss. 238 & 239

a

In considering making an order in reliance on section 241 the court must have regard to Objective 1 of section 137.

b

Ignore subsections (2A)(a) and (3) to (3C).

Section 242

Gratuitous alienations (Scotland)

Section 243

Unfair preferences (Scotland)

In considering the grant of a decree under subsection (5) the court must have regard to Objective 1 of section 137.

Section 244

Extortionate credit transactions

Section 245

Avoidance of floating charges

Section 246

Unenforceability of liens

F42Section 246ZA

Fraudulent trading: administration

Section 246ZB

Wrongful trading: administration

(a) Treat the reference in subsection (2)(b) to going into insolvent liquidation as a reference to entering bank insolvency under Part 2 of this Act at a time when the bank’s assets are insufficient for the payment of its debts and other liabilities and the expenses of the bank insolvency.

(b) Ignore subsection (6)(b).

Section 246ZC

Proceedings under section 246ZA or 246ZB

Section 246ZD

Power to assign certain causes of action

Sections 386 & 387, and Schedule 6 (and Schedule 4 to the Pension Schemes Act 1993)

Preferential debts

Section 389

Offence of acting without being qualified

Treat references to acting as an insolvency practitioner as references to acting as a bank administrator.

F43Sections 390 to 391T

Authorisation and regulation of insolvency practitioners

(a) In section 390 treat references to acting as an insolvency practitioner as references to acting as a bank administrator.

(b) Read subsection (2) of that section (as so modified) as if after “authorised” there were inserted “to act as an insolvency practitioner”.

(c) An order under section 391 has effect in relation to any provision applied for the purposes of bank administration.

(d) In sections 390A, 390B(1) and (3), 391O(1)(b) and 391R(3)(b), in a reference to authorisation or permission to act as an insolvency practitioner in relation to (or only in relation to) companies the reference to companies has effect without the modification in subsection (4)(d) of this section.

(e) In sections 391Q(2)(b) and 391S(3)(e) the reference to a company has effect without the modification in subsection (4)(d) of this section.

Sections 423–425

Transactions defrauding creditors

a

In considering granting leave under section 424(1) the court must have regard to Objective 1 of section 137.

b

In considering making an order in reliance on section 425 the court must have regard to Objective 1 of section 137.

Sections 430–432 & Schedule 10

Offences

Section 433

Statements: admissibility

For section 433(1)(a) and (b) substitute a reference to a statement prepared for the purposes of a provision of this Part.

F62145APower to direct bank administrator

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

I21146Status of bank administrator

A bank administrator is an officer of the court.

I22147Administrator's proposals

1

This section applies before the giving of an Objective 1 Achievement Notice (at which point paragraph 49 of Schedule B1 to the Insolvency Act 1986 applies in accordance with section 145).

2

The bank administrator must as soon as is reasonably practicable after appointment make a statement setting out proposals for achieving the Objectives in section 137.

3

The statement must say whether the bank administrator proposes to pursue Objective 2(a) or 2(b) in section 140.

4

The statement must have been agreed with the Bank of England.

5

But a bank administrator who is unable to agree a statement with the Bank of England may apply to the court for directions under paragraph 63 of Schedule B1 to the Insolvency Act 1986 (as applied by section 145); and the court may make any order, including dispensing with the need for the Bank of England's agreement.

6

The bank administrator must send the statement to the F4PRA and a copy of it to the FCA.

7

The bank administrator may revise the statement (and subsections (4) to (6) apply to a revised statement as to the original).

8

The statement shall be treated in the same way (subject to this section) as a statement under paragraph 49 of Schedule B1 to the Insolvency Act 1986.

I34I1148Sharing information

1

This section applies to bank administration following transfer to a F36resolution company.

2

Within the period of 5 days beginning with the day on which the bank administrator is appointed, the Bank of England must give the bank administrator information about the financial positions of the residual bank and the F36resolution company.

3

While the residual bank is in bank administration the F36resolution company must give the bank administrator on request information about the financial position of the F36resolution company that the bank administrator requires for the purposes of pursuing Objective 1 in section 137.

4

Until the Bank of England has given an Objective 1 Achievement Notice, the bank administrator must—

a

give the Bank of England information on request,

b

allow the Bank of England access to records on request,

c

give the F36resolution company information on request,

d

allow the F36resolution company access to records on request,

e

keep the Bank of England informed about, and allow the Bank to participate in, any discussions between the bank administrator and another person which relate to, or are likely to affect, pursuit of Objective 1 in section 137, and

f

keep the F36resolution company informed about, and allow the F36resolution company to participate in, any discussions between the bank administrator and another person which relate to, or are likely to affect, pursuit of Objective 1 in section 137.

5

The Treasury shall by regulations prescribe—

a

the classes of information that must be provided under subsections (2) to (4), and

b

the classes of record to which access must be allowed under subsection (4).

6

Regulations under subsection (5)—

a

shall be made by statutory instrument, and

b

shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Multiple transfers

I35I2149General application of this Part

1

This section applies where more than one property transfer instrument is made in respect of a bank.

2

For that purpose “property transfer instrument” includes—

a

supplemental instruments under section 42,

b

onward property transfer instruments under section 43, F19...

F20ba

bridge bank supplemental property transfer instruments under section 44D, and

c

property transfer orders under section 45.

3

This Part applies to the bank with any modifications specified by the Treasury in regulations.

4

The regulations—

a

shall be made by statutory instrument, and

b

may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

I23150F16Resolution company to private purchaser

1

This section applies where the Bank of England gives a bank administrator —

a

an Objective 1 Achievement Notice in respect of a F24resolution company, and

b

notice that Objective 1 is still required to be pursued in respect of a commercial purchaser who has acquired all or part of the business of the F24resolution company.

2

An Objective 1 Achievement Notice accompanied by a notice under subsection (1)(b) is referred to in this Part as an Objective 1 Interim Achievement Notice.

3

Where an Objective 1 Interim Achievement Notice is given, Objective 1 continues to apply—

a

in accordance with section 138(3), and

b

with the commercial purchaser being treated as the “private sector purchaser”.

4

An Objective 1 Interim Achievement Notice in respect of the F25resolution company—

a

has effect as between the bank administrator and the F25resolution company, but

b

has no other effect for the purposes of provisions of this Part which refer to the giving of an Objective 1 Achievement Notice.

5

When the Bank of England gives the bank administrator an Objective 1 Achievement Notice in respect of the commercial purchaser, section 139 and other provisions of this Part which refer to the giving of an Objective 1 Achievement Notice shall have effect.

I24151Property transfer from F21resolution company

1

This section applies where the Bank of England —

a

transfers all or part of the business of a bank (“the original bank”) to a F26resolution company (“the original F26resolution company”) by making a property transfer instrument in accordance with section 12(2) F27or 12ZA(3), and

b

later makes or proposes to make an onward property transfer instrument under section 43(2) from the F26resolution company to a transferee (“the onward transferee”).

2

If the onward transferee is a company which is wholly owned by the Bank of England—

a

the onward transferee is treated as a F26resolution company for the purposes of this Part, and

b

the original F26resolution company is treated as a residual bank for the purposes of this Part.

3

In any other case, the Bank of England may determine that the original F26resolution company is to be treated as a residual bank for the purposes of this Part.

4

Where the original F26resolution company is put into bank administration in reliance on subsection (2)(b), Objective 1 shall apply in accordance with section 138(4) in relation to both—

a

services provided by the original bank to the original F26resolution company, and

b

services provided by the original F26resolution company to the onward transferee.

5

Where the original F26resolution company is put into bank administration in reliance on a determination under subsection (3), Objective 1 shall apply in accordance with—

a

section 138(3) in relation to services provided by the original F26resolution company to the onward transferee, and

b

section 138(4) in relation to services provided by the original bank to the original F26resolution company .

6

But the Bank may determine—

a

that subsection (5) does not apply, and

b

that section 150 shall apply as if the Bank had given—

i

an Objective 1 Interim Achievement Notice in respect of the original F26resolution company, and

ii

a notice under section 150(1)(b) in respect of the onward transferee.

I36I3152Property transfer from temporary public ownership

1

This section applies where the Treasury—

a

make a share transfer order, in respect of securities issued by a bank (or a bank's holding company), in accordance with section 13(2), and

b

later make a property transfer order from the bank (or from another bank which is or was in the same group as the bank) under section 45(2).

2

This Part applies to the transferor under the property transfer order as to the transferor under a property transfer instrument.

3

For that purpose this Part applies with any modifications specified by the Treasury in regulations; and the regulations—

a

shall be made by statutory instrument, and

b

may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Annotations:
Commencement Information
I36

S. 152 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 3

I3

S. 152 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 3

152AF10Property transfer from transferred institution

1

This section applies where the Bank of England—

a

makes a resolution instrument that transfers securities issued by a bank (or a bank's parent undertaking), in accordance with section 12A(2), and

b

later makes a property transfer instrument from the bank or from another bank which is or was in the same group as the bank, in accordance with section 41A(2).

F281A

This section also applies where the Bank of England—

a

makes a share transfer instrument that transfers securities issued by a bank (or a bank's parent undertaking), in accordance with section 12(2), and

b

later makes a property transfer instrument from the bank in accordance with section 44D.

2

This Part applies to the transferor under the property transfer instrument made in accordance with section 41A(2) F29or 44D(2) as to the transferor under a property transfer instrument made in accordance with section 12(2).

3

For that purpose this Part applies with any modifications specified by the Treasury in regulations; and any regulations—

a

are to be made by statutory instrument, and

b

may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Termination

I25153Successful rescue

1

This section applies if—

a

the Bank of England has given an Objective 1 Achievement Notice, and

b

the bank administrator has pursued Objective 2(a) in section 140 and believes that it has been achieved.

F22

The bank administrator shall make an application under paragraph 79 of Schedule B1 to the Insolvency Act 1986 (court ending administration on achievement of objectives).

3

A bank administrator who makes an application in accordance with subsection (2) must send a copy to the F5PRA and the FCA.

4

Failure without reasonable excuse to comply with subsection (3) is an offence.

I26154Winding-up or voluntary arrangement

1

This section applies if—

a

the Bank of England has given an Objective 1 Achievement Notice, and

b

the bank administrator pursues Objective 2(b) in section 140.

2

The bank administrator may—

a

give a notice under paragraph 84 of Schedule B1 to the Insolvency Act 1986 (no more assets for distribution), or

b

make a proposal in accordance with section 1 of that Act (company voluntary arrangement).

F482A

For the purpose of subsection (2)(a), paragraph 84 of Schedule B1 has effect without the amendment made by paragraph 10(33) of Schedule 9 to the Small Business, Enterprise and Employment Act 2015 (further amendments relating to opted-out creditors).

3

Part 1 of F50the Insolvency Act 1986 shall apply to a proposal made by a bank administrator, with the following modifications.

F493A

Sections 2 to 6 and 7 F60... have effect without the amendments of those provisions made by paragraphs 2 to F618 of Schedule 9 to the Small Business, Enterprise and Employment Act 2015 (further amendments relating to the abolition of requirements to hold meetings).

4

In section 3 (summoning of meetings) subsection (2) (and not (1)) applies.

5

The action that may be taken by the court under section 5(3) (effect of approval) includes suspension of the bank administration order.

6

On the termination of a company voluntary arrangement the bank administrator may apply to the court to lift the suspension of the bank administration order.

7

The bank administrator may not act under subsection (2) above unless satisfied that the bank has received any funds it is likely to receive from any scheme under a resolution fund order under section 52.

Miscellaneous

I27155Disqualification of directors

1

In this section “the Disqualification Act” means the Company Directors Disqualification Act 1986.

2

In the Disqualification Act—

a

a reference to liquidation includes a reference to bank administration,

b

a reference to winding up includes a reference to making or being subject to a bank administration order,

c

a reference to becoming insolvent includes a reference to becoming subject to a bank administration order, and

d

a reference to a liquidator includes a reference to a bank administrator.

F473

For the purposes of the application of section 7A of the Disqualification Act (office-holder’s report on conduct of directors) to a bank which is subject to a bank administration order—

a

the “office-holder” is the bank administrator;

b

the “insolvency date” means the date on which the bank administration order is made; and

c

subsections (9) to (11) are omitted.

4

After section 21A of the Disqualification Act (bank insolvency–inserted by section 121 above) insert—

21BBank administration

Section 155 of the Banking Act 2009 provides for this Act to apply in relation to bank administration as it applies in relation to liquidation.

I37I4156Application of other law

1

The Secretary of State and the Treasury may by order made jointly—

a

provide for an enactment about insolvency or administration to apply to bank administration (with or without specified modifications);

b

amend, or modify the application of, an enactment about insolvency or administration in consequence of this Part.

2

An order under subsection (1)—

a

shall be made by statutory instrument, and

b

may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Annotations:
Commencement Information
I37

S. 156 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 3

I4

S. 156 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 3

I28157Other processes

1

F6Before the PRA or the FCA exercises an insolvency power in respect of a residual bank, whichever of them is exercising the power must give notice to the Bank of England, which may participate in any proceedings arising out of the exercise of the power.

2

In subsection (1)—

a

“residual bank” means a bank all or part of whose business has been transferred to a commercial purchaser in accordance with section 11 or to a F30resolution company in accordance with section 12 F31or 12ZA, and

b

“insolvency power” means—

i

section 359 of the Financial Services and Markets Act 2000 (application for administration order), and

ii

section 367 of that Act (winding-up petition).

157AF3Banks not regulated by PRA

1

In the application of this Part to an FCA-regulated bank the modifications specified in the Table apply.

2

In this section “FCA-regulated bank” means a bank which does not carry on any activity which is a PRA-regulated activity for the purposes of the Financial Services and Markets Act 2000.

TABLE OF MODIFICATIONS

Provision

Modification

Section 147

The bank administrator must send the statement to the FCA (and need not send a copy of it to the PRA).

Section 153

Ignore the reference to the PRA in subsection (3).

Section 157

Ignore the reference to the PRA in subsection (1).

I38I5158Building societies

1

The Treasury may by order provide for this Part to apply to building societies (within the meaning of section 119 of the Building Societies Act 1986) as it applies to banks, subject to modifications set out in the order.

2

An order may—

a

amend the Building Societies Act 1986 or any other enactment which relates, or in so far as it relates, to building societies;

b

amend an enactment amended by this Part;

c

replicate, with or without modifications, a provision of this Part;

d

apply a provision made under or by virtue of this Part, with or without modifications, to this Part as it applies to building societies.

3

An order—

a

shall be made by statutory instrument, and

b

may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

4

Provision made under or by virtue of this Part may make special provision in relation to the application of this Part to building societies.

Annotations:
Commencement Information
I38

S. 158 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 3

I5

S. 158 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 3

I39I6159Credit unions

1

The Treasury may by order provide for this Part to apply to credit unions (within the meaning of section 31 of the Credit Unions Act 1979) as it applies to banks, subject to modifications set out in the order.

2

An order may—

a

amend the Credit Union Act 1979, the Industrial and Providential Societies Act 1965 or any other enactment which relates, or in so far as it relates, to credit unions;

b

amend an enactment amended by this Part;

c

replicate, with or without modifications, a provision of this Part;

d

apply a provision made under or by virtue of this Part, with or without modifications, to this Part as it applies to credit unions.

3

An order—

a

shall be made by statutory instrument, and

b

may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

4

Provision made under or by virtue of this Part may make special provision in relation to the application of this Part to credit unions.

Annotations:
Commencement Information
I39

S. 159 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 3

I6

S. 159 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 3

159AF8Application to investment firms

This Part applies to investment firms as it applies to banks.

I29160Rules

1

Section 411 of the Insolvency Act 1986 (company insolvency rules) is amended as follows.

2

After subsection (1A) (inserted by section 125 above) insert—

1B

Rules may also be made for the purpose of giving effect to Part 3 of the Banking Act 2009 (bank administration); and rules for that purpose shall be made—

a

in relation to England and Wales, by the Lord Chancellor with the concurrence of—

i

the Treasury, and

ii

in the case of rules that affect court procedure, the Lord Chief Justice, or

b

in relation to Scotland, by the Treasury.

3

In subsection (2), after “(1A)” (inserted by section 125 above) insert “ or (1B) ”.

4

After subsection (2C) (inserted by section 125 above) insert—

2D

For the purposes of subsection (2), a reference in Schedule 8 to this Act to doing anything under or for the purposes of a provision of this Act includes a reference to doing anything under or for the purposes of Part 3 of the Banking Act 2009.

5

In subsection (3)—

a

after “bank liquidator” (inserted by section 125 above) insert “ or administrator ”, and

b

after “Part 2” (inserted by section 125 above) insert “ or 3 ”.

6

Section 413(2) of the Insolvency Act 1986 (rules: duty to consult Insolvency Rules Committee) shall not apply to the first set of rules which is made in reliance on this section.

I30161Fees

After section 414(8A) of the Insolvency Act 1986 (fees orders–inserted by section 126 above) insert—

8B

This section applies in relation to Part 3 of the Banking Act 2009 (bank administration) as in relation to Parts I to VII of this Act.

I31162Evidence

In section 433(1) of the Insolvency Act 1986 (admissibility of statements of affairs) after paragraph (aa) (inserted by section 128 above) insert (before the “and”)—

ab

a statement made in pursuance of a requirement imposed by or under Part 3 of that Act (bank administration),

I7163Partnerships

C61

The Lord Chancellor may, by order made with the concurrence of the Secretary of State and the Lord Chief Justice, modify provisions of this Part in their application to partnerships.

2

For procedural purposes an order under subsection (1) shall be treated in the same way as an order under section 420 of the Insolvency Act 1986 (partnerships).

3

This section does not apply in relation to partnerships constituted under the law of Scotland.

I40I8164Scottish partnerships

1

The Secretary of State may by order modify provisions of this Part in their application to partnerships constituted under the law of Scotland.

2

An order—

a

shall be made by statutory instrument, and

b

shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Annotations:
Commencement Information
I40

S. 164 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 3

I8

S. 164 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 3

I32165Co-operation between courts

1

Provisions of or by virtue of this Part are “insolvency law” for the purposes of section 426 of the Insolvency Act 1986 (co-operation between courts).

2

At the end of that section (after the subsection added by section 129) add—

14

Section 165 of the Banking Act 2009 provides for provisions of that Act about bank administration to be “insolvency law” for the purposes of this section.

I33166Interpretation: general

1

In this Part “the court” means—

a

in England and Wales, the High Court,

b

in Scotland, the Court of Session, and

c

in Northern Ireland, the High Court.

F72

In this Part—

  • “the FCA” means the Financial Conduct Authority, and

  • “the PRA” means the Prudential Regulation Authority.

3

For the purposes of a reference in this Part to inability to pay debts—

a

a bank that is in default on an obligation to pay a sum due and payable under an agreement, is to be treated as unable to pay its debts, and

b

section 123 of the Insolvency Act 1986 (inability to pay debts) also applies; and

for the purposes of paragraph (a) “agreement” means an agreement the making or performance of which constitutes or is part of a regulated activity carried on by the bank.

4

Expressions used in this Part and in the Insolvency Act 1986 have the same meaning as in that Act.

5

Expressions used in this Part and in the Companies Act 2006 have the same meaning as in that Act.

6

A reference in this Part to action includes a reference to inaction.

I9C5167Northern Ireland

In the application of this Part to Northern Ireland—

a

a reference to an enactment is to be treated as a reference to the equivalent enactment having effect in relation to Northern Ireland,

b

where this Part amends an enactment an equivalent amendment (incorporating any necessary modification) is made to the equivalent enactment having effect in relation to Northern Ireland,

c

the reference in section 159 to section 31 of the Credit Unions Act 1979 is to be treated as a reference to Article 2 of the Credit Unions (Northern Ireland) Order 1985, and

d

in section 163—

i

the reference to the Secretary of State is to be treated as a reference to the Department for Enterprise, Trade and Investment, and

ii

the reference to the Lord Chief Justice is a reference to the Lord Chief Justice in Northern Ireland.

I41I10168Consequential provision

1

The Treasury may by order make provision in consequence of this Part.

2

An order may, in particular, amend or modify the effect of an enactment (including a fiscal enactment) passed before the commencement of this Part.

3

An order—

a

shall be made by statutory instrument, and

b

may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.