The Insurers (Reorganisation and Winding Up) (Lloyd's) Regulations 2005

• (b) “reinsurance to close contract” means a contract under which, in accordance with the rules or practices of Lloyd's, underwriting members (“the reinsured members”) who are members of a syndicate for a year of account (“the closed year”) agree with underwriting members who constitute that or another syndicate for a later year of account (“the reinsuring members”) that the reinsuring members will indemnify the reinsured members against all known and unknown liabilities of the reinsured members arising out of the insurance business underwritten through that syndicate and allocated to the closed year (including liabilities under any reinsurance to close contract underwritten by the reinsured members).

Assets of members

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• (1) This regulation applies where a member or former member is treated as a UK insurer in accordance with regulations 13 and 40 above.

• (2) Subject to paragraphs (3) and (4), the undistributed assets of the member are to be treated as assets of the insurer for the purposes of the application of Part 4 of the principal Regulations in accordance with regulation 43 below.

• (3) For the purposes of this regulation, the undistributed assets of the member so treated do not include any asset held in a relevant trust fund.

• (4) But any asset released from a relevant trust fund and received by such a member is to be treated as an asset of the insurer for the purposes of the application of Part 4 of the principal Regulations.

Application of Part 4 of the principal Regulations: protection of settlements

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• (1) This regulation applies where a member or former member is subject to an insolvency measure mentioned in paragraph (4) at the time that a Lloyd's market reorganisation order comes into force.

• (2) Nothing in these Regulations or Part 4 of the principal Regulations affects the validity of any payment or disposition made, or any settlement agreed, by the relevant officer before the date when the Lloyd's market reorganisation order came into force.

• (3) For the purposes of the application of Part 4 of the principal Regulations, the insolvent estate of the member or former member shall not include any assets which are subject to a relevant compromise or arrangement, a relevant individual voluntary arrangement, or a relevant trust deed for creditors.

• (4) In paragraph (2) “relevant officer” means—

• (a) where the insolvency measure is a voluntary arrangement, the nominee;

• (b) where the insolvency measure is administration, the administrator;

• (c) where the insolvency measure is the appointment of a provisional liquidator, the provisional liquidator;

• (d) where the insolvency measure is a winding up, the liquidator;

• (e) where the insolvency measure is an individual voluntary arrangement, the nominee or supervisor;

• (f) where the insolvency measure is bankruptcy, the trustee in bankruptcy ;

• (g) where the insolvency measure is sequestration, the interim or permanent trustee; and

• (h) where the insolvency measure is a trust deed for creditors, the trustee.

• (5) For the purposes of paragraph (3)—

• (a) “assets” has the same meaning as “property” in section 436 of the 1986 Act or Article 2(2) of the 1989 Order;

• (b) “insolvent estate” in England and Wales and Northern Ireland has the meaning given by rule 1.2 of the Insolvency Rules or Rule 0.2 of the Insolvency Rules (Northern Ireland), and in Scotland means the whole estate of the member;

• (c) “a relevant compromise or arrangement” means—

• (i) a compromise or arrangement—

• (aa) sanctioned by the court under section 425 of the Companies Act 1985 (excluding a compromise or arrangement falling within section 427 or 427A of that Act),

• (bb) sanctioned by the court under Article 418 of the Companies (Northern Ireland) Order 1986 (excluding a compromise or arrangement falling within Article 420 or 420A of that Order), or

• (cc) which is a compromise or arrangement under section 899 or section 901F,

that was sanctioned by the court before the date on which an application for a Lloyd’s market reorganisation order was made, or

• (ii) any subsequent compromise or arrangement—

• (aa) sanctioned by the court as mentioned in paragraph (i)(aa) or (bb), or

• (bb) which is a compromise or arrangement under section 899 or section 901F,

that was sanctioned by the court to amend or replace a compromise or arrangement of the kind mentioned in paragraph (i);

• (d) “a relevant individual voluntary arrangement” and “a relevant trust deed for creditors” mean an individual voluntary arrangement or trust deed for creditors which was sanctioned by the court or entered into before the date on which an application for a Lloyd's market reorganisation order was made.

Challenge by reorganisation controller to conduct of insolvency practitioner

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• (1) The reorganisation controller may apply to the court claiming that a relevant officer is acting, has acted, or proposes to act in a way that fails to comply with a requirement of Part 4 of the principal Regulations.

• (2) The reorganisation controller must send a copy of an application under paragraph (1) to the relevant officer in respect of whom the application is made.

• (3) In the case of a relevant officer who is acting in respect of a member or former member subject to the jurisdiction of a Scottish court, the application must be made to the Court of Session.

• (4) The court may—

• (a) dismiss the application;

• (b) make an interim order;

• (c) make any other order it thinks appropriate.

• (5) In particular, an order under this regulation may—

• (a) regulate the relevant officer's exercise of his functions;

• (b) require that officer to do or not do a specified thing;

• (c) make consequential provision.

• (6) An order may not be made under this regulation if it would impede or prevent the implementation of—

• (a) a voluntary arrangement approved under Part 1 of the 1986 Act or Part 2 of the 1989 Order before the date when the Lloyd's market reorganisation order was made;

• (b) an individual voluntary arrangement approved under Part 8 of that Act or Part 8 of that Order before the date when the Lloyd's market reorganisation order was made; or

• (c) a compromise or arrangement sanctioned by the court before the date when the Lloyd’s market reorganisation order was made which is—

• (i) which is a compromise or arrangement under section 899 or section 901F,

• (ii) a compromise or arrangement sanctioned under section 425 of the Companies Act 1985 (excluding a compromise or arrangement falling within section 427 or 427A of that Act), or

• (iii) a compromise or arrangement sanctioned under Article 418 of the Companies (Northern Ireland) Order 1986 (excluding a compromise or arrangement falling within Article 420 or 420A of that Order).

• (7) In this regulation “relevant officer” means—

• (a) a liquidator,

• (b) a provisional liquidator,

• (c) an administrator

• (d) the official receiver or a trustee in bankruptcy, or

• (e) in Scotland, an interim or permanent trustee or a trustee for creditors,

who is appointed in relation to a member or former member.

Application of Part 5 of the principal Regulations

45

• (1) Part 5 of the principal Regulations (reorganisation or winding up of UK insurers ... applies with the modifications set out in regulation 46 where, on or after the date that a Lloyd's market reorganisation order comes into force, a member or former member is or becomes subject to a reorganisation or insolvency measure.

• (2) For the purposes of this regulation a “reorganisation or insolvency measure” means—

• (a) a voluntary arrangement, having a qualifying purpose, approved in accordance with section 4A of the 1986 Act or Article 17A of the 1989 Order;

• (b) administration pursuant to an order under paragraph 13 of Schedule B1 or under paragraph 14 of Schedule B1 to the 1989 Order;

• (c) the reduction by the court of the value of one or more relevant contracts of insurance under section 377 of the 2000 Act or section 24(5) of the Friendly Societies Act 1992 ;

• (d) winding up;

• (e) the appointment of a provisional liquidator in accordance with section 135 of the 1986 Act or Article 115 of the 1989 Order;

• (f) an individual voluntary arrangement, having a qualifying purpose, approved in accordance with section 258 of the 1986 Act or Article 232 of the 1989 Order;

• (g) in Scotland a qualifying trust deed for creditors within the meaning of section 5(4A) of the Bankruptcy (Scotland) Act 1985;

• (h) bankruptcy, in accordance with Part 9 of the 1986 Act or Part 9 of the1989 Order; or

• (i) sequestration under the Bankruptcy (Scotland) Act 1985.

• (3) A measure imposed under the law of a State or country other than the United Kingdom is not a reorganisation or insolvency measure for the purposes of this regulation.

• (4) For the purposes of sub-paragraphs (a), (f) and (g) of paragraph (2), a voluntary arrangement or individual voluntary arrangement has a qualifying purpose and a trust deed is a qualifying trust deed if it—

• (a) varies the rights of creditors as against the member and is intended to enable the member to continue to carry on an insurance market activity at Lloyd's; or

• (b) includes a realisation of some or all of the assets of the member and the distribution of proceeds to creditors, with a view to terminating the whole or any part of that member's business at Lloyd's.

Modification of provisions in Part 5 of the principal Regulations

46

• (1) The modifications mentioned in regulation 45(1) are as follows.

• (2) Regulation 35 is disapplied.

• (3) Regulation 36 (interpretation of Part 5) has effect as if—

• (a) in paragraph (1)—

• (i) the meaning of “affected insurer” included a member or former member who, on or after the date that a Lloyd's market reorganisation order comes into force, is or becomes subject to a reorganisation or insolvency measure within the meaning given by regulation 44(2)of these Regulations;

• (ii) the meaning of “relevant reorganisation or relevant winding up” included any reorganisation or insolvency measure, in respect of a member or former member, to which Part 5 of the principal Regulations applies by virtue of regulation 45(1) of these Regulations;

• (iii) in the case of sequestration, the date of sequestration within the meaning of section 12 of the Bankruptcy (Scotland) Act 1985; and

• (b) in paragraph (2) references to the opening of a relevant reorganisation or a relevant winding up meant (in addition to the meaning in the cases set out in that paragraph)—

• (i) in the case of an individual voluntary arrangement, the date when a decision with respect to that arrangement has effect in accordance with section 258 of the 1986 Act or Article 232 of the 1989 Order;

• (ii) in the case of bankruptcy, the date on which the bankruptcy order is made under Part 9 of the 1986 Act or Part 9 of the 1989 Order;

• (iii) in the case of a trust deed for creditors under the Bankruptcy (Scotland) Act 1985 the date when the trust deed was granted.

• (4) Regulation 37 of the principal Regulations (... applicable law in the winding up of a UK insurer) has effect as if—

• (a) references to a relevant winding up included (in each case) a reference to a reorganisation or insolvency measure within the meaning given by sub-paragraphs (d), (g) (h) and (i) of regulation 45(2) of these Regulations (winding up and bankruptcy) in respect of a member or former member; and

• (b) the reference in paragraph (3)(c) to the liquidator included a reference to the trustee in bankruptcy or in Scotland to the interim or permanent trustee.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of Part 5 of the principal Regulations: protection of dispositions etc. made before a Lloyd's market reorganisation order comes into force

47

• (1) This regulation applies where—

• (a) a member or former member is subject to a reorganisation or insolvency measure on the date when a Lloyd's market reorganisation order comes into force; and

• (b) Part 5 of the principal Regulations applies in relation to that reorganisation or insolvency measure by virtue of regulation 45 above.

• (2) Nothing in Part 5 of the principal Regulations affects the validity of any payment or disposition made, or any settlement agreed, by the relevant officer before the date when the Lloyd's market reorganisation order came into force.

• (3) For the purposes of the application of Part 5 of the principal Regulations, the insolvent estate of the member does not include any assets which are subject to a relevant compromise or arrangement, a relevant individual voluntary arrangement, or a relevant trust deed for creditors.

• (4) In paragraph (2) “relevant officer” means—

• (a) where the member is subject to a voluntary arrangement in accordance with section 4A of the 1986 Act or Article 17A of the 1989 Order, the supervisor;

• (b) where the member is in administration in accordance with Schedule B1 or with Schedule B1 to the 1989 Order, the administrator;

• (c) where a provisional liquidator has been appointed in relation to a member in accordance with section 135 of the 1986 Act or Article 115 of the 1989 Order, the provisional liquidator;

• (d) where the member is being wound up under Part 4 of the 1986 Act or Part 5 of the 1989 Order, the liquidator;

• (e) where the member has made a voluntary arrangement in accordance with Part 8 of the 1986 Act or Part 8 of the 1989 Order, the nominee;

• (f) where the member is bankrupt within the meaning of Part 9 of the 1986 Act or Part 9 of the 1989 Order, the official receiver or trustee in bankruptcy;

• (g) where the member is being sequestrated, the interim or permanent trustee; and

• (h) where a trust deed for creditors has been granted, the trustee.

• (5) For the purposes of paragraph (3)—

• (a) “assets” has the same meaning as “property” in section 436 of the 1986 Act or Article 2(2) of the 1989 Order, except in relation to relevant trust deeds;

• (b) “insolvent estate” in England and Wales and Northern Ireland has the meaning given by Rule 1.2 of the Insolvency Rules or Rule 0.2 of the Insolvency Rules (Northern Ireland), and in Scotland means the assets of the member;

• (c) “relevant compromise or arrangement” means—

• (i) a compromise or arrangement—

• (aa) sanctioned by the court under section 425 of the Companies Act 1985 (excluding a compromise or arrangement falling within section 427 or 427A of that Act),

• (bb) sanctioned by the court under Article 418 of the Companies (Northern Ireland) Order 1986 (excluding a compromise or arrangement falling within Article 420 or 420A of that Order), or

• (cc) which is a compromise or arrangement under section 899 or section 901F,

that was sanctioned by the court before the date on which an application for a Lloyd’s market reorganisation order was made, or

• (ii) any subsequent compromise or arrangement—

• (aa) sanctioned by the court as mentioned in sub–paragraph (aa) or (bb) of paragraph (i), or

• (bb) which is a compromise or arrangement under section 899 or section 901F,

that was sanctioned by the court to amend or replace a compromise or arrangement of the kind mentioned in paragraph (i);

• (d) “relevant individual voluntary arrangement” means—

• (i) an individual voluntary arrangement approved under Part 8 of the 1986 Act or Part 8 of the 1989 Order before the date when a Lloyd's market reorganisation order came in to force, and

• (ii) any subsequent individual voluntary arrangement sanctioned by the court to amend or replace an arrangement of the kind mentioned in paragraph (i); and

• (e) “relevant trust deed” means a trust deed granted by a member or former member before the date when the Lloyd's market reorganisation order entered into force.

Non-EEA countries

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In respect of a member or former member who is established in a country outside the United Kingdom, the court or the PRA may, subject to sections 348 and 349 of the 2000 Act, make such disclosures as each considers appropriate to a court or to a regulator with a role equivalent to that of the PRA for the purpose of facilitating the work of the reorganisation controller.

Amendment of principal Regulations

49

In regulation 19(2)(b) of the principal Regulations, for “regulation 18(4)”, substitute “regulation 18(5)”.

Signed

Gillian Merron — Tom Watson — Two of the Lords Commissioners of Her Majesty's Treasury — 2005-07-19

Explanatory note

(This note is not part of the Order)

Footnotes

Editorial notes