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The Building Society Insolvency (England and Wales) Rules 2010

Type Statutory-Instrument

Publication 2010-10-20

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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Made: 20th October 2010

Laid before Parliament: 25th October 2010

Coming into force: 15th November 2010

The Lord Chancellor has not consulted the Committee existing for the purposes of section 413 of the Insolvency Act 1986: this is the first set of rules made in relation to building society insolvency and the duty to consult does not therefore apply to these Rules by virtue of article 16 of the Building Societies (Insolvency and Special Administration) Order 2009[^f00003].

PART 1 — INTRODUCTORY PROVISIONS

Citation and commencement

1

These Rules may be cited as the Building Society Insolvency (England and Wales) Rules 2010 and come into force on 15th November 2010.

Extent

2

These Rules extend to England and Wales only.

Application of Rules, construction and interpretation

3

(1) These Rules apply in relation to a building society undergoing the procedure in Part 2 of the Banking Act 2009[^f00004], as applied and modified by section 90C of the Building Societies Act 1986[^f00005] and by any order made under section 130 of the Banking Act, known as building society insolvency.

(2) In these Rules—

“the 1986 Rules” means the Insolvency Rules 1986[^f00006] including all amendments to them up to and including those made by the Insolvency (Amendment)(No. 2) Rules 2009[^f00007];

“the 2009 Order” means the Building Societies (Insolvency and Special Administration) Order 2009;

“the 2010 Rules” mean these Rules;

“the Banking Act” means the Banking Act 2009;

“the Building Societies Act” means the Building Societies Act 1986;

“building society” means a building society incorporated under the Building Societies Act;

“building society insolvency”, “building society insolvency order” and “building society liquidator” have the same meaning as in the Building Societies Act (see section 90C(2));

“contributory”, in relation to a building society and subject as provided in rule 40— means every person liable to contribute to the assets of the society in the event of its being wound up, and for the purposes of all proceedings for determining, and all proceedings prior to the determination of, the persons who are deemed to be contributories, includes any person alleged to be a contributory, and includes persons who are liable to pay or contribute to the payment of any debt or liability of the building society, or any sum for the adjustment of rights of members among themselves, or the expenses of the winding up, but does not include persons liable to contribute by virtue of a declaration by the court under section 213 (fraudulent trading) or 214 (wrongful trading) of the Insolvency Act;

“CPR” means the Civil Procedure Rules 1998[^f00008];

“eligible depositor” means a depositor who is eligible for compensation under the FSCS;

“the FSA” means the Financial Services Authority;

“the FSCS” means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000[^f00009]) or, where appropriate, the scheme manager of that scheme;

“the Insolvency Act” means the Insolvency Act 1986[^f00010];

“liquidation committee” means the committee established pursuant to section 100 of the Banking Act;

“Objective 1” has the same meaning as in Part 2 of the Banking Act (see section 99(2));

“personal service” has the meaning given in Part 6 of the CPR;

“principal office” means— the place which is specified in the building society’s memorandum sent to the FSA under paragraph 1(1)(c) of Schedule 2 to the Building Societies Act as the address of its principal office; or if notice has been given by the building society to the FSA under paragraph 11(2) of that Schedule (change of principal office), the place specified in that notice or, as the case may be, in the last such notice;

“registered name” in relation to a building society means the name of the society which is for the time being registered with the FSA; and

“sealed” means sealed with the seal of the court under which the application was made.

(3) Other expressions used in these Rules, where used in relation to building societies, have the same meaning as in the Building Societies Act.

(4) In these Rules—

(a) any reference to Part 2 of the Banking Act (Bank Insolvency), or to any provision in that Part, is a reference to that Part or provision as applied and modified by section 90C of the Building Societies Act and by any order made under section 130 of the Banking Act;

(b) any reference to any provision of the Insolvency Act that is not applied by Part 2 of the Banking Act, is a reference to that provision as applied and modified by section 90A of, and Schedule 15A to, the Building Societies Act;

(c) any reference to any provision of the Insolvency Act which is applied by Part 2 of the Banking Act is a reference to that provision as applied and modified by section 90C of the Building Societies Act and by any order made under section 130 of the Banking Act.

(5) These Rules consist of—

(a) the rules set out in full;

(b) in the case of a rule applying a rule in Part 4, 7, 8, 9, 11, 12 or 13 of the 1986 Rules, the rule so applied with—

(i) the modifications set out in paragraph (6),

(ii) the modifications contained in the rule applying it, and

(iii) any other necessary modification;

(6) The modifications are that where applicable, a reference to—

(a) any provision of the Insolvency Act that is applied by Part 2 of the Banking Act is a reference to that provision as applied and modified by section 90C of the Building Societies Act and by any order made under section 130 of the Banking Act;

(b) any provision of the Insolvency Act that is not applied by Part 2 of the Banking Act is a reference to that provision as applied and modified by section 90A of, and Schedule 15A to, the Building Societies Act;

(d) an affidavit is a reference to a witness statement;

(e) ex parte is a reference to without notice;

(f) the commencement of winding up is a reference to the commencement of building society insolvency;

(g) the chairman is a reference to the chair;

(h) a company is a reference to a building society;

(i) going into liquidation is a reference to entering building society insolvency;

(j) insolvency proceedings is a reference to building society insolvency proceedings;

(k) the official receiver should be ignored unless otherwise stated;

(l) a petition for winding up is a reference to an application for building society insolvency under section 95 of the Banking Act;

(m) a petitioner is a reference to an applicant;

(n) the provisional liquidator is a reference to the provisional building society liquidator;

(o) winding up is a reference to building society insolvency;

(p) winding up by the court is a reference to a building society being placed into building society insolvency by the court;

(q) a winding–up order is a reference to a building society insolvency order;

(r) the registered office is a reference to the principal office within the meaning of these Rules;

(s) the articles is a reference to the rules of the building society;

(t) the officers, or a particular officer of a company, is a reference to the officers, or the corresponding officer, of the building society and includes a person holding themself out as such an officer;

(u) the registrar of companies or the registrar is a reference to the FSA;

(v) contributory is a reference to a contributory in relation to a building society within the meaning of these Rules.

(7) Expressions used—

(a) both in a rule set out in full and in Part 2 of the Banking Act, or

(b) both in a modification to a rule from the 1986 Rules applied by these Rules and in Part 2 of the Banking Act,

have the same meaning as in Part 2 of the Banking Act.

(8) Expressions used—

(a) both in a rule set out in full and in the Building Societies Act, or

(b) both in a modification to a rule from the 1986 Rules applied by these Rules and in the Building Societies Act,

have the same meaning as in the Building Societies Act.

(9) Where a rule applies a rule of the 1986 Rules and modifies that rule by inserting or substituting text—

(a) any reference in the modified rule to the 2010 Rules is a reference to these Rules;

(b) expressions inserted or substituted have the same meaning as in these Rules.

(10) Where a rule in the 1986 Rules (Rule A) contains a reference to another such rule (Rule B) and—

(a) both Rule A and Rule B are applied by these Rules, or

(b) Rule A is applied by and the provision in Rule B to which Rule A refers is substantially repeated in these Rules,

the reference in Rule A shall be treated, for the purpose of these Rules, as being, respectively, to the rule in these Rules that applies Rule B or the provision in these Rules that substantially repeats the provision in Rule B.

(11) Where a rule (Rule A) refers to another rule (Rule B), and Rule B applies a rule of the 1986 Rules (Rule C) with or without modifications, the reference in Rule A includes a reference to Rule C as applied by Rule B.

(12) Any notice or document required to be sent electronically pursuant to these Rules shall be treated as having been sent to the person if—

(a) it is sent by email to the person’s last known email address, and

(b) the email contains a prompt asking the person for an electronic receipt saying that the email has been read.

(13) Where these Rules provide for a witness statement (either expressly, or through the application of the 1986 Rules as modified above)—

(a) that statement is a reference to a witness statement verified by a statement of truth in accordance with Part 22 of the CPR, and

(b) if the statement is made by the building society liquidator or provisional building society liquidator, the statement should state as such and should include the address at which that person works.

Overview

4

The purpose of these Rules is to provide a procedure for the appointment of a building society liquidator and the operation of building society insolvency under Part 2 of the Banking Act in England and Wales.

Forms

5

(1) This rule applies where a provision of these rules—

(a) applies a provision of the 1986 Rules which requires the use of a prescribed form, or

(b) makes provision similar to that made by a provision of those Rules which requires the use of a prescribed form.

(2) The form prescribed for the purposes of those Rules is to be used with any modification that the person using the form thinks desirable to reflect the nature of building society insolvency (whether or not the modification is set out in a Practice Form issued by the Treasury for that purpose).

Time limits

6

(1) Where by any provision of the Insolvency Act, the Banking Act or these Rules, the time for doing anything is limited, the court may extend the time, either before or after it has expired, on such terms, if any, as it thinks fit.

(2) If the court’s consideration of whether to extend the time for doing anything takes place before a full payment resolution has been passed, the court shall only extend the time if it considers that the resulting delay will not significantly prejudice the achievement of Objective 1.

PART 2 — APPLICATION FOR ORDER

Filing of application

7

(1) The application for a building society insolvency order, verified by witness statement in accordance with rule 11, shall be filed in court.

(2) There shall be filed with the application—

(a) one copy for service on the building society,

(b) one copy to be attached to the proof of service, and

(3) The court shall fix the venue, date and time for the hearing of the application and in doing so shall have regard to—

(a) the desirability of the application being heard as soon as is reasonably practicable, and

(b) the need to give the building society a reasonable opportunity to attend.

(4) Each of the copies issued to the applicant shall be sealed and be endorsed with the venue, date and time for the hearing.

(5) Any application filed in relation to a building society in respect of which there is in force a voluntary arrangement under Part 1 of the Insolvency Act shall be filed in accordance with this rule, but a copy of that application shall also be sent to the court to which the nominee’s report under section 2 of the Insolvency Act was submitted, if that is not the same court.

Service of application

8

(1) The applicant shall serve the building society with a sealed copy of the application.

(2) The application shall be served on the building society at its principal office.

(3) Service of the application at the principal office may be effected in any of the following ways—

(a) it may be handed to a person who there and then acknowledges that they are, or, to the best of the server’s knowledge, information and belief, are, a director or other officer, or employee, of the building society, or

(b) it may be handed to a person who there and then acknowledges that they are authorised to accept service of documents on the building society’s behalf, or

(c) in the absence of such person as is mentioned in sub-paragraphs (a) and (b), it may be deposited at or about the principal office in such a way that it is likely to come to the notice of a person attending the office.

(4) If for any reason it is impracticable to effect service as provided by paragraph (2) or (3), the application may be served in such other manner as the court may approve or direct.

(5) Application for permission of the court under paragraph (4) may be made without notice to the building society, stating in a witness statement what steps have been taken to comply with paragraph (2) or (3), and the reasons why it is impracticable to effect service as there provided.

(6) If the building society or its legal representatives fail to attend the hearing, the court may make the building society insolvency order in its absence if satisfied that the application has been served in accordance with this rule.

Proof of service

9

Apply rule 4.9 of the 1986 Rules.

Other persons to receive copy of application

10

(1) The applicant shall send two copies of the application to—

(a) the proposed building society liquidator,

(b) the Bank of England (if it is not the applicant),

(d) the FSCS,

(e) any person who has given notice to the FSA in respect of the building society under section 90D of the Building Societies Act[^f00011],

(f) if there is in force for the building society a voluntary arrangement under Part 1 of the Insolvency Act, the supervisor of that arrangement, and

(g) if an administrative receiver has been appointed in relation to the building society, that receiver,

in accordance with paragraph (2).

(2) One copy shall be sent electronically as soon as practicable and the other (a sealed copy) shall be sent by first class post on the business day on which the application is served on the building society.

(3) Any of the persons in sub-paragraph (1) will have the right to attend and be heard at the hearing of the application.

Verification of application

11

(1) This applies where an application has been filed in court under rule 7.

(2) A witness statement shall be attached to the application to state that the statements in the application are true, or are true to the best of the applicant’s knowledge, information and belief.

(3) The witness statement shall identify the person making the statement and shall include the capacity in which that person makes the statement and the basis for that person’s knowledge of the matters set out in the application.

(4) The witness statement is, unless proved otherwise, evidence of the statements in the application.

Persons entitled to copy of application

12

(1) Every contributory or creditor of the building society is entitled to a copy of the application on request from the applicant.

(2) The applicant shall respond to any request for a copy of the application as soon as reasonably practicable after the application has been made on payment of the appropriate fee.

Certificate of compliance

13

(1) Apply rule 4.14 of the 1986 Rules.

(2) In paragraph (1) the period for filing shall be as soon as reasonably practicable before the hearing of the application.

(3) In paragraph (2)[^f00012], leave out the words “a copy or” to the end.

(4) After paragraph (2) insert—

(2A) A witness statement made by the proposed building society liquidator to the effect that— (a) the person is qualified to act as an insolvency practitioner in accordance with section 390 of the Insolvency Act, and (b) the person consents to act as the building society liquidator, shall be filed in court with the certificate.

Leave for the applicant to withdraw

14

Apply rule 4.15 of the 1986 Rules. Leave out “at least 5 days” and ignore sub–paragraph (a).

Witness statement in opposition

15

(1) If the building society intends to oppose an application, the building society may (but need not) file a witness statement in opposition in court.

(2) A statement under paragraph (1) must be filed before the hearing of the application and a copy must be served on the applicant, before the hearing.

(3) The statement may be served on the applicant by personal service or by electronic means.

(4) The statement should also be sent to the persons in rule 10(1) before the hearing.

(5) The fact that the building society has not filed a statement under this rule shall not prevent the building society from being heard at the hearing.

Making, transmission and advertisement of order

16

(1) The court shall not make a building society insolvency order unless the person nominated to be appointed as the building society liquidator in the application for the order has filed in court a witness statement under rule 13.

(2) When the building society insolvency order has been made the court shall immediately send five sealed copies (or such larger number as the building society liquidator may have requested) to the building society liquidator.

(3) The court shall also, if practicable, immediately send a copy of the order to the building society liquidator electronically.

(4) The building society liquidator shall serve a sealed copy of the order on the building society at its principal office and, where the building society liquidator knows the building society’s email address, shall send an electronic copy to the building society.

(5) The building society liquidator shall send two copies of the order to—

(a) the Bank of England,

(b) the FSA,

(d) if there is in force for the building society a voluntary arrangement under Part 1 of the Insolvency Act, the supervisor of that arrangement, and

(e) if an administrative receiver has been appointed in relation to the building society, that administrative receiver,

in accordance with paragraph (6).

(6) One copy shall be sent electronically as soon as practicable and the other (a sealed copy) shall be sent by first class post on the business day on which the order is served on the building society.

(7) The building society liquidator—

(a) shall cause notice of the order to be gazetted as soon as reasonably practicable , and

(b) may advertise notice of the order in such other manner as the building society liquidator thinks fit.

Authentication of building society liquidator’s appointment

17

A sealed copy of the court’s order may in any proceedings be adduced as proof that the person appointed is duly authorised to exercise the powers and perform the duties of the building society liquidator in the building society insolvency.

Initial duties of building society liquidation committee

18

(1) As soon as reasonably practicable after the making of a building society insolvency order, the liquidation committee shall meet the building society liquidator for the purpose of discussing which of the objectives, or combination of objectives, mentioned in section 102(1) of the Banking Act, the committee should recommend the building society liquidator to pursue.

(2) If the building society liquidator and every individual on the liquidation committee agree, the meeting may be held by audio or video conference.

(3) The liquidation committee shall make its recommendation to the building society liquidator at the meeting.

(4) The Bank of England shall confirm the liquidation committee’s recommendation in writing as soon as practicable after the meeting.

(5) As soon as practicable after the making of a building society insolvency order, the liquidation committee shall also pass a resolution as to the terms on which, in accordance with rule 99, the building society liquidator is to be remunerated.

(6) Until a full payment resolution has been passed, the building society liquidation committee—

(a) shall take decisions and pass resolutions by a simple majority, and

(b) for the purpose of taking decisions and passing resolutions, may communicate by any means that its members consider convenient.

Expenses of voluntary arrangement

19

Apply rule 4.21A of the 1986 Rules[^f00013].

PART 3 — PROVISIONAL BUILDING SOCIETY LIQUIDATOR

Appointment of provisional building society liquidator

20

(1) An application to the court for the appointment of a provisional building society liquidator under section 135 of the Insolvency Act may be made—

(a) by the Bank of England,

(b) by the FSA (with the consent of the Bank of England).

(2) The application must be supported by a witness statement stating—

(a) the grounds upon which it is proposed that the provisional building society liquidator should be appointed,

(b) that the person to be appointed has consented to act,

(d) whether to the applicant’s knowledge—

(i) there has been proposed or is in force for the building society a voluntary arrangement under Part 1 of the Insolvency Act, or

(ii) an administrative receiver is acting in relation to the building society,

(e) the applicant’s estimate of the value of the assets in respect of which the provisional building society liquidator is to be appointed, and

(f) the functions the applicant wishes to be carried out by the provisional building society liquidator in relation to the building society’s affairs.

(3) The court may on the application, if satisfied that sufficient grounds are shown for the appointment, make it on such terms as it thinks fit.

Notice of appointment

21

(1) Where a provisional building society liquidator has been appointed, the court shall notify the applicant and the person appointed.

(2) Unless the court otherwise directs, on receipt of the notification under paragraph (1), the provisional liquidator shall give notice of that appointment as soon as reasonably practicable. Such notice—

(a) shall be gazetted, and

(b) may be advertised in such other manner as the provisional liquidator thinks fit.

Order of appointment

22

(1) The order of appointment shall specify the functions to be carried out by the provisional building society liquidator in relation to the building society’s affairs.

(2) The court shall, immediately after the order is made, send four sealed copies of the order (or such larger number as the provisional building society liquidator may have requested), to the provisional building society liquidator.

(3) The court shall also, if practicable, immediately send a copy of the order to the provisional building society liquidator electronically.

(4) The provisional building society liquidator shall serve a sealed copy of the order on the building society at its principal office and, where the provisional building society liquidator knows the building society’s email address, shall send an electronic copy to the building society.

(5) The provisional building society liquidator shall send two copies of the order to—

(a) the Bank of England,

(b) the FSA,

(d) if there is in force for the building society a voluntary arrangement under Part 1 of the Insolvency Act, the supervisor of that arrangement, and

(e) if an administrative receiver has been appointed in relation to the building society, that administrative receiver,

in accordance with paragraph (6).

(6) One copy shall be sent electronically as soon as practicable and the other (a sealed copy) shall be sent by first class post on the business day on which the order is served on the building society.

Security

23

Apply rule 4.28 of the 1986 Rules[^f00014].

Failure to give or keep up security

24

Apply rule 4.29 of the 1986 Rules.

Remuneration

25

Apply rule 4.30 of the 1986 Rules. Ignore paragraph (4).

Termination of appointment

26

(1) Apply rule 4.31 of the 1986 Rules[^f00015].

(2) After paragraph (2) insert—

(2A) On the making of a building society insolvency order the appointment of the provisional building society liquidator shall terminate.

PART 4 — STATEMENT OF AFFAIRS AND OTHER INFORMATION

Notice requiring statement of affairs

27

(1) Apply rule 4.32 of the 1986 Rules. For “official receiver”, substitute “building society liquidator”.

Verification and filing

28

(1) Apply rule 4.33 of the 1986 Rules. For “official receiver” substitute “building society liquidator”.

(2) For paragraph (6), substitute—

(6) The building society liquidator shall file the statement of affairs in court and shall send a copy of it to the FSA.

(3) Ignore paragraph (7).

Limited disclosure

29

(1) Apply rule 4.35 of the 1986 Rules. In paragraph (1), for “official receiver”, substitute “building society liquidator”.

(2) After paragraph (1), insert—

(1A) The building society liquidator may also apply to the court for an order of limited disclosure in respect of those depositors of the building society who, at the time of the making of the statement of affairs, still have a claim against the building society in respect of their deposits.

Release from duty to submit statement of affairs; extension of time

30

Apply rule 4.36 of the 1986 Rules[^f00016]. For “official receiver” substitute “building society liquidator.”

Expenses of statement of affairs

31

Apply rule 4.37 of the 1986 Rules[^f00017]. For “official receiver”, substitute “building society liquidator”.

Submission of accounts

32

Apply rule 4.39 of the 1986 Rules. For “official receiver”, substitute “building society liquidator”.

Further disclosure

33

Apply rule 4.42 of the 1986 Rules. For “official receiver”, substitute “building society liquidator”.

PART 5 — INFORMATION TO CREDITORS AND CONTRIBUTORIES

Report by building society liquidator

34

(1) The building society liquidator shall, at least once after the making of the building society insolvency order, make a report with respect to the proceedings in the building society insolvency and the state of the building society’s affairs.

(2) Regardless of whether the liquidation committee has passed a full payment resolution, the first report under paragraph (1) shall be, within eight weeks of the commencement of the building society insolvency, made publicly available on the building society’s website and the building society liquidator shall send a copy of it to any creditor or contributory on request.

(3) The building society liquidator shall include in the report under paragraph (1)—

(a) a statement that the proceedings are being held in the High Court and the relevant court reference number;

(b) the full registered name of the building society, any other trading names of the building society, and the address of its principal office;

(c) details relating to the building society liquidator’s appointment, including the date of appointment, and, where there are joint liquidators, details of—

(i) which functions (if any) are to be exercised by the persons appointed acting jointly, and

(ii) which functions (if any) are to be exercised by any or all of the persons appointed;

(d) the names of the directors, chief executive and secretary of the building society and details of any shares in the building society that they have;

(e) an account of the circumstances giving rise to the building society insolvency;

(f) if a statement of affairs has been submitted, a copy of that statement;

(g) if a statement of affairs has yet to be submitted—

(i) the names, addresses and details of any debts owed to the creditors, including details of any security held (or, in the case of depositors who are still creditors of the building society at the time the report is made, a single statement of their aggregate debt),

(ii) details of the shares issued by the society (including the types of shares issued and the number of each type in issue), and

(iii) details of the financial position of the building society at the latest practicable date (which must, unless the court orders otherwise, be a date not earlier than the commencement of building society insolvency);

(h) the basis upon which it has been proposed under rule 42, or, if the full payment resolution has yet to be passed, rule 18, that the building society liquidator’s remuneration be fixed;

(i) to the best of the building society liquidator’s knowledge and belief—

(i) an estimate of the value of the prescribed part (within the meaning of section 176A of the Insolvency Act) regardless of whether—

(aa) the building society liquidator proposes to make an application to the court under section 176A(5) of that Act, or

(bb) section 176A(3) of that Act applies, and

(ii) an estimate of the value of the building society’s net property;

(j) whether, and if so, why, the building society liquidator proposes to make an application to court under section 176A(5) of the Insolvency Act;

(k) a summary of —

(i) how Objective 1 is being or has been achieved and an estimate of the costs to the building society liquidator of achieving it,

(ii) the manner in which the affairs and business of the building society not involved in the achievement of Objective 1 have, since the commencement of the building society insolvency, been managed and financed, including, where any assets have been disposed of, the reasons for such disposals and the terms upon which such disposals were made, and

(iii) how the affairs and business of the building society will continue to be managed and financed; and

(l) an explanation of how it is envisaged the objectives of the building society liquidator will be achieved, including whether a dividend will be paid, an estimate as to the amount of this dividend, and how it is proposed that the building society liquidation shall end.

(4) Nothing in this rule is to be taken as requiring either estimate mentioned in paragraph (3)(i) to include any information the disclosure of which could seriously prejudice the commercial interests of the building society. If such information is excluded from the calculation the estimate shall be accompanied by a statement to that effect.

(5) The building society liquidator shall file with the court a copy of any report sent under this rule.

Meaning of “creditors”

35

Apply rule 4.44 of the 1986 Rules.

Report where statement of affairs lodged

36

Apply rule 4.45 of the 1986 Rules[^f00018]. For “official receiver”, substitute “building society liquidator”.

Statement of affairs dispensed with

37

Apply rule 4.46 of the 1986 Rules. For “official receiver”, substitute “building society liquidator”.

General rule as to reporting

38

Apply rule 4.47 of the 1986 Rules. For “official receiver”, substitute “building society liquidator”.

Building society insolvency stayed

39

Apply rule 4.48 of the 1986 Rules. For “official receiver”, substitute “building society liquidator”.

PART 6 — MEETINGS OF CREDITORS AND CONTRIBUTORIES

Meaning of “contributories”

40

For the purposes of this Part, “contributories” does not include the borrowing members of the society (see paragraph 5(2) of Schedule 2 to the Building Societies Act).

First meeting

41

(1) Once the liquidation committee passes a full payment resolution the building society liquidator shall—

(a) immediately summon a meeting of the building society’s creditors and a meeting of the building society’s contributories, and

(b) fix a venue, date and time for the meetings,

and the date must be within three months of the date on which the full payment resolution was passed.

(2) When the venue, date and time of the meetings have been fixed the building society liquidator shall give notice of the meetings to—

(a) the court,

(b) every creditor who is known to the building society liquidator or is identified in the building society’s statement of affairs,

(c) every person appearing (by the building society’s books or otherwise) to be a contributory of the building society, and

(d) each member of the liquidation committee.

(3) The building society liquidator—

(a) shall gazette the notice of the meeting as soon as reasonably practicable, and

(b) may advertise it in such other manner as the building society liquidator thinks fit.

(4) In giving the notice mentioned in paragraph (2) the building society liquidator shall, if practicable, indicate whether the present intention of the FSCS is to resign from the liquidation committee at the meeting.

(5) Notice to the court and the members of the liquidation committee shall be given immediately; notice to creditors and contributories shall be given, and the advertisements placed to appear, at least 21 days before the date fixed for the meeting.

(6) The notice to creditors shall specify a time and date, not more than four days before the date fixed for the meeting, by which they must lodge proofs and (if applicable) proxies, in order to be entitled to vote at the meeting.

(7) The FSCS is entitled to be represented at the meeting and Schedule 1 to the 1986 Rules, as applied by rule 285, has effect with respect to its voting rights at such a meeting.

(8) Meetings summoned under this rule are known respectively as “the first meeting of creditors” and “the first meeting of contributories”, and jointly as “the first meetings in the building society liquidation”.

Business at first meetings of creditors and contributories

42

(1) At the first meeting of creditors the FSCS shall state whether or not it is resigning from the liquidation committee.

(2) At that meeting those creditors present (or represented by proxy) may—

(a) where the FSCS has not resigned, elect two or four individuals as new members of the liquidation committee,

(b) where the FSCS has resigned, elect three or five individuals as new members of the liquidation committee,

in place of the members nominated by the Bank of England and the FSA. In accordance with section 100(6)(e) of the Banking Act, the liquidation committee ceases to exist at the end of the meeting if no individuals are elected as mentioned or if the resulting committee would have fewer than three members or an even number of members. The maximum number of committee members will be five.

(3) At the first meeting of creditors no resolutions shall be taken other than the following—

(a) if an application has been made to the court by the creditors under rule 95 for the court to direct the building society liquidator to summon a meeting of creditors for the purpose of removing the building society liquidator, and the court has directed that a resolution may be passed to that effect at the first meeting of creditors, —

(i) a resolution to remove the building society liquidator (or a resolution to remove one or more of the building society liquidators if joint liquidators were originally appointed), and

(ii) a resolution to appoint a named insolvency practitioner to be building society liquidator or two or more insolvency practitioners as joint liquidators;

(b) if no individuals have been elected to form a liquidation committee under paragraph (2), a resolution specifying the terms on which the liquidator is to be remunerated, or to defer consideration of that matter;

(c) where two or more persons are appointed jointly to act as building society liquidator, a resolution specifying which acts are to be done by both of them, all of them or by only one;

(d) a resolution to adjourn the meeting for not more than three weeks; and

(e) any other resolutions which the chair thinks it right to allow for special reasons.

(4) At the first meeting of contributories, no resolutions shall be taken other than the following—

(a) if no individuals have been elected to form a liquidation committee under paragraph (2), a resolution to form a liquidation committee (and rule 118 shall then apply);

(b) a resolution to adjourn the meeting for no more than three weeks;

(5) The FSCS shall be entitled to be a member of any liquidation committee formed where the liquidation committee has ceased to exist at the end of the first meeting of the creditors.

General power to call meetings

43

(1) Apply rule 4.54 of the 1986 Rules[^f00019].

(2) Where the building society liquidator has been directed to summon a meeting of creditors under section 195 of the Insolvency Act (as applied by section 109 of the Banking Act) for the purpose of removing the building society liquidator, the building society liquidator shall give notice of the meeting to the Bank of England and the FSA.

The chair at meetings

44

(1) Meetings shall be chaired by the building society liquidator or a person nominated in writing by the building society liquidator.

(2) A person nominated under paragraph (1) must be—

(a) qualified to act as an insolvency practitioner in accordance with section 390 of the Insolvency Act, or

(b) an employee of the building society liquidator or of the building society liquidator’s firm who is experienced in insolvency matters.

Requisitioned meetings: general

45

Apply rule 4.57 of the 1986 Rules. In rule 4.57(4)(a) for “the amount for which they may vote at any meeting” substitute “the value of the shares held by them in the society”.

Requisitioned meetings: reforming the liquidation committee

46

(1) Rule 4.57 of the 1986 Rules also applies where—

(a) the liquidation committee has ceased to exist at the end of the first meeting of creditors under rule 42 and no further steps have been taken to re-establish that committee; and

(b) the building society liquidator has been requested, by no less than one-tenth in value of the building society’s creditors, to summon a meeting for the purpose of re-establishing the liquidation committee.

(2) Where a meeting is requisitioned to re-establish the liquidation committee, the time periods set out in rule 4.57 of the 1986 Rules may be expedited by the building society liquidator at the request of the building society’s creditors.

(3) The building society liquidator shall give notice of the meeting to the FSA and Bank of England.

(4) Rule 42(1) and (2) shall apply at this meeting as if it were the first meeting of creditors.

Attendance at meetings of building society’s personnel

47

Apply rule 4.58 of the 1986 Rules.

Notice of meetings by advertisement only

48

Apply rule 4.59 of the 1986 Rules.

Venue

49

Apply rule 4.60 of the 1986 Rules.

Expenses of summoning meetings

50

Apply rule 4.61 of the 1986 Rules [^f00020].

Resolutions

51

Apply rule 4.63 of the 1986 Rules[^f00021]. In rule 4.63(1) for “the number of votes conferred on each contributory by the company’s articles” substitute “the value of the shares each contributory holds in the building society”.

Chair of meeting as proxy–holder

52

Apply rule 4.64 of the 1986 Rules.

Suspension and adjournment

53

(1) Apply rule 4.65 of the 1986 Rules[^f00022].

(2) In paragraph (3), leave out “or, as the case may be, 4.114–CVL(3)”.

Entitlement to vote (creditors)

54

(1) Apply rule 4.67 of the 1986 Rules[^f00023].

(2) Ignore paragraph (ii) of paragraph (1)(a) and paragraph (8).

(3) In paragraph (9), ignore the reference to paragraph (8).

Entitlement to vote (contributories)

55

Apply rule 4.69 of the 1986 Rules.

Admission and rejection of proof (creditors’ meetings)

56

Apply rule 4.70 of the 1986 Rules. For paragraph (5) substitute—

(5) The chair is not personally liable for costs incurred by any person in respect of an application under this rule unless the court makes an order to that effect.

Record of proceedings

57

Apply rule 4.71 of the 1986 Rules.

PART 7 — PROOF OF DEBTS

Meaning of “prove”

58

(1) Apply rule 4.73 of the 1986 Rules.

(2) In paragraph (5), for “or a Government Department” substitute “, a Government Department or the FSCS”.

(3) Ignore paragraphs (2) and (8)[^f00024].

Supply of forms

59

Apply rule 4.74 of the 1986 Rules[^f00025].

Contents of proof

60

Apply rule 4.75 of the 1986 Rules[^f00026].

Claim established by witness statement

61

Apply rule 4.77 of the 1986 Rules. Ignore paragraph (3).

Cost of proving

62

(1) Apply rule 4.78 of the 1986 Rules[^f00027].

(2) In paragraph (1) leave out “or 4.76–CVL”.

Building society liquidator to allow inspection of proofs

63

Apply rule 4.79 of the 1986 Rules.

New building society liquidator appointed

64

Apply rule 4.81 of the 1986 Rules.

Admission and rejection of proofs for dividend

65

Apply rule 4.82 of the 1986 Rules.

Appeal against decision on proof

66

(1) Apply rule 4.83 of the 1986 Rules.

(2) For paragraph (6) substitute—

(6) The building society liquidator is not personally liable for costs incurred by any person in respect of an application under this rule unless the court makes an order to that effect.

Withdrawal or variation of proof

67

Apply rule 4.84 of the 1986 Rules.

Expunging of proof by the court

68

Apply rule 4.85 of the 1986 Rules.

Estimate of quantum

69

Apply rule 4.86 of the 1986 Rules.

Negotiable instruments, etc.

70

Apply rule 4.87 of the 1986 Rules.

Secured creditors

71

Apply rule 4.88 of the 1986 Rules.

Discounts

72

Apply rule 4.89 of the 1986 Rules.

Mutual credits and set–off

73

(1) This rule applies where, before the building society goes into building society insolvency, there have been mutual credits, mutual debts or other mutual dealings between the society and any creditor of the society proving or claiming to prove for a debt in the building society insolvency.

(2) The reference in paragraph (1) to mutual credits, mutual debts or other mutual dealings does not include—

(a) any debt arising out of an obligation incurred at a time when the creditor had notice that—

(i) a meeting of creditors had been summoned under section 98 of the Insolvency Act,

(ii) a petition for the winding up of the building society was pending, or

(iii) an application for a building society insolvency order in respect of the building society was pending;

(b) any debt which has been acquired by a creditor on assignment or otherwise, pursuant to an agreement between the creditor and any other party where that agreement was entered into—

(i) after the commencement of building society insolvency,

(ii) at a time when the creditor had notice that a meeting of creditors had been summoned under section 98,

(iii) at a time when the creditor had notice that a winding up petition was pending, or

(iv) at a time when the creditor had notice that an application for a building society insolvency order in respect of the building society was pending;

(c) any mutual dealings between the building society and a creditor who is also a shareholding member of the building society in respect of shares held by that person in the building society.

(3) An account shall be taken of what is due from each party to the other in respect of the mutual dealings, and the sums due from one party shall be set off against the sums due from the other.

(4) A sum shall be regarded as being due to or from the building society for the purposes of paragraph (3) whether—

(a) it is payable at present or in the future;

(b) the obligation by virtue of which it is payable is certain or contingent; or

(5) Rule 4.86 of the 1986 Rules shall apply for the purposes of this rule to any obligation to or from the building society which, by reason of its being subject to any contingency or for any other reason, does not bear a certain value.

(6) Rules 75 to 77 shall apply for the purposes of this rule in relation to any sums due to the building society which—

(a) are payable in a currency other than sterling,

(b) are of a periodical nature, or

(7) Rule 251 shall apply for the purposes of this rule to any sum due to or from the building society which is payable in the future.

(8) Subject to rule 74, only the balance (if any) of the account owed to the creditor is provable in the liquidation. Alternatively the balance (if any) owed to the building society shall be paid to the building society liquidator as part of the assets except where all or part of the balance results from a contingent or prospective debt owed by the creditor and in such a case the balance (or that part of it which results from the contingent or prospective debt) shall be paid if and when that debt becomes due and payable.

(9) In this rule, “obligation” means an obligation however arising, whether by virtue of an agreement, rule of law or otherwise.

Disapplication of set-off for eligible depositors

74

(1) This rule applies if the FSA Rules allow the FSCS to make gross payments of compensation.

(2) In respect of protected deposits Rule 73 shall apply and, for the purpose of determining the sums due from the building society to an eligible depositor under rule 73(3)—

(a) where the total of the sums held by the building society for the eligible depositor in respect of protected deposits is no more than the prescribed limit, then paragraph (3) applies; and

(b) where the sums held exceed the prescribed limit, then paragraph (4) applies.

(3) Where this paragraph applies, there shall be deemed to have been no mutual dealings, regardless of whether there are any sums due from the depositor to the building society, and the sum due to the eligible depositor from the building society in respect of the protected deposits will be the total of the sums held by the building society for that depositor in respect of those deposits.

(4) Where this paragraph applies then—

(a) any mutual dealings shall be treated as being mutual dealings only in relation to the amount by which that total exceeds the prescribed limit, and

(b) the sums due from the building society to the eligible depositor in respect of the protected deposits will be—

(i) the amount by which that total exceeds the prescribed limit, set off in accordance with rule 73(3); and

(ii) the sums held by the building society for the eligible depositor in respect of protected deposits up to the prescribed limit.

(5) Any arrangements with regard to set-off between the building society and the eligible depositor in existence before the commencement of building society insolvency shall be subject to this rule, insofar as they relate to protected deposits.

(6) In this rule—

“the FSA Rules” means the FSA’s Compensation Sourcebook, as amended from time to time, made under section 213 of the Financial Services and Markets Act 2000[^f00028];

“prescribed limit” means the amount prescribed as the maximum compensation payable in respect of protected deposits under Part 15 of the Financial Services and Markets Act 2000; and

“protected deposit” means a protected deposit within the meaning given by the FSA Rules but does not include a share in the society held by an eligible depositor.

Debt in foreign currency

75

Apply rule 4.91 of the 1986 Rules[^f00029]. In paragraph (1), leave out from “or, if” to the end.

Payments of a periodical nature

76

Apply rule 4.92 of the 1986 Rules. In paragraph (1), leave out from “or, if” to the end[^f00030].

Interest

77

Apply rule 4.93 of the 1986 Rules. In paragraph (1), leave out from “or, if” to the end[^f00031].

Debt payable at future time

78

(1) Apply rule 4.94 of the 1986 Rules[^f00032].

(2) Leave out from “or, if” to “entered administration”.

PART 8 — SECURED CREDITORS

Value of security

79

Apply rule 4.95 of the 1986 Rules.

Surrender for non–disclosure

80

Apply rule 4.96 of the 1986 Rules. Ignore paragraph (3)[^f00033].

Redemption by liquidator

81

Apply rule 4.97 of the 1986 Rules[^f00034].

Test of security’s value

82

Apply rule 4.98 of the 1986 Rules.

Realisation of security by creditor

83

Apply rule 4.99 of the 1986 Rules.

PART 9 — THE BUILDING SOCIETY LIQUIDATOR

CHAPTER 1 — GENERAL

Remuneration of building society liquidator

84

(1) This rule applies where—

(a) the liquidation committee has ceased to exist as mentioned in rule 42(2),

(b) the committee has not been reformed at a meeting of creditors held under rule 42, 45 or 46, and

(2) Where this rule applies the creditors may, at the first or any subsequent meeting of creditors, pass a resolution as to the terms on which, in accordance with rule 99, the building society liquidator is to be remunerated.

(3) Where such a resolution is passed—

(a) it supersedes any resolution as to the remuneration of the building society liquidator passed by the liquidation committee before the first meeting of creditors, and

(b) the building society liquidator shall be paid under the resolution passed by the liquidation committee under rule 18(5) in respect of the performance of the building society liquidator’s functions before the day on which the creditors’ resolution is passed and under the creditors’ resolution in respect of the performance of the building society liquidator’s functions on and after that day.

Replacement of building society liquidator by creditors

85

(1) Apply rule 4.100 of the 1986 Rules[^f00035].

(2) For paragraph (1) substitute—

(1) This rule applies where a person is appointed as building society liquidator by a meeting of creditors.

(3) For paragraph (4) substitute—

(4) The chair of the meeting shall— (a) send the certificate to the new building society liquidator, (b) send a copy of the certificate to the Bank of England and the FSA, and (c) file a copy of the certificate in court .

Authentication of building society liquidator’s appointment

86

Apply rule 4.105 of the 1986 Rules[^f00036]). Leave out from “or (as” to “the Act”.

Appointment to be advertised and registered

87

(1) This rule applies where the building society liquidator is appointed by a meeting of the creditors or by the Bank of England under rule 107.

(2) The building society liquidator shall, after receiving the certificate of appointment, as soon as reasonably practicable give notice of that appointment. Such notice—

(a) shall be gazetted; and

(b) may be advertised in such other manner as the building society liquidator thinks fit.

(3) The expense of giving notice under this rule shall be borne in the first instance by the building society liquidator; but the building society liquidator is entitled to be reimbursed as an expense of the building society insolvency.

(4) The building society liquidator shall immediately notify the appointment to the FSA.

CHAPTER 2 — RESIGNATION AND REMOVAL

Creditors’ meeting to be notified of the building society liquidator’s resignation

88

(1) Apply rule 4.108 of the 1986 Rules[^f00037].

(2) For paragraph (1), substitute—

(1) Before resigning office, the building society liquidator must obtain the consent of the Bank of England and must call a meeting of creditors to notify them of this. (1A) The notice summoning the meeting shall indicate that this is the purpose, or one of the purposes, of the meeting and shall draw the attention of the creditors to rule 96 with respect to the building society liquidator’s release. (1B) The notice in paragraph (1A) shall enclose a copy of the Bank of England’s consent.

(3) For paragraph (2) substitute—

(2) Copies of the notice and of the account mentioned in paragraph (3) shall be sent to the court, the Bank of England and the FSA.

Action following acceptance of resignation

89

(1) This rule applies where a meeting is summoned to notify the creditors of the building society liquidator’s resignation.

(2) The meeting shall resolve whether to give the building society liquidator their release.

(3) If the meeting resolves not to release the building society liquidator , the building society liquidator shall be given a copy of that resolution and rule 96 applies.

(4) After the meeting the building society liquidator shall file the notice of resignation in court and shall send copies of the notice to the Bank of England and the FSA.

(5) The building society liquidator’s resignation is effective as from the date on which the court receives the notice of that resignation, and the court shall endorse that date on the notice.

Advertisement of resignation

90

Apply rule 4.112 of the 1986 Rules.

Meeting of creditors to remove building society liquidator

91

(1) Apply rule 4.113 of the 1986 Rules.

(2) In paragraph (1), for “section 174(4)” substitute “section 109 of the Banking Act 2009”.

(3) In paragraph (2), for “official receiver” substitute “Bank of England and the FSA”.

(4) For paragraph (4) substitute—

(4) Where the meeting passes a resolution that— (a) the building society liquidator be removed, (b) a new building society liquidator be appointed, or (c) the building society liquidator not be given their release, the building society liquidator shall be given a copy of that resolution and if it has been resolved to remove the building society liquidator, the building society liquidator shall be given a certificate to that effect.

(5) For paragraph (5) substitute—

(5) If the creditors have resolved to appoint a new building society liquidator, the certificate of that appointment shall also be sent to the FSA and rule 4.100 shall apply.

Court’s power to regulate meetings under rule 89

92

Apply rule 4.115 of the 1986 Rules. Leave out “or 4.114–CVL”.

Procedure on removal

93

(1) Apply rule 4.116 of the 1986 Rules.

(2) For “official receiver”, wherever it appears, substitute “out-going building society liquidator”.

(3) For paragraph (3) substitute—

(3) A copy of the certificate so endorsed shall be sent by the court to the outgoing building society liquidator and to any new building society liquidator appointed.

(4) Ignore paragraph (4).

Advertisement of removal

94

Apply rule 4.118 of the 1986 Rules.

Removal of building society liquidator by the court

95

(1) Apply rule 4.119 of the 1986 Rules[^f00038].

(2) After paragraph (1) insert—

(1A) If the liquidation committee has not yet passed a full payment resolution, the court shall dismiss any application under paragraph (1) where the application is made by someone other than the Bank of England, the FSA or the liquidation committee.

(3) In paragraph (2), for “at least 7 days’ notice” substitute—

(a) if the application is made before the passing of a full payment resolution, such notice as is reasonable in all the circumstances, and (b) if the application is made after the passing of a full payment resolution, at least 7 days’ notice.

(4) In paragraph (4), leave out “, at least 14 days before the hearing,”.

(5) After paragraph (4) insert—

(4A) The notice and copies mentioned in paragraph (4) shall be sent— (a) if the application is made before the passing of a full payment resolution, within such time so as to give the building society liquidator notice of the hearing as is reasonable in all the circumstances, and (b) if the application is made after the passing of a full payment resolution, at least 14 days before the hearing.

(6) In paragraph (6)—

(a) in sub-paragraph (a), for “official receiver” substitute “Bank of England and the FSA” and at the end insert “and”, and

(b) leave out “and” at the end of sub-paragraph (b), and sub–paragraph (c).

Release of resigning or removed building society liquidator

96

(1) Apply rule 4.121 of the 1986 Rules.

(2) In paragraph (1), for “accepted by” substitute “notified to”.

(3) For rule 4.109 substitute “rule 89 of the 2010 Rules”.

(4) In paragraph (3)—

(a) in sub paragraph (a) for “receive his resignation” substitute “be notified of his resignation”; and

(b) leave out “or” at the end of sub–paragraph (a) and at the end of sub–paragraph (b) insert “or” and—

(c) the building society liquidator resigns, and the Bank of England has refused his release,

(5) For paragraph (4) substitute—

(4) When the Secretary of State gives the release, he shall certify it accordingly, file the certificate in court and send a copy to the FSA.

CHAPTER 3 — RELEASE ON COMPLETION OF WINDING UP

Final meeting

97

(1) The building society liquidator shall give at least 14 days’ notice of the final meeting of the liquidation committee to be held under section 115 of the Banking Act to the following—

(a) the FSA,

(b) the FSCS,

(d) the Treasury, and

(e) the members of the liquidation committee.

(2) The building society liquidator’s final report to be laid before the meeting under that section shall contain an account of the liquidator’s administration of the winding up, including—

(a) details as to how Objective 1 was achieved having regard, in particular, to the expenses of the building society liquidator in connection with that Objective,

(b) a summary of the building society liquidator’s receipts and payments,

(c) a statement that the building society liquidator has reconciled his account with that which is held by the Secretary of State in respect of the winding up, and

(d) a statement as to the amount paid to unsecured creditors by virtue of the application of section 176A (prescribed part) of the 1986 Act[^f00039].

(3) At the same time that notice of the final meeting is sent out, the building society liquidator shall file the final report in court and send it to the FSA.

(4) The building society liquidator shall give notice to all creditors and contributories that the final report is available, either on request to the building society liquidator or from the FSA, and shall cause that notice to be gazetted and to be advertised by such other method as the liquidator sees fit at least 14 days before the final meeting is held.

(5) At the final meeting, the liquidation committee may question the building society liquidator with respect to any matter contained in the final report, and may resolve against the building society liquidator being released.

(6) The building society liquidator shall give notice to the court that the final meeting has been held and the notice shall state whether or not he has been given his release.

(7) Where the liquidation committee does not resolve against the building society liquidator’s release, the building society liquidator vacates office at the end of the meeting and has his release when the notice in paragraph (6) is filed in court.

(8) If there is no quorum present at the final meeting, the building society liquidator shall report to the court that a final meeting was summoned in accordance with section 115 of the Banking Act, but there was no quorum present; and the final meeting is then deemed to have been held, and the liquidation committee not to have resolved against the building society liquidator being released.

(9) If the liquidation committee resolves against the building society liquidator having his release then rule 96 applies.

Rule as to reporting

98

Apply rule 4.125A[^f00040] of the 1986 Rules. For “Rule 4.124 or 4.125” substitute “Rule 97 of the 2010 Rules”.

CHAPTER 4 — REMUNERATION

Fixing of remuneration

99

(1) Apply rule 4.127 of the 1986 Rules[^f00041].

(2) In paragraph (3), leave out from the beginning to “receiver”.

(3) For paragraph (5) substitute—

(5) If, under rule 42(2) of the 2010 Rules, the liquidation committee ceases to exist at the end of the first meeting of creditors, the terms on which the building society liquidator is to be remunerated determined by the initial liquidation committee under rule 18 of the 2010 Rules can be re-determined by a resolution of a meeting of creditors, and paragraph (4) applies to the determination of the creditors as it does to the determination of the liquidation committee.

(4) In paragraph (6), for the words from the beginning to “his” substitute “Where the building society liquidator’s”.

Building society liquidator’s entitlement to remuneration where it is not fixed under rule 99

100

(1) Apply rule 4.127A[^f00042] of the 1986 Rules.

(2) In paragraph (1), for the words from “liquidator” to “his” substitute “building society liquidator’s”.

(3) In paragraph (2), after “Schedule 6” add “to the 1986 Rules as applied by the Schedule to the 2010 Rules ”.

Building society liquidator’s remuneration where he realises assets on behalf of chargeholder

101

(1) Apply rule 4.127B[^f00043] of the 1986 Rules.

(2) In paragraph (1), for the words from “liquidator” to “and” substitute “building society liquidator”.

(3) In paragraphs (2) and (3), after “Schedule 6” add “to the 1986 Rules as applied by the Schedule to the 2010 Rules”.

Other matters affecting remuneration

102

Apply rule 4.128 of the 1986 Rules[^f00044].

Recourse of building society liquidator to meeting of creditors

103

Apply rule 4.129 of the 1986 Rules.

Recourse to the court

104

Apply rule 4.130 of the 1986 Rules[^f00045].

Creditors’ claim that remuneration is excessive

105

(1) Apply rule 4.131 of the 1986 Rules.

(2) In paragraph (1) at the end insert “The FSCS may also apply to the Court for such an order on those grounds”.

Primacy of Objective 1

106

Nothing done under a rule in this Chapter may prejudice the achievement of Objective 1.

CHAPTER 5 — SUPPLEMENTARY PROVISIONS

Replacement building society liquidator

107

(1) Where the building society liquidator vacates office for any reason (including death) other than by removal by a meeting of creditors in accordance with rule 91, the Bank of England shall appoint a new building society liquidator as soon as practicable.

(2) Where a building society liquidator has been removed by a meeting of creditors and no resolution has been passed by that meeting to appoint a new building society liquidator, the Bank of England shall appoint a new building society liquidator as soon as practicable.

(3) The Bank of England shall file in court the document appointing the new building society liquidator (“the certificate of appointment”) together with statements to the effect that the new building society liquidator—

(a) is qualified to act as an insolvency practitioner in accordance with section 390 of the Insolvency Act, and

(b) consents to act as the building society liquidator.

(4) The building society liquidator shall send a copy of the certificate of appointment to the FSA.

Building society liquidator deceased

108

(1) Unless notice of the death of the building society liquidator has been given under paragraph (2) or (3), it is the duty of the building society liquidator’s personal representatives, where the building society liquidator has died, to give notice of that fact to the Bank of England and the liquidation committee, specifying the date of the death.

(2) If the deceased building society liquidator was a partner in a firm, notice may be given to the Bank of England, the FSA and the liquidation committee by a partner in the firm who is qualified to act as an insolvency practitioner, or is a member of any body recognised by the Secretary of State for the authorisation of insolvency practitioners.

(3) Notice of the death may also be given by any person producing the relevant death certificate or a copy of it to the Bank of England, the FSA and the liquidation committee.

(4) The Bank of England shall give notice to the court, for the purpose of fixing the date of the deceased building society liquidator’s release.

Loss of qualification as insolvency practitioner

109

(1) Apply rule 4.134 of the 1986 Rules. For paragraph (2) substitute—

(2) The building society liquidator shall immediately give notice of his doing so to the Bank of England. (3) The Bank of England shall file a copy of this notice in court.

Resignation of the building society liquidator

110

(1) This rule applies where the building society liquidator was appointed by the court (in the building society insolvency order) or by the Bank of England.

(2) The building society liquidator can only resign—

(a) after the liquidation committee have passed a full payment resolution, and

(b) with the consent of the Bank of England.

(3) Before calling a meeting of creditors under rule 88 to receive notice of the building society liquidator’s resignation, the building society liquidator must write to the Bank of England notifying it of the intention to resign.

(4) The Bank of England shall notify the building society liquidator in writing within 21 days as to whether it consents to the resignation; if the Bank of England does not consent to the resignation, it shall set out its reasons in writing.

(5) The building society liquidator, if not content with the Bank of England’s response, may apply to the court for directions under section 168(3) of the Insolvency Act.

Notice to Bank of England of intention to vacate office

111

(1) This rule applies where the building society liquidator was appointed by a meeting of creditors.

(2) Apply rule 4.137 of the 1986 Rules[^f00046].

(3) For “official receiver”, wherever it appears, substitute “Bank of England” and for “receive his resignation” substitute “be notified of his resignation”.

Building society liquidator’s duties on vacating office

112

Apply rule 4.138 of the 1986 Rules[^f00047]. Ignore paragraph (3).

Power of court to set aside certain transactions

113

(1) Apply rule 4.149 of the 1986 Rules.

(2) In paragraph (2)—

(a) leave out “either”, and

(b) leave out “or” at the end of sub–paragraph (a), and after sub–paragraph (b) insert “, or” and—

(c) it is shown to the court’s satisfaction that the transaction was entered into by the building society liquidator for the purpose of achieving Objective 1.

Rule against solicitation

114

(1) Apply rule 4.150 of the 1986 Rules[^f00048].

PART 10 — THE LIQUIDATION COMMITTEE

Application of rules in this Part

115

The rules in this Part apply only in relation to the liquidation committee established after a full payment resolution has been passed.

Membership of committee

116

(1) Apply rule 4.152 of the 1986 Rules.

(2) For paragraph (1) substitute—

(1) Subject to rule 42(2) and (5) of the 2010 Rules, rule 4.154 as applied by rule 118 of the 2010 Rules and rule 4.171 as applied by rule 134 of the 2010 Rules, the liquidation committee shall consist of either three or five creditors of the company, elected by the meeting of creditors held under rule 42 of those Rules.

(3) Ignore paragraphs (2), (4) and (7)[^f00049].

Formalities of establishment

117

Apply rule 4.153 of the 1986 Rules[^f00050].

Committee established by contributories

118

(1) Apply rule 4.154 of the 1986 Rules[^f00051].

(2) For paragraph (1) substitute—

(1) This rule applies where the outcome of the creditors’ meeting summoned by the building society liquidator under rule 42 of the 2010 Rules is, (by virtue of rule 42(2)), that the liquidation committee ceases to exist at the end of the meeting.

(3) In paragraph (2), for “that section” substitute “section 141 of the Act”.

(4) In paragraph (4) for “at least 3 and not more than 5”, substitute “three or five”.

Obligations of liquidator to committee

119

Apply rule 4.155 of the 1986 Rules.

Meetings of the committee

120

(1) Apply rule 4.156 of the 1986 Rules.

(2) In paragraph (2)(a), after “representative” insert “or the FSCS”.

The chair at meetings

121

Apply rule 4.157 of the 1986 Rules.

Quorum

122

Subject to rule 4.171(6A) of the 1986 Rules as inserted by rule 134(3) of these rules, a meeting of the committee is duly constituted if due notice of it has been given to all the members, and at least two members are present or represented.

Committee–members’ representatives

123

Apply rule 4.159 of the 1986 Rules[^f00052].

Resignation

124

Apply rule 4.160 of the 1986 Rules.

Termination of membership

125

Apply rule 4.161 of the 1986 Rules[^f00053].

Removal

126

Apply rule 4.162 of the 1986 Rules.

Vacancy (creditor members)

127

Apply rule 4.163 of the 1986 Rules.

Vacancy (contributory members)

128

Apply rule 4.164 of the 1986 Rules.

Voting rights and resolutions

129

Apply rule 4.165 of the 1986 Rules. In paragraph (1), leave out “creditor”.

Resolutions by post

130

(1) Apply rule 4.167 of the 1986 Rules[^f00054].

(2) In paragraph (3), after “committee” insert “or the FSCS”.

Liquidator’s reports

131

Apply rule 4.168 of the 1986 Rules.

Expenses of members, etc.

132

Apply rule 4.169 of the 1986 Rules[^f00055].

Dealings by committee–members and others

133

Apply rule 4.170 of the 1986 Rules[^f00056].

Composition of committee when creditors paid in full

134

(1) Apply rule 4.171 of the 1986 Rules.

(2) In paragraph (6)—

(a) at the beginning, insert “Subject to paragraph (6A) below”;

(b) after “under paragraph (1)” insert “or since the FSCS has ceased to be on the committee”;

(3) After paragraph (6) insert—

(6A) The liquidation committee continues to exist and can act so long as it consists of at least the FSCS.

Committee’s functions vested in the Secretary of State

135

Apply rule 4.172 of the 1986 Rules. Ignore paragraph (2).

Formal defects

136

Apply rule 4.172A of the 1986 Rules[^f00057].

PART 11 — COLLECTION AND DISTRIBUTION OF BUILDING SOCIETY’S ASSETS BY BUILDING SOCIETY LIQUIDATOR

General duties of building society liquidator

137

Apply rule 4.179 of the 1986 Rules.

General qualification on powers

138

In exercising any power conferred on the building society liquidator by this Part before a full payment resolution has been passed, the building society liquidator shall exercise it consistently with Objective 1.

Manner of distributing assets

139

Apply rule 4.180 of the 1986 Rules.

Debts of insolvent building society to rank equally

140

Apply rule 4.181 of the 1986 Rules[^f00058].

Supplementary provisions as to dividend

141

Apply rule 4.182 of the 1986 Rules.

Division of unsold assets

142

Apply rule 4.183 of the 1986 Rules.

General powers of the liquidator

143

Apply rule 4.184 of the 1986 Rules[^f00059]. In paragraph (1) leave out “section 165(2) or”.

Enforced delivery up of building society’s property

144

Apply rule 4.185 of the 1986 Rules.

Final distribution

145

Apply rule 4.186 of the 1986 Rules[^f00060]. For “Part 11 of the Rules”, substitute “Part 21 of the 2010 Rules”.

PART 12 — DISCLAIMER

Liquidator’s notice of disclaimer

146

Apply rule 4.187 of the 1986 Rules.

Communication of disclaimer to persons interested

147

Apply rule 4.188 of the 1986 Rules.

Additional notices

148

Apply rule 4.189 of the 1986 Rules.

Duty to keep court informed

149

Apply rule 4.190 of the 1986 Rules.

Application by interested party under section 178(5)

150

Apply rule 4.191 of the 1986 Rules.

Interest in property to be declared on request

151

Apply rule 4.192 of the 1986 Rules.

Disclaimer presumed valid and effective

152

Apply rule 4.193 of the 1986 Rules. For “Chapter” substitute “Part”.

Application for exercise of court’s powers under s 181

153

Apply rule 4.194 of the 1986 Rules.

PART 13 — SETTLEMENT OF LIST OF CONTRIBUTORIES

Preliminary

154

Apply rule 4.195 of the 1986 Rules.

Primacy of Objective 1

155

Where the building society liquidator considers that the carrying out of a duty imposed by a rule in this Part would prejudice the achievement of Objective 1, the building society liquidator shall postpone the carrying out of that duty until the building society liquidator considers that the carrying out of the duty would no longer be likely to prejudice the achievement of that Objective.

Duty of liquidator to settle list

156

Apply rule 4.196 of the 1986 Rules.

Form of list

157

Apply rule 4.197 of the 1986 Rules.

Procedure for settling list

158

Apply rule 4.198 of the 1986 Rules.

Application to court for variation of the list

159

Apply rule 4.199 of the 1986 Rules.

Variation of, or addition to, the list

160

Apply rule 4.200 of the 1986 Rules.

Costs not to fall on building society liquidator

161

The building society liquidator is not personally liable for any costs incurred by a person in respect of an application to set aside or vary the building society liquidator’s act or decision in settling the list of contributories, or varying or adding to the list, unless the court makes an order to that effect.

PART 14 — CALLS

Calls by building society liquidator

162

Apply rule 4.202 of the 1986 Rules.

Control by building society liquidation committee

163

Apply rule 4.203 of the 1986 Rules.

Application to court for leave to make a call

164

Apply rule 4.204 of the 1986 Rules.

Making and enforcement of the call

165

Apply rule 4.205 of the 1986 Rules.

PART 15 — SPECIAL MANAGER

Appointment and remuneration

166

Apply rule 4.206 of the 1986 Rules.

Security

167

Apply rule 4.207 of the 1986 Rules[^f00061].

Failure to give or keep up security

168

Apply rule 4.208 of the 1986 Rules.

Accounting

169

Apply rule 4.209 of the 1986 Rules.

Termination of appointment

170

Apply rule 4.210 of the 1986 Rules.

PART 16 — ORDER OF PAYMENT AS TO COSTS, ETC. OUT OF ASSETS

General rule as to priority

171

(1) Apply rule 4.218 of the 1986 Rules[^f00062].

(2) In paragraph (3)—

(a) ignore sub–paragraphs (a)(iii) and (iv), (b), and (d),

(b) in sub-paragraph (c) leave out the words from “or section 415A” to the end,

Litigation expenses and property subject to a floating charge–general application

172

Apply rule 4.218A[^f00063] of the 1986 Rules.

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