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The Investment Bank Special Administration (England and Wales) Rules 2011

Type Statutory-Instrument

Publication 2011-05-15

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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(4) Where P would have been eligible to submit a claim under rule 11(1)(b), the notice under paragraph (2) shall state that—

(a) the administrator believes that P is able to assert a security interest over certain client assets held by the investment bank; and

(b) in making the distribution plan under rule 144, the administrator intends to take into account the security interest according to the information available to the administrator,

unless P submits a claim in accordance with rule 140 within 14 business days of receipt of the notice (or such longer period as may be agreed by the administrator).

CHAPTER 3 — Distribution plan

Distribution plan

144

(1) This rule applies where after setting a bar date and making the notification required by rule 143, the administrator proposes to return client assets.

(2) The administrator shall draw up a distribution plan setting out—

(a) subject to paragraph (3), a schedule of dates on which the client assets are to be returned (“a distribution”);

(b) the unencumbered assets to be returned and to whom;

(c) in respect of encumbered client assets, how the amount of client assets to be returned to a particular client is to be calculated (“the net asset claim”), taking into account—

(i) any liabilities owed by the client to the investment bank in respect of financial contracts;

(ii) any liabilities owed to the client by the investment bank in respect of financial contracts; and

(iii) any shortfall claim of the client (as defined under regulation 12);

(d) in respect of a client’s net assets claim, whether the administrator intends to pay the client money or money’s worth in lieu of returning the assets to the client (but a client cannot be paid money or money’s worth out of the investment bank’s estate in lieu of assets unless the estate is able to retain assets the value of which is equivalent to that paid out); and

(e) the amount and identity of client assets that are to be retained by the administrator to pay the expenses of the special administration in accordance with rules 135 and 137 and how the retention of these assets will affect the amount of client assets to be returned to clients.

(3) In setting out the schedule of dates for the return of the client assets, no date shall be sooner than the date which is 3 months after the bar date.

(4) In setting out the schedule for the return of encumbered client assets,—

(a) where a person (“P”) notified under rule 143(2) has failed to respond to that notice, the administrator shall make provision in the distribution plan—

(i) for client assets to be returned to P according to the information available to the administrator in respect of the amount of client assets held for P by the investment bank; or

(ii) to take into account any security interest that according to the information available to the administrator, P is entitled to assert over certain client assets held by the investment bank,

as the case may be;

(b) the administrator shall make provision in respect of any security interest asserted over those assets by another person; and

(c) the administrator shall set out the extent to which a proportion of securities are to be held back from the initial distributions and the reasons why.

(5) The distribution plan will also set out—

(a) where any liabilities under paragraph (2)(c) are contingent, how the administrator intends to value the liability; and

(b) where any liabilities are disputed, whether the administrator intends to make an assumption as to the outcome of the dispute,

for the purpose of calculating the client’s net asset claim so that the claim can be paid out (or partly paid out) or assets returned (or returned in part) before the contingency occurs or the dispute is resolved, and the arrangements by which the administrator may revise such valuations or assumptions when further information becomes known.

(6) In this rule, “encumbered client assets” means client assets over which a third party or the investment bank exerts a security interest.

Approval by the creditors’ committee

145

(1) Where there is a creditors’ committee, the administrator shall summon a meeting of that committee to approve the distribution plan.

(2) The administrator shall send the proposed distribution plan to each member of the creditors’ committee when sending out notice of the meeting.

(3) The creditors’ committee may approve the distribution plan with or without modification.

Approval by the court

146

(1) This rule applies where a meeting of the creditors’ committee has taken place in accordance with rule 145 or where there is no creditors’ committee.

(2) The administrator shall apply to the court for approval of the distribution plan.

(3) The administrator shall send a copy of the distribution plan to—

(a) all persons who have submitted a claim of the type described in regulation 11(1);

(b) all persons notified under rule 143;

(c) in a special administration (bank administration), before the Bank of England has given an Objective A Achievement Notice, the Bank of England; and

(d) the FSA,

and details as to how to find out the venue for the hearing shall be sent out with the copy of the distribution plan.

(4) The court, on receiving an application under paragraph (2) shall fix the venue for the hearing and in fixing the venue shall have regard to the desirability of the application being heard as soon as is reasonably practicable subject to the persons notified under paragraph (3) and the members of the creditors’ committee being able to attend and make representations at the hearing.

(5) On hearing the application under paragraph (2) the court may—

(a) make an order approving the distribution plan with or without modification if satisfied that—

(i) where rule 143 applies, the administrator has made the necessary notifications in accordance with that rule; and

(ii) where there is a creditors’ committee, either that the committee has approved the distribution plan with or without modification or where the committee has been unable to approve the plan, the court has heard from the members of the committee or has given them an opportunity to explain why the committee were unable to approve the plan;

(b) dismiss the application;

(d) make any other order which the court thinks appropriate.

Treatment of late claimants

147

(1) This rule applies where after a distribution has taken place, the administrator receives a claim of the type described in regulation 11(1).

(2) Where the claim is not submitted in accordance with rule 139 or, as the case may be, rule 140, the administrator shall notify the claimant accordingly and ask them to resubmit their claim in accordance with the relevant rule.

(3) Where the claim is submitted in accordance with rule 139 or 140, if the administrator determines that, had the claim been submitted before the bar date, the claimant would have received client assets as part of the distribution —

(a) if enough of those assets amounting to what the client would have received in the distribution are still available to be distributed, they shall be returned to the client as soon as reasonably practicable and any remainder of the claimant’s claim shall be included in the distribution plan for further distributions; and

(b) if there are insufficient assets, any assets that can be returned to the claimant shall be, but the claimant may submit a proof under rule 152 for the value of those client assets not returned.

(4) Where the claimant’s proof under paragraph (3)(b) is in respect of assets that are securities, the value of those securities is to be calculated in accordance with rule 91 and for this purpose the references to “chair” in rule 91 shall be read as references to the administrator.

(5) The administrator may amend the distribution plan to reflect the return of client assets under this rule without need for the plan to be approved again by either the court or the creditors’ committee.

PART 6 — Distributions to creditors

CHAPTER 1 — Application

Distribution to creditors

148

(1) This Chapter applies where the administrator makes, or proposes to make, a distribution to any class of creditors other than secured creditors.

(2) Where the distribution is to a particular class of creditors, references in this Chapter to creditors shall, in so far as the context requires, be a reference to that class of creditors only.

(3) In a special administration (bank administration), before the Bank of England has given an Objective A Achievement Notice, no distributions to creditors under this Chapter shall be made without the consent of the Bank of England.

(4) The administrator shall give notice to the creditors of his intention to declare and distribute a dividend in accordance with rule 175.

(5) Where it is intended that the distribution is to be a sole or final dividend, the administrator shall, after the date specified in the notice referred to in paragraph (4)—

(a) defray any outstanding expenses of a voluntary arrangement that immediately preceded the special administration in accordance with rule 133;

(b) defray any items payable in accordance with rules 134 and 136;

(c) defray any amounts (including any debts or liabilities and the administrator’s own remuneration and expenses) which would, if the administrator were to cease to be the administrator of the investment bank, be payable out of the property of which the administrator had custody or control in accordance with paragraph 99; and

(d) declare and distribute that dividend without regard to the claim of any person in respect of a debt not already proved.

(6) The court may, on the application of any person, postpone the date specified in the notice.

Debts of investment bank to rank equally

149

Debts, other than preferential debts, rank equally between themselves in the special administration and, after the preferential debts, shall be paid in full unless the assets are insufficient for meeting them, in which case they abate in equal proportions between themselves.

Supplementary provisions as to dividend

150

(1) In the calculation and distribution of a dividend the administrator shall make provision for—

(a) any debts which appear to the administrator to be due to persons who, by reason of the distance of their place of residence, may not have had sufficient time to tender and establish their proofs;

(b) any debts which are the subject of claims which have not yet been determined; and

(2) A creditor who has not proved their debt before the declaration of any dividend is not entitled to disturb, by reason that they have not participated in it, the distribution of that dividend or any other dividend declared before their debt was proved, but—

(a) when the creditor has proved that debt, they are entitled to be paid, out of any money for the time being available for the payment of any further dividend, any dividend or dividends which the creditor has failed to receive; and

(b) any dividends payable under sub-paragraph (a) shall be paid before the money is applied to the payment of any such further dividend.

(3) No action lies against the administrator for a dividend; but if the administrator refuses to pay a dividend the court may, if it thinks just, order the administrator to pay it and also to pay, out of the administrator’s own money—

(a) interest on the dividend, at the rate for the time being specified in section 17 of the Judgments Act 1838[^f00016], from the time when it was withheld; and

(b) the costs of the proceedings in which the order to pay is made.

Division of unsold assets

151

(1) The administrator may, with the permission of the creditors’ committee, or if there is no creditors’ committee, the creditors, divide in its existing form amongst the investment bank’s creditors, according to its estimated value, any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold.

(2) The administrator must—

(a) in the receipts and payments account included in the final progress report under rule 220, state the estimated value of the property divided amongst the creditors of the investment during the period to which the report relates, and

(b) as a note to the account, provide details of the basis of the valuation.

CHAPTER 2 — Proofs of debts

Proving a debt

152

(1) A person claiming to be a creditor of the investment bank and wishing to recover their debt in whole or in part must (subject to any order of the court to the contrary) submit their claim in writing to the administrator.

(2) A creditor who claims is referred to as “proving” for their debt and a document by which that creditor seeks to establish their claim is their “proof”.

(3) Subject to the next paragraph, a proof must—

(a) be made out by, or under the direction of, the creditor and authenticated by the creditor or a person authorised in that behalf; and

(b) state the following matters—

(i) the creditor’s name and address,

(ii) if the creditor is a company, its registered number;

(iii) the total amount of the creditor’s claim (including value added tax) as at the date on which the investment bank entered special administration, less any payments made after that date in respect of the claim, any deduction under rule 163 and any adjustment by way of set-off in accordance with rule 164 or, as the case may be, rule 165;

(iv) whether or not the claim includes outstanding uncapitalised interest,

(v) particulars of how and when the debt was incurred by the investment bank,

(vi) particulars of any security held, the date on which it was given and the value which the creditor puts on it,

(vii) details of any reservation of title in respect of goods to which the debt refers, and

(viii) the name, address and authority of the person authenticating the proof (if not the creditor).

(4) There shall be specified in the proof details of any documents by reference to which the debt can be substantiated; but (subject as follows) it is not essential that such document be attached to the proof or submitted with it.

(5) The administrator may call for any document or other evidence to be produced, where the administrator thinks it necessary for the purpose of substantiating the whole or any part of the claim made in the proof.

Costs of proving

153

Unless the court otherwise orders—

(a) every creditor bears the cost of proving their own debt, including costs incurred in providing documents or evidence under rule 152; and

(b) costs incurred by the administrator in estimating the quantum of a debt under rule 160 are payable out of the assets as an expense of the administration.

Administrator to allow inspection of proofs

154

(1) The administrator shall, so long as proofs lodged are in the administrator’s hands, allow them to be inspected, at all reasonable times on any business day, by any of the following persons—

(a) any creditor who has submitted a proof of debt (unless that proof has been wholly rejected for purposes of dividend or otherwise);

(b) any contributory of the company; and

New administrator appointed

155

(1) If a new administrator is appointed in place of another, the former administrator must as soon as reasonably practicable, transmit to the new administrator all proofs received, together with an itemised list of them.

(2) The new administrator shall authenticate the list by way of receipt for the proofs, and return it to the former administrator.

(3) From then on, all proofs of debt must be sent to and retained by the new administrator.

Admission and rejection of proofs for dividend

156

(1) A proof may be admitted for dividend either for the whole amount claimed by the creditor, or for part of that amount.

(2) If the administrator rejects a proof in whole or in part, the administrator shall prepare a written statement of reasons for doing so, and send it as soon as reasonably practicable to the creditor.

Appeal against decision on proof

157

(1) If a creditor is dissatisfied with the administrator’s decision with respect to their proof (including any decision on the question of preference), that creditor may apply to the court for the decision to be reversed or varied and the application must be made within 21 days of the creditor receiving the statement sent under rule 156.

(2) A member or any other creditor may, if dissatisfied with the administrator’s decision admitting or rejecting the whole or any part of a proof, make such an application within 21 days of becoming aware of the administrator’s decision.

(3) Notice of an application under paragraph (1) or (2) shall be given by the applicant to—

(a) the FSA, and

(b) in a special administration (bank administration), before the Bank of England has given an Objective A Achievement Notice, the Bank of England.

(4) Where application is made to the court under this rule, the court shall fix a venue for the application to be heard, notice of which shall be sent by the applicant to—

(a) the creditor who lodged the proof in question (if the applicant is not that creditor);

(b) the administrator;

(d) in a special administration (bank administration), before the Bank of England has given an Objective A Achievement Notice, the Bank of England.

(5) The administrator shall, on receipt of the notice, file with the court the relevant proof, together (if appropriate) with a copy of the statement sent under rule 156.

(6) Where the application is made by a member, the court must not disallow the proof (in whole or in part) unless the member shows that there is (or would be but for the amount claimed in the proof), or that it is likely that there will be (or would be but for the amount claimed in the proof), a surplus of assets to which the investment bank would be entitled.

(7) After the application has been heard and determined, the proof shall, unless it has been wholly disallowed, be returned by the court to the administrator.

(8) The administrator is not personally liable for costs incurred by any person in respect of an application under this rule unless the court otherwise orders.

Withdrawal or variation of proof

158

A creditor’s proof may at any time, by agreement with the administrator, be withdrawn or varied as to the amount claimed.

Expunging of proof by the court

159

(1) The court may expunge a proof or reduce the amount claimed—

(a) on the administrator’s application, where the administrator thinks that the proof has been improperly admitted, or ought to be reduced; or

(b) on the application of a creditor, if the administrator declines to interfere in the matter.

(2) Where application is made to the court under this rule, the court shall fix a venue for the application to be heard, notice of which shall be sent by the applicant—

(a) in the case of an application by the administrator, to the creditor who made the proof; and

(b) in the case of an application by a creditor, to the administrator and to the creditor who made the proof (if the applicant is not the same creditor).

CHAPTER 3 — Quantification of claims

Estimate of quantum

160

(1) The administrator shall estimate the value of any debt which, by reason of it being subject to any contingency or for any other reason, does not bear a certain value; and a previous estimation may be revised, if the administrator thinks fit, by reference to any change of circumstances or to information becoming available to the administrator.

(2) The creditors shall be informed of the estimation and any revision of it.

(3) Where the value of a debt is estimated under this rule, the amount provable in the administration in the case of that debt is that of the estimate for the time being.

Negotiable instruments

161

Unless the administrator allows, a proof in respect of money owed on a bill of exchange, promissory note, cheque or other negotiable instrument or security cannot be admitted unless there is produced the instrument or security itself or a copy of it, certified by the creditor or the creditor’s authorised representative to be a true copy.

Secured creditors

162

(1) If a secured creditor realises their security, the creditor may prove for the balance of their debt, after deducting the amount realised.

(2) If a secured creditor voluntarily surrenders their security for the general benefit of creditors, they may prove for their whole debt, as if it were unsecured.

Discounts

163

There shall in every case be deducted from the claim all trade and other discounts which would have been available to the investment bank but for it going into special administration, except any discount for immediate, early or cash settlement.

Mutual credit and set-off

164

(1) This rule applies where the administrator, being authorised to make the distribution in question, has, pursuant to rule 175, given notice of a proposal to make the distribution.

(2) In this rule, “mutual dealings” means mutual credits, mutual debts or other mutual dealings between the investment bank and a creditor of the investment bank proving or claiming to prove for a debt in the special administration, but does not include any of the following—

(a) any debt arising out of an obligation incurred after the investment bank entered special administration;

(b) any debt arising out of an obligation incurred at a time when the creditor had notice that an application for a special administration order was pending;

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

(i) after the investment bank entered administration, or

(ii) at a time when the creditor had notice that an application for a special administration order was pending.

(3) An account shall be taken as at the date of the notice referred to in paragraph (1) 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 investment bank 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 160 shall apply for the purposes of this rule to any obligation to or from the investment bank which, by reason of its being subject to any contingency or for any other reason, does not bear a certain value.

(6) Rules 166 to 168 shall apply for the purposes of this rule in relation to any sums due to the investment bank which—

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

(b) are of a periodical nature; or

(7) Rule 186 shall apply for the purposes of this rule to any sum due to or from the investment bank which is payable in the future.

(8) Only the balance (if any) of the account owed to the creditor is provable in the special administration. Alternatively the balance (if any) owed to the investment bank shall be paid to the administrator 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.

Application of rule 164 in a special administration (bank administration) and special administration (bank insolvency)

165

(1) This rule applies—

(a) in a special administration (bank insolvency); and

(b) in a special administration (bank administration) if all or part of a creditor’s claim against the investment bank is in respect of protected deposits.

(2) Rule 164 shall apply, but for the purpose of determining the sums due from the investment bank to an eligible depositor in respect of protected deposits under rule 164(3)—

(a) where the total of the sums held by the investment bank for the depositor in respect of protected deposits is no more than the amount prescribed as the maximum compensation payable in respect of protected deposits under Part 15 of the Financial Services and Markets Act 2000 (“the limit”), then paragraph (3) applies; and

(b) where the sums held exceed the 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 investment bank, and the sum due to the depositor from the investment bank will be the total of the sums held by the investment bank for that depositor in respect of the protected 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 the total of the sums due to the depositor exceeds the limit, and

(b) the sums due from the investment bank to the depositor in respect of the protected deposits will be—

(i) the amount by which that total exceeds the limit, set off against the amounts due to the investment bank from the depositor in accordance with rule 164(3); and

(ii) the sums held by the investment bank for the depositor in respect of protected deposits up to the limit.

(5) Any arrangements with regard to set-off between the investment bank and the eligible depositor in existence before the date of the notice referred to in rule 164(1) shall be subject to this rule in so far as they relate to protected deposits.

(6) In this rule—

“eligible depositor” has the meaning given to it by section 93(3) of the 2009 Act;

“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[^f00017]; and

“protected deposit” means a protected deposit within the meaning given by the FSA Rules held by the investment bank at the date of the notice referred to in rule 164(1).

Debt in a foreign currency

166

(1) For the purpose of proving a debt incurred or payable in a currency other than sterling, the amount of the debt shall be converted into sterling at the official exchange rate prevailing on the date when the investment bank entered special administration.

(2) “The official exchange rate” means the mean of the buying and selling spot rates prevailing in the London market as published at the close of business for the date in question. In the absence of any such published rate, it is such rate as the court determines.

Payments of a periodical nature

167

(1) In the case of rent and other payments of a periodical nature, the creditor may prove for any amounts due and unpaid up to the date when the investment bank entered special administration.

(2) Where at that date any payment was accruing due, the creditor may prove for so much as would have fallen due at that date, if accruing from day to day.

Interest

168

(1) In this Rule, “the relevant date” means the date on which the investment bank entered special administration.

(2) Where a debt proved in the special administration bears interest, that interest is provable as part of the debt except in so far as it is payable in respect of any period after the relevant date.

(3) In the following circumstances the creditor’s claim may include interest on the debt for periods before the relevant date, although not previously reserved or agreed.

(4) If the debt is due by virtue of a written instrument and payable at a certain time, interest may be claimed for the period from that time to the relevant date.

(5) If the debt is due otherwise, interest may only be claimed if, before the relevant date, a demand for payment of the debt was made in writing by or on behalf of the creditor, and notice given that interest would be payable from the date of the demand to the date of payment.

(6) Interest under paragraph (5) may only be claimed for the period from the date of the demand to the relevant date and for all the purposes of the Regulations and these Rules shall be chargeable at a rate not exceeding that mentioned in paragraph (7).

(7) The rate of interest to be claimed under paragraphs (4) and (5) is the rate specified in section 17 of the Judgments Act 1838 on the relevant date.

(8) Any surplus remaining after payment of the debts proved shall, before being applied for any purpose, be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the relevant date.

(9) All interest payable under paragraph (8) ranks equally whether or not the debts on which it is payable rank equally.

(10) The rate of interest payable under paragraph (8) is whichever is the greater of the rate specified under paragraph (7) and the rate applicable to the debt apart from the special administration.

Debt payable at a future time

169

A creditor may prove for a debt of which payment was not yet due on the date when the investment bank entered special administration, subject to rule 186.

Value of security

170

(1) A secured creditor may, with the agreement of the administrator or the permission of the court, at any time alter the value which that creditor has, in their proof of debt, put upon their security.

(2) However, if a secured creditor—

(a) being the applicant for an special administration order, has in the application put a value on their security; or

(b) has voted in respect of the unsecured balance of their debt,

that creditor may re-value their security only with permission of the court.

Surrender for non-disclosure

171

(1) If a secured creditor omits to disclose their security in their proof of debt, the creditor shall surrender their security for the general benefit of creditors, unless the court, on application by that creditor, relieves them from the effect of this rule on the ground that the omission was inadvertent or the result of honest mistake.

(2) If the court grants that relief, it may require or allow the creditor’s proof of debt to be amended, on such terms as may be just.

Redemption by administrator

172

(1) The administrator may at any time give notice to a creditor whose debt is secured that it is proposed, at the expiration of 28 days from the date of the notice, to redeem the security at the value put upon it in the creditor’s proof.

(2) The creditor then has 21 days (or such longer period as the administrator may allow) in which, if the creditor so wishes, to exercise their right to revalue their security (with the permission of the court, where rule 170 applies). If the creditor re-values their security, the administrator may only redeem at the new value.

(3) If the administrator redeems the security, the cost of transferring it is payable out of the assets.

(4) A secured creditor may at any time, by a notice in writing, call on the administrator to elect whether the administrator will or will not exercise their power to redeem the security at the value then placed on it; and the administrator then has 3 months in which to exercise the power or determine not to exercise it.

Test of security’s value

173

(1) Subject as follows, the administrator, if dissatisfied with the value which a secured creditor puts on their security (whether in their proof or by way of re-valuation under rule 170), may require any property comprised in the security to be offered for sale.

(2) The terms of sale shall be such as may be agreed, or as the court may direct; and if the sale is by auction, the administrator on behalf of the investment bank, and the creditor on their own behalf, may appear and bid.

(3) This rule does not apply if the security has been revalued and the revaluation has been approved by the court.

Realisation of security by creditor

174

If a creditor who has valued their security subsequently realises it (whether or not at the instance of the administrator)—

(a) the net amount realised shall be substituted for the value previously put by the creditor on the security; and

(b) that amount shall be treated in all respects as an amended valuation made by the creditor.

Notice of proposed distribution

175

(1) Where an administrator is proposing to make a distribution to creditors, the administrator shall give notice of that fact.

(2) The notice in paragraph (1) shall—

(a) state whether the distribution is to preferential creditors or preferential creditors and unsecured creditors; and

(b) where the administrator proposes to make a distribution to unsecured creditors, state the value of the prescribed part, except where the court has made an order under section 176A(5) of the 1986 Act.

(3) The notice in paragraph (1) shall be given to—

(a) all creditors whose addresses are known to the administrator;

(b) the FSA;

(d) in a special administration (bank administration), before the Bank of England has given an Objective A Achievement Notice, the Bank of England.

(4) Subject to paragraph (5)(b), before declaring a dividend the administrator shall by notice invite the creditors to prove their debts. Such notice—

(a) shall be gazetted; and

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

(5) A notice pursuant to paragraph (1) must, in addition to the standard contents—

(a) state that it is the intention of the administrator to make a distribution to creditors within the period of 2 months from the last date for proving;

(b) specify whether the proposed dividend is interim or final;

(i) is the same date for all creditors; and

(ii) is not less than 21 days from that of the notice.

(6) Where a dividend is to be declared for preferential creditors—

(a) the notice pursuant to paragraph (1) need only to be given to those creditors in whose case the administrator has reason to believe that their debts are preferential; and

(b) the notice pursuant to paragraph (3) need only be given if the administrator thinks fit.

Admission or rejection of proofs

176

(1) Unless the administrator has already dealt with them, within 5 business days of the last date for proving, the administrator shall—

(a) admit or reject (in whole or in part) proofs that have been submitted; or

(b) make such provision in respect of them as the administrator thinks fit.

(2) The administrator is not obliged to deal with proofs lodged after the last date for proving, but may do so, if the administrator thinks fit.

(3) In the declaration of a dividend no payment shall be made more than once by virtue of the same debt.

Postponement or cancellation of dividend

177

(1) If in the period of 2 months referred to in rule 175(5)(a)—

(a) the administrator has rejected a proof in whole or in part and application is made to the court for that decision to be reversed or varied; or

(b) an application is made to the court for the administrator’s decision on a proof to be reversed or varied, or for a proof to be expunged, or for a reduction of the amount claimed,

the administrator may postpone or cancel the dividend.

(2) Where in that same period the administrator considers that, due to the nature of the business of the investment bank, there is real complexity in admitting or rejecting proofs of claims submitted, or that the quantum of claims may be affected by any shortfalls in claims for client assets, the administrator may postpone the dividend.

Declaration of a dividend

178

(1) Where rule 177(2) does not apply and subject to paragraph (2), within the 2 month period referred to in rule 175(5)(a) the administrator shall proceed to declare the dividend to one or more classes of creditor who have been given notice under that rule.

(2) Except with the permission of the court, the administrator shall not declare a dividend so long as there is pending any application to the court to reverse or vary the administrator’s decision on a proof, or to expunge a proof or to reduce the amount claimed.

(3) If the court gives permission under paragraph (2), the administrator must make such provision in respect of the proof in question as the court directs.

Notice of declaration of a dividend

179

(1) Where the administrator declares a dividend, notice of this shall be given to—

(a) all creditors who have proved their debts;

(b) the FSA;

(d) in a special administration (bank administration), before the Bank of England has given an Objective A Achievement Notice, the Bank of England.

(2) The notice shall include the following particulars relating to the special administration—

(a) amounts raised from the sale of assets, indicating (so far as practicable) amounts raised by the sale of particular assets;

(b) payments made by the administrator when acting as such;

(c) where the administrator proposed to make a distribution to unsecured creditors, the value of the prescribed part, except where the court has made an order under section 176A(5) of the 1986 Act;

(d) provision (if any) made for unsettled claims, and funds (if any) retained for particular purposes;

(e) the total amount of dividend and the rate of dividend; and

(f) whether, and if so when, any further dividend is expected to be declared.

(3) In a special administration (bank administration) where property of the investment bank has been transferred to a bridge bank under section 12 of the 2009 Act, if the administrator declares a dividend before the Bank of England has given an Objective A Achievement Notice, the notice shall also include details of any payment made from a scheme under a resolution fund order.

180

(1) The dividend may be distributed simultaneously with the notice declaring it.

(2) Payment of dividend may be made by post, or arrangements may be made with any creditor for it to be paid in another way, or held for collection.

(3) Where a dividend is paid on a bill of exchange or other negotiable instrument, the amount of the dividend shall be endorsed on the instrument, or on a certified copy of it, if required to be produced by the holder for that purpose.

Notice of no dividend or no further dividend

181

(1) If the administrator gives notice to creditors that no dividend (or as the case may be, no further dividend) can be declared, the notice shall contain a statement to the effect either—

(a) that no funds have been realised; or

(b) that the funds realised have already been distributed or used or allocated for defraying the expenses of administration.

(2) The notice to creditors in paragraph (1) shall also be given to—

(a) the FSA;

(b) in a special administration (bank administration), the FSCS; and

(c) in a special administration (bank administration), in a case where the Bank of England consented to a distribution, to the Bank of England.

Proof altered after payment of dividend

182

(1) If after payment of dividend the amount claimed by a creditor in their proof is increased, the creditor is not entitled to disturb the distribution of the dividend; but is entitled to be paid, out of any money for the time being available for the payment of any further dividend, any dividend or dividends which that creditor has failed to receive.

(2) Any dividend or dividends payable under paragraph (1) shall be paid before the money there referred to is applied to the payment of any such further dividend.

(3) If, after a creditor’s proof has been admitted, the proof is withdrawn or expunged, or the amount is reduced, the creditor is liable to repay to the administrator any amount overpaid by way of dividend.

Secured creditors

183

(1) The following applies where a creditor re-values their security at a time when a dividend has been declared.

(2) If the revaluation results in a reduction of the creditor’s unsecured claim ranking for dividend, the creditor shall, as soon as reasonably practicable, repay to the administrator, for the credit of the administration, any amount received by the creditor as dividend in excess of that to which that creditor would be entitled having regard to the revaluation of the security.

(3) If the revaluation results in an increase of the creditor’s unsecured claim, the creditor is entitled to receive from the administrator, out of any money for the time being available for the payment of a further dividend, before any such further dividend is paid, any dividend or dividends which the creditor has failed to receive, having regard to the revaluation of the security.

(4) However, the creditor is not entitled to disturb any dividend declared (whether or not distributed) before the date of the revaluation.

Disqualification from dividend

184

(1) If a creditor contravenes any provision of the Regulations or these Rules relating to the valuation of securities, the court may, on the application of the administrator, order that the creditor be wholly or partly disqualified from participation in any dividend.

(2) Notice of an application under paragraph (1) shall be given by the administrator to the FSA and the FSA shall have the right to appear and be heard at the hearing of the application.

Assignment of right to dividend

185

(1) If a person, entitled to a dividend, gives notice to the administrator that they wish the dividend to be paid to another person, or that they have assigned that entitlement to another person, the administrator shall pay the dividend to that other accordingly.

(2) A notice given under this rule must specify the name and address of the person to whom payment is to be made.

Debt payable at a future time

186

(1) Where a creditor has proved for a debt of which payment is not due at the date of the declaration of dividend, that creditor is entitled to dividend equally with other creditors, but subject as follows.

(2) For the purpose of dividend (and no other purpose) the amount of the creditor’s admitted proof (or, if a distribution has previously been made to that creditor, the amount remaining outstanding in respect of their admitted proof) shall be reduced by applying the following formula—

$$X 1.05 n$ where— “X” is the value of the admitted proof; and “n” is the period beginning with the relevant date and ending with the date on which the payment of the creditor’s debt would otherwise be due expressed in years and months in a decimalised form.$

(3) In paragraph (2), “relevant date” means the date that the investment bank entered special administration.

PART 7 — The Administrator

CHAPTER 1 — Powers of the administrator

General powers

187

(1) Any permission given by the creditors’ committee (or if there is no such committee, a meeting of the company’s creditors and clients or the court under the Rules), shall not be a general permission but shall relate to a particular proposed exercise of the administrator’s power in Schedule 4 to the 1986 Act.

(2) A person dealing with the administrator in good faith and for value is not concerned to enquire whether any such permission has been given.

(3) Where the administrator has done anything without that permission, the court or the creditors’ committee may, for the purpose of enabling the administrator to meet the administrator’s expenses out of the assets, ratify what the administrator has done; but neither shall do so unless it is satisfied that the administrator has acted in a case of urgency and has sought ratification without undue delay.

Powers of disclaimer

188

(1) Where the administrator disclaims property under section 178 of the 1986 Act, the notice of disclaimer shall contain such particulars of the property disclaimed as enable it to be easily identified.

(2) The notice of disclaimer must be authenticated and dated by the administrator.

(3) As soon as reasonably practicable after authenticating the notice of disclaimer, the administrator must—

(a) send a copy of the notice to the registrar of companies; and

(b) in any case where the disclaimer is of registered land as defined in section 132(1) of the Land Registration Act 2002[^f00018], send a copy of the notice to the Chief Land Registrar.

(4) For the purposes of section 178, the date of the prescribed notice is that on which the administrator authenticated it.

Communication of disclaimer to persons interested

189

(1) Within 7 business days after the date of the notice of disclaimer, the administrator shall send or give copies of the notice to the persons mentioned in paragraphs (2) to (4).

(2) Where the property disclaimed is of a leasehold nature, the administrator shall send or give a copy to every person who (to the administrator’s knowledge) claims under the company as underlessee or mortgagee.

(3) The administrator shall in any case send or give a copy of the notice to every person who (to the administrator’s knowledge)—

(a) claims an interest in the disclaimed property; or

(b) is under any liability in respect of the property, not being a liability discharged by the disclaimer.

(4) If the disclaimer is of an unprofitable contract, the administrator shall send or give copies of the notice to all such persons as, to the administrator’s knowledge, are parties to the contract or have interests under it.

(5) If subsequently it comes to the administrator’s knowledge, in the case of any person ‘P’, that P has such an interest in the disclaimed property as would have entitled P to receive a copy of the notice of disclaimer in pursuance of paragraphs (2) to (4), the administrator shall then, as soon as reasonably practicable, send or give to P a copy of the notice.

(6) Compliance with paragraph (5) is not required if—

(a) the administrator is satisfied that P has already been made aware of the disclaimer and its date, or

(b) the court, on the administrator’s application, orders that compliance is not required in that particular case.

Additional notices

190

(1) The administrator disclaiming property may at any time send or give copies of the notice of the disclaimer to any persons who in the administrator’s opinion ought, in the public interest or otherwise, to be informed of the disclaimer.

(2) Paragraph (1) is without prejudice to the administrator’s obligations under sections 178 to 180 of the 1986 Act and rules 188 and 189.

Records

191

The administrator must include in the administrator’s records of the special administration a record of—

(a) the persons to whom that administrator has sent or given copies of the notice of disclaimer under the two preceding rules, showing their names and addresses, and the nature of their respective interests;

(b) the dates on which the copies of the notice of disclaimer were sent or given to those persons;

(c) the date on which, as required by rule 188, a copy of the notice of disclaimer was sent to the registrar of companies; and

(d) (where applicable) the date on which, as required by rule 188, a copy of the notice was sent to the Chief Land Registrar.

Application by interested party

192

(1) The following applies where, in the case of any property, application is made to the administrator by an interested party under section 178(5) of the 1986 Act.

(2) The application must be delivered to the administrator—

(a) personally;

(b) by electronic means in accordance with Part 11; or

(c) by any other means of delivery which enables proof of receipt of the application by the administrator to be provided, if requested.

Interest in property to be declared on request

193

(1) If, in the case of property which the administrator has the right to disclaim, it appears to the administrator that there is some person ‘P’ who claims, or may claim, to have an interest in the property, the administrator may give notice to P calling on that person to declare within 14 days whether P claims any such interest and, if so, the nature and extent of it.

(2) Failing compliance with the notice, the administrator is entitled to assume that P has no such interest in the property as will prevent or impede its disclaimer.

Disclaimer presumed valid and effective

194

Any disclaimer of property by the administrator is presumed valid and effective, unless it is proved that the administrator has been in breach of their duty with respect to the giving of notice of disclaimer, or otherwise, under sections 178 to 180 of the 1986 Act or under this Chapter of the Rules.

Application for the exercise of court’s powers under section 181

195

(1) This rule applies with respect to an application by any person under section 181 of the 1986 Act for an order of the court to vest or deliver disclaimed property.

(2) The application must be made within 3 months of the applicant becoming aware of the disclaimer, or of the applicant receiving a copy of the administrator’s notice of disclaimer sent under rule 189, whichever is the earlier.

(3) The applicant shall with the application file a witness statement—

(a) stating whether the application is made under—

(i) paragraph (a) of section 181(2) (claim of interest in the property), or

(ii) under paragraph (b) (liability not discharged);

(b) specifying the date on which the applicant received a copy of the administrator’s notice of disclaimer, or otherwise became aware of the disclaimer; and

(c) specifying the grounds of the application and the order which the applicant desires the court to make under section 181.

(4) The court shall fix a venue for the hearing of the application; and the applicant shall, not later than 5 business days before the date fixed, give to the administrator notice of the venue, accompanied by copies of the application and the witness statement required by paragraph (3).

(5) On the hearing of the application, the court may give directions as to other persons (if any) who should be sent or given notice of the application and the grounds on which it is made.

(6) Sealed copies of any order made on the application shall be sent by the court to the applicant and the administrator.

(7) In a case where the property disclaimed is of a leasehold nature, and section 179 of the 1986 Act applies to suspend the effect of the disclaimer, there shall be included in the court’s order a direction giving effect to the disclaimer.

(8) Paragraph (7) does not apply if, at the time when the order is issued, other applications under section 181 are pending in respect of the same property.

CHAPTER 2 — Fixing of remuneration

Fixing of remuneration

196

(1) The administrator is entitled to receive remuneration for services given in respect of—

(a) the pursuit of—

(i) Objective A in a special administration (bank insolvency),

(ii) Objective A in a special administration (bank administration), and

(iii) Objectives 2 and 3,

to be paid out of the estate of the investment bank; and

(b) the pursuit of Objective 1 to be paid out of the client assets held by the investment bank.

(2) The basis of remuneration in both cases in paragraph (1) shall be fixed—

(a) as a percentage of the value of the property with which the administrator has to deal; or

(b) by reference to the time properly given by the insolvency practitioner (as administrator) and his staff in attending to matters arising in the special administration; or

(3) The basis of remuneration may be fixed as any one or more of the bases set out in paragraph (2), and different bases may be fixed in respect of different things done by the administrator.

(4) Where the basis of remuneration is fixed as set out in paragraph (2)(a), different percentages may be fixed in respect of different things done by the administrator.

(5) It is for the creditors’ committee (if there is one) to determine for each case—

(a) which of the bases set out in paragraph (2) are to be fixed and (where appropriate) in what combination under paragraph (3), and

(b) the percentage or percentages (if any) to be fixed under paragraphs (2)(a) and (4) and the amount (if any) to be set under paragraph (2)(c).

(6) In making the determinations, the committee shall have regard to the following matters—

(a) the complexity (or otherwise) of the case;

(b) any respects in which, in connection with the pursuit of either Objective 1, or of Objectives A, 2 and 3, there falls on the administrator any responsibility of an exceptional kind or degree;

(c) the effectiveness with which the administrator appears to be carrying out, or to have carried out, their duties as such; and

(d) the value and nature in each case of the property with which the administrator has to deal.

(7) If there is no creditors’ committee, or the committee does not make the requisite determinations, the basis of the administrator’s remuneration in each case may be fixed (in accordance with paragraphs (2) to (5)) by resolutions of a meeting of creditors and clients, or in respect of the administrator’s remuneration for the purpose outlined in rule 196(1)(b), a meeting of clients and paragraph (6) applies to them as it does to the creditors’ committee.

(8) If not fixed as above, the basis of the administrator’s remuneration in either case shall, on the administrator’s application, be fixed by the court and the provisions above apply as they do to the fixing of the basis of remuneration by the creditors’ committee; but such an application may not be made by the administrator unless the administrator has first sought fixing of the basis in accordance with paragraph (5) or (7), and in any event may not be made more than 18 months after the date of the administrator’s appointment.

(9) Where there are joint administrators, it is for them to agree between themselves as to how the remuneration payable should be apportioned. Any dispute arising between them may be referred—

(a) to the court, for settlement by order; or

(b) to the creditors’ committee or a meeting of creditors and clients, for settlement by resolution.

(10) If the administrator is a solicitor and employs their own firm, or any partner in it, to act on behalf of the investment bank, profit costs shall not be paid unless this is authorised by the creditors’ committee, the meeting of the creditors and clients, or the court.

Remuneration (special administration (bank insolvency))

197

(1) In a special administration (bank insolvency), where the basis for the administrator’s remuneration for services set out in rule 196(1)(a) has been fixed in accordance with rule 29, the creditors’ committee (or if there is no creditors’ committee, the meeting of creditors and clients) shall resolve whether to confirm the basis for remuneration as set by the Objective A committee, or whether to redetermine the basis for remuneration in accordance with rule 196(2) to (5).

(2) Any redetermination by the creditors’ committee under paragraph (1) shall apply only in respect of the administrator’s remuneration as from the date of the committee’s decision and shall not have retrospective effect.

Remuneration (special administration (bank administration)

198

(1) In a special administration (bank administration), where the basis for the administrator’s remuneration for services set out in rule 196(1)(a) has been fixed in accordance with rule 48, the creditors’ committee (or if there is no creditors’ committee, the meeting of creditors and clients) shall resolve whether to confirm the basis for remuneration as set by the Bank of England, or whether to redetermine the basis for remuneration in accordance with rule 196(2) to (5).

(2) Paragraph (1) only applies where the Bank of England has passed an Objective A Achievement Notice.

(3) Any redetermination by the creditors’ committee under paragraph (1) shall apply only in respect of the administrator’s remuneration as from the date of the committee’s decision and shall not have retrospective effect.

Recourse to meeting of creditors and clients

199

(1) If the basis of the administrator’s remuneration for either case in rule 196(1) has been fixed by the creditors’ committee or confirmed or redetermined under rules 197 or 198, and the administrator considers, in either or in both cases, the rate or amount to be insufficient, or the basis to be inappropriate, the administrator may request that the rate or amount be increased or the basis changed by resolution of the creditors and the clients.

Recourse to the court

200

(1) If the administrator considers that the basis of remuneration for either case in rule 196(1) fixed for the administrator by—

(a) the creditors’ committee; or

(b) by resolution of the creditors and clients, or as the case may be, a meeting of clients,

is insufficient or inappropriate, the administrator may apply to the court for an order changing it or increasing its amount or rate.

(2) If in a special administration (bank insolvency) the administrator considers that the basis for remuneration for services set out in rule 196(1)(a) fixed for the administrator by the Objective A committee or under rule 197 above is insufficient or inappropriate, the administrator may apply to the court for an order changing it or increasing its amount or rate.

(3) If in a special administration (bank administration) the administrator considers that the basis for remuneration for services set out in rule 196(1)(a) fixed for the administrator by the Bank of England or under rule 198 above is insufficient or inappropriate, the administrator may apply to the court for an order changing it or increasing its amount or rate.

(4) The administrator shall give at least 14 days’ notice of the application to the members of the creditors’ committee; and the committee may nominate one or more members to appear, or be represented, and to be heard on the application.

(5) If there is no creditors’ committee, the notice of the application shall be sent to such one or more of the investment bank’s creditors or clients as the court may direct; those creditors or clients shall nominate one or more of their number to appear or be represented.

(6) Notice of the application shall also be given to the FSA and the FSA may nominate a person to appear and be heard on the application.

(7) In a special administration (bank administration), before the Bank of England has given an Objective A Achievement Notice, the court on hearing an application under this rule shall have regard to the achievement of Objective A.

(8) The court may, if it appears to be a proper case, order the costs of the administrator’s application, including the costs of any member of the creditors’ committee appearing or being represented on it, or any creditor or client so appearing or being represented, to be paid as an expense of the administration.

Creditors’ and clients’ request for further information

201

(1) If—

(a) within 21 days of receipt of a progress report under rule 122—

(i) a secured creditor,

(ii) an unsecured creditor with the concurrence of at least 5% in value of the unsecured creditors (including the creditor in question), or

(iii) a client with the concurrence of clients claiming for at least 5% in value of the client assets (including the client in question); or

(b) with the permission of the court upon an application made within that period of 21 days, any unsecured creditor,

makes a request in writing to the administrator for further information about remuneration or expenses (other than pre-administration costs) set out in a statement required by rule 122(1)(g) or (h), the administrator must, within 14 days of receipt of the request, comply with paragraph (2).

(2) The administrator complies with this paragraph by either—

(a) providing all of the information asked for, or

(b) so far as the administrator considers that—

(i) the time or cost of preparation of the information would be excessive, or

(ii) disclosure of the information would be prejudicial to the conduct of the administration or might reasonably be expected to lead to violence against any person, or

(iii) the administrator is subject to an obligation of confidentiality in respect of the information,

giving reasons for not providing all of the information.

(3) Any creditor or client, who need not be the same as the person who requested further information under paragraph (1), may apply to the court within 21 days of—

(a) the giving by the administrator of reasons for not providing all of the information asked for, or

(b) the expiry of the 14 days provided for in paragraph (1),

and the court may make such order as it thinks just.

(4) Without prejudice to the generality of paragraph (3), the order of the court under that paragraph may extend the period of 8 weeks provided for in rule 202(4) by such further period as the court thinks just.

Claim that remuneration is excessive

202

(1) The following persons may apply to the court for one or more of the orders in paragraph (7) in respect of the administrator’s remuneration for services set out in rule 196(1)(a) —

(a) a secured creditor;

(b) an unsecured creditor with either the concurrence of at least 10% in value of the unsecured creditors (including that creditor) or the permission of the court; or

(c) a client with the concurrence of clients representing at least 10% of the total claims in respect of client assets held by the investment bank or with the permission of the court; or

(d) the FSA.

(2) A client, with the concurrence of clients representing at least 10% of the total claims in respect of client assets held by the investment bank, or with the permission of the court, may apply to the court for one or more of the orders in paragraph (7) in respect of the administrator’s remuneration for services set out in rule 196(1)(b).

(3) Application under paragraphs (1) and (2) may be made on the grounds that—

(a) the remuneration charged by the administrator;

(b) the basis fixed for the administrator’s remuneration; or

is or are, in all the circumstances, excessive or, in the case of an application under sub-paragraph (b), inappropriate.

(4) The application must, subject to any order of the court under rule 201(4), be made no later than 8 weeks after receipt by the applicant of the progress report which first reports the charging of the remuneration or the incurring of the expenses in question (“the relevant report”).

(5) The court may, if it thinks that no sufficient cause is shown for a reduction, dismiss it without a hearing but it shall not do so without giving the applicant at least 5 business days’ notice, upon receipt of which the applicant may require the court to list the application for a without notice hearing. If the application is not dismissed, the court shall fix a venue for it to be heard, and give notice to the applicant accordingly.

(6) The applicant shall, at least 14 days before the hearing, send to the administrator a notice stating the venue and accompanied by a copy of the application, and of any evidence which the applicant intends to adduce in support of it.

(7) If the court considers the application to be well-founded, it must make one or more of the following orders—

(a) an order reducing the amount of remuneration which the administrator was entitled to charge;

(b) an order fixing the basis of remuneration at a reduced rate or amount;

(d) an order that some or all of the remuneration or expenses in question be treated as not being expenses of the administration;

(e) an order that the administrator or the administrator’s personal representative pay to the investment bank the amount of the excess of remuneration or expenses or such part of the excess as the court may specify;

and may make any other order that it thinks just; but an order under sub-paragraph (b) or (c) may be made only in respect of periods after the period covered by the relevant report.

(8) Unless the court orders otherwise, the costs of the application shall be paid by the applicant, and are not payable as an expense of the special administration.

(9) In a special administration (bank administration), this rule only applies after the Bank of England has given an Objective A Achievement Notice.

Review of remuneration

203

(1) Where, after the basis of the administrator’s remuneration has been fixed, there is a material and substantial change in the circumstances which were taken into account in fixing it, the administrator may request that it be changed.

(2) The request must be made—

(a) where the creditors’ committee fixed the basis, to the committee;

(b) where the creditors and clients fixed the basis, to the creditors and clients;

(d) where the Objective A committee fixed the basis, to that committee (unless that committee has passed a full payment resolution, in which case the request must be made to the creditors’ committee, or if there is no creditors’ committee, to the meeting of creditors and clients);

(e) where the Bank of England fixed the basis, to the Bank of England (unless the Bank of England has given an Objective A Achievement Notice, in which case the request must be made to the creditors’ committee, or if there is no creditors’ committee, to the meeting of creditors and clients);

and this Chapter applies as appropriate.

(3) Any change in the basis for remuneration applies from the date of the request under paragraph (1) and not for any earlier period.

Remuneration of new administrator

204

(1) If a new administrator is appointed in place of another, any determination, resolution or court order in effect under the preceding provisions of this Chapter immediately before the former administrator ceased to hold office continues to apply in respect of the remuneration of the new administrator until a further determination, resolution or court order is made in accordance with those provisions.

Apportionment of set fee remuneration

205

(1) In a case in which the basis of the administrator’s remuneration is a set amount under rule 196(2)(c) and the administrator (“the former administrator”) ceases (for whatever reason) to hold office before the time has elapsed or the work has been completed in respect of which the amount was set, application may be made for determination of what portion of the amount should be paid to the former administrator or the former administrator’s personal representative in respect of the time which has actually elapsed or the work which has actually been done.

(2) Application may be made—

(a) by the former administrator or the former administrator’s personal representative within the period of 28 days beginning with the date upon which the former administrator ceased to hold office; or

(b) by the administrator for the time being in office if the former administrator or the former administrator’s personal representative has not applied by the end of that period.

(3) Application must be made—

(a) where the creditors’ committee fixed the basis, to that committee for a resolution determining the portion;

(b) where the creditors and clients fixed the basis, to the creditors and clients for a resolution determining the portion;

(d) where the Objective A committee fixed the basis, to that committee (unless that committee has passed a full payment resolution, in which case the request must be made to the creditors’ committee, or if there is no creditors’ committee, to the meeting of creditors and clients); and

(e) where the Bank of England fixed the basis, to the Bank of England (unless the Bank of England has given an Objective A Achievement Notice, in which case the request must be made to the creditors’ committee, or if there is no creditors’ committee, to the meeting of creditors and clients).

(4) The applicant must give a copy of the application to the administrator for the time being in office or to the former administrator or the former administrator’s personal representative, as the case may be (“the recipient”).

(5) The recipient may within 21 days of receipt of the copy of the application give notice of intent to make representations to the creditors’ committee, or to the creditors and clients or to appear or be represented before the court, as the case may be.

(6) No determination may be made upon the application until expiry of the 21 days referred to in paragraph (5) or, if the recipient does give notice of intent in accordance with that paragraph, until the recipient has been afforded the opportunity to make representations or to appear or be represented, as the case may be.

(7) If the former administrator or the former administrator’s personal representative (whether or not the original applicant) considers that the portion determined upon application to the creditors’ committee or the creditors and clients is insufficient, that person may apply—

(a) in the case of a determination by the creditors’ committee, to the creditors and clients for a resolution increasing the portion;

(b) in the case of a resolution of the creditors and clients (whether under paragraph (1) or under sub-paragraph (a)), to the court for an order increasing the portion;

and paragraphs (4) to (6) apply as appropriate.

CHAPTER 3 — Replacing the administrator

Grounds for resignation

206

(1) The administrator may resign in the following circumstances—

(a) on grounds of ill health;

(b) that the administrator intends ceasing to be in practice as an insolvency practitioner; or

(c) that there is some conflict of interest, or change of personal circumstances, which precludes or makes impracticable the further discharge by that person of the duties of administrator.

(2) The administrator may, with the permission of the court, resign on grounds other than those specified in paragraph (1).

(3) In a special administration (bank insolvency) before the Objective A committee has passed a full payment resolution, the administrator needs the permission of the Bank of England to resign on grounds other than those specified in paragraph (1).

(4) In a special administration (bank administration) before the Bank of England has given an Objective A Achievement Notice, the administrator needs the permission of the Bank of England to resign on grounds other than those specified in paragraph (1).

Notice of intention to resign

207

(1) The administrator shall in all cases give at least 5 business days’ notice of their intention to resign, or their intention to apply for the court’s permission to do so, to the following persons—

(a) if there is a continuing administrator of the investment bank, to that person; and

(b) if there is a creditors’ committee, to it; but

(c) if there is no such administrator and no creditors’ committee, to the investment bank and its creditors and clients of whose claim the administrator is aware and of whom the administrator has a means of contacting.

(2) Where the administrator was appointed on the application of the FSA or the Secretary of State, notice under paragraph (1) shall also be given to the applicant.

(3) In a special administration (bank insolvency), before the Objective A committee has passed a full payment resolution, notice under paragraph (1) shall be given to the Bank of England.

(4) In a special administration (bank administration), notice under paragraph (1) shall be given to the FSA and to the Bank of England.

(5) The notice under paragraph (1) shall set out—

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

(b) the full name, registered address, registered number of the investment bank;

(d) either—

(i) the date on which the administrator’s resignation shall take effect; or

(ii) the date upon which the administrator intends to apply to court for leave to resign.

Notice of resignation

208

(1) The notice of resignation shall set out—

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

(b) the full name, registered address and registered number of the investment bank;

(d) whether or not the person resigning is the sole administrator of the investment bank; and

(e) a statement that either—

(i) the administrator resigns from office with effect from a specified date; or

(ii) the court gave the administrator leave to resign (and the statement shall include the date of the court’s permission) and that the administrator therefore resigns with effect from a specified date.

(2) In a special administration (bank insolvency), before the Objective A committee has passed a full payment resolution, where the administrator has applied to court for leave to resign, the notice of resignation shall also contain confirmation from the Bank of England that it consents to the resignation.

(3) In a special administration (bank administration) before the Bank of England has given an Objective A Achievement Notice, where the administrator has applied to court for leave to resign, the notice of resignation shall also contain confirmation from the Bank of England that it consents to the resignation.

(4) The notice shall be filed with the court and a copy of the notice of resignation shall be sent not more than 5 business days after it has been filed with the court to all those to whom the notice of intention to resign was sent.

(5) The administrator shall notify the registrar of companies of their resignation.

Application to court to remove administrator from office

209

(1) Any application under paragraph 88 shall state the grounds on which it is requested that the administrator should be removed from office.

(2) In a special administration (bank administration), the application must state that either—

(a) the Bank of England has consented to the application being made; or

(b) the Bank of England has given an Objective A Achievement Notice.

(3) Service of the notice of the application shall be effected on—

(a) the administrator;

(b) the person who made the application for the special administration order;

(d) the joint administrator (if any);

(e) where there is neither a creditors’ committee or joint administrator, the investment bank and all the creditors and clients of whose claim the administrator is aware and of whom they have a means of contacting;

(f) the FSA; and

(g) in a special administration (bank administration) where the Bank of England has not given an Objective A Achievement Notice, the Bank of England.

(4) Where a court makes an order removing the administrator it shall give a copy of the order to the applicant who as soon as reasonably practicable, shall send a copy to the administrator.

(5) The applicant shall also within 5 business days of the order being made send a copy of the order to all those to whom notice of the application was sent.

(6) The applicant shall send notice of the order to the registrar of companies within the same time period.

Notice of vacation of office when administrator ceases to be qualified

210

Where the administrator who has ceased to be qualified to act as an insolvency practitioner in relation to the investment bank gives notice in accordance with paragraph 89, notice shall also be given—

(a) to the registrar of companies; and

(b) (where the administrator was appointed on the application of the FSA or the Secretary of State) to the applicant.

Administrator deceased

211

(1) Subject as follows, where the administrator has died, it is the duty of the administrator’s personal representatives to give notice of the fact to the court, specifying the date of the death. This does not apply if notice has been given under either paragraph (3) or (4) of this rule.

(2) Notice of the death must also be sent to the registrar of companies.

(3) If the deceased administrator was a partner in or an employee of a firm, notice to the court may be given 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 or the Department of Enterprise, Trade and Investment for Northern Ireland for the authorisation of insolvency practitioners.

(4) Notice of the death may be given to the court by any person producing to the court the relevant death certificate or a copy of it.

Application to replace (special administration)

212

(1) Where an application is made to court under paragraph 91(1) to appoint a replacement administrator, the application shall be accompanied by a written statement by the person proposed to be the replacement administrator.

(2) The written statement shall be in accordance with rule 7.

(3) A copy of the application shall be served on—

(a) the person who made the application for a special administration order;

(b) the investment bank (if neither the investment bank nor its directors are the applicant);

(d) on the FSA (if not the applicant).

(4) Rule 10 shall apply to the service of an application under paragraph 91(1) as it applies to service of the application for a special administration order.

(5) Rules 11 and 13 apply to an application under this rule and rule 16(1) and (2) shall apply to the notice of appointment under paragraph 91(1) as it applies to notice of a special administration order.

(6) This rule does not apply—

(a) in a special administration (bank insolvency) before the Objective A committee has passed a full payment resolution; or

(b) in a special administration (bank administration) before the Bank of England has given an Objective A Achievement Notice

Application to replace (special administration (bank insolvency))

213

(1) This rule applies in a special administration (bank insolvency) before the Objective A committee has passed a full payment resolution.

(2) Where there is a vacancy in office the Bank of England must appoint a replacement administrator as soon as reasonably practicable.

(3) The rules for the appointment of an administrator in Chapter 2 of Part 2 shall apply to the appointment of a replacement administrator.

Application to replace (special administration (bank administration))

214

(1) This rule applies in a special administration (bank administration) before the Bank of England has given an Objective A Achievement Notice.

(2) Where there is a vacancy in office the Bank of England must appoint a replacement administrator as soon as reasonably practicable.

(3) Where an application is made by the Bank of England to remove or replace an administrator, the rules in Chapter 3 of Part 2 for the application to appoint an administrator shall apply to the service of notice of the application and of the hearing.

(4) Both the person proposed to be appointed and the existing administrator are entitled to be served and heard.

Notification and advertisement of appointment of replacement administrator

215

(1) Where a replacement administrator is appointed, the same provisions apply in respect of giving notice of, and advertising, the replacement appointment as in the case of the appointment, subject to rule 218.

(2) All statements, consents etc as are required shall also be required in the case of the appointment of a replacement.

(3) All notices shall clearly identify that the appointment is of a replacement administrator.

Notification and advertisement of appointment of joint administrator

216

Where, after an initial appointment has been made, an additional person or persons are to be appointed as joint administrator, the same rules shall apply in respect of giving notice of and advertising the appointment as in the case of the initial appointment, subject to rule 218.

Additional joint administrator (special administration (bank administration))

217

(1) This rule applies to an application to appoint an additional joint administrator in a special administration (bank administration) before the Bank of England has given an Objective A Achievement Notice.

(2) The process for the initial appointment of an administrator under Chapter 3 of Part 2 shall apply to the appointment of an additional joint administrator.

(3) The existing administrator (or each of them) is entitled to a copy of the application and may—

(a) file written representations; and

(b) be heard at the hearing.

(4) An application for the appointment of an additional joint administrator under this rule may only be made by the Bank of England.

(5) Rules 216 and 218 apply in respect to the notification and advertisement of the appointment of a additional joint administrator.

Notification of new administrator

218

(1) The replacement or additional administrator shall send notice of the appointment to the registrar of companies.

(2) The notice in paragraph (1) shall contain—

(a) the name and business address of the administrator appointed;

(b) the name, registered address and registered number of the investment bank in respect of which the appointment is made;

(c) whether the administrator is appointed to replace an existing administrator or in addition to a previously appointed administrator; and

(d) the date from which the administrator’s appointment will take effect.

Administrator’s duties on vacating office

219

(1) Where the administrator (‘A’) ceases to be in office in consequence of this chapter, A is under obligation as soon as reasonably practicable to deliver up to the person succeeding A as administrator (‘B’) the assets (after deduction of any expenses properly incurred and distributions made by A) and further to deliver up to B—

(a) the records of the administration, including correspondence, proofs and other related papers appertaining to the administration while it was within A’s responsibility; and

(b) the investment bank’s books, papers and other records.

(2) If A makes default in complying with this rule, A is liable to a fine and, for continued contravention, to a daily default fine.

PART 8 — End of special administration

Final progress reports

220

(1) In this Part, reference to a progress report is to a report in the form specified in rule 122.

(2) The final progress report means a progress report which includes a summary of—

(a) the administrator’s proposals (including whether the FSA has given a direction under regulation 16 and whether that direction has been withdrawn);

(b) any major amendments to, or deviations from, those proposals;

(c) the steps taken during the special administration, including in a special administration (bank insolvency) or a special administration (bank administration), the steps taken to achieve Objective A; and

(d) the outcome.

Application to court by administrator

221

(1) An application to court under paragraph 79 for an order ending an administration shall have attached to it—

(a) a progress report for the period since the last progress report (if any) or the date the investment bank entered special administration; and

(b) a statement indicating what the administrator thinks should be the next steps for the investment bank (if applicable).

(2) Before making the application under paragraph (1), the administrator shall—

(a) give notice in writing to—

(i) the applicant for the special administration order under which the administrator was appointed,

(ii) the creditors and clients,

(iii) the FSA,

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The Investment Bank Special Administration (England and Wales) Rules 2011

CHAPTER 3 — Distribution plan

Distribution plan

144

Approval by the creditors’ committee

145

Approval by the court

146

Treatment of late claimants

147

PART 6 — Distributions to creditors

CHAPTER 1 — Application

Distribution to creditors

148

Debts of investment bank to rank equally

149

Supplementary provisions as to dividend

150

Division of unsold assets

151

CHAPTER 2 — Proofs of debts

Proving a debt

152

Costs of proving

153

Administrator to allow inspection of proofs

154

New administrator appointed

155

Admission and rejection of proofs for dividend

156

Appeal against decision on proof

157

Withdrawal or variation of proof

158

Expunging of proof by the court

159

CHAPTER 3 — Quantification of claims

Estimate of quantum

160

Negotiable instruments

161

Secured creditors

162

Discounts

163

Mutual credit and set-off

164

Application of rule 164 in a special administration (bank administration) and special administration (bank insolvency)

165

Debt in a foreign currency

166

Payments of a periodical nature

167

Interest

168

Debt payable at a future time

169

Value of security

170

Surrender for non-disclosure

171

Redemption by administrator

172

Test of security’s value

173

Realisation of security by creditor

174

Notice of proposed distribution

175

Admission or rejection of proofs

176

Postponement or cancellation of dividend

177

Declaration of a dividend

178

Notice of declaration of a dividend

179

Payments of dividend and related matters

180