Legalize / United Kingdom / Statutory-Instrument

The Investment Bank Special Administration (Scotland) Rules 2011

Type Statutory-Instrument

Publication 2011-09-12

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

PDF Download

articles Not indexed

Reform history JSON API

Made: 12th September 2011

Laid before Parliament: 13th September 2011

Coming into force: 14th November 2011

The Treasury, in exercise of the powers conferred by section 411(1A)(b), (2), (2C) and (3) of the Insolvency Act 1986[^f00001], as applied by the Investment Bank Special Administration Regulations 2011[^f00002], make the following Rules:

PART 1 — Introductory Provisions

Citation

1

These Rules may be cited as the Investment Bank Special Administration (Scotland) Rules 2011.

Commencement

2

These Rules come into force on 14th November 2011.

Extent

3

These Rules extend to Scotland only.

Interpretation

4

(1) In these Rules—

“the 1985 Act” means the Bankruptcy (Scotland) Act 1985[^f00003];

“the 1986 Act” means the Insolvency Act 1986;

“the 2006 Act” means the Companies Act 2006[^f00004];

“the 2009 Act” means the Banking Act 2009[^f00005];

“accounting period” has the meaning given in rule 100 or, in relation to Part 6, section 52 of the 1985 Act[^f00006] as applied by rule 132;

“appropriate fee” means 15 pence per A4 or A5 page and 30 pence per A3 page;

“business address” means the place where a person works;

“business day” means any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday in any part of Great Britain;

“expenses of the special administration” means those expenses incurred in the course of the special administration, or treated as incurred as such by these Rules, that are to be paid out in accordance with Part 4;

“final progress report” has the meaning set out in rule 149;

“financial contract” means a bilateral or multilateral contract entered into with the investment bank before it entered special administration, relating to transactions or positions of a financial nature, including contracts for the delivery or custody of client assets (but not including contracts which are purely administrative or contracts for services);

“investment bank” has the meaning set out in section 232 of the 2009 Act[^f00007];

“market price” has the meaning set out in regulation 12(9);

“prescribed part” has the same meaning as it does in section 176A(2)(a) of the 1986 Act[^f00008] and the Insolvency Act 1986 (Prescribed Part) Order 2003[^f00009];

“principal” has the meaning set out in rule 101(1);

“proxy-holder” has the meaning set out in rule 101(1);

“registered number” of the investment bank has the meaning set out in section 1066 of the 2006 Act;

“registrar of companies” means the registrar of companies for Scotland;

“the Regulations” means the Investment Bank Special Administration Regulations 2011;

“resolution fund order” has the meaning set out in section 49(3) of the 2009 Act;

“special administration” means, unless otherwise stated, special administration, special administration (bank insolvency) or special administration (bank administration) as the case may be;

“standard content” means— in relation to a notice to be published or advertised in the Edinburgh Gazette, the content specified in rule 174; and in relation to a notice to be advertised in any other way, the content specified in rule 175.

(2) Expressions used both in these Rules and in the Regulations (including expressions used in the provisions of the 1986 Act applied by the Regulations) have, unless otherwise stated, the meaning given in the Regulations.

(3) A reference to a numbered paragraph in these Rules shall, unless—

(a) it is a reference to a paragraph within the same rule; or

(b) otherwise stated,

be to the paragraph so numbered in Schedule B1 to the 1986 Act[^f00010], as applied by regulation 15.

(4) A reference to a provision of the 1986 Act, if that provision is listed in Table 1 or 2 in regulation 15, is, unless otherwise stated and subject to paragraph (5), a reference to that provision as applied by regulation 15.

(5) A reference to a provision of the 1986 Act being applied by regulation 15 in a special administration (bank administration) means that provision as applied by section 145 of the 2009 Act, together with the modifications (if any) set out in the table in paragraph 6 of Schedule 2 to the Regulations.

(6) A reference to a numbered regulation shall, unless otherwise stated, be to the regulation so numbered in the Regulations.

Application of Rules

5

(1) These Rules apply as follows—

(a) Part 2, Chapter 1 applies where an application is made for a special administration order;

(b) Part 2, Chapter 2 applies where an application is made for a special administration (bank insolvency) order; and

(2) Unless otherwise stated, the remaining rules apply in respect of special administration, special administration (bank insolvency) and special administration (bank administration).

PART 2 — Application for Order

CHAPTER 1 — Application for special administration order

Content of application

6

An application for a special administration order in respect of an investment bank must specify—

(a) the full name and registered number of the investment bank;

(b) any other trading names;

(d) the address of the investment bank’s registered office;

(e) an email address for the investment bank;

(f) the identity of the person (or persons) nominated for appointment as administrator; and

(g) a statement setting out which of the grounds in regulation 6(1) the applicant is relying on in making the application.

Statement of proposed administrator

7

An application must be accompanied by a statement by the proposed administrator—

(a) specifying the name and address of the person (or each person) proposed to be appointed;

(b) giving that person’s (or each person’s) consent to act;

(d) giving details of any prior professional relationship that the person (or any of them) has had with the investment bank.

Lodging of application

8

The application, and its accompanying documents, must be lodged with the court.

Service of application

9

(1) The application shall be served on—

(a) the FSA (if not the applicant);

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

(d) any person who has given notice to the FSA in respect of the investment bank under regulation 8;

(e) if there is in force for the investment bank a voluntary arrangement under Part 1 of the 1986 Act, the supervisor of that arrangement;

(f) the registrar of companies; and

(g) the Keeper of the Register of Inhibitions and Adjudications for recording in that register.

(2) Notice of the application shall also be given to the persons upon whom the court orders that the application be served.

Expenses

10

If the court makes a special administration order, the expenses of the applicant, and of any other party whose expenses are allowed by the court, shall be regarded as expenses of the special administration.

Notice of special administration order

11

(1) If the court makes a special administration order, the applicant shall immediately after the order is made, send a certified copy of the order to—

(a) the administrator; and

(b) the FSA (if not the applicant).

(2) If the court makes an order under regulation 7(1)(d), or any other order under regulation 7(1)(f), it may direct (or give directions as) to whom, and how, notice of that order is to be given.

CHAPTER 2 — Application for a special administration (bank insolvency) order

Application for a special administration (bank insolvency) order

12

(1) An application for a special administration (bank insolvency) order under section 95 of the 2009 Act (as applied by Schedule 1 to the Regulations) shall be in accordance with this Chapter and Chapter 74 of the Rules of the Court of Session 1994.

(2) In this rule, “Rules of the Court of Session 1994” means those rules set out in Schedule 2 to the Act of Sederunt (Rules of the Court of Session 1994) 1994[^f00011].

Persons entitled to copy of application

13

(1) Every contributory, creditor or client of the investment bank 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.

Appointment of administrator by the court

14

(1) This rule applies where an application is made for a special administration (bank insolvency) order.

(2) The court shall not make the order unless there is lodged in court a statement to the effect that—

(a) the person proposed to be appointed as the administrator is qualified to act as an insolvency practitioner in accordance with section 390 of the 1986 Act; and

(b) that person consents so to act.

(3) When the special administration (bank insolvency) order has been made, the court shall immediately send a certified copy of the order to—

(a) the person appointed as administrator under the order (who shall also, where practicable, be sent an electronic copy of the certified copy of the order); and

(b) the applicant.

(4) The administrator shall immediately—

(a) serve a copy of the order on the investment bank at its registered office and, where the administrator has received an electronic copy of the order and knows the investment bank’s email address, send an electronic copy to the investment bank; and

(b) send (electronically or otherwise) a copy of the order to—

(i) the FSA (if it is not the applicant);

(ii) the Bank of England (if it is not the applicant);

(iii) the FSCS; and

(iv) if there is in force for the investment bank a voluntary arrangement under Part 1 of the 1986 Act, the supervisor of that arrangement.

Authentication of the administrator’s appointment

15

A copy certified by the clerk of court of the order of court appointing the administrator under rule 14 shall be sufficient evidence for all purposes and in any proceedings that that person has been appointed to exercise the powers and perform the duties of administrator in the special administration (bank insolvency) of that investment bank.

Duties of Objective A committee

16

(1) As soon as reasonably practicable after the making of a special administration (bank insolvency) order, the Objective A committee shall meet the administrator for the purpose of discussing which of the Objectives, or combination of Objectives, mentioned in section 102(1) of the 2009 Act (as applied by paragraph 6 of Schedule 1 to the Regulations) the committee should recommend the administrator to pursue.

(2) If the administrator and every individual on the Objective A committee agree, the meeting may be held by audio or video conference.

(3) The Objective A committee shall make its recommendation to the administrator at the meeting.

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

(5) As soon as reasonably practicable after the making of a special administration (bank insolvency) order, the Objective A committee shall also pass a resolution as to the terms on which, in accordance with rule 135, the administrator is to be remunerated in respect of—

(a) work done by the administrator in pursuit of Objective A; and

(b) work done by the administrator in pursuit of Objectives 2 and 3 of the special administration objectives.

(6) The Objective A 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.

Appointment of person under section 135 of the 1986 Act

17

(1) An application to the court for the appointment of a person under section 135 of the 1986 Act (as applied by paragraph 8 of Schedule 1 to the Regulations) may be made—

(a) by the Bank of England; or

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

(2) The court may on the application, if satisfied that an application has been made for a special administration (bank insolvency) order and that sufficient grounds are shown for the making of the order, make it on such terms as it thinks fit.

Order of appointment

18

(1) The order of appointment of a person appointed under rule 17 shall specify the functions to be carried out by that person in relation to the investment bank’s affairs.

(2) The applicant shall, immediately after the order is made, send a certified copy of the order to—

(a) the person appointed;

(b) the Bank of England (if the Bank of England is not the applicant);

(d) the FSCS,

and may also send to those persons an electronic copy of the certified copy of the order.

(3) Immediately after the order of appointment is made, the person appointed shall—

(a) serve a certified copy of the order on the investment bank and each director of the investment bank;

(b) give notice of the appointment to—

(i) the registrar of companies; and

(ii) if there is in force for the investment bank a voluntary arrangement under Part 1 of the 1986 Act, the supervisor of that arrangement; and

(4) Service on a director may be effected electronically by sending it to that director’s work email address.

Caution

19

The cost of providing the caution required by the person appointed under rule 17 shall unless the court otherwise directs be—

(a) if a special administration (bank insolvency) order is not made, reimbursed to that person out of the property of the investment bank, and the court may make an order against the investment bank accordingly; and

(b) if a special administration (bank insolvency) order is made, reimbursed to that person as an expense of the special administration.

Failure to find or maintain caution

20

(1) If the person (“P”) appointed under rule 17 fails to find or to maintain their caution, the court may remove P and make such order as it thinks fit as to expenses.

(2) If an order is made under this rule removing P, or discharging the order appointing P, the court shall give directions as to whether any, and if so what, steps should be taken for the appointment of another person in P’s place.

Remuneration

21

(1) The remuneration of the person (“P”) appointed under rule 17 shall be fixed by the court from time to time.

(2) The basis for fixing the amount of the remuneration payable to P may be a commission calculated by reference to the value of the investment bank’s estate which has been realised by P but there shall in any event be taken into account—

(a) the work which, having regard to that value, was reasonably undertaken by P; and

(b) the extent of P’s responsibilities in administering the investment bank’s estate.

(3) Without prejudice to any order of the court as to expenses, P’s remuneration shall be paid, and the amount of any expenses incurred by P reimbursed—

(a) if a special administration (bank insolvency) order is not made, out of the investment bank’s estate; and

(b) if a special administration (bank insolvency) order is made, as an expense of the special administration.

(4) Unless the court otherwise directs, in a case falling within paragraph (3)(a), P may retain out of the investment bank’s estate such sums or property as are or may be required for meeting their remuneration and expenses.

Termination of appointment

22

(1) The appointment of a person (“P”) under rule 17 may be terminated by the court on P’s application, or the application of—

(a) the Bank of England; or

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

(2) If P’s appointment terminates in consequence of the dismissal of the application for the special administration (bank insolvency) order, the court may give such directions as it thinks fit with respect to—

(a) the accounts of P’s administration;

(b) the expenses properly incurred by P; or

(3) On the making of a special administration (bank insolvency) order, P’s appointment shall terminate.

(4) Unless the court directs otherwise, where the appointment is terminated, P shall give notice of that termination. Such notice—

(a) shall be advertised once in the Edinburgh Gazette; and

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

(5) P shall send notice of the termination of their appointment to the registrar of companies.

CHAPTER 3 — Application for a special administration (bank administration) order

Application for a special administration (bank administration) order

23

(1) An application by the Bank of England for a special administration (bank administration) order in respect of an investment bank must specify—

(a) the full name of the investment bank;

(b) any other trading names of the investment bank;

(d) an email address for the investment bank;

(e) the address of the Bank of England; and

(f) the identity of the person (or persons) nominated for appointment as administrator.

(2) If the investment bank has notified the Bank of England of an address for service which is, because of special circumstances, to be used in place of the registered office, that address shall be specified under paragraph (1)(c).

Statement of proposed administrator

24

An application must be accompanied by a statement by the proposed administrator—

(a) specifying the name and address of the person proposed (or each person) to be appointed;

(b) giving that person’s (or each person’s) consent to act;

(d) giving details of any prior professional relationship that person (or any of them) has had with the investment bank.

Lodging

25

The application, and its accompanying documents, must be lodged with the court.

Service

26

(1) The Bank of England shall serve the application—

(a) on the FSA;

(b) on the investment bank;

(d) on any person who has given notice to the FSA in respect of the investment bank under section 120 of the 2009 Act (bank insolvency: notice of preliminary steps of other insolvency procedures);

(e) if a property transfer instrument was made or is to be made under section 11(2)(b) of the 2009 Act (transfer to commercial purchaser), on each transferee as referred to in that instrument;

(f) on the registrar of companies; and

(g) on the Keeper of the Register of Inhibitions and Adjudications for recording in that register.

(2) Service must be effected as soon as reasonably practicable, having regard in particular to the need to give the investment bank’s representatives a reasonable opportunity to attend the hearing of the application.

Expenses

27

If the court makes a special administration (bank administration) order, the following are payable as an expense of the special administration—

(a) the Bank of England’s expenses of making the application; and

(b) any other expenses allowed by the court.

Notice of order

28

If the court makes a special administration (bank administration) order, the Bank of England shall immediately after the order is made, send a certified copy of the order to—

(a) the administrator;

(b) the FSA; and

Remuneration of the administrator

29

As soon as practicable after the making of a special administration (bank administration) order, the Bank of England shall fix the terms on which, in accordance with rule 135, the administrator is to be remunerated in respect of—

(a) work done by the administrator in pursuit of Objective A;

(b) work done by the administrator in pursuit of Objectives 2 and 3 of the special administration objectives.

Appointment of person under section 135 of the 1986 Act

30

An application to the court for the appointment of a person under section 135 of the 1986 Act (as applied by Table 2 in section 145(6) of the 2009 Act[^f00012] and by paragraph 6 of Schedule 2 to the Regulations) may be made by the Bank of England.

Order of appointment

31

(1) The order of appointment of a person appointed under rule 30 shall specify the functions to be carried out by that person in relation to the investment bank’s affairs.

(2) The Bank of England shall, immediately after the order is made, send a certified copy of the order to—

(a) the person appointed;

(b) the FSA; and

and may also send to those persons an electronic copy of the certified copy of the order.

(3) Immediately after the order of appointment is made, the person appointed shall—

(a) serve a certified copy of the order on the investment bank and each director of the investment bank;

(b) give notice of the appointment to—

(i) the registrar of companies; and

(ii) if there is in force for the investment bank a voluntary arrangement under Part 1 of the 1986 Act, the supervisor of that arrangement; and

(4) Service on a director may be effected electronically by sending it to that director’s work email address.

(5) The Bank of England may disclose the fact and terms of the order of appointment to any person whom the Bank of England thinks has a sufficient business interest.

(6) Rules 19 to 22 shall then apply with the following modifications—

(a) a reference to “special administration (bank insolvency)” is to be read as a reference to “special administration (bank administration)”; and

(b) a reference to a person being appointed under rule 17 is to a person being appointed following an application made under rule 30.

PART 3 — Process of Special Administration

CHAPTER 1 — Notice of appointment and statement of affairs

Notification and advertisement of administrator’s appointment

32

(1) The notice of the appointment, which an administrator must publish as soon as reasonably practicable after appointment by virtue of paragraph 46(2)(b)—

(a) shall be advertised once in the Edinburgh Gazette; and

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

(2) In addition to the standard content, notices published under paragraph (1) must state—

(a) that an administrator has been appointed; and

(b) the date of the appointment.

(3) The administrator shall at the same time give notice of the appointment to the following persons—

(a) any supervisor of a voluntary arrangement under Part 1 of the 1986 Act; and

(b) the Keeper of the Register of Inhibitions and Adjudications for recording in that register.

(4) The administrator shall send the notice of appointment and a copy of the special administration order to the registrar of companies within 7 days of the appointment.

(5) Where, by virtue of a provision of Schedule B1 to the 1986 Act or of these Rules, the administrator is required to send a notice of the appointment to any person, the administrator shall satisfy that requirement by sending to that person—

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

(b) the name and business address of the person or persons appointed as administrator.

Notice requiring statement of affairs

33

(1) In this Part, “relevant person” has the meaning given to it in paragraph 47(3).

(2) The administrator shall send to each relevant person upon whom the administrator decides to make a requirement under paragraph 47 a notice requiring the relevant person to provide a statement of the investment bank’s affairs.

(3) The notice shall inform each of the relevant persons—

(a) of the names and addresses of all others (if any) to whom the same notice has been sent;

(b) of the time within which the statement must be delivered;

(d) of the application to that relevant person, and to each other relevant person, of section 235 of the 1986 Act[^f00013] (duty to provide information, and to attend on the administrator, if required).

(4) The administrator shall furnish each relevant person upon whom the administrator decides to make a requirement under paragraph 47 with the information that the administrator considers is necessary for the preparation of the statement of affairs.

Details of the client assets held by the investment bank

34

(1) The statement of affairs shall include particulars of the client assets held by the investment bank.

(2) The particulars shall include—

(a) the names and addresses of clients of the investment bank for whom the investment bank holds client assets, but where these clients are individuals, the administrator shall not disclose their names and addresses;

(b) details as to the amount of client assets held, categorised into type and securities of a particular description;

(d) details as to any security interest held by the investment bank or another person in respect of the client assets.

Statements of affairs and statements of concurrence

35

(1) In addition to the information required by rule 34, the statement of the investment bank’s affairs shall be in the form required by rule 7.30 of, and Schedule 5 to, the Insolvency (Scotland) Rules 1986[^f00014].

(2) Where more than one relevant person is required to submit a statement of affairs the administrator may require one or more such persons to submit, in place of a statement of affairs, a statement of concurrence in the form required by rule 7.30 and Schedule 5; and where the administrator does so, the person making the statement of affairs shall be informed of that fact.

(3) The person making the statutory declaration in support of a statement of affairs shall send the statement and one copy of the statement to the administrator, and a copy of the statement to each of those persons whom the administrator has required to submit a statement of concurrence.

(4) A person required to submit a statement of concurrence shall deliver to the administrator the statement of concurrence, together with one copy of the statement, before the end of the period of 5 business days (or such other period as the administrator may agree) beginning with the day on which the statement of affairs being concurred with is received by that person.

(5) A statement of concurrence may be qualified in respect of matters dealt with in the statement of affairs, where the maker of the statement of concurrence is not in agreement with the statement of affairs, the maker considers that statement to be erroneous or misleading, or the maker is without the direct knowledge necessary for concurring with it.

(6) Subject to rule 36, the administrator shall, as soon as reasonably practicable, file a copy of the statement of affairs and any statement of concurrence with the registrar of companies.

(7) Subject to rule 36, the administrator shall insert any statement of affairs submitted to the administrator, together with any statement of concurrence, in the sederunt book.

Limited disclosure

36

(1) Where the administrator thinks that it would prejudice the conduct of the administration or might be reasonably expected to lead to violence against any person for the whole or part of the statement of the investment bank’s affairs to be disclosed, the administrator may apply to the court for an order of limited disclosure in respect of the statement, or any specified part of it.

(2) The court may order that the statement or, as the case may be, the specified part of it, shall not be filed with the registrar of companies or entered in the sederunt book.

(3) The administrator shall as soon as reasonably practicable file a copy of that order with the registrar of companies, and shall place a copy of the order in the sederunt book.

(4) If a creditor or a client seeks disclosure of the statement of affairs or a specified part of it in relation to which an order has been made under this rule, that person may apply to the court for an order that the administrator disclose it or a specified part of it.

(5) Where a special administration (bank administration) order has been made, and where an application has been made under paragraph (4), the Bank of England and the FSA may appear or be represented at the hearing or may make written representations.

(6) The applicant shall give the administrator notice of the application at least 3 business days before the hearing.

(7) The court may attach to an order for disclosure any conditions as to confidentiality, duration and scope of the order in any material change of circumstances, and other matters as it sees fit.

(8) If there is a material change in circumstances rendering the limit on disclosure unnecessary, the administrator shall, as soon as reasonably practicable after the change, apply to the court for the order to be discharged or varied, and upon the discharge or variation of the order the administrator shall, as soon as reasonably practicable—

(a) file a copy of the full statement of affairs (or so much of the statement of affairs as is no longer subject to the order) with the registrar of companies;

(b) where the administrator has previously sent a copy of the statement of proposals to the creditors and clients in accordance with paragraph 49, provide the creditors and clients with a copy of the full statement of affairs (or so much of the statement as is no longer subject to the order) or a summary of the statement of affairs; and

(c) place a copy of the full statement of affairs (or so much of the statement as is no longer subject to the order) in the sederunt book.

(9) In paragraph (8)(b) the reference to the statement of proposals having been sent out in accordance with paragraph 49 also includes the situation where the statement has been sent out in accordance with paragraph 9 of Schedule 2 to the Regulations.

Release from duty to submit statement of affairs

37

(1) The power of the administrator under paragraph 48(2) to revoke a requirement under paragraph 47(1), or to grant an extension of time, may be exercised at the administrator’s own instance, or at the request of any relevant person.

(2) A relevant person whose request under this rule has been refused by the administrator may apply to the court for a release or extension of time, and where the application is for an extension of time, the period referred to in paragraph 48(1) is suspended pending the court’s decision.

(3) An applicant under this rule shall bear their own expenses in the application and, unless the court otherwise orders, no allowance towards such expenses shall be made as an expense of the special administration of the investment bank.

(4) Where an application has been made under paragraph (2), the FSA may be given notice of the hearing and may appear or be represented and in a special administration (bank administration) the administrator and the Bank of England may also be given notice of the hearing and may appear or be represented at the hearing or may make written representations.

Expenses of statement of affairs

38

(1) A relevant person who provides to the administrator a statement of affairs of the investment bank or statement of concurrence shall be allowed, and paid by the administrator as an expense of the special administration, any expenses incurred by the relevant person in so doing which the administrator considers reasonable.

(2) Any decision by the administrator under this rule is subject to appeal to the court.

(3) Nothing in this rule relieves a relevant person from any obligation to provide a statement of affairs or statement of concurrence, or to provide information to the administrator.

CHAPTER 2 — Statement of proposals

Statement of proposals

39

(1) The administrator shall under paragraph 49 (or in the case of a special administration (bank administration) paragraph 7 of Schedule 2 to the Regulations) make a statement of proposals, which shall be sent to the registrar of companies.

(2) In addition to the information required by that paragraph, the statement of proposals must include—

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

(b) the full name, any other trading names, the registered address and registered number of the investment bank;

(d) in the case of joint administrators, details of the apportionment of functions;

(e) the names of the directors and secretary of the investment bank and details of any shareholdings in the investment bank they have;

(f) an account of the circumstances giving rise to the application for the appointment of the administrator;

(g) if a statement of the investment bank’s affairs has been submitted, a copy or summary of it with the administrator’s comments, if any;

(h) if an order limiting the disclosure of the statement of affairs has been made under rule 36, a statement of that fact, as well as—

(i) details of who provided the statement of affairs,

(ii) the date of the order for limited disclosure, and

(iii) the details or a summary of the details that are not subject to that order;

(i) if a full statement of affairs is not provided, the names, addresses and debts of the creditors including details of any security held (or in case of any depositors of the investment bank, a single statement of their aggregate debt);

(j) if a full statement of affairs is not provided, or if no statement of affairs is provided, the names and addresses of clients of the investment bank together with a description of the amount and type of client assets held, the type of ownership the clients have in respect of those assets and details as to any security interest held by the investment bank or another person in respect of those assets, but where those clients are individuals, their names and addresses are not to be disclosed;

(k) if no statement of affairs is provided, details of the financial position of the investment bank at the latest practicable date (which must, unless the court otherwise orders, be a date not earlier than that on which the investment bank entered special administration), a list of the investment bank’s creditors including their names, addresses and details of their debts, including any security held (or in case of any depositors of the investment bank, a single statement of their aggregate debt) and an explanation as to why there is no statement of affairs;

(l) the basis upon which it is proposed that the administrator’s remuneration should be fixed under rule 135, and, if this basis has already been set by the Objective A committee or by the Bank of England in respect of the relevant Objective A, or in respect of Objectives 2 and 3 of the special administration objectives, details as to what has been set and any proposals for this to be changed;

(m) a statement complying with paragraph (4) of any pre-administration costs charged or incurred by the administrator or, to the administrator’s knowledge, by any other person qualified to act as an insolvency practitioner;

(n) details of whether (and why) the administrator proposes to apply to the court under section 176A(5) of the 1986 Act[^f00015] (share of assets for unsecured creditors) as applied by regulation 15 (unless the administrator intends to propose a company voluntary arrangement);

(o) an estimate of the value of the prescribed part for the purposes of section 176A (unless the bank intends to propose a company voluntary arrangement) certified as being made to the best of the administrator’s knowledge and belief;

(p) an estimate of the value of the investment bank’s net property (unless the administrator intends to propose a company voluntary arrangement) certified as being made to the best of the administrator’s knowledge and belief;

(q) in—

(i) a special administration, an explanation of the priority that has been given since the commencement of special administration to the special administration objectives (and where the FSA has given a direction under regulation 16, an explanation as to how this has dictated the priority given to a particular objective), and

(ii) a special administration (bank insolvency) or a special administration (bank administration)—

(aa) a summary of how the relevant Objective A is being or has been achieved and the resources devoted to the pursuit of the relevant Objective A; and

(bb) an explanation of the priority that has been given since the commencement of special administration to the special administration objectives (and where the FSA has given a direction under regulation 16, an explanation as to how this has dictated the priority given to a particular objective);

(r) the manner in which the affairs and business of the investment bank have been managed and financed since the date of the administrator’s appointment (including the reasons for and terms of any disposal of assets);

(s) details as to the order in which the administrator aims to pursue the special administration objectives and the manner in which the affairs and business of the investment bank will be managed and financed if the administrator’s proposals are approved;

(t) whether the administrator expects a dividend to be paid to creditors and an estimate of the amount of this dividend;

(u) how it is proposed that the special administration shall end (winding-up or voluntary arrangement), in accordance with Objective 3; and

(v) any other information which the administrator thinks necessary to enable creditors and clients to vote for the approval of the statement of proposals.

(3) In this Part—

(a) “pre-administration costs” are—

(i) fees charged, and

(ii) expenses incurred,

by the administrator, or another person qualified to act as an insolvency practitioner, before the investment bank entered special administration but with a view to its doing so; and

(b) “unpaid pre-administration costs” are pre-administration costs which had not been paid when the investment bank entered special administration.

(4) A statement of pre-administration costs complies with this paragraph if it includes—

(a) details of any agreement under which the fees were charged and expenses incurred, including the parties to the agreement and the date on which the agreement was made;

(b) details of the work done for which the fees were charged and expenses incurred;

(c) an explanation of why the work was done before the investment bank entered special administration and how it would further the achievement of the special administration objectives;

(d) a statement of the amount of the pre-administration costs, setting out separately—

(i) the fees charged by the administrator,

(ii) the expenses incurred by the administrator,

(iii) the fees charged (to the administrator’s knowledge) by any other person qualified to act as an insolvency practitioner (and, if more than one, by each separately), and

(iv) the expenses incurred (to the administrator’s knowledge) by any other person qualified to act as an insolvency practitioner (and, if more than one, by each separately);

(e) a statement of the amounts of pre-administration costs which have already been paid (set out separately as under sub-paragraph (d));

(f) the identity of the person who made the payment or, if more than one person made the payment, the identity of each such person and of the amounts paid by each such person set out separately as under sub-paragraph (d);

(g) a statement of the amounts of unpaid pre-administration costs (set out separately as under sub-paragraph (d)); and

(h) a statement that the payment of unpaid pre-administration costs as an expense of the administration is—

(i) subject to approval under rule 112; and

(ii) not part of the proposals subject to approval under paragraph 53.

(5) The statement of proposals—

(a) may exclude information the disclosure of which could seriously prejudice the commercial interests of the investment bank; and

(b) must include a statement of any exclusion.

(6) In the case of special administration (bank administration) following transfer to a bridge bank under section 12(2) of the 2009 Act—

(a) the statement of proposals must state whether any payment is to be made to the investment bank from a scheme under a resolution fund order; or

(b) if that information is unavailable when the statement of proposals is made, the administrator must issue a supplemental statement when the information is available.

(7) Following an application by the administrator under paragraph 107, where the court orders an extension of the period of time in paragraph 49(5), the administrator shall notify—

(a) every creditor of the investment bank of whose address the administrator is aware;

(b) every client of the investment bank of whose claim the administrator is aware and whom the administrator has a means of contacting; and

as soon as possible after the order is made.

(8) Where the administrator wishes to publish a notice under paragraph 49(6) or gives notice that the statement of proposals is to be provided free of charge to a market infrastructure body, the notice must be published once in a newspaper which the administrator considers to be suitable.

(9) A notice under paragraph (7) must include the standard content and must state—

(a) that persons can write for a copy of the statement of proposals for achieving the purpose of administration; and

(b) the address to which to write.

(10) This notice must be published as soon as reasonably practicable after the administrator sends out the statement of proposals in accordance with paragraph 49(4) (or in the case of a special administration (bank administration) under paragraph 9 of Schedule 2 to the Regulations), but no later than 8 weeks (or such other period as may be agreed by the creditors and clients or as the court may order) from the date that the investment bank entered special administration.

CHAPTER 3 — Initial meeting to consider proposals

Initial meeting

40

(1) As soon as reasonably practicable after an invitation to the initial meeting has been sent out in accordance with paragraph 51(1), (or in a special administration (bank administration), in accordance with paragraph 10 of Schedule 2 to the Regulations), the administrator must have advertised once in the Edinburgh Gazette—

(a) that an initial meeting of creditors and clients is to take place;

(b) the venue fixed for the meeting; and

(2) The information required to be advertised under paragraph (1) may also be advertised in such other manner as the administrator thinks fit.

(3) In a special administration (bank insolvency) or a special administration (bank administration) the Bank of England and the FSCS shall also be invited to the initial meeting.

(4) This rule shall not apply where the FSA has given a direction under regulation 16 and the direction has not been withdrawn.

Notice to officers

41

(1) Where rule 40 applies, notice to attend the meeting must be given to every present or former officer of the investment bank whose presence the administrator thinks is required at the same time that notice is sent to creditors and clients.

(2) That notice must contain—

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

(b) the full name, registered address, registered number and any other trading names of the investment bank;

(d) details of the venue, the date and the time of the meeting.

(3) Every person who receives a notice under paragraph (1) must attend.

Business of the initial meeting

42

(1) At the initial meeting of creditors and clients—

(a) a creditors’ committee may be established in accordance with Chapter 8 of this Part; and

(b) the statement of proposals shall be approved as follows.

(2) The proposals shall not be approved unless both classes of voter have voted to approve them.

(3) The creditors and the clients shall vote separately on whether to approve the proposals.

(4) In a special administration (bank insolvency) (and in a special administration (bank administration) if there are depositors) the FSCS shall be entitled to vote as a creditor under this rule and rule 65 has effect with respect to its voting rights.

(5) If the proposals were approved by a class of voter subject to a modification, the proposals will not be considered approved by the other class unless that other class has approved the proposal as modified.

(6) Where the administrator is unable to get the requisite majority of a class of voter for approval of the statement of proposals (with or without any modifications), rule 43 applies.

(7) Paragraph (6) shall not apply in a special administration (bank administration).

(8) This rule shall not apply where the FSA has given a direction under regulation 16 and the direction has not been withdrawn.

Adjournment of meeting to approve the statement of proposals

43

(1) If, at the initial meeting of creditors and clients, there is not the requisite majority for approval of the statement of proposals (with or without any modifications), the administrator may, and shall if a resolution is passed to that effect, adjourn the meeting for not more than 14 days (subject to any direction by the court).

(2) If there are subsequently further adjournments, the final adjournment must not be to a day later than 14 days after the date on which the meeting was originally held (subject to any direction by the court).

(3) Where a meeting is adjourned under this rule, proofs and proxies may be used if lodged at any time up to 12.00 hours on the business day immediately before the adjourned meeting.

(4) Where at the initial meeting, the proposals were approved (whether or not with modifications) by one class of voter but not the other, that approval shall no longer stand at the adjourned meeting unless the version of the proposals to be voted on has not been modified from the version that was approved.

(5) If the administrator is unable to get the requisite majority of creditors or clients for approval of the statement of proposals, the administrator may apply to the court for directions under paragraph 63.

(6) This rule shall not apply in a special administration (bank administration).

Revision of the statement of proposals

44

(1) The administrator shall under paragraph 54 (or regulation 18 or paragraph 11 of Schedule 2 to the Regulations as the case may be) make a statement setting out the proposed revisions to the statement of proposals (“the revised statement”).

(2) The revised statement, which shall be sent out in accordance with paragraph 54(2)(b) and (c), shall include—

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

(b) the full name, registered address, registered number and any other trading names of the investment bank;

(d) in the case of joint administrators, details of the apportionment of functions;

(e) the names of the directors and secretary of the investment bank and details of any shareholdings in the investment bank they have;

(f) a summary of the initial proposals and the reasons for proposing a revision;

(g) details of the proposed revision including details of the administrator’s assessment of the likely impact of the proposed revision upon the creditors generally or upon each class of creditor or on the clients (as the case may be); and

(h) any other information that the administrator thinks necessary to enable creditors to decide whether or not to vote for the proposed revisions.

(3) The FSA shall be sent a copy of the revised statement at the same time as the revised statement is sent out.

(4) Where the administrator considers that the revision proposed will only affect creditors or, as the case may be, clients, the notice of the meeting to consider the revised proposals shall be sent to both creditors and clients, but will state who is invited to the meeting.

(5) In a special administration (bank insolvency) or a special administration (bank administration) the Bank of England and the FSCS shall also be invited to the meeting.

(6) Subject to paragraph 54(3) within 5 business days of sending out the revised statement in paragraph (1), the administrator shall send a copy of the statement to every member of the investment bank.

(7) Any notice to be published under paragraph 54(3) shall be advertised in such a manner as the administrator thinks fit.

(8) The notice shall be published as soon as reasonably practicable after the administrator sends the statement in accordance with paragraph 54(2) and, in addition to the standard content, shall state—

(a) that members can write for a copy of the statement of revised proposals, and

(b) the address to which to write.

(9) Paragraphs (4) and (5) shall not apply—

(a) in a special administration (bank administration), where—

(i) the FSA has given a direction under regulation 16 and has not withdrawn its direction at the time that the administrator proposes a revision to the statement of proposals, and

(ii) Objective A has been achieved; and

(b) in a special administration or a special administration (bank insolvency) where the FSA has given a direction under regulation 16 and has not withdrawn its direction at the time that the administrator proposes a revision to the statement of proposals.

(10) In this rule, a reference to—

“paragraph 54(2)” also includes a reference to regulation 18(4) or paragraph 13(4) of Schedule 2 to the Regulations as the case may be; and

“paragraph 54(3)” also includes a reference to regulation 18(5) or paragraph 13(5) of Schedule 2 to the Regulations as the case may be.

Meeting to approve the revised statement of proposals

45

(1) This rule applies to a meeting of creditors, a meeting of clients or a meeting of creditors and clients to approve the revisions to the statement of proposals.

(2) Where the revisions are being approved by a meeting of creditors and clients—

(a) the creditors and the clients shall vote separately on whether to approve the revisions;

(b) the revisions shall not be approved unless both classes of voter have voted to approve them; and

(c) where the revisions are approved by a class of voter subject to a modification, the proposals will not be considered approved by the other class unless that other class has approved the proposals as modified.

(3) In a special administration (bank insolvency) (and in an special administration (bank administration) if there are depositors) the FSCS shall be entitled to vote as a creditor under this rule and rule 65 has effect with respect to its voting rights.

(4) In a special administration or a special administration (bank insolvency), where the FSA has given a direction under regulation 16 and has not withdrawn its direction at the time that the administrator proposes a revision to the statement of proposals, this rule shall not apply.

(5) In a special administration (bank administration), where the FSA has given a direction under regulation 16 and has not withdrawn its direction at the time that the administrator proposes a revision to the statement of proposals—

(a) if Objective A has not been achieved, paragraph (2)(c) shall not apply; and

(b) if Objective A has been achieved, this rule shall not apply.

Notice to creditors and clients

46

As soon as reasonably practicable after the conclusion of a meeting of creditors or clients, or of creditors and clients to consider the administrator’s proposals or revised proposals, the administrator shall—

(a) send notice of the result of the meeting to every person who received notice of the meeting and to the registrar of companies;

(b) lodge in court, and send to any person who did not receive notice of the meeting and of whose claim the administrator has become subsequently aware, a copy of the notice of the result of the meeting along with a copy of the proposals which were considered at that meeting; and

CHAPTER 4 — Meetings generally

Meetings generally

47

This Chapter, except where different provision is made in the Regulations or these Rules, applies to meetings summoned by the administrator under—

(a) paragraph 51 (initial meeting);

(b) paragraph 54(2) (meeting to consider revision to the administrator’s proposals);

or following a request or a direction from the court under paragraph 56 (further creditors’ meetings).

Venue

48

(1) In fixing the venue for a meeting, the convener must have regard to the convenience of those attending.

(2) Meetings must be summoned for commencement between 10.00 and 16.00 hours on a business day (subject to any direction by the court).

(3) In this rule, “meeting” includes an adjourned meeting.

Notice of meeting by individual notice: when and where sent

49

(1) This rule applies except where the court orders under rule 51 that notice of a meeting be given by advertisement only.

(2) Notice summoning a meeting must be delivered at least 14 days before the day fixed for the meeting as provided in paragraph (3).

(3) Notice must be sent—

(a) for a meeting involving the creditors, to all the creditors of whose address the administrator is aware and who had claims against the investment bank at the date when it entered administration (except for those who have subsequently been paid in full);

(b) for a meeting involving the clients, to all clients of whose claim the administrator is aware (except for those who have no outstanding claim to client assets held by the investment bank) and whom the administrator has a means of contacting;

(c) for a meeting of contributories, to every person appearing (by the investment bank’s books or otherwise) to be a contributory of the investment bank.

(4) The FSA, and in a special administration (bank insolvency) or special administration (bank administration), the Bank of England and the FSCS, shall also be notified of any such meeting.

Notice of meeting by individual notice: content and accompanying documents

50

(1) This rule applies except where the court orders under rule 51 that notice of a meeting be given by advertisement only.

(2) Notice summoning a meeting must specify—

(a) the purpose of and venue for the meeting;

(b) the persons who are entitled to attend and vote at the meeting;

and state that claims or proofs and (if applicable) proxies must be lodged at a specified place not later than 12.00 hours on the business day before the date fixed for the meeting in order that creditors or clients may be entitled to vote at the meeting.

(3) Forms of proxy complying with rule 102 must be sent out with every notice summoning a meeting.

Notice of meeting by advertisement only

51

(1) The court may order that notice of any meeting under these Rules be given by advertisement and not by individual notice to the persons concerned.

(2) In considering whether so to order, the court must have regard to the cost of advertisement, the amount of assets available and the extent of the interest of creditors, clients, members and contributories or any particular class of them.

Content of notice for meetings

52

(1) Notice of a meeting of the creditors, clients or a meeting of creditors and clients, must contain the following information—

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

(b) the full name, registered address, registered number and any other trading names of the investment bank;

(d) details of the venue, the date and time of the meeting;

(e) whether the meeting is—

(i) an initial creditors and clients’ meeting under paragraph 51,

(ii) to consider revisions to the administrator’s proposals under paragraph 54(2),

(iii) a further creditors’, or creditors and clients’, or clients’ meeting under paragraph 56, or

(iv) a meeting under paragraph 62,

unless the court orders that it be given by advertisement only in accordance with rule 51.

(2) Where the court orders an extension to the period set out in paragraph 51(2)(b), the administrator shall notify each person who was sent notice in accordance with paragraph 49(4) (or in a special administration (bank administration), paragraph 9 to Schedule 2 to the Regulations).

Advertisement of meetings

53

(1) The administrator, in convening a meeting under these Rules, must have advertised once in the Edinburgh Gazette a notice which, in addition to the standard content, must state—

(a) that a meeting of creditors, clients, creditors and clients, members or contributories is to take place;

(b) the venue fixed for the meeting;

(d) the time and date by which, and place at which, those attending must lodge proxies and (in the case of a meeting of creditors, clients or both) claims or proofs in order to be entitled to vote.

(2) Notice under this rule must be advertised before or as soon as reasonably practicable after notice is given to those attending.

(3) Information to be advertised in the Edinburgh Gazette under this rule may also be advertised in such other manner as the administrator thinks fit.

Non-receipt of notice of meeting

54

Where, in accordance with the Regulations or these Rules, a meeting is summoned by notice, the meeting is presumed to have been duly summoned and held, even if not all those to whom the notice is to be given have received it.

Requisition of meetings

55

(1) In this Chapter, “requisitioned meeting” means a meeting requested under paragraph 56(1).

(2) A request for a meeting must contain the following information—

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

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

(d) the full amount of that creditor’s claim.

(3) The request for a requisitioned meeting must include a statement of the purpose of the proposed meeting and—

(a) either—

(i) a list of the creditors or contributories concurring with the request and of the amounts of their respective claims or values, and

(ii) written confirmation of concurrence from each creditor or contributory concurring, or

(b) a statement that the requesting creditor’s debt or contributory’s value alone is sufficient without the concurrence of other creditors or contributories.

(4) In the preceding paragraph, a contributory’s value is the amount in respect of which the contributory may vote at any meeting.

(5) A requisitioned meeting must be held within 28 days of the date of the administrator’s receipt of the notice.

(6) The administrator—

(a) shall notify the FSA of the details and purpose of the requisitioned meeting;

(b) shall—

(i) in a special administration (bank insolvency), notify the Bank of England of the details and purpose of the requisitioned meeting, or

(ii) in a special administration (bank administration), notify the Bank of England and the FSCS of the details and purpose of the requisitioned meeting, and

Expenses of requisitioned meetings

56

(1) The expenses of summoning and holding a requisitioned meeting shall be paid by the person who makes the request, who shall deposit with the administrator caution for their payment.

(2) The sum to be deposited shall be such as the administrator may determine, and the administrator shall not act without the deposit having been made.

(3) The meeting may resolve that the expenses of summoning and holding it are to be payable out of the assets of the investment bank as an expense of the administration.

(4) To the extent that any caution made under this rule is not required for the payment of expenses of summoning and holding the meeting, it shall be repaid to the person who made it.

Quorum at meetings

57

(1) A meeting of creditors, clients, creditors and clients or contributories is not competent to act unless a quorum is present.

(2) A quorum is—

(a) in the case of a meeting of creditors, at least one creditor entitled to vote;

(b) in the case of a meeting of clients, at least one client entitled to vote;

(c) in the case of a meeting of creditors and clients, at least one creditor and one client who are each entitled to vote;

(d) in the case of a meeting of contributories, at least 2 contributories so entitled, or all the contributories, if their number does not exceed 2.

(3) For the purposes of this rule, the reference to the creditor or contributories necessary to constitute a quorum is not confined to those persons present or duly represented under section 323 of the 2006 Act but includes those represented by proxy by any person (including the chair).

(4) Where at any meeting under paragraph (2)—

(a) the provisions of this rule as to a quorum being present are satisfied by the attendance of—

(i) the chair alone, or

(ii) one other person in addition to the chair, and

(b) the chair is aware, by virtue of claims or proofs and proxies received or otherwise, that one or more additional persons would, if attending, be entitled to vote,

the meeting must not commence until at least the expiry of 15 minutes after the time appointed for its commencement.

Chair at meetings

58

(1) At any meeting of creditors, clients, or creditors and clients summoned by the administrator, either the administrator shall be the chair, or a person nominated by the administrator in writing to act in the administrator’s place.

(2) A person so nominated must be either—

(a) one who is qualified to act as an insolvency practitioner in relation to the investment bank; or

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

(3) Where the chair holds a proxy which includes a requirement to vote for a particular resolution and no other person proposes that resolution—

(a) the chair must propose it unless the chair considers that there is good reason for not doing so, and

(b) if the chair does not propose it, the chair must as soon as reasonably practicable after the meeting notify the principal of the reason why not.

Adjournment by chair

59

(1) The chair may, and must if the meeting so resolves, adjourn the meeting to such time and place as seems to the chair to be appropriate in the circumstances.

(2) An adjournment under this paragraph must not be for a period of more than 14 days, subject to any direction by the court.

(3) If there are further adjournments, the final adjournment must not be to a day later than 14 days after the date on which the meeting was originally held.

(4) Rule 48 applies with regard to the venue fixed for a meeting adjourned under this rule.

(5) This rule does not apply to the initial meeting of creditors and clients.

Adjournment in absence of chair

60

(1) If within 30 minutes from the time fixed for commencement of a meeting there is no person present to act as chair, the meeting stands adjourned to the same time and place in the following week or, if that is not a business day, to the business day immediately following.

(2) If within 30 minutes from the time fixed for the commencement of the meeting those persons attending the meeting do not constitute a quorum, the chair may adjourn the meeting to such time and place as the chair may appoint.

Claims, proofs and proxies in adjournment

61

Where a meeting under these Rules is adjourned, claims, proofs and proxies may be used if lodged at any time up to 12.00 hours on the business day immediately before the adjourned meeting.

Suspension

62

Once only in the course of a meeting, the chair may, without an adjournment, declare it suspended for any period up to 1 hour.

Venue and conduct of company meetings

63

(1) In fixing the date, time and place for a meeting, the administrator shall have regard to the convenience of those members of the investment bank attending.

(2) The chair of the meeting shall be the administrator or the person nominated by the administrator in writing to act in the administrator’s place.

(3) A person so nominated must be either—

(a) one who is qualified to act as an insolvency practitioner in relation to the investment bank; or

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

(4) If within 30 minutes from the time fixed for commencement of a meeting there is no person present to act as chair, the meeting stands adjourned to the same time and place in the following week or, if that is not a business day, to the business day immediately following.

(5) Subject to anything to the contrary in the Regulations and these Rules, the meeting must be summoned and conducted in accordance with the law of Scotland, including any applicable provision in or made under the 2006 Act.

(6) The chair of the meeting shall cause minutes of the proceedings to be entered in the sederunt book.

CHAPTER 5 — Entitlement to vote at meetings

Entitlement to vote (creditors)

64

(1) A creditor is entitled to vote at any creditors’ or creditors and clients’ meeting of the special administration if that creditor’s claim has been submitted to the administrator and that claim has been accepted in whole or in part in accordance with the rules in Part 6.

(2) A claim submitted by a creditor, which has been accepted in whole or in part by the administrator for the purpose of voting at a meeting shall be deemed to have been resubmitted for the purpose of obtaining an adjudication as to that creditor’s entitlement to vote at any subsequent meeting.

FSCS and voting rights

65

(1) For the purpose of voting at a meeting in a special administration (bank insolvency) (or in a special administration (bank administration) if there are depositors), the FSCS, instead of complying with the requirements set out in rule 126(1)(d) may give a statement containing—

(a) the names of the creditors of the investment bank in respect of whom an obligation of the FSCS has arisen or may reasonably be expected to arise;

(b) the amount of each such obligation; and

(2) The FSCS may from time to time submit a further statement; and each such statement supersedes any previous statement.

(3) Any voting rights which a creditor might otherwise exercise in the special administration in respect of a claim are reduced by a sum equal to the amount of that claim in relation to which the FSCS, by virtue of its having submitted a statement under this rule, is entitled to exercise voting rights at the meeting.

Calculation of voting rights (creditors)

66

Section 50 of the 1985 Act[^f00016] (entitlement to vote and draw dividend) (as applied by rule 127) applies with regard to a creditor’s entitlement to vote in the special administration.

Calculation of voting rights: special cases (creditors)

67

(1) An owner of goods under a hire-purchase or chattel leasing agreement, or a seller of goods under a conditional sale agreement, is entitled to vote in respect of the amount of the debt due and payable by the investment bank on the date on which it entered special administration.

(2) In calculating the amount of any debt for the purpose of paragraph (1), no account is to be taken of any amount attributable to the exercise of any right under the relevant agreement so far as the right has become exercisable solely by virtue of—

(a) the making of a special administration application, or

(b) the investment bank entering special administration.

Entitlement to vote (clients)

68

(1) A client is entitled to vote at a meeting of creditors and clients or of clients only if—

(a) the administrator has been given written details of the client’s claim as to the total amount of client assets over which the client asserts—

(i) a beneficial right of ownership or a right of ownership where the investment bank has been acting as custodier of those assets, or

(ii) another means of ownership; and

(b) the details were given to the administrator—

(i) not later than 12.00 hours on the business day before the day fixed for the meeting, or

(ii) later than that time but the chair of the meeting is satisfied that the delay was due to circumstances beyond that client’s control; and

and there has been lodged with the administrator any proxy intended to be used on behalf of that person.

(2) Subject to paragraph (4), for the purposes of this Chapter, written details of a claim for client assets, once lodged or given in accordance with this rule, need not be lodged or given again.

(3) The chair may call for any document or other evidence to be produced if the chair thinks it necessary for the purpose of substantiating the whole or any part of a claim for client assets.

(4) Where at the date of the meeting the client is aware that there will be a shortfall in respect of their claim to client assets, the client shall—

(a) resubmit a claim under paragraph (1), subtracting the value of the shortfall of assets (as calculated, in respect of securities, in accordance with rule 69) from that claim; and

(b) submit a claim under rule 64 and under Part 6 as to the debt owed to the client by the investment bank in respect of the shortfall.

(5) If at the time that the invitation to the initial meeting, or notice of a creditors and clients’ or a client’s meeting, is sent out, the administrator has become aware that there will be a shortfall in respect of a client’s claim to client assets, the administrator shall notify the client at the same time as the invitation or notice is sent out.

(6) If after the time that the invitation to the initial meeting, or notice of a creditors and clients’ or a clients’ meeting, is sent out, the administrator becomes aware that there will be a shortfall in respect of a client’s claim to client assets, the administrator shall notify the client as soon as reasonably practicable prior to the meeting and take this shortfall into account in calculating the client’s entitlement to vote.

Calculation of voting rights (clients)

69

(1) For the purposes of this Chapter, a client’s voting rights are calculated according to the value of the client’s claim submitted under rule 68(1)(a) taking into account any shortfall identified prior to the meeting.

(2) Subject to paragraph (4), the chair is to value any securities making up the client’s claim under paragraph (1) by reference to the closing or settlement price for such securities of a particular description.

(3) In paragraph (2)—

“closing or settlement price” means— in relation to securities traded on a relevant exchange, the closing or settlement price published by that exchange; and in relation to securities traded elsewhere, the closing or settlement price published by an appropriate pricing source,

on the last business day before the date the investment bank entered special administration; but where such securities are traded outside the United Kingdom, the closing or settlement price shall be the most recent closing price before that date; and

“securities of a particular description” has the meaning set out in regulation 12(9);

and in this paragraph—

“appropriate pricing source” means a reputable source used by the investment bank immediately prior to the investment bank entering special administration for valuing or reporting in respect of those securities, unless the client asserts with good reason (and the chair agrees) that an alternative source should be used; and

“relevant exchange” means a recognised investment exchange or recognised overseas investment exchange used by the investment bank to trade such securities immediately prior to the investment bank entering special administration, unless the client asserts with good reason (and the chair agrees) that an alternative exchange should be used.

(4) Where the chair considers that it is not practicable to value a client asset by reference to a closing or settlement price published by a relevant exchange or an appropriate pricing source, the chair may put upon the asset an estimated minimum value for the purposes of the entitlement to vote.

(5) Where client assets are quoted in currencies other than sterling, in order to value the assets for the purposes of this Chapter, the administrator shall convert the market price of the assets to sterling at the rate of exchange for that other currency as at the mean of the buying and selling spot rates prevailing in the London market as published at the close of business on the business day prior to the date of the investment bank entering special administration, or in the absence of any such published rate, such rate as the court determines.

Procedure for admitting clients’ claims for voting

70

(1) At a meeting of creditors and clients, or clients, the chair must ascertain the entitlement of persons wishing to vote as clients and admit or reject their claims accordingly.

(2) The chair may admit or reject a claim in whole or in part.

(3) If the chair is in any doubt whether a claim should be admitted or rejected, the claim must be marked as objected to and allow votes to be cast in respect of it, subject to such votes being subsequently declared invalid if the objection to the claim is sustained.

Voting at meetings of creditors and clients

71

(1) This rule applies to meetings of creditors and clients.

(2) If the administrator thinks it appropriate, the creditors and clients may vote on the same resolution at the meeting, however the creditors and the clients shall vote separately on the resolution.

(3) In a special administration (bank insolvency) the FSCS shall be entitled to vote as a creditor under this rule and rule 65 has effect with respect to its voting rights.

Requisite majorities

72

At a meeting of creditors, clients, or of creditors and clients, a resolution is passed when a majority (in value) of those present and voting, in person or by proxy, have voted in favour of it.

Requisite majorities at members or contributories’ meetings

73

(1) At a meeting of members or contributories of the investment bank, voting rights are as at a general meeting of the investment bank, subject to any provision of the articles affecting entitlement to vote, either generally or at a time when the investment bank is in liquidation.

(2) References in this rule to a person’s share include any other interests which that person may have as a member of the investment bank.

Administrator voting

74

(1) Where a resolution is proposed which affects a person in respect of that person’s remuneration or conduct as the administrator, the vote of that person, or of their firm or of any partner or employee of the administrator shall not be reckoned in the majority required for passing the resolution.

(2) Paragraph (1) applies with respect to a vote given by a person (whether personally or on their behalf by a proxy-holder) either as creditor or client, or contributory or as proxy-holder for a creditor, client or contributory.

CHAPTER 6 — Correspondence and remote attendance

Correspondence instead of meetings

75

(1) This rule applies where an administrator proposes to conduct the business of a creditors’ meeting, a clients’ meeting, a creditors and clients’ meeting or a meeting of contributories (as the case may be) by correspondence.

(2) Where the meeting in question is a creditors’ meeting, a clients’ meeting or a creditors and clients’ meeting, notice of the business to be conducted shall be given to all who are entitled to be notified of the meeting by virtue of paragraph 51.

(3) The administrator may seek to obtain the agreement of the participants of the meeting to a resolution by sending to each participant a copy of the proposed resolution.

(4) The administrator shall send to the participants of the meeting a copy of any proposed resolution on which a decision is sought, which shall be set out in such a way that agreement with or dissent from each separate resolution may be indicated by the recipient on the copy so sent.

(5) The administrator shall set a closing date for receipt of votes and comments. The closing date shall be set at the discretion of the administrator, but shall not be less than 14 business days from the date of issue of the notice under paragraph (2) of this rule.

(6) In order to be considered, votes and comments must be received by the administrator by the closing date and must be accompanied by the creditor’s submission of claim or the client’s details of their claim (referred to in rules 64 and 68) except where these have already been provided to the administrator.

(7) Rule 71 applies where both creditors and clients are voting on a proposed resolution as it applies to meetings of creditors and clients.

(8) For the conduct of business to proceed, the administrator must receive at least one response which satisfies the requirements of paragraph (6) of this rule.

(9) If no responses are received by the closing date then the administrator shall summon a meeting of creditors, of clients or of creditors and clients, or a meeting of contributories, as the case may be.

(10) Any single creditor, or a group of creditors, of the company whose debt amounts to at least 10% of the total debts of the investment bank may, within 5 business days from the date of the administrator sending out the proposed resolution, require the administrator to summon a creditors’ meeting to consider the proposed resolution.

(11) Clients asserting claims over at least 10% of the total value of client assets held by the investment bank may, within 5 business days from the date of issue of the notice, require the administrator to call a meeting of clients to consider the proposed resolution.

(12) Contributories representing claims over at least 10% of the total voting rights of all contributories having the right to vote at a meeting of contributories may, within 5 business days from the date of issue of the notice, require the administrator to call a meeting of contributories to consider the proposed resolution.

(13) If the administrator’s proposed resolution is rejected by the creditors or by the clients pursuant to this rule, the administrator may summon a meeting of creditors, clients or creditors and clients, as the case may be.

(14) A reference in this Part to anything done at a meeting of creditors, clients, creditors and clients or contributories includes a reference to anything done in the course of correspondence in accordance with this rule.

Remote attendance at meetings conducted in accordance with section 246A(9) of the 1986 Act

76

(1) This rule applies to a request to the administrator for a meeting under section 246A(9) of the 1986 Act[^f00017] (remote attendance at meetings) to specify a place for the meeting.

(2) The request must be accompanied by—

(a) in the case of a request by creditors, a list of the creditors making or concurring with the request and the amounts of their respective debts in the special administration;

(b) in the case of a request by clients, a list of the clients making or concurring with the request and the amounts of their respective claims in respect of client assets in the special administration;

(c) in the case of a request by contributories, a list of the contributories making or concurring with the request and their respective values (being the amounts for which they may vote at the meeting);

(d) in the case of a request by members, a list of the members making or concurring with the request and their voting rights; and

(e) from each person concurring, written confirmation of that person’s concurrence.

(3) The request must be made within 7 business days of the date on which the administrator sent the notice of the meeting in question.

(4) Where the administrator considers that the request has been properly made in accordance with the Regulations and this rule, the administrator must—

(a) give notice to all those previously given notice of the meeting—

(i) that it is to be held at a specified place, and

(ii) as to whether the date and time are to remain the same or not;

(b) set a venue (including specification of a place) for the meeting, the date of which must be not later than 28 days after the original date for the meeting; and

and the notices required by sub-paragraphs (a) and (c) may be given at the same or different times.

(5) Where the administrator has specified a place for the meeting in response to a request to which this rule applies, the chair of the meeting must attend the meeting by being present in person at that place.

(6) Rule 56 (expenses of requisitioned meetings) does not apply to the summoning and holding of a meeting at a place specified in accordance with section 246A(9) of the 1986 Act.

Action where person excluded

77

(1) In this rule and rules 78 and 79 an “excluded person” means a person who —

(a) has taken all steps necessary to attend a meeting under the arrangements put in place to do so by the administrator under section 246A(6) of the 1986 Act; and

(b) is not permitted by those arrangements to attend the whole or part of that meeting.

(2) Where the chair becomes aware during the course of the meeting that there is an excluded person, the chair may—

(a) continue the meeting;

(b) declare the meeting void and convene the meeting again;

(3) Where the chair continues the meeting, the meeting is valid unless—

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.