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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

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

(b) the extent of the administrator’s responsibilities in administering the investment bank’s assets; or as the case may be, in pursuing Objective 1.

(8) If the administrator’s remuneration and outlays have been fixed by determination of the creditors’ committee in accordance with paragraph (5)(a)(ii) and the administrator considers the amount to be insufficient, the administrator may request that the remuneration and outlays be increased by—

(a) resolution of the creditors and clients in respect of a claim under paragraph (1)(a); or

(b) resolution of the clients in respect of a claim under paragraph (1)(b).

(9) If the creditors’ committee fails to issue a determination in accordance with paragraph (5)(a)(ii), the administrator shall submit their claim—

(a) to a meeting of creditors and clients in respect of a claim under paragraph (1)(a); or

(b) to a meeting of clients in respect of a claim under paragraph (1)(b),

and the meeting shall issue a determination in accordance with paragraph (5)(a)(ii).

(10) If the meeting of creditors and clients, or as the case may be, the meeting of clients fails to issue a determination in accordance with paragraph (9), then the administrator shall submit their claim to the court and the court shall issue a determination.

(11) In fixing the amount of the administrator’s remuneration and outlays in respect of any accounting period, the creditors’ committee or, as the case may be, a meeting of creditors and clients or a meeting of clients may take into account any adjustment which that body may wish to make in the amount of the remuneration and outlays fixed in respect of any earlier accounting period.

(12) Where there are joint administrators—

(a) it is for them to agree between themselves as to how the remuneration payable should be apportioned;

(b) if they cannot agree as to how the remuneration payable should be apportioned, any one of them may refer the issue for determination—

(i) by the court, or

(ii) by resolution of the creditors’ committee or a meeting of creditors and clients.

Administrator’s application to increase remuneration

136

(1) If the administrator considers that the remuneration or outlays fixed for the administrator under rule 135 by—

(a) the creditors’ committee; or

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

is insufficient, the administrator may apply to the court for an order increasing this 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 16(5) fixed for the administrator by the Objective A committee or under rule 135 above is insufficient, 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 29 fixed for the administrator by the Bank of England or under rule 135 above is insufficient, 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 to be represented, 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 to be represented on the application.

(6) Notice of the application shall also be given to the FSA and the FSA may nominate a person to appear or be represented 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 expenses of the administrator’s application, including the expenses 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.

CHAPTER 2 — Replacing the administrator

Grounds for resignation

137

(1) The administrator may resign on grounds of ill health or because—

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

(b) 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 leave 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

138

(1) The administrator must give at least 5 business days’ notice of the administrator’s intention to resign, or to apply for the court’s leave to do so—

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

(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, its creditors and its clients of whose claim the administrator is aware and 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 that 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.

Notice of resignation

139

(1) The notice of resignation shall be lodged in court, and a copy sent to the registrar of companies.

(2) A copy of the notice of resignation shall be sent, not more than 5 business days after it has been lodged in court, to all other persons to whom notice of intention to resign was sent.

(3) 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 application.

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

Application to court to remove administrator from office

140

(1) An application to the court to remove an administrator from office shall be served upon—

(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 creditor’s committee nor a joint administrator, upon 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.

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

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

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

(3) An applicant under this rule shall, 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, and notice of the order to the registrar of companies.

Incapacity of administrator to act through death or otherwise

141

(1) Subject to the following paragraphs of this rule, where the administrator has died, it is the duty of that person’s executors to give notice of that fact to the court and to the registrar of companies, specifying the date of death.

(2) If the deceased administrator was a partner in or an employee of a firm, notice 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.

(3) Notice of the death may also be given by any person.

(4) Where an 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(2), the administrator shall also give notice to—

(a) 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.

Application to replace (special administration)

142

(1) Where an application is made to the court under paragraph 91(1) to appoint a replacement administrator, the application shall be accompanied by a statement of the proposed administrator in accordance with rule 7.

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

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

(b) the person nominated for appointment as administrator;

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

(3) Where the court makes an order filling a vacancy in the office of administrator, the same provisions shall apply, subject to such modification as may be necessary, in respect of giving notice of, and advertising, the appointment as in the case of the making of the special administration order.

(4) Service of the application under this rule shall be the same as service of an application for a special administration order.

(5) Rule 11 shall apply to the notice of appointment of a replacement administrator 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))

143

(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 the office of administrator 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))

144

(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 the office of administrator 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 to appear or be represented.

Notification and advertisement of appointment of replacement administrator

145

(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 an initial appointment, and all statements, consents and other documents as required shall also be required in this case.

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

Notification and advertisement of appointment of joint administrator

146

(1) Where a person is appointed in accordance with paragraph 103 to act as administrator jointly or concurrently with the person or persons then acting, the same provisions shall apply, subject to this rule and to such other modification as may be necessary, in respect of the making of this appointment as in the case of the original appointment of an administrator.

(2) An appointment made under paragraph 103 shall be notified to the registrar of companies.

Additional joint administrator (special administration (bank administration))

147

(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) lodge written representations; and

(b) appear or be represented 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) Rule 145 applies in respect to the notification and advertisement of the appointment of an additional joint administrator.

Administrator’s duties on vacating office

148

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.

PART 8 — End of Special Administration

Final progress report

149

“Final progress report” means a progress report which includes a summary account of—

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

(b) any major changes to, or deviations from, those proposals in the course of the special administration;

(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

150

(1) An application under paragraph 79 for an order providing for the appointment of an administrator of the investment bank to cease to have effect shall be accompanied by—

(a) a progress report for the period since the last such report (if any); 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), administrator shall give notice in writing of the administrator’s intention to apply to—

(a) the applicant for the special administration order under which the administrator was appointed;

(b) the creditors and clients;

(d) in a special administration (bank insolvency), the Bank of England; and

(e) in a special administration (bank administration), the Bank of England and the FSCS.

(3) Notice under paragraph (2) shall be give at least 5 business days before the date on which the administrator intends to make the application.

Application to court by creditor

151

(1) Where a creditor applies to the court to end the special administration a certified copy of the application shall be served on—

(a) the administrator;

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

(2) Service shall be effected not less than 5 business days before the date fixed for the hearing.

(3) The persons in paragraph (1) may appear or be represented at the hearing of the application.

(4) Where the court makes an order to end the special administration, the court shall send a copy of the order to the administrator.

(5) This rule does not apply in a special administration (bank insolvency) or a special administration (bank administration).

Notification by administrator of court order

152

(1) Where the court makes an order to end the administration, the administrator must send a copy of the court order and a copy of the final progress report to the registrar of companies.

(2) As soon as reasonably practicable, the administrator must send a copy of the notice and the final progress report to all other persons who received notice of the administrator’s appointment.

Moving from administration to dissolution

153

(1) The notice of vacation of office required to be sent by the administrator in accordance with paragraph 84(1) shall be accompanied by a final progress report.

(2) As soon as reasonably practicable a copy of the notice and accompanying documents shall be sent to all other persons who received notice of the administrator’s appointment.

(3) Where the court makes an order under paragraph 84(7) it shall, where the applicant is not the administrator, give a certified copy of the order to the administrator.

PART 9 — Applications to Court

CHAPTER 1 — Applications under section 176A of the 1986 Act

Applications under section 176A(5) of the 1986 Act to disapply section 176A

154

An application under section 176A(5) of the 1986 Act[^f00027] (share of assets for unsecured creditors) shall include averments—

(a) that the application arises in respect of a special administration;

(b) as to the financial position of the investment bank; and

(c) as to the basis of the applicant’s view that the cost of making a distribution to unsecured creditors would be disproportionate to the benefits.

Notice of an order under section 176A(5) of the 1986 Act

155

(1) Where the court makes an order under section 176A(5) of the 1986 Act the applicant shall, as soon as reasonably practicable after the making of the order—

(a) send to the investment bank a copy of the order certified by the clerk of court,

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

(2) The court may direct that the requirement of paragraph (1)(c) of this rule be met by the publication of a notice containing the standard content and stating that the court has made an order disapplying the requirement to set aside the prescribed part.

(3) The notice referred to in paragraph (2) must be published once as soon as reasonably practicable in the Edinburgh Gazette and be further advertised in such other manner as the court may direct.

CHAPTER 2 — Defects

Power of court to cure defects

156

(1) The court may, on the application of any person having an interest—

(a) if there has been a failure to comply with any requirement of the Regulations or these Rules, make an order waiving any such failure and, so far as practicable, restoring any person prejudiced by the failure to the position that person would have been in but for the failure;

(b) if for any reason anything required or authorised to be done in, or in connection with, the special administration cannot be done, make such order as may be necessary to enable that thing to be done.

(2) The court, in an order under paragraph (1), may impose such conditions, including conditions as to expenses, as the court thinks fit and may—

(a) authorise or dispense with the performance of any act in the special administration;

(b) appoint as administrator of the investment bank a person who would be eligible to be appointed as such under Part 2 of these Rules, whether or not in place of an existing administrator;

(3) The administrator shall record in the sederunt book the decision of the court under this rule.

PART 10 — Application of section 216 of the 1986 Act

Preliminary

157

The Rules in this Part—

(a) relate to the leave required under section 216 of the 1986 Act (restriction on re-use of company names) for a person to act as mentioned in section 216(3) of that Act in relation to an investment bank with a prohibited name; and

(b) prescribe the cases excepted from that provision, that is to say, those in which a person to whom the section applies may so act without that leave.

Application for leave under section 216(3) of the 1986 Act

158

When considering an application for leave under section 216(3) of the 1986 Act, the court may call on the administrator or any former administrator of the investment bank for a report of the circumstances in which that investment bank became insolvent, and the extent (if any) of the applicant’s apparent responsibility for its doing so.

First excepted case

159

(1) This rule applies where—

(a) a person (“P”) was within the period mentioned in section 216(1) of the 1986 Act a director, or shadow director, of an investment bank that has gone into special administration by virtue of Ground A in regulation 6(1) being satisfied; and

(b) P acts in all or any of the ways specified in section 216(3) of that Act in connection with, or for the purposes of, the carrying on (or proposed carrying on) of the whole or substantially the whole of the business of the investment bank where that business (or substantially the whole of it) is (or is to be) acquired from the investment bank under arrangements—

(i) made by the administrator,

(ii) made before the investment bank entered into special administration by an office-holder acting in relation to it as supervisor of a voluntary arrangement under Part 1 of the 1986 Act,

(iii) made before the investment bank entered into special administration (bank administration) or special administration (bank insolvency) by a person appointed in accordance with rule 17 or 30, or

(iv) made before the investment bank entered into special administration (bank administration) by the Bank of England under a power in Part 1 of the 2009 Act (special resolution regime).

(2) P will not be taken to have contravened section 216 of the 1986 Act if prior to P’s acting in the circumstances set out in paragraph (1) a notice is, in accordance with the requirements of paragraph (3)—

(a) given by P to every creditor of the investment bank whose name and address—

(i) is known by P, or

(ii) is ascertainable by P on the making of such enquiries as are reasonable in the circumstances; and

(b) published in the Edinburgh Gazette.

(3) The notice referred to in paragraph (2)—

(a) may be given and published before the completion of the arrangements referred to in paragraph (1)(b) but must be given and published no later than 28 days after that completion; and

(b) must state—

(i) the name and registered number of the investment bank,

(ii) P’s name,

(iii) that it is P’s intention to act in all or any of the ways specified in section 216(3) of the 1986 Act in connection with, or for the purposes of, the carrying on of the whole or substantially the whole of the business of the investment bank, and

(iv) the prohibited name.

(4) Notice may in particular be given under this rule—

(a) prior to the investment bank entering special administration where the business (or substantially the whole of the business) is, or is to be, acquired by another company under arrangements made by any of the persons mentioned in paragraph (1)(b) (whether or not at the time of the giving of the notice P is a director of that other company); or

(b) at a time where P is a director of another company where—

(i) the other company has acquired, or is to acquire, the whole, or substantially the whole, of the business of the investment bank under arrangements made by the administrator, and

(ii) it is proposed that after the giving of the notice a prohibited name should be adopted by the other company.

(5) Where the investment bank has gone into special administration (bank administration), the reference in this rule to the business of the investment bank may be considered as a reference to only the deposit-taking business of the investment bank.

Second excepted case

160

(1) Where a person (“P”) to whom section 216 of the 1986 Act applies as having been a director or shadow director of the investment bank applies for leave of the court under that section not later than 7 days from the date on which the investment bank went into special administration, P may, during the period specified in paragraph (2), act in any of the ways mentioned in section 216(3), notwithstanding that P has not the leave of the court under that section.

(2) The period referred to in paragraph (1) begins with the day on which the investment bank goes into special administration and ends either on the day falling 6 weeks after that date or on the day on which the court disposes of the application for leave under section 216, whichever of those days occurs first.

Third excepted case

161

The court’s leave under section 216(3) of the 1986 Act is not required where the investment bank there referred to, though known by a prohibited name within the meaning of the section—

(a) has been known by that name for the whole of the period of 12 months ending with the day before the investment bank went into special administration, and

(b) has not at any time in those 12 months been dormant within the meaning of section 1169(1), (2) and (3)(a) of the 2006 Act.

PART 11 — Provisions of General Effect

CHAPTER 1 — Miscellaneous and general

Fees and expenses

162

(1) Subject to paragraphs (2) and (3), all fees, costs, charges and other expenses incurred in the course of the special administration are to be regarded as expenses of the special administration.

(2) In a special administration (bank insolvency), paragraph (1) does not include any money paid by the FSCS to eligible depositors in pursuance of Objective A.

(3) The fees, costs, charges and other expenses associated with the prescribed part shall be met out of the prescribed part.

(4) In this rule, “eligible depositors” has the meaning given to it by section 93(3) of the 2009 Act.

Punishment of offences

163

(1) Where the administrator commits an offence under rule 100(4) (administrator failing to send notification as to progress of administration)—

(a) the offence shall be punishable on summary conviction;

(b) the maximum punishment by way of fine shall be one-fifth of the statutory maximum; and

(c) a person convicted of the offence after continued contravention is liable to a daily default fine which shall be one-fiftieth of the statutory maximum; that is to say, that person is liable on a second or subsequent conviction of the offence to this amount for each day on which the contravention is continued instead of the penalty specified for the offence in sub-paragraph (b).

(2) Section 431 of the 1986 Act[^f00028] (summary proceedings), as it applies to Scotland, has effect in relation to this offence as to offences under the 1986 Act.

CHAPTER 2 — Giving of notice and supply of documents

Application of Chapter 2

164

(1) Subject to paragraph (2), this Chapter applies where a notice or other document is required to be given, delivered or sent under the Regulations or these Rules by any person, including the administrator.

(2) This Chapter does not apply to—

(a) the lodging of any application, or other document, with the court;

(b) the service of any application, or other document, lodged with the court;

(d) the submission of documents to the registrar of companies.

Giving of notices

165

(1) All notices required or authorised by or under the Regulations or these Rules to be given, sent or delivered must be in writing, unless it is otherwise provided, or the court allows the notice to be sent or given in some other way.

(2) Where electronic delivery is permitted, a notice or other document in electronic form is treated as being in writing if a copy of it is capable of being produced in a legible form.

(3) Any reference in the Regulations or these Rules to giving, sending or delivering a notice or any other document means, without prejudice to any other way and unless it is otherwise provided, that the notice or document may be sent by post, and that, subject to rule 166, any form of post may be used.

(4) Personal service of the notice or document is permissible in all cases.

(5) Where under the Regulations or these Rules a notice or other document is required or authorised to be given, sent or delivered by a person (“the sender”) to another (“the recipient”), it may be given, sent or delivered by any person duly authorised by the sender to do so to any person duly authorised by the recipient to receive or accept it.

(6) Where two or more persons are acting jointly as administrators, the giving, sending or delivering of a notice or document to one of them is to be treated as the giving, sending or delivering of a notice or document to each or all.

Sending by post

166

(1) For a document to be properly sent by post, it must be contained in an envelope addressed to the person to whom it is to be sent, and pre-paid for either first or second class post.

(2) Any document to be sent by post may be sent to the last known address of the person to whom the document is to be sent.

(3) Where first class post is used, the document is to be deemed to be received on the second business day after the date of posting, unless the contrary is shown.

(4) Where second class post is used, the document is to be deemed to be received on the fourth business day after the date of posting, unless the contrary is shown.

Certificate of giving notice

167

(1) Where in any proceedings a notice or document is required to be given, sent or delivered by the administrator, the date of giving, sending or delivery of it may be proved by means of a certificate signed by that person or on their behalf by a solicitor, or a partner or an employee of either of them, that the notice or document was duly given, posted or otherwise sent, or delivered on the date stated in the certificate.

(2) In the case of a notice or document to be given, sent or delivered by a person other than the administrator, the date of giving, sending or delivery of it may be proved by means of a certificate by that person that the notice or document was given, posted or otherwise delivered by that person on the date stated in the certificate, or that that person instructed another (named) person to do so.

(3) A certificate under this rule may be endorsed on a copy of the notice to which it relates.

(4) A certificate purporting to be signed by or on behalf of the administrator or by the person mentioned in paragraph (2), shall be deemed, unless the contrary is shown, to be sufficient evidence of the matters stated in the certificate.

Authentication

168

(1) A document or information given, delivered or sent in hard copy form under these Rules is sufficiently authenticated if it is signed by the person sending or supplying it.

(2) A document or information given, delivered or sent in electronic form under these Rules is sufficiently authenticated—

(a) if the identity of the sender is confirmed in a manner specified by the recipient, or

(b) where no such manner has been specified by the recipient, if the communication contains or is accompanied by a statement of the identity of the sender and the recipient has no reason to doubt the truth of that statement.

Electronic delivery

169

(1) Unless in any particular case some other form of delivery is required by the Regulations or these Rules or any order of the court, a notice or other document may be given, delivered or sent by electronic means provided that the intended recipient of the notice or other document has—

(a) consented (whether in the specific case or generally) to electronic delivery (and has not revoked that consent); and

(b) provided an electronic address for delivery.

(2) Where an administrator gives, sends or delivers a notice or other document to any person by electronic means, it must contain or be accompanied by a statement that the recipient may request a hard copy of the notice or document, and specify a telephone number, email address and postal address which may be used to make such a request.

(3) Where a hard copy of the notice or other document is requested it must be sent within 5 business days of receipt of the request by the administrator, who may not make a charge for sending it in that form.

(4) In the absence of evidence to the contrary, a notice or other document shall be presumed to have been delivered where—

(a) the sender can produce a copy of the electronic message which—

(i) contained the notice or other document, or to which the notice or other document was attached, and

(ii) shows the time and date the message was sent; and

(b) that electronic message was sent to the address supplied under paragraph (1)(b).

(5) A message delivered electronically shall be deemed to have been delivered to the recipient at 9.00 am on the next business day after it was sent.

(6) Paragraph (5) does not apply in respect of documents sent electronically under Part 2.

Use of websites by administrator

170

(1) This rule applies for the purpose of section 246B of the 1986 Act[^f00029] (use of websites).

(2) An administrator required to give, deliver or send a document to any person may (other than in a case where personal service is required) satisfy that requirement by sending that person a notice—

(a) stating that the document is available for viewing and downloading on a website;

(b) specifying the address of that website together with any password necessary to view and download the document from that website; and

(c) containing a statement that the recipient of the notice may request a hard copy of the document, and specifying a telephone number, email address and postal address which may be used to make such a request.

(3) Where a notice to which this rule applies is sent, the document to which it relates must—

(a) be available on the website for a period of not less than 3 months after the date on which the notice is sent; and

(b) be in such a format as to enable it to be downloaded from the website within a reasonable time of an electronic request being made for it to be downloaded.

(4) Where a hard copy of the document is requested it must be sent within 5 business days of the receipt of the request by the administrator, who may not make a charge for sending it in that form.

(5) Where a document is given, delivered or sent to a person by means of a website in accordance with this rule, it is deemed to have been delivered—

(a) when the document was first made available on the website; or

(b) if later, when the notice under paragraph (2) was delivered to that person.

Special provision on account of expense as to website use

171

(1) Where the court is satisfied that the expense of sending notices in accordance with rule 165 would, on account of the number of persons entitled to receive them, be disproportionate to the benefit of sending notices in accordance with that rule, it may order that the requirement to give, deliver or send a relevant document to any person may (other than in a case where personal service is required) be satisfied by the administrator sending each of those persons a notice—

(a) stating that all relevant documents will be made available for viewing and downloading on a website;

(b) specifying the address of that website together with any password necessary to view and download the document from that site; and

(c) containing a statement that the person to whom the notice is given, delivered or sent may at any time request that hard copies of all, or specific, relevant documents are sent to that person, and specifying a telephone number, email address and postal address which may be used to make that request.

(2) A document to which this rule relates must—

(a) be available on the website for a period of not less than 12 months from the date when it was first made available on the website or, if later, from the date upon which the notice was sent; and

(b) be in such a format as to enable it to be downloaded from the website within a reasonable time of an electronic request being made for it to be downloaded.

(3) Where hard copies of relevant documents have been requested, they must be sent by the administrator—

(a) within 5 business days of the receipt by the administrator of the request to be sent hard copies, in the case of relevant documents first appearing on the website before the request was received; or

(b) within 5 business days from the date a relevant document first appears on the website, in all other cases.

(4) An administrator must not require a person making a request under paragraph (3) to pay a fee for the supply of the document.

(5) Where a relevant document is given, delivered or sent to a person by means of a website in accordance with this rule, it is deemed to have been delivered—

(a) when the relevant document was first made available on the website; or

(b) if later, when the notice under paragraph (1) was delivered to that person.

(6) In this rule a “relevant document” means any document which the administrator is first required to give, deliver or send to any person after the court has made an order under paragraph (1).

Electronic submission of information

172

(1) This rule applies in any case where information is required by these Rules to be sent by any person to the Secretary of State or the administrator.

(2) A requirement of the kind mentioned in paragraph (1) is treated as having been satisfied where—

(a) the information is submitted electronically with the agreement of the person to whom the information is sent;

(b) the form in which the electronic submission is made satisfies the requirements of the person to whom the information is sent;

(d) the person to whom the information is sent can produce in legible form the information so submitted.

(3) Where information is permitted to be sent electronically under paragraph (2), any requirement that the information be accompanied by a signature is taken to be satisfied—

(a) if the identity of the person who is supplying the information and whose signature is required is confirmed in a manner specified by the recipient; or

(b) where no such manner has been specified by the recipient, if the communication contains or is accompanied by a statement of the identity of the person who is providing the information, and the recipient has no reason to doubt the truth of that statement.

(4) Where information has been supplied to a person, whether or not it has been supplied electronically in accordance with paragraph (2), and a copy of that information is required to be supplied to another person falling within paragraph (1), the requirements contained in paragraph (2) apply in respect of the supply of the copy to that other person as they apply in respect of the original.

Electronic submission of information where rule 172 does not apply

173

(1) This rule applies in any case where rule 172 does not apply, where information is required by these Rules to be sent by any person.

(2) A requirement of the kind mentioned in paragraph (1) is treated as having been satisfied where—

(a) the person to whom the information is sent has agreed—

(i) to receiving the information electronically and to the form in which it is to be sent, and

(ii) to the specified manner in which paragraph (3) is to be satisfied;

(b) all the information required to be given is provided in the electronic submission; and

(3) Any requirement that the information be accompanied by a signature is taken to be satisfied if the identity of the person who is supplying the information and whose signature is required is confirmed in the specified manner.

(4) Where information has been supplied to a person, whether or not it has been supplied electronically in accordance with paragraph (2), and a copy of that information is required to be supplied to another person falling within paragraph (1), the requirements contained in paragraph (2) apply in respect of the supply of the copy to that other person, as they apply in respect of the original.

Contents of notices to be advertised in the Edinburgh Gazette

174

(1) Where under the Regulations or these Rules a notice must be published or advertised in the Edinburgh Gazette, in addition to any content specifically required by the Regulations or any other provision of these Rules, the content of such a notice must be as set out in this rule.

(2) All notices published must specify insofar as it is applicable in relation to the particular notice—

(a) the name and postal address of the administrator acting in the special administration to which the notice relates and the date of the appointment of that person;

(b) either an email address, or a telephone number, through which the administrator may be contacted;

(c) the name of any person other than the administrator (if any) who may be contacted regarding the special administration;

(d) the number assigned to the administrator by the Secretary of State; and

(e) the court name and any number assigned to the special administration by the court.

(3) All notices published must specify as regards the investment bank to which the notice relates—

(a) the registered name of the investment bank;

(b) its registered number;

(d) any principal trading address if this is different from its registered office;

(e) any name under which it was registered in the 12 months prior to the date of the commencement of the special administration; and

(f) any name or style (other than its registered name) under which—

(i) the investment bank carried on business;

(ii) the investment bank undertook to hold an asset on behalf of a client; or

(iii) any debt owed to a creditor was incurred.

Notices otherwise advertised under the Regulations or these Rules

175

(1) Where under the Regulations or these Rules a notice may be advertised otherwise than in the Edinburgh Gazette, in addition to any content specifically required by the Regulations or any other provision of these Rules, the content of such a notice must be as set out in this rule.

(2) All notices published must specify insofar as it is applicable in relation to the particular notice—

(a) the name and postal address of the administrator acting in the proceedings to which the notice relates; and

(b) either an email address, or a telephone number, through which the administrator may be contacted.

(3) All notices published must specify as regards the investment bank to which the notice relates—

(a) the registered name of the investment bank;

(b) its registered number;

(c) any name under which it was registered in the 12 months prior to the date of the commencement of the special administration; and

(d) any name or style (other than its registered name) under which—

(i) the investment bank carried on business;

(ii) the investment bank undertook to hold an asset on behalf of a client; or

(iii) any debt owed to a creditor was incurred.

Notices otherwise advertised

176

The information required to be contained in a notice to which rule 175 applies must be included in the advertisement of that notice in a manner that is reasonably likely to ensure, in relation to the form of the advertising used, that a person reading, hearing or seeing the advertisement, will be able to read, hear or see that information.

Omission of unobtainable information

177

Information required by rules 174 and 175 to be included in a notice may be omitted if it is not reasonably practicable to obtain it.

CHAPTER 3 — Notifications to the registrar of companies

Application of Chapter 3

178

This Chapter applies where under the Regulations or these Rules information is to be sent or delivered to the registrar of companies.

Information to be contained in all notifications to the registrar

179

Where under the Regulations or these Rules a return, notice, or any other document or information is to be sent to the registrar of companies, that notification must specify—

(a) the registered name of the investment bank;

(b) its registered number;

(d) the regulation or the rule under which the notification is made;

(e) the date of the notification;

(f) the name and postal address of person making the notification; and

(g) the capacity in which that person is acting in respect of the investment bank; and

the notification must be authenticated by the person making the notification.

Notification relating to the administrator

180

In addition to the information required by rule 179, a notification relating to the office of the administrator must also specify—

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

(b) the date of the event notified;

(d) where the notification relates to the termination of an appointment, the reason for that termination (for example, resignation).

Notifications relating to documents

181

In addition to the information required by rule 179, a notification relating to a document (for example, a statement of affairs) must also specify—

(a) the nature of the document; and

(b) either—

(i) the date of the document; or

(ii) where the document relates to a period of time (for example a report) the period of time to which the document relates.

Notifications relating to court orders

182

In addition to the information required by rule 179, a notification relating to a court order must also specify—

(a) the nature of the court order; and

(b) the date of the order.

Notifications relating to other events

183

In addition to the information required by rule 179, a notification relating to any other event (for example, the coming into force of a moratorium) must specify—

(a) the nature of the event including the regulation or rule under which it took place; and

(b) the date the event occurred.

Notifications of more than one nature

184

A notification which includes a notification of more than one nature must satisfy the requirements applying in respect of each of those notifications.

Notifications made to other persons at the same time

185

(1) Where under the Regulations or these Rules a notice or other document is to be sent to another person at the same time that it is to be sent to the registrar of companies, that requirement may be satisfied by sending to that other person a copy of the notification sent to the registrar.

(2) Paragraph (1) does not apply—

(a) where additional information is prescribed for the notification to the other person; or

(b) where the notification to the registrar of companies is incomplete.

CHAPTER 4 — Further provisions concerning documents

Confidentiality of documents

186

(1) Where the administrator considers, in the case of a document forming part of the records of the special administration—

(a) that it should be treated as confidential, or

(b) that it is of such a nature that its disclosure would be calculated to be injurious to the interests of the investment bank’s creditors, clients, members or contributories,

the administrator may decline to allow it to be inspected by a person who would otherwise be entitled to inspect it.

(2) The persons who may be refused the right to inspect documents under this rule by the administrator include the members of a creditors’ committee.

(3) Where under this rule the administrator refuses inspection of a document, the person who made that request may apply to the court for an order to overrule the refusal and the court may either overrule it altogether, or sustain it, either unconditionally or subject to such conditions, if any, as it thinks fit to impose.

(4) Nothing in this rule entitles the administrator to decline to allow inspection of any claim or proxy.

Right to inspect documents, to have list of creditors and to copy documents

187

(1) Subject to rule 186, the following persons have the right to inspect documents held by the administrator—

(a) a person who is or was an officer of the investment bank;

(b) a member of the investment bank;

(d) any person stating in writing to be a client of the investment bank;

(e) any person stating in writing to be a contributory of the investment bank;

(f) a member of the creditors’ committee;

(g) in a special administration (bank insolvency) the Bank of England or the FSCS;

(h) in a special administration (bank administration) the Bank of England and, if there are depositors, the FSCS;

(i) the FSA.

(2) A right of inspection may be exercised on a person’s behalf by anyone authorised by that person in writing.

(3) Subject to rule 186, any of the persons listed in paragraph (1) also has the right to require the administrator to furnish that creditor with a list of the investment bank’s creditors and the amounts of their respective debts.

(4) Where the administrator is requested by any of the persons listed in paragraph (1) to supply a copy of any document, the administrator is entitled to require payment of the appropriate fee in respect of the supply of that copy.

(5) Where a person has the right to inspect documents, the right includes that of taking copies of those documents, on payment of the appropriate fee.

Sederunt book

188

(1) The administrator shall maintain a sederunt book during their term of office for the purpose of providing an accurate record of the special administration.

(2) Without prejudice to the generality of the above paragraph, there shall be in the sederunt book a copy of anything required to be recorded in it by provision of the Regulations or of these Rules.

(3) The administrator shall make the sederunt book available for inspection at all reasonable hours by any interested person.

(4) Any entry in the sederunt book shall be sufficient evidence of the facts in that entry, except where it is founded on by the administrator in their own interest.

(5) Without prejudice to paragraph (3), the administrator shall retain, or shall make arrangements for retention of, the sederunt book for a period of ten years from the date the special administration ends, in accordance with paragraph 79 or 84 (as applied by regulation 15) and regulation 20 or 21.

(6) Where the sederunt book is maintained in non-documentary form, it shall be capable of reproduction in legible form.

Disposal of investment bank’s books, papers and other records

189

(1) Where an investment bank is in special administration, the administrator shall dispose of the books, papers and records of the investment bank either in accordance with—

(a) the directions of the creditors’ committee (if any); or

(b) where there is no such committee, the court,

or, if, by the date which is 12 months after the dissolution of the investment bank, no such directions have been given, the administrator may do so after that date in such a way as the administrator deems appropriate.

(2) An administrator or former administrator (“A”) shall within 14 days of a request by the Secretary of State give the Secretary of State particulars of any money in A’s hands or under A’s control representing unclaimed or undistributed assets of the investment bank or dividends or other sums due to any person as a member or former member of the investment bank.

CHAPTER 5 — Further provisions concerning the administrator

Administrator’s caution

190

(1) Wherever under these Rules any person has to appoint an administrator, that person must be satisfied before making the appointment that the person appointed or to be appointed has caution for the proper performance of the functions of that office.

(2) It is the duty of the creditors’ committee to review from time to time the adequacy of the administrator’s caution.

(3) The cost of the administrator’s caution shall be paid as an expense of the proceedings.

Information about time spent on the special administration

191

(1) Subject as set out in this rule, the administrator must, on request in writing by any person mentioned in paragraph (2), supply free of charge to that person a statement of the kind in paragraph (3).

(2) The persons referred to in paragraph (1) are—

(a) any director of the investment bank; or

(b) any creditor, client or member of the investment bank.

(3) The statement referred to in paragraph (1)—

(a) must comprise the following details—

(i) the total number of hours spent on the special administration by the administrator or a former administrator and any staff assigned to the special administration during the period covered by the statement,

(ii) for each grade of individual so engaged, the average hourly rate at which any work carried out by individuals in that grade is charged, and

(iii) the number of hours spent by each grade of staff during that period; and

(b) must cover the period beginning with the date of the appointment of that person as administrator and ending—

(i) with the date next before the date of making the request on which that person has completed any period as administrator, which is a multiple of 6 months, or

(ii) where a person has ceased to act as administrator, the date upon which the person so ceased.

(4) No request pursuant to this rule may be made where more than 2 years has elapsed since the person ceased to act as administrator.

(5) Any statement required to be provided to any person under this rule must be supplied within 28 days of the date of the receipt of the request by the person required to supply it.

Service on joint administrators

192

Where there are joint administrators in a special administration, service on one of them is to be treated as service on all of them.

CHAPTER 6 — Transfer of proceedings

Proceedings commenced in the wrong court

193

Where a special administration is commenced in a court other than the Court of Session, that court may order the transfer of the proceedings to the Court of Session.

Proceedings other than special administration commenced

194

(1) Where—

(a) a winding-up order or an administration order has been made in respect of an investment bank; or

(b) a resolution has been made for the winding up of or for the appointment of an administrator of an investment bank,

the Authority may apply to the court for an order that the proceedings be converted to a special administration, a special administration (bank insolvency) or a special administration (bank administration) as the case may be.

(2) In making an order under paragraph (1), the court shall give such directions as it sees fit, including directions as to the former officer-holder’s remuneration and expenses.

(3) An application under paragraph (1) may be made without notice.

(4) Without prejudice to the generality of the court’s power in paragraph (1), where the person (“P”) appointed as office-holder under the original proceedings is not the same person as the administrator of the special administration, the court may direct that—

(a) P be sent a copy of the order under paragraph (1) by the administrator;

(b) P hand over—

(i) the records of the original proceedings, including correspondence, proofs and other related papers appertaining to those proceedings while they were within P’s responsibility; and

(ii) the investment bank’s books, papers and other records; and

(c) P hand over all the assets of the investment bank and the client assets held by the investment bank in P’s possession.

(5) In this rule—

“the Authority” means— where the investment bank is a deposit-taker and the application under paragraph (1) is for an order to convert the proceedings to— a special administration (bank administration), the Bank of England; or a special administration (bank insolvency), the Bank of England or the FSA (with the consent of the Bank of England); or otherwise, the FSA;

“office-holder” means provisional liquidator, liquidator or administrator as the case may be; and

“original proceedings” means the proceedings following the making of the winding up order, the administration order or the resolution referred to in paragraph (1).

Signed

Jeremy Wright — James Duddridge — Two of the Lords Commissioners of Her Majesty’s Treasury — 12th September 2011

Explanatory note

(This note is not part of the Rules)

EXPLANATORY NOTE

These Rules set out the procedure in Scotland for the investment bank special administration process under the Investment Bank Special Administration Regulations 2011 (S.I. 2011/245) (“the Regulations”).

The main features of investment bank special administration are that:

(d) the order appoints an administrator;

(e) the administrator is to pursue the special administration objectives in accordance with the statement of proposals approved by the meeting of creditors and clients and, in certain circumstances, the FSA; and

(f) in other respects the procedure is similar to administration under Schedule B1 to the Insolvency Act 1986 (c.45).

Where the investment bank is also a deposit-taking bank, the Rules also apply in relation to the special administration (bank insolvency) and special administration (bank administration) processes under Schedules 1 and 2 to the Regulations.

Part 2 sets out the procedure for applying for a special administration order, a special administration (bank insolvency) order or a special administration (bank administration) order.

Part 3 sets out the process of the special administration.

Part 4 provides for the expenses of the special administration.

Part 5 provides for the pursuit of Objective 1 set out in the Regulations (to ensure the return of client assets as soon as reasonably practicable).

Part 6 provides for distributions to creditors.

Part 7 sets out rules concerning the administrator (and there are further rules concerning the administrator in Chapter 5 of Part 11).

Part 8 provides for the end of the special administration.

Part 9 sets out special rules in respect of court procedure and practice.

Part 10 provides for the application of section 216 of the Insolvency Act 1986 (as applied by the Regulations).

Part 11 contains provisions of general effect.

The Rules apply to investment banks incorporated as companies and also to investment banks that are limited liability partnerships by virtue of paragraph 6 of Schedule 3 to the Regulations which applies the Rules with such modifications as the context requires for giving effect to the Regulations.

An impact assessment of the effect that these Rules will have on the costs of business and the voluntary sector is available from the Financial Regulatory Strategy Team, HM Treasury, 1 Horse Guards Road, London SW1A 2HQ. It is also published with the Explanatory Memorandum alongside the Rules on legislation.gov.uk and on HM Treasury’s website (www.hm-treasury.gov.uk).

Footnotes

[^f00001]: 1986 c.45: section 411 is applied with modifications by regulation 15 of S.I. 2011/245; subsections (1A) and (2C) were inserted by and subsections (2) and (3) amended by sections 125 and 160 of the Banking Act 2009 (c.1); subsection (2) was also amended by S.I. 2009/1941 and subsection (3) was also amended by S.I. 2007/2194.

[^f00002]: S.I. 2011/245.

[^f00003]: 1985 c.66.

[^f00004]: 2006 c.46.

[^f00005]: 2009 c.1.

[^f00006]: Section 52 was amended by the Bankruptcy (Scotland) Act 1993 (c.6), section 11(3) and Schedule 1; the Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), sections 36 and 226(2) and schedule 1 and schedule 6, Part 1; and S.I. 2003/2109.

[^f00007]: Section 232 was amended by S.I. 2011/239.

[^f00008]: Section 176A was inserted by section 252 of the Enterprise Act 2002 (c. 40) and amended by S.I. 2008/948.

[^f00009]: S.I. 2003/2097.

[^f00010]: Relevant amendments to Schedule B1 were made by S.I. 2003/2096, 2005/879, 2007/2974, 2008/948, 2008/1897, 2009/1941 and 2010/18.

[^f00011]: S.I. 1994/1443, last amended by S.S.I. 2011/303.

[^f00012]: Section 145 was amended by section 21 of the Financial Services Act 2010 (c. 28).

[^f00013]: Section 235 was amended by the Enterprise Act 2002 (c.40), Schedule 17, paragraphs 9, 24.

[^f00014]: S.I. 1986/1915. Schedule 5 was amended by S.I. 2003/2111 and 2006/734; there are other amending instruments but none is relevant.

[^f00015]: Section 176A was inserted by section 252 of the Enterprise Act 2002 (c. 40) and amended by S.I. 2008/948.

[^f00016]: Section 50 has been amended by the Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), section 226(2), schedule 6 Part 1, and S.I. 2003/2109.

[^f00017]: Section 246A was inserted by S.I. 2010/18.

[^f00018]: Section 176A was inserted by the Enterprise Act 2002 (c.40), section 252 and was amended by S.I. 2008/948.

[^f00019]: 2006 c.46; section 323 was amended by S.I. 2009/1632.

[^f00020]: 1995 c.7.

[^f00021]: 1985 c.66; sections 22(5), 48(5) and (8), 49(1) to (5), 50(1) and 60(2) and paragraphs 3 and 5 of Schedule 1 have been amended by the Bankruptcy and Diligence etc. (Scotland) Act 2007 (asp 3), section 226(2), schedule 6, Part 1; section 49(2A) was inserted by section 8(3) of that Act, section 49(6) has been amended by section 31(1)(a) of that Act, and section 49(6A) was inserted by section 31(1)(b) of that Act; section 50(1) has also been amended by S.I. 2003/2109.

[^f00022]: Section 386 has been amended by section 251 of the Enterprise Act 2002 (c.40) and Schedule 8 to the Pension Schemes Act 1993 (c.48).

[^f00023]: Section 242 has been amended by Schedule 17 to the Enterprise Act 2002.

[^f00024]: Subsection (1) of section 52 has been amended by the Bankruptcy (Scotland) Act 1993 (c.6), section 11(3) and Schedule 1, paragraph 21; subsections (1) to (9) of section 52 have been amended by the Bankruptcy and Diligence etc. (Scotland) Act 2007, section 226(2), schedule 6, Part 1; subsection (2) has also been amended by section 36 of, and schedule 1, paragraph 44(1) and (2)(b) to, that Act; subsection (2ZA) has been inserted by section 36 of, and schedule 1, paragraph 44(1) and (3) to, that Act; and subsections (10) and (11) have been inserted by S.I. 2003/2109.

[^f00025]: Subsections (1) and (3) of section 58 have been amended by the Bankruptcy (Scotland) Act 1993, Schedule 1, paragraph 25.

[^f00026]: 2000 c. 8.

[^f00027]: 1986 c.45; section 176A was inserted by the Enterprise Act 2002 (c.40), section 252 and amended by S.I. 2008/948.

[^f00028]: Section 431 has been amended by the Criminal Procedure (Consequential Provisions) (Scotland) Act 1995 (c.40), Schedule 4.

[^f00029]: Section 246B was inserted by S.I. 2010/18.

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