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The Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021

Type Statutory-Instrument

Publication 2021-10-21

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

Reform history JSON API PDF

Made: 21st October 2021

Laid before Parliament: 22nd October 2021

Coming into force: 12th November 2021

Before making these Rules, the Lord Chancellor consulted the committee existing for the purposes of section 413 of the Insolvency Act 1986.

PART 1 — Introductory Provisions

Citation

1

These Rules may be cited as the Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021.

Commencement

2

These Rules come into force on 12th November 2021.

Extent

3

These Rules extend to England and Wales only.

Interpretation

4

(1) The following definitions apply to these Rules or may be seen at the places indicated—

Word or expression	Meaning
asset pool	together (a) the asset pool as defined in the Regulations and (b) any funds properly transferred into a relevant funds account following the commencement of the special administration
authenticate	to authenticate in accordance with rule 256
business address	the place where a person works
business day	any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday in any part of England and Wales or Scotland under or by virtue of the Banking and Financial Dealings Act 1971[^f00003]
contact details	a postal address, an email address or a telephone number through which a customer may be contacted
CPR	Civil Procedure Rules 1998[^f00004] and “CPR” followed by a Part or a rule number means the Part or rule with that number in those rules
customer	(a) user, which has the meaning set out in regulation 6, or (b) holder, which has the meaning set out in regulation 6
file with the court	deliver to the court for filing
the Gazette	the London Gazette
gazetted	advertised once in the Gazette
IP number	the number assigned to an office-holder as an insolvency practitioner by the Secretary of State
means of contacting	being able to contact that person specifically
practice direction	a direction as to the practice and procedure of any court within the scope of the CPR
prescribed part	has the same meaning as it does in section 176A(2)(a) of the IA 1986[^f00005] and the Insolvency Act 1986 (Prescribed Part) Order 2003[^f00006]
progress report	a report which complies with rule 87
registered number	has the meaning set out in section 1066 of the CA 2006[^f00007]
the registrar	an Insolvency and Companies Court Judge and unless the context otherwise requires includes a District Judge in a District Registry of the High Court
registrar of companies	the registrar of companies for England and Wales
the Regulations	the Payment and Electronic Money Institution Insolvency Regulations 2021[^f00008]
Payment Systems Regulator	the body established under section 40 of the Financial Services (Banking Reform) Act 2013[^f00009]	the body established under section 40 of the Financial Services (Banking Reform) Act 2013[^f00009]
requisitioned meeting	a meeting requested under paragraph 56(1)
shortfall claim	that part of a relevant funds claim which will not be met from the asset pool because of a shortfall in the amount available in the asset pool to settle relevant funds claims, including where the shortfall arises as a result of any deduction from the relevant funds of costs under rule 99 or amounts that the court orders be paid from the asset pool or from the relevant funds
standard contents	(a) in relation to a notice to be gazetted, the contents specified in rules 266 and 267, and (b) in relation to a notice to be advertised in any other way, the contents specified in rules 270 and 271
statement of concurrence	a statement, verified by a statement of truth, that that person concurs in the statement of affairs submitted by a nominated person
statement of truth	a statement of truth in accordance with CPR Part 22
witness statement	a witness statement verified by a statement of truth in accordance with CPR Part 22

(2) A fee or remuneration is charged when the work to which it relates is done.

(3) Reference to a notice or other document being given, delivered or sent under these Rules or in the Regulations shall be interpreted in accordance with Chapters 2 to 4 of Part 12 of these Rules.

(4) Expressions used both in these Rules and in the Regulations (including expressions used in the provisions of the IA 1986 applied by the Regulations) have, unless otherwise stated, the meaning set out in the Regulations.

(5) 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 IA 1986, as applied by regulation 37.

(6) A reference to a provision of the IA 1986, if that provision is listed in the Table in regulation 37, is a reference to that provision as applied and modified by the Regulations.

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

(8) For the purposes of these Rules:

(a) references to a customer, and

(b) references to relevant funds,

do not include a customer of, or relevant funds received by:

(i) a small payment institution, or

(ii) in the case of funds received for the execution of payment transactions that are not related to the issuance of electronic money, a small electronic money institution,

where the institution had not chosen to voluntarily safeguard the funds when it entered special administration.

(9) To the extent that a customer claims a shortfall as a creditor, that shortfall claim is to be treated as a debt owed to the customer by the institution arising before the institution entered special administration.

(10) A relevant funds claim which is held jointly by one or more customers shall be treated as a single relevant funds claim under these Rules.

Application of Rules

5

These Rules apply in respect of a special administration.

PART 2

Application for special administration order

Content of application

6

(1) An application for a special administration order must be made in writing and authenticated by the applicant.

(2) The application must state—

(a) the full name and registered number of the institution,

(b) any other trading names of the institution,

(d) the institution’s nominal capital and the amount of capital paid up,

(e) the address of the institution’s registered office,

(f) an email address for the institution,

(g) the identity of the person (or persons) nominated for appointment as administrator, and

(h) a statement setting out which of the grounds in regulation 9(1) the applicant is relying on in making the application.

Statement of proposed administrator

7

An application for a special administration order must be accompanied by a statement by the proposed administrator—

(a) specifying the name and business 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 institution.

Witness statement in support of application

8

(1) An application for a special administration order must be accompanied by a witness statement.

(2) If the application is made by—

(a) the institution or one of its directors, the witness statement must be made by one of its directors or the company secretary of the institution, stating that they make it on behalf of the institution or, as the case may be, on behalf of the directors,

(b) a creditor or a contributory of the institution, the witness statement must be made by a person acting under the authority of all the creditors, or, as the case may be, all the contributories, making the application,

(c) the FCA, the witness statement must identify the person making the statement and must include the capacity in which that person makes the statement and the basis for that person’s knowledge of the matters set out in the statement, or

(d) a combination of the persons listed in regulation 8(1)(a) to (e), the witness statement must be made by a person acting under the authority of all the applicants.

(3) The witness statement must—

(a) set out the reasons by which the applicant believes the ground in regulation 9(1) on which the application is based is satisfied,

(b) state the institution’s current financial position, specifying (to the best of the applicant’s knowledge and belief) the institution’s assets and liabilities, including contingent and prospective liabilities,

(d) specify the amount of relevant funds held by the institution to the best of the applicant’s knowledge and belief,

(e) specify how functions are going to be allocated where more than one person is to be appointed as administrator (stating in particular whether functions are to be exercisable jointly or by any or all of the persons appointed), and

(f) specify any other matters which the applicant thinks will assist the court in deciding whether to make the special administration order.

Filing of application

9

(1) The application and its accompanying documents must be filed with the court together with enough copies of the application and accompanying documents for service and proof of service under rule 10.

(2) The court must fix a venue for the hearing of the application.

(3) In fixing the venue the court must have regard to—

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

(b) the need for the institution’s representatives to be able to reach the venue in time for the hearing.

(4) Each of the copies filed—

(a) must have the seal of the court applied to it,

(b) must be endorsed with the date and time of filing, and

Service of application

10

(1) The application must be served on—

(a) the institution (if neither the institution nor its directors are the applicant),

(b) the person (or each of the persons) nominated for appointment as administrator,

(d) if there is in force for the institution a voluntary arrangement under Part 1 of the IA 1986, the supervisor of that arrangement.

(2) Service under paragraph (1) must be service of a sealed and endorsed copy of the application and its accompanying documents issued under rule 9.

(3) Service of the application must be effected by the applicant, or their solicitor, or by a person instructed by the applicant or the solicitor, as soon as is reasonably practicable before the hearing.

(4) Service must be effected as follows—

(a) on the institution (subject to paragraph (5)), by delivering the documents to its registered office, and

(b) on any other person (subject to paragraph (6)) by delivering the documents to that person’s proper address.

(5) If delivery to the institution’s registered office is not practicable, service may be effected by delivery to its last known principal place of business in England and Wales.

(6) For the purposes of paragraph (4)(b), a person’s proper address is any which that person has previously notified to the applicant as their address for service, but if no address has been notified, service may be effected by delivery to that person’s usual or last known address.

(7) Delivery or service of documents to any place or address under paragraph (4) or paragraph (5) may be made by leaving them there or by electronic delivery in accordance with rule 257, and where the document is sent electronically, it must be sent with a read receipt and the message shall be deemed to be delivered when the message is read.

Proof of service

11

(1) Service of the application must be verified by a witness statement specifying the date and time on which, and the manner in which, service was effected.

(2) The witness statement, with a sealed copy of the application exhibited to it, must be filed with the court—

(a) as soon as is reasonably practicable, and

(b) in any event, before the hearing of the application.

Further notification

12

As soon as is reasonably practicable after filing the application, the applicant must notify—

(a) any enforcement officer or other officer whom the applicant knows to be charged with effecting an execution or other legal process against the institution or its property,

(b) any person whom the applicant knows to have distrained against the institution or its property, and

The hearing

13

At the hearing of the application, any of the following may appear or be represented—

(a) the applicant,

(b) the institution,

(d) the person (or a person) nominated for appointment as administrator,

(e) any supervisor of a voluntary arrangement under Part 1 of the IA 1986,

(f) any person who has given notice to the FCA in respect of the institution under regulation 11(6),

(g) the FCA, and

(h) with the permission of the court, any other person who appears to have an interest.

The special administration order

14

If the court makes a special administration order, the order must state—

(a) the name and address of the applicant,

(b) the name, registered address and registered number of the institution to which the order refers,

(d) the name of any administrator appointed by the order,

(e) the date and time from which their appointment shall take effect,

(f) the terms for costs of the application, and

(g) any further particulars that the court thinks fit.

Costs

15

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

(a) costs of the applicant, and

(b) any other costs allowed by the court.

Notice of special administration order

16

(1) If the court makes a special administration order, it must, as soon as is reasonably practicable, deliver 3 sealed copies to the applicant.

(2) The applicant must as soon as is reasonably practicable, deliver a sealed copy to—

(a) the administrator, and

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

(3) If the court makes an order under regulation 10(1)(d) or regulation 10(1)(f), it must give directions as to the persons to whom and how notice of that order is to be given.

PART 3 — Process of Special Administration

CHAPTER 1 — Notice of appointment and statement of affairs

Notification and advertisement of administrator’s appointment

17

(1) The notice of appointment under paragraph 46(2)(b) to be given by the administrator as soon as is reasonably practicable after appointment—

(a) must be gazetted, and

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

(2) In addition to the standard contents, the notice must state that an administrator has been appointed and the date of the appointment.

(3) The administrator must as soon as is practicable after appointment give notice of the appointment to—

(a) any enforcement officer who, to the administrator’s knowledge, is charged with execution or other legal process against the institution,

(b) any person who, to the administrator’s knowledge, has distrained against the institution, and

(4) The administrator shall send the notice of appointment to the registrar of companies within seven days of the date of the order appointing them.

(5) Any notice required to be sent by the administrator under these Rules or under Schedule B1 must—

(a) contain details of the court where the proceedings are and the relevant court reference number,

(b) contain the full name, registered address, registered number, all trading names and principal trading office of the institution,

(c) contain the name, business address and IP number of the person or persons appointed as administrator and the date of their appointment, and

(d) be authenticated and dated by the administrator.

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