The Payment and Electronic Money Institution Insolvency (Scotland) Rules 2022

Made: 25th November 2022

Laid before Parliament: 28th November 2022

Coming into force: 19th December 2022

The Treasury makes the following Rules, in exercise of the powers conferred by section 411(1A)(b), (2), (2C) and (3) of the Insolvency Act 1986[^f00001], as applied and modified by regulation 37 of the Payment and Electronic Money Institution Insolvency Regulations 2021[^f00002].

PART 1 — Introductory Provisions

Citation

1

These Rules may be cited as the Payment and Electronic Money Institution Insolvency (Scotland) Rules 2022.

Commencement

2

These Rules come into force on 19th December 2022.

Extent

3

These Rules extend to Scotland only.

Interpretation

4

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

Word or expression	Meaning
accounting period	has the meaning given in rule 86 or, in relation to Part 7, rule 128
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 168, other than in relation to rule 93, where it shall have the meaning set out in rule 93(4)
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 Scotland or England and Wales 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
customer	(a) user, which has the meaning set out in regulation 6, or (b) holder, which has the meaning set out in regulation 6
debt	has the meaning set out in rule 205
expense 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 143
the Gazette	the Edinburgh 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
official rate	the rate of interest on a sheriff court decree or extract under section 9 of the Sheriff Courts (Scotland) Extracts Act 1892[^f00004] (as it may be amended by section 4 of the Administration of Justice (Scotland) Act 1972)[^f00005]
Payment Systems Regulator	the body established under section 40 of the Financial Services (Banking Reform) Act 2013[^f00006]
prescribed part	has the same meaning as it does in section 176A(2)(a) of the IA 1986 [^f00007] and the Insolvency Act 1986 (Prescribed Part) Order 2003[^f00008]
principal	has the meaning set out in rule 87(1), unless the context otherwise requires
progress report	a report which complies with rule 85
proxy-holder	has the meaning set out in rule 87(1)
registered number	has the meaning set out in section 1066 of the CA 2006[^f00009]
registrar of companies	the registrar of companies for Scotland
the Regulations	the Payment and Electronic Money Institution Insolvency Regulations 2021
requisitioned meeting	a meeting requested under paragraph 56(1)
sederunt book	has the meaning set out in rule 194(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 96 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 rule 177, (b) in relation to a notice to be advertised in any other way, the contents specified in rule 180
standard fee for copies	15 pence per A4 or A5 page or 30 pence per A3 page
statement of claim	is to be interpreted in accordance with rule 116
statement of concurrence	a statement, verified by a statutory declaration, that that person concurs in the statement of affairs under paragraph 47 submitted by a nominated person

• (2) A fee or remuneration is chargeable 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 (in which case the number of the paragraph is written in parenthesis), 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 references to a customer, or to relevant funds do not include a customer of, or relevant funds received by—

• (a) a small payment institution, or

• (b) 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 voluntarily to 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

An application for a special administration order must state—

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

• (b) any other trading names of the institution,

• (c) the institution’s date of incorporation,

• (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,

• (h) 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,

• (c) giving details of the person’s (or each person’s) qualification to act as an insolvency practitioner,

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

Lodging of application

8

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

Service of application

9

• (1) The application must be served on—

• (a) the FCA (if not the applicant),

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

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

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

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

• (f) the registrar of companies,

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

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

Further notification

10

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

• (a) any messenger-at-arms or sheriff officer whom the applicant knows to be charged with executing diligence or other legal process against the institution or its property,

• (b) any person whom the applicant knows to have executed diligence or other legal process against the institution or its property.

The hearing

11

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

• (a) the applicant,

• (b) the institution,

• (c) one or more of the directors,

• (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,

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

The special administration order

12

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,

• (c) details of any other parties appearing at the hearing,

• (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,

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

Expenses allowed by the court

13

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

• (a) costs of the applicant,

• (b) the costs of any other party whose expenses are allowed by the court.

Notice of special administration order

14

• (1) If the court makes a special administration order, it must, as soon as is reasonably practicable, deliver two copies of the order certified by the court to the applicant.

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

• (a) the administrator,

• (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 may direct (or give directions as) 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

15

• (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,

• (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 reasonably practicable after appointment give notice of the appointment to—

• (a) any messenger-at-arms or sheriff officer who, to the administrator’s knowledge, is charged with executing diligence or other legal process against the institution,

• (b) any person who, to the administrator’s knowledge, has executed diligence or other legal process against the institution,

• (c) the Keeper of the Register of Inhibitions and Adjudications,

• (d) any supervisor of a voluntary arrangement under Part 1 of the IA 1986.

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

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notice requiring statement of affairs

16

• (1) In this Part, “relevant person” has the meaning given to it in paragraph 47(3) and “nominated person” is the relevant person who has been required by the administrator to make out and deliver a statement of affairs to the administrator.

• (2) The administrator must deliver notice to each relevant person who the administrator deems appropriate requiring that relevant person to make out and deliver a statement of the institution’s affairs.

• (3) The notice must be headed “notice requiring statement of affairs” and must inform each of the nominated persons of—

• (a) the name and addresses of all others (if any) to whom the same notice has been sent,

• (b) the date by which the statement must be delivered to the administrator, being before the end of the period of eleven days beginning with the day on which the nominated person receives notice of the requirement,

• (c) the effect of paragraph 48(4),

• (d) the application to that nominated person and to each other relevant person of section 235 of the IA 1986[^f00010],

• (e) details of the court and the relevant court reference number,

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

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

• (3A) The notice must be authenticated and dated by the administrator.

• (4) The administrator must, on request, provide details to the nominated person as to how the statement should be prepared.

• (5) The nominated person must deliver the statement of affairs, together with a copy, to the administrator.

Statement of affairs: content

17

• (1) The statement of the institution’s affairs must be headed “Statement of affairs” and must—

• (a) identify the institution immediately below the heading,

• (b) state that it is a statement of the affairs of the institution on a specified date, being the date on which it entered special administration.

• (2) The statement of affairs must contain (in addition to the matters required by paragraph 47(2))—

• (a) a summary of the assets of the institution, setting out the book value and the estimated realisable value of—

• (i) any assets subject to a fixed charge,

• (ii) any assets subject to a floating charge,

• (iii) any uncharged assets,

• (iv) the total value of all the assets available for preferential creditors,

• (b) a summary of the liabilities of the institution, setting out—

• (i) the amount of preferential debts,

• (ii) an estimate of the deficiency with respect to preferential debts or the surplus available after paying the preferential debts,

• (iii) an estimate of the prescribed part, if applicable,

• (iv) an estimate of the total assets available to pay debts secured by floating charges,

• (v) the amount of debts secured by floating charges,

• (vi) an estimate of the deficiency with respect to debts secured by floating charges or the surplus available after paying the debts secured by fixed or floating charges,

• (vii) the amount of unsecured debts (excluding preferential debts),

• (viii) an estimate of the deficiency with respect to unsecured debts or the surplus available after paying unsecured debts,

• (ix) any issued and called-up capital,

• (x) an estimate of the deficiency with respect to, or surplus available to, members of the institution,

• (c) a list of the institution’s creditors with the further particulars required by paragraph (3) indicating—

• (i) any creditors under hire-purchase, conditional sale and hiring agreements,