The Water Industry (Special Administration) (England and Wales) Rules 2024

PART 8 — REPORTING BY, AND REMUNERATION OF, OFFICE-HOLDERS: APPLICATION OF PART 18 OF THE 2016 RULES

Reporting by the office-holder (rule 18.2)

141

Rule 18.2 has effect as if for that rule there were substituted—

(18.2) The special administrator must prepare and deliver reports in accordance with this Chapter.

Contents of progress reports in administration, winding up and bankruptcy (rule 18.3)

142

Rule 18.3 has effect as if—

• (a) in paragraph (1)—

• (i) in the opening words, “in an administration, winding up and bankruptcy” were omitted;

• (ii) sub-paragraphs (b) and (f) were omitted;

• (iii) in sub-paragraph (g), for “rules 18.10 to 18.13 as applicable” there were substituted “rule 18.10”;

• (b) paragraphs (5) and (6) were omitted.

Progress reports in administration: timing (rule 18.6)

143

Rule 18.6 has effect as if, in paragraph (4), “unless the report is a final progress report under rule 3.55” were omitted.

Administration, creditors’ voluntary liquidation and compulsory winding up: reporting distribution of property to creditors under rule 14.13 (rule 18.10)

144

Rule 18.10 has effect as if—

• (a) in paragraph (1), “in an administration, creditors’ voluntary liquidation or compulsory winding up” were omitted;

• (b) for paragraph (3) there were substituted—

(3) Paragraph (2) applies to the following— (a) rule 3.63 (administrator’s intention to resign); and (b) rule 18.3 (contents of progress report).

Remuneration principles (rule 18.16)

145

Rule 18.16 has effect as if for that rule there were substituted—

(18.16) (1) A special administrator is entitled to receive remuneration for services as special administrator. (2) The basis of such remuneration is to be fixed by reference to the time properly spent by the special administrator and the special administrator’s staff in attending to matters arising in the special administration.

Remuneration of joint office-holders (rule 18.17)

146

Rule 18.17 has effect as if paragraph (a) were omitted.

Remuneration: application to the court to fix the basis (rule 18.23)

147

Rule 18.23 has effect as if for that rule there were substituted—

(18.23) (1) The special administrator’s remuneration must, on the special administrator’s application, be fixed by the court. (2) The special administrator must give at least 14 days’ notice of the application made under paragraph (1) to the following, who may appear or be represented— (a) the relevant authority; (b) the Water Services Regulation Authority; and (c) the creditors of the company. (3) In fixing the remuneration, the court must have regard to the following matters— (a) the complexity (or otherwise) of the case; (b) any respects in which, in connection with a company’s affairs, there falls on the special administrator any responsibility of an exceptional kind or degree; (c) the effectiveness with which the special administrator appears to be carrying out, or to have carried out, the special administrator’s duties; and (d) the value and nature of the property with which the special administrator has had to deal.

Remuneration: new administrator, liquidator or trustee (rule 18.31)

148

Rule 18.31 has effect as if for that rule there were substituted—

(18.31) (1) If a new special administrator is appointed in place of a special administrator, any court order in effect under rule 18.23 (remuneration: application to the court to fix the basis) immediately before the former special administrator ceased to hold office continues to apply in respect of the remuneration of the new special administrator until a further court order is made in accordance with those provisions. (2) Where a special administrator has ceased to act as such for any reason, the special administrator (or the special administrator’s estate, as the case may be) is to be entitled to any amounts outstanding on the basis of the services which that special administrator provided in accordance with Rule 18.23.

PART 9 — PERMISSION TO ACT AS DIRECTOR ETC. OF COMPANY WITH A PROHIBITED NAME (SECTION 216): APPLICATION OF PART 22 OF THE 2016 RULES

First excepted case (rule 22.4)

149

Rule 22.4 has effect as if—

• (a) paragraph (1)(b)(i) were omitted;

• (b) in paragraph (1)(b)(ii), “acting in relation to it as administrator, administrative receiver or supervisor of a CVA” were omitted;

• (c) for paragraph (3)(c) there were substituted—

(c) where the company is in special administration, must contain— (i) the date that the company entered special administration, and (ii) a statement that the person was a director of the company on that date.

• (d) paragraph (3)(d) were omitted;

• (e) in sub-paragraph (4)(a), “, administrative receiver” to “other company)” were omitted.

SCHEDULE — Application of the 2016 Rules for the purposes of these Rules

Signed

Signed, by the authority of the Lord Chancellor

Mike Freer — Parliamentary Under Secretary of State — Ministry of Justice — 23rd February 2024

I concur, on behalf of the Secretary of State

Robbie Moore — Parliamentary Under Secretary of State — Department for Environment, Food and Rural Affairs — 26th February 2024

I concur

Julian Flaux — Chancellor of the High Court — 20th February 2024

Explanatory note

(This note is not part of these Rules)

EXPLANATORY NOTE

These Rules apply and modify insolvency provisions as they apply to the special administration procedure which relates to water industry companies. These Rules form part of the updated framework for the water industry special administration regime, specifically created for such companies. Similar regimes exist for other kinds of company that provide major infrastructure services, for example the special administration procedure that covers energy supply companies.

The original framework for the water industry special administration regime was set out in sections 23 to 26 and Schedule 3 to the Water Industry Act 1991 (c. 56) (“the 1991 Act”). The accompanying Water Industry (Special Administration) Rules 2009 (2009/2477) (“the 2009 Rules”) set out a detailed procedure for the conduct of special administration proceedings under that regime. This original water industry special administration framework was based upon a modified version of the administration regime contained in Part 2 of the Insolvency Act 1986 (c. 45) (“the 1986 Act”) and the accompanying Insolvency Rules 1986 (1986/1925) (“the 1986 Rules”), as they were both in force at the relevant time.

The administration regime in Part 2 of the 1986 Act was significantly updated by the Enterprise Act 2002 (c. 40) to take account of changes in modern day business practices. It underwent further updates pursuant to the Small Business, Enterprise and Employment Act 2015 (c. 26) and Deregulation Act 2015 (c. 20). The 1986 Rules were also updated and replaced by the Insolvency (England and Wales) Rules 2016 (2016/1024) (“the 2016 Rules”).

The Flood and Water Management Act 2010 (c. 29) (“the 2010 Act”) introduced special administration-related modernising changes to the 1991 Act. The parts of Schedule 5 to the 2010 Act which had not previously been commenced were brought into force by the Flood and Water Management Act 2010 (Commencement No. 10) Order 2024 (2024/35) and have the effect of updating the 1991 Act to, among other things, apply the modern version of administration contained in Schedule B1 to the 1986 Act in place of old Part 2 of the 1986 Act. The Water Industry (Special Administration) Regulations 2024 (2024/205) apply, disapply and modify provisions of Schedule B1, the rest of the 1986 Act and other enactments in relation to water industry special administration.

These Rules complete the update of the water industry special administration regime. They apply the 2016 Rules with specified modifications and replace the 2009 Rules, which are revoked. They set out a modernised and revised procedure for the conduct of special administration proceedings for water industry companies.

Part 1 contains introductory and revocation provisions and provisions on construction and interpretation.

Part 2 contains provisions on scope, interpretation, time and rules about documents.

Part 3 contains provisions relating to the appointment of the special administrator, to the statement of affairs and to the special administrator’s proposals. Part 3 also contains provisions on the extension and ending of a special administration and on replacing a special administrator when needed.

Part 4 contains provisions on court procedure and practice including provisions relating to costs, enforcement and appeals.

Part 5 contains provisions relating to claims by and distributions to creditors in special administration.

Part 6 contains provisions relating to decision-making including provisions relating to decision procedures, meetings and voting.

Part 7 contains provisions relating to proxies and corporate representation.

Part 8 contains provisions relating to the reporting by, and remuneration of, special administrators.

Part 9 contains provisions relating to permission to act as director etc. of a company with a prohibited name.

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.

Footnotes

[^f00001]: 1986 c. 45. Section 411 was amended by section 15(1) of, and paragraph 188(2) of Schedule 4 to, the Constitutional Reform Act 2005 (c. 4), sections 125 and 160 of the Banking Act 2009 (c. 1), section 2(1) of, and paragraph 22(2) of Schedule 3 to, the Corporate Insolvency and Governance Act 2020 (c. 12), S.I. 2002/1037, 2007/2194, 2009/805 and 1941, 2017/702 and 2019/146.

[^f00002]: S.I. 2024/205.

[^f00003]: 1991 c. 56.

[^f00004]: The requirement under section 413(2) of the Insolvency Act 1986 to consult the Committee established under section 10 of the Insolvency Act 1976 (c. 60) does not apply in relation to Rules which contain a statement to this effect. Section 413(2) was amended by paragraph 78(2) of Schedule 25 to the Water Act 1989 (c. 15).

[^f00005]: S.I. 2009/2477.

[^f00006]: 1986 c. 45.

[^f00007]: 1991 c. 56.

[^f00008]: S.I. 2016/1024.

[^f00009]: Schedule B1 to the Insolvency Act 1986 was inserted by the Enterprise Act 2002 (c. 40), section 248(2) and Schedule 16.

[^f00010]: S.I. 2024/205.

[^f00011]: Section 23 was amended by section 101(1) of, and paragraphs 2 and 8 of Schedule 8 to, the Water Act 2003 (c. 37), sections 34 of, and paragraphs 3, 5, and 6 of Schedule 5 to, the Flood and Water Management Act 2010 (c. 29), sections 5 and 56 of, paragraphs 1 and 23 of Schedule 5 to, and paragraphs 2, 5 and 35 of Schedule 7 to, the Water Act 2014 (c. 21), section 7 of, and paragraph 11 of Schedule 9 to, the Corporate Insolvency and Governance Act 2020 (c. 12).

[^f00012]: The original Instruments of Appointment of water undertakers and sewerage undertakers, including maps of the areas of appointment and any amendments to them, are available to view online at: https://www.ofwat.gov.uk/regulated-companies/ofwat-industry-overview/licences/#ioa. They may also be inspected in person at: Ofwat, 7 Hill Street, Birmingham, B5 4UA, between the hours of 9.30am and 1pm, and 2pm and 4.30pm, Monday to Friday (except public and other holidays), at a cost (at the date on which these Rules are made) of £20 per inspection except where an appointment to inspect is made at least 24 hours in advance (by calling 0121 644 7600) in which case the inspection is free of charge.

[^f00013]: Schedule B1 to the Insolvency Act 1986 was inserted by the Enterprise Act 2002 (c. 40), section 248(2) and Schedule 16.