Financial Services (Banking Reform) Bill

House of Lords

Session 2013 - 14
Internet Publications
Other Bills before Parliament

Financial Services (Banking Reform) Bill

Financial Services (Banking Reform) Bill
Schedule 6 — Conduct of FMI administration
148

Provision of
Subject
Modification

Schedule B1

Para. 63
Application to court for
(a)
Before making an application in

directions
reliance on this paragraph the FMI

administrator must give notice to

5

the Bank of England, which is to be

entitled to participate in the

proceedings.

(b)
In making directions the court must

have regard to the objective in

10

section 100 of this Act.

Para. 64
Management powers

Para. 65
Distribution to creditors

Para. 66
Payments

Para. 67
Taking custody of property

15

Para. 68
Management
(a)
Ignore sub-paras. (1) and (3).

(b)
The Bank of England may apply to

the court for the variation or

revocation of any directions given

by the court.

20

Para. 69
Agency

Para. 70
Floating charges

Para. 71
Fixed charges

Para. 72
Hire-purchase property

Para. 73
Protection for secured and

25

preferential creditors

Para. 74
Challenge to administrator’s
For sub-para. (2) there is to be taken to be

conduct
substituted—


“(2) Where a company is in FMI

administration, a creditor or

30

member of the company may apply

to the court claiming that the FMI

administrator is conducting himself

or herself in a manner preventing

the achievement of the objective of

35

the FMI administration as quickly

and efficiently as is reasonably

practicable.”

Para. 75
Misfeasance
In addition to applications that may anyway

be made under para. 75, an application may

40

be made by the FMI administrator or the

Bank of England.

Financial Services (Banking Reform) Bill
Schedule 6 — Conduct of FMI administration
149

Provision of
Subject
Modification

Schedule B1

Para. 79
Court ending administration on
For sub-paras. (1) to (3) there are to be taken

application of administrator
to be substituted—


“(1) On an application made by a

5

person mentioned in sub-paragraph

(2), the court may provide for the

appointment of an FMI

administrator of a company to cease

to have effect from a specified time.

10


(2) The persons who may apply to

the court under sub-paragraph (1)

are—


(a) the Bank of England;


(b) with the consent of the Bank, the

15

FMI administrator.”

Para. 84
Termination: no more assets for

distribution

Para. 85
Discharge of administration

order

20

Para. 86
Notice to Companies Registrar

of end of administration

Para. 87
Resignation
An FMI administrator may not resign under

para. 87 without giving 28 days’ notice of the

intention to do so to the Bank of England.

25

Para. 88
Removal
An application for an order removing an FMI

administrator from office may be made only

by or with the consent of the Bank of

England.

Para. 89
Disqualification
The notice under sub-para. (2) must be given

30

to the Bank of England.

Paras. 90
Replacement
(a)
Para. 91(1) applies as if the only

and 91

person who could make an

application were the Bank of

England.

35

(b)
Ignore para. 91(2).

Para. 98
Discharge
Ignore sub-paras. (2)(b) and (3).

Para. 99
Vacation of office: charges and
In the application of sub-para. (3), payments

liabilities
may be made only—

(a)
in accordance with directions of the

40

Bank of England, and

(b)
if the Bank is satisfied that they will

not prejudice the objective in section

100 of this Act.

Paras. 100 to
Joint administrators
An application under para. 103 may be made

45

103

only by the Bank of England.

Para. 104
Validity

Para. 106
Fines

(and section

430 and

50

Schedule 10)

Paras. 107 to
Extension of time limits

109

Financial Services (Banking Reform) Bill
Schedule 6 — Conduct of FMI administration
150

Provision of
Subject
Modification

Schedule B1

Para. 110
Amendment of provisions about
An order under para. 110 may amend a

time
provision of the Schedule as it applies by

virtue of this Act (whether or not in the same

5

way as it amends the provision as it applies

otherwise).

Para. 111
Interpretation

Paras. 112 to
Scotland

116

10

TABLE 2 OF APPLIED PROVISIONS
OTHER PROVISIONS OF THE INSOLVENCY ACT 1986

Section
Subject
Modification or comment

Section 233
Utilities

Section 234
Getting in company’s property

15

Section 235
Duty to co-operate with office-

holder

Section 236
Inquiry into company’s dealings

Section 237
Section 236: enforcement by

court

20

Section 238
Transactions at an undervalue

(England and Wales)

Section 239
Preferences (England and

Wales)

Section 240
Ss. 238 and 239: relevant time

25

Section 241
Orders under ss. 238 and 239
(a)
In considering making an order in

reliance on section 241 the court

must have regard to the objective in

section 100 of this Act.

(b)
Ignore subsections (2A)(a) and (3) to

30

(3C).

Section 242
Gratuitous alienations

(Scotland)

Section 243
Unfair preferences (Scotland)
In considering the grant of a decree under

subsection (5) the court must have regard to

35

the objective in section 100 of this Act.

Section 244
Extortionate credit transactions

Section 245
Avoidance of floating charges

Section 246
Unenforceability of liens

Financial Services (Banking Reform) Bill
Schedule 7 — Financial market infrastructure transfer schemes
151

Section
Subject
Modification or comment

Sections 386
Preferential debts

and 387, and

Schedule 6

(and

5

Schedule 4

to the

Pension

Schemes Act

1993)

10

Section 389
Offence of acting without being
Treat references to acting as an insolvency

qualified
practitioner as references to acting as an FMI

administrator.

Section 390
Persons not qualified to act
Treat references to acting as an insolvency

practitioner as references to acting as an FMI

15

administrator.

Section 391
Recognised professional bodies
An order under section 391 has effect in

relation to any provision applied for the

purposes of FMI administration.

Sections 423
Transactions defrauding
In considering granting leave under section

20

to 425
creditors
424(1) or making an order in reliance on

section 425, the court must have regard to the

objective in section 100 of this Act.

Sections 430
Offences

to 432 and

25

Schedule 10

6     (1)
The Treasury may by order amend this Schedule so as to make further
modifications.
      (2)
The further modifications that may be made are confined to such
modifications of—
30
(a)
the 1986 Act, or
(b)
other enactments passed or made before this Act that relate to
insolvency or make provision by reference to anything that is or may
be done under the 1986 Act,

as the Treasury consider appropriate in relation to any provision made by or
35
under this Part of this Act.
      (3)
An order under this paragraph may also make modifications of the
provisions of this Schedule.
Schedule 7
Section 106

Financial market infrastructure transfer schemes
40
Application of Schedule
1
This Schedule applies where—
(a)
the court has made an FMI administration order in relation to a
company (“the old company”), and
(b)
it is proposed that a transfer within section 100(5) be made to another
45
company (“the new company”).

Financial Services (Banking Reform) Bill
Schedule 7 — Financial market infrastructure transfer schemes
152

Interpretation of Schedule
2
In this Schedule—
“FMI transfer scheme” has the meaning given by paragraph 4(1);
“the new company” and “the old company” are to be read in
accordance with paragraph 1;
5
“third party”, in relation to an FMI transfer scheme or a modification of
such a scheme, means a person other than the old company or the
new company.
FMI administrator to act on behalf of old company
3
It is for the FMI administrator, while the FMI administration order is in
10
force, to act on behalf of the old company in the doing of anything that it is
authorised or required to do by or under this Schedule.
Making of FMI transfer schemes
4     (1)
The old company may—
(a)
with the consent of the new company, and
15
(b)
for the purpose of giving effect to the proposed transfer,

make a scheme under this Schedule for the transfer of property, rights and
liabilities from the old company to the new company (an “FMI transfer
scheme”).
      (2)
Such a scheme may be made only at a time when the FMI administration
20
order is in force in relation to the old company.
      (3)
An FMI transfer scheme may set out the property, rights and liabilities to be
transferred in one or more of the following ways—
(a)
by specifying or describing them in particular,
(b)
by identifying them generally by reference to, or to a specified part
25
of, the undertaking of the old company, or
(c)
by specifying the manner in which they are to be determined.
      (4)
An FMI transfer scheme is to take effect in accordance with paragraph 7 at
the time appointed by the court.
      (5)
But the court must not appoint a time for a scheme to take effect unless that
30
scheme has been approved by the Bank of England.
      (6)
The Bank of England may modify an FMI transfer scheme before approving
it, but only modifications to which both the old company and the new
company have consented may be made.
      (7)
In deciding whether to approve an FMI transfer scheme, the Bank of
35
England must have regard, in particular, to—
(a)
the public interest, and
(b)
any effect that the scheme is likely to have on the interests of third
parties.
      (8)
Before approving an FMI transfer scheme, the Bank of England must consult
40
the Treasury.
      (9)
The old company and the new company each have a duty to provide the
Bank of England with all information and other assistance that the Bank may

Financial Services (Banking Reform) Bill
Schedule 7 — Financial market infrastructure transfer schemes
153

reasonably require for the purposes of, or in connection with, the exercise of
the powers conferred on it by this paragraph.
Provision that may be made by a scheme
5     (1)
An FMI transfer scheme may contain provision—
(a)
for the creation, in favour of the old company or the new company,
5
of an interest or right in or in relation to property transferred in
accordance with the scheme;
(b)
for giving effect to a transfer to the new company by the creation, in
favour of that company, of an interest or right in or in relation to
property retained by the old company;
10
(c)
for the creation of new rights and liabilities (including rights of
indemnity and duties to indemnify) as between the old company and
the new company;
(d)
in connection with any provision made under this sub-paragraph,
provision making incidental provision as to the interests, rights and
15
liabilities of other persons with respect to the property, rights and
liabilities to which the scheme relates.
      (2)
The property, rights and liabilities of the old company that may be
transferred in accordance with an FMI transfer scheme include—
(a)
property, rights and liabilities that would not otherwise be capable
20
of being transferred or assigned by the old company;
(b)
property acquired, and rights and liabilities arising, in the period
after the making of the scheme but before it takes effect;
(c)
rights and liabilities arising after it takes effect in respect of matters
occurring before it takes effect;
25
(d)
property situated anywhere in the United Kingdom or elsewhere;
(e)
rights and liabilities under the law of a part of the United Kingdom
or of a place outside the United Kingdom;
(f)
rights and liabilities under an enactment, EU instrument or
subordinate legislation.
30
      (3)
The transfers to which effect may be given by an FMI transfer scheme
include transfers of interests and rights that are to take effect in accordance
with the scheme as if there were—
(a)
no such requirement to obtain a person’s consent or concurrence,
(b)
no such liability in respect of a contravention of any other
35
requirement, and
(c)
no such interference with any interest or right,

as there would be, in the case of a transaction apart from this Act, by reason
of a provision falling within sub-paragraph (4).
      (4)
A provision falls within this sub-paragraph to the extent that it has effect
40
(whether under an enactment or agreement or otherwise) in relation to the
terms on which the old company is entitled, or subject, to anything to which
the transfer relates.
      (5)
Sub-paragraph (6) applies where (apart from that sub-paragraph) a person
would be entitled, in consequence of anything done or likely to be done by
45
or under this Act in connection with an FMI transfer scheme—
(a)
to terminate, modify, acquire or claim an interest or right, or
(b)
to treat an interest or right as modified or terminated.

Financial Services (Banking Reform) Bill
Schedule 7 — Financial market infrastructure transfer schemes
154

      (6)
That entitlement—
(a)
is not enforceable in relation to that interest or right until after the
transfer of the interest or right by the scheme, and
(b)
is then enforceable in relation to the interest or right only in so far as
the scheme contains provision for the interest or right to be
5
transferred subject to whatever confers that entitlement.
      (7)
Sub-paragraphs (3) to (6) have effect where shares in a subsidiary of the old
company are transferred—
(a)
as if the reference in sub-paragraph (4) to the terms on which the old
company is entitled or subject to anything to which the transfer
10
relates included a reference to the terms on which the subsidiary is
entitled or subject to anything immediately before the transfer takes
effect, and
(b)
in relation to an interest or right of the subsidiary, as if the references
in sub-paragraph (6) to the transfer of the interest or right included
15
a reference to the transfer of the shares.
      (8)
Sub-paragraphs (3) and (4) apply to the creation of an interest or right by an
FMI transfer scheme as they apply to the transfer of an interest or right.
Further provision about transfers
6     (1)
An FMI transfer scheme may make incidental, supplemental, consequential
20
and transitional provision in connection with the other provisions of the
scheme.
      (2)
An FMI transfer scheme may in particular make provision, in relation to a
provision of the scheme—
(a)
for the new company to be treated as the same person in law as the
25
old company;
(b)
for agreements made, transactions effected or other things done by
or in relation to the old company to be treated, so far as may be
necessary for the purposes of or in connection with a transfer in
accordance with the scheme, as made, effected or done by or in
30
relation to the new company;
(c)
for references in an agreement, instrument or other document to the
old company or to an employee or office holder with the old
company to have effect, so far as may be necessary for the purposes
of or in connection with a transfer in accordance with the scheme,
35
with such modifications as are specified in the scheme;
(d)
that the effect of any transfer in accordance with the scheme in
relation to contracts of employment with the old company is not to
terminate any of those contracts but is to be that periods of
employment with that company are to count for all purposes as
40
periods of employment with the new company;
(e)
for proceedings commenced by or against the old company to be
continued by or against the new company.
      (3)
Sub-paragraph (2)(c) does not apply to references in an enactment or in
subordinate legislation.
45
      (4)
An FMI transfer scheme may make provision for disputes between the old
company and the new company as to the effect of the scheme to be referred
to such arbitration as may be specified in or determined under the scheme.