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Banking Bill


Banking Bill
Part 3 — Bank Administration

71

 

TABLE 2 OF APPLIED PROVISIONS

OTHER PROVISIONS OF THE INSOLVENCY ACT 1986

 

Section

Subject

Modification or comment

 
 

Section

Discretion in managing and

In the case of bank administration following

 
 

168(4) (and

distributing assets

transfer to a bridge bank, until the Bank of

 

5

 

para. 13 of

 

England has given an Objective 1

 
 

Schedule 4)

 

Achievement Notice distribution may be

 
   

made only—

 
   

(a)   

with the Bank of England’s consent,

 
   

or

 

10

   

(b)   

out of assets which have been

 
   

designated as realisable by

 
   

agreement between the bank

 
   

administrator and the Bank of

 
   

England.

 

15

 

Section

Unsecured creditors

In the case of bank administration following

 
 

176A

 

transfer to a bridge bank, until the Bank of

 
   

England has given an Objective 1

 
   

Achievement Notice distribution may be

 
   

made in reliance on s. 176A only—

 

20

   

(a)   

with the Bank of England’s consent,

 
   

or

 
   

(b)   

out of assets which have been

 
   

designated as realisable by

 
   

agreement between the bank

 

25

   

administrator and the Bank of

 
   

England.

 
 

Section 178

Disclaimer of onerous property

In the case of bank administration following

 
   

transfer to a bridge bank, until the Bank of

 
   

England has given an Objective 1

 

30

   

Achievement Notice notice of disclaimer may

 
   

be given only with the Bank of England’s

 
   

consent.

 
 

Section 188

Publicity

  
 

Section 213

Fraudulent trading

  

35

 

Section 214

Wrongful trading

Ignore subsection (6).

 
 

Section 233

Utilities

  
 

Section 234

Getting in company’s property

  
 

Section 235

Co-operation with liquidator

  
 

Section 236

Inquiry into company’s dealings

  

40

 

Section 237

Section 236: enforcement by

  
  

court

  
 

Section 238

Transactions at undervalue

  
  

(England and Wales)

  
 

Section 239

Preferences (England and

  

45

  

Wales)

  
 

Section 240

Ss. 238 & 239: relevant time

  
 
 

Banking Bill
Part 3 — Bank Administration

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Section

Subject

Modification or comment

 
 

Section 241

Orders under ss. 238 & 239

(a)   

In considering making an order in

 
   

reliance on section 241 the court

 
   

must have regard to Objective 1 of

 
   

section 124.

 

5

   

(b)   

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

 
   

(3C)).

 
 

Section 242

Gratuitous alienations

  
  

(Scotland)

  
 

Section 243

Unfair preferences (Scotland)

In considering the grant of a decree under

 

10

   

subsection (5) the court must have regard to

 
   

Objective 1 of section 124.

 
 

Section 244

Extortionate credit transactions

  
 

Section 245

Avoidance of floating charges

  
 

Section 246

Unenforceability of liens

  

15

 

Sections 386

Preferential debts

  
 

& 387, and

   
 

Schedule 6

   
 

(and

   
 

Schedule 4

   

20

 

to the

   
 

Pension

   
 

Schemes Act

   
 

1993)

   
 

Section 389

Offence of acting without being

Treat references to acting as an insolvency

 

25

  

qualified

practitioner as references to acting as a bank

 
   

administrator.

 
 

Section 390

Persons not qualified to act

Treat references to acting as an insolvency

 
   

practitioner as references to acting as a bank

 
   

administrator.

 

30

 

Section 391

Recognised professional bodies

An order under section 391 has effect in

 
   

relation to any provision applied for the

 
   

purposes of bank administration.

 
 

Sections 423

Transactions defrauding

(a)   

In considering granting leave under

 
 

- 425

creditors

section 424(1) the court must have

 

35

   

regard to Objective 1 of section 124.

 
   

(b)   

In considering making an order in

 
   

reliance on section 425 the court

 
   

must have regard to Objective 1 of

 
   

section 124.

 

40

 

Sections 430

Offences

  
 

- 432 &

   
 

Schedule 10

   
 

Section 433

Statements: admissibility

For section 433(1)(a) and (b) substitute a

 
   

reference to a statement prepared for the

 

45

   

purposes of a provision of this Part.

 
 

133     

Status of bank administrator

A bank administrator is an officer of the court.

 
 

Banking Bill
Part 3 — Bank Administration

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134     

Administrator’s proposals

(1)   

This section applies before the giving of an Objective 1 Achievement Notice (at

which point paragraph 49 of Schedule B1 to the Insolvency Act 1986 applies in

accordance with section 132).

(2)   

The bank administrator must as soon as is reasonably practicable after

5

appointment make a statement setting out proposals for achieving the

Objectives in section 124.

(3)   

The statement must say whether the bank administrator proposes to pursue

Objective 2(a) or 2(b) in section 127.

(4)   

The statement must have been agreed with the Bank of England.

10

(5)   

But a bank administrator who is unable to agree a statement with the Bank of

England may apply to the court for directions under paragraph 63 of Schedule

B1 to the Insolvency Act 1986 (as applied by section 132); and the court may

make any order, including dispensing with the need for the Bank of England’s

agreement.

15

(6)   

The bank administrator must send the statement to the FSA.

(7)   

The bank administrator may revise the statement (and subsections (4) to (6)

apply to a revised statement as to the original).

(8)   

The statement shall be treated in the same way (subject to this section) as a

statement under paragraph 49 of Schedule B1 to the Insolvency Act 1986.

20

135     

Sharing information

(1)   

This section applies to bank administration following transfer to a bridge bank.

(2)   

Within the period of 5 days beginning with the day on which the bank

administrator is appointed, the Bank of England must give the bank

administrator information about the financial positions of the residual bank

25

and the bridge bank.

(3)   

While the residual bank is in bank administration the bridge bank must give

the bank administrator on request information about the financial position of

the bridge bank that the bank administrator requires for the purposes of

pursuing Objective 1 in section 124.

30

(4)   

Until the Bank of England has given an Objective 1 Achievement Notice, the

bank administrator must—

(a)   

give the Bank of England information on request,

(b)   

allow the Bank of England access to records on request,

(c)   

give the bridge bank information on request,

35

(d)   

allow the bridge bank access to records on request,

(e)   

keep the Bank of England informed about, and allow the Bank to

participate in, any discussions between the bank administrator and

another person which relate to, or are likely to affect, pursuit of

Objective 1 in section 124, and

40

(f)   

keep the bridge bank informed about, and allow the bridge bank to

participate in, any discussions between the bank administrator and

another person which relate to, or are likely to affect, pursuit of

Objective 1 in section 124.

 
 

Banking Bill
Part 3 — Bank Administration

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(5)   

The Treasury shall by regulations prescribe—

(a)   

the classes of information that must be provided under subsections (2)

to (4), and

(b)   

the classes of record to which access must be allowed under subsection

(4).

5

(6)   

Regulations under subsection (5)—

(a)   

shall be made by statutory instrument, and

(b)   

shall be subject to annulment in pursuance of a resolution of either

House of Parliament.

Multiple transfers

10

136     

General application of this Part

(1)   

This section applies where more than one property transfer instrument is made

in respect of a bank.

(2)   

For that purpose “property transfer instrument” includes—

(a)   

supplemental instruments under section 39,

15

(b)   

onward property transfer instruments under section 40, and

(c)   

property transfer orders under section 41).

(3)   

This Part applies to the bank with any modifications specified by the Treasury

in regulations.

(4)   

The regulations—

20

(a)   

shall be made by statutory instrument, and

(b)   

may not be made unless a draft has been laid before and approved by

resolution of each House of Parliament.

137     

Bridge bank to private purchaser

(1)   

This section applies where the Bank of England gives a bank administrator —

25

(a)   

an Objective 1 Achievement Notice in respect of a bridge bank, and

(b)   

notice that Objective 1 is still required to be pursued in respect of a

commercial purchaser who has acquired all or part of the business of

the bridge bank.

(2)   

An Objective 1 Achievement Notice accompanied by a notice under subsection

30

(1)(b) is referred to in this Part as an Objective 1 Interim Achievement Notice.

(3)   

Where an Objective 1 Interim Achievement Notice is given, Objective 1

continues to apply—

(a)   

in accordance with section 125(3), and

(b)   

with the commercial purchaser being treated as the “private sector

35

purchaser”.

(4)   

An Objective 1 Interim Achievement Notice in respect of the bridge bank—

(a)   

has effect as between the bank administrator and the bridge bank, but

(b)   

has no other effect for the purposes of provisions of this Part which

refer to the giving of an Objective 1 Achievement Notice.

40

 
 

Banking Bill
Part 3 — Bank Administration

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(5)   

When the Bank of England gives the bank administrator an Objective 1

Achievement Notice in respect of the commercial purchaser, section 126 and

other provisions of this Part which refer to the giving of an Objective 1

Achievement Notice shall have effect.

138     

Property transfer from bridge bank

5

(1)   

This section applies where the Bank of England —

(a)   

transfers all or part of the business of a bank to a bridge bank by making

a property transfer instrument in accordance with section 11(2), and

(b)   

later makes or proposes to make an onward property transfer

instrument under section 40(2) from the bridge bank.

10

(2)   

If the transferee under the onward property transfer instrument is a company

which is wholly owned by the Bank of England—

(a)   

the transferee is treated as a bridge bank for the purposes of this Part,

and

(b)   

the bridge bank under the original property transfer instrument is

15

treated as a residual bank for the purposes of this Part.

(3)   

In any other case, section 137 shall apply as if the Bank of England had given—

(a)   

an Objective 1 Interim Achievement Notice in respect of the bridge

bank under the original property transfer instrument, and

(b)   

a notice under section 137(1)(b) in respect of the transferee under the

20

onward property transfer instrument.

(4)   

Where a bank is put into bank administration in reliance on this section, the

Bank of England may not give an Objective 1 Interim Achievement Notice.

139     

Property transfer from temporary public ownership

(1)   

This section applies where the Treasury—

25

(a)   

make a share transfer order, in respect of securities issued by a bank, in

accordance with section 12(2), and

(b)   

later make a property transfer order from the bank under section 41(2).

(2)   

This Part applies to the transferor under the property transfer order as to the

transferor under a property transfer instrument.

30

(3)   

For that purpose this Part applies with any modifications specified by the

Treasury in regulations; and the regulations—

(a)   

shall be made by statutory instrument, and

(b)   

may not be made unless a draft has been laid before and approved by

resolution of each House of Parliament.

35

Termination

140     

Successful rescue

(1)   

This section applies if—

(a)   

the Bank of England has given an Objective 1 Achievement Notice, and

(b)   

the bank administrator has pursued Objective 2(a) in section 127 and

40

believes that it has been achieved.

 
 

Banking Bill
Part 3 — Bank Administration

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(2)   

The bank administrator may give a notice under paragraph 80 of Schedule B1

to the Insolvency Act 1986 (notice bringing administrator’s appointment to an

end on achievement of objectives).

(3)   

A bank administrator who gives a notice in accordance with subsection (2)

must send a copy to the FSA.

5

(4)   

Failure without reasonable excuse to comply with subsection (3) is an offence.

141     

Winding-up or voluntary arrangement

(1)   

This section applies if—

(a)   

the Bank of England has given an Objective 1 Achievement Notice, and

(b)   

the bank administrator pursues Objective 2(b) in section 127.

10

(2)   

The bank administrator may—

(a)   

give a notice under paragraph 84 of Schedule B1 to the Insolvency Act

1986 (no more assets for distribution), or

(b)   

make a proposal in accordance with section 1 of that Act (company

voluntary arrangement).

15

(3)   

Part 1 of that Act shall apply to a proposal made by a bank administrator, with

the following modifications.

(4)   

In section 3 (summoning of meetings) subsection (2) (and not (1)) applies.

(5)   

The action that may be taken by the court under section 5(3) (effect of approval)

includes suspension of the bank administration order.

20

(6)   

On the termination of a company voluntary arrangement the bank

administrator may apply to the court to lift the suspension of the bank

administration order.

(7)   

The bank administrator may not act under subsection (2) above unless satisfied

that the bank has received any funds it is likely to receive from any scheme

25

under a resolution fund order under section 46.

Miscellaneous

142     

Disqualification of directors

(1)   

In this section “the Disqualification Act” means the Company Directors

Disqualification Act 1986.

30

(2)   

In the Disqualification Act—

(a)   

a reference to liquidation includes a reference to bank administration,

(b)   

a reference to winding up includes a reference to making or being

subject to a bank administration order,

(c)   

a reference to becoming insolvent includes a reference to becoming

35

subject to a bank administration order, and

(d)   

a reference to a liquidator includes a reference to a bank administrator.

(3)   

For the purposes of the application of section 7(3) of the Disqualification Act

(disqualification order or undertaking) to a bank which is subject to a bank

administration order, the responsible office-holder is the bank administrator.

40

(4)   

After section 21A of the Disqualification Act (bank insolvency - inserted by

 
 

Banking Bill
Part 3 — Bank Administration

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section 108 above) insert—

“21B    

Bank administration

Section 142 of the Banking Act 2008 provides for this Act to apply in

relation to bank administration as it applies in relation to liquidation.”

143     

Application of other law

5

(1)   

The Secretary of State and the Treasury may by order made jointly—

(a)   

provide for an enactment about insolvency or administration to apply

to bank administration (with or without specified modifications);

(b)   

amend, or modify the application of, an enactment about insolvency or

administration in consequence of this Part.

10

(2)   

In subsection (1) “enactment” includes—

(a)   

subordinate legislation,

(b)   

an Act of the Scottish Parliament and an instrument under an Act of the

Scottish Parliament, and

(c)   

Northern Ireland legislation.

15

(3)   

An order under subsection (1)—

(a)   

shall be made by statutory instrument, and

(b)   

may not be made unless a draft has been laid before and approved by

resolution of each House of Parliament.

144     

Other processes

20

(1)   

Before exercising an insolvency power in respect of a residual bank the FSA

must give notice to the Bank of England, which may participate in any

proceedings arising out of the exercise of the power.

(2)   

In subsection (1)—

(a)   

“residual bank” means a bank all or part of whose business has been

25

transferred to a commercial purchaser in accordance with section 10 or

to a bridge bank in accordance with section 11, and

(b)   

“insolvency power” means—

(i)   

section 359 of the Financial Services and Markets Act 2000

(application for administration order), and

30

(ii)   

section 367 of that Act (winding-up petition).

145     

Building societies

(1)   

The Treasury may by order provide for this Part to apply to building societies

(within the meaning of section 119 of the Building Societies Act 1986) as it

applies to banks, subject to modifications set out in the order.

35

(2)   

An order may—

(a)   

amend the Building Societies Act 1986 or any other enactment which

relates, or in so far as it relates, to building societies;

(b)   

amend an enactment amended by this Part;

(c)   

replicate, with or without modifications, a provision of this Part;

40

(d)   

apply a provision made under or by virtue of this Part, with or without

modifications, to this Part as it applies to building societies.

 
 

 
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