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129 | Consequential provision |
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(1) | The Treasury may by order make provision in consequence of this Part. |
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(2) | An order may, in particular, amend or modify the effect of an enactment |
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(including a fiscal enactment) passed before the commencement of this Part. |
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| 5 |
(a) | shall be made by statutory instrument, and |
| |
(b) | may not be made unless a draft has been laid before and approved by |
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resolution of each House of Parliament. |
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| 10 |
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(1) | This Part provides for a procedure to be known as bank administration. |
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(2) | The main features of bank administration are that— |
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(a) | it is used where part of the business of a bank is sold to a commercial |
| 15 |
purchaser in accordance with section 11 or transferred to a bridge bank |
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in accordance with section 12 (and it can also be used in certain cases of |
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multiple transfers under Part 1), |
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(b) | the court appoints a bank administrator on the application of the Bank |
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| 20 |
(c) | the bank administrator is able and required to ensure that the non-sold |
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or non-transferred part of the bank (“the residual bank”) provides |
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services or facilities required to enable the commercial purchaser (“the |
| |
private sector purchaser”) or the transferee (“the bridge bank”) to |
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| 25 |
(d) | in other respects the process is the same as for normal administration |
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under the Insolvency Act 1986, subject to specified modifications. |
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(3) | The Table describes the provisions of this Part. |
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| 35 |
(1) | A bank administrator has two objectives— |
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(a) | Objective 1: support for commercial purchaser or bridge bank (see |
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(b) | Objective 2: “normal” administration (see section 134). |
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(2) | Objective 1 takes priority over Objective 2 (but a bank administrator is obliged |
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to begin working towards both objectives immediately upon appointment). |
| 5 |
132 | Objective 1: supporting private sector purchaser or bridge bank |
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(1) | Objective 1 is to ensure the supply to the private sector purchaser or bridge |
| |
bank of such services and facilities as are required to enable it, in the opinion |
| |
of the Bank of England, to operate effectively. |
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(2) | For the purposes of Objective 1— |
| 10 |
(a) | the reference to services and facilities includes a reference to acting as |
| |
transferor or transferee under a supplemental property transfer |
| |
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(b) | the reference to “supply” includes a reference to supply by persons |
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other than the residual bank. |
| 15 |
(3) | In the case of bank administration following a private sector purchase the bank |
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administrator must co-operate with any request of the Bank of England to enter |
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into an agreement for the residual bank to provide services or facilities to the |
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private sector purchaser; and— |
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(a) | in pursuing Objective 1 the bank administrator must have regard to the |
| 20 |
terms of that or any other agreement entered into between the residual |
| |
bank and the private sector purchaser, |
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(b) | in particular, the bank administrator must avoid action that is likely to |
| |
prejudice performance by the residual bank of its obligations in |
| |
accordance with those terms, |
| 25 |
(c) | if in doubt about the effect of those terms the bank administrator may |
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apply to the court for directions under paragraph 63 of Schedule B1 to |
| |
the Insolvency Act 1986 (applied by section 139 below), and |
| |
(d) | the private sector purchaser may refer to the court a dispute about any |
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agreement with the residual bank, by applying for directions under |
| 30 |
paragraph 63 of Schedule B1. |
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(4) | In the case of bank administration following transfer to a bridge bank, the bank |
| |
administrator must co-operate with any request of the Bank of England to enter |
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into an agreement for the residual bank to provide services or facilities to the |
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| 35 |
(a) | the bank administrator must avoid action that is likely to prejudice |
| |
performance by the residual bank of its obligations in accordance with |
| |
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(b) | the bank administrator must ensure that so far as is reasonably |
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practicable an agreement entered into includes provision for |
| 40 |
consideration at market rate, |
| |
(c) | paragraph (b) does not prevent the bank administrator from entering |
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into an agreement on any terms that the bank administrator thinks |
| |
necessary in pursuit of Objective 1, and |
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(d) | this subsection does not apply after Objective 1 ceases. |
| 45 |
(5) | Where a bank administrator requires the Bank of England’s consent or |
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approval to any action in accordance with this Part, the Bank may withhold |
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|
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consent or approval only on the grounds that the action might prejudice the |
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achievement of Objective 1. |
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133 | Objective 1: duration |
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(1) | Objective 1 ceases if the Bank of England notifies the bank administrator that |
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the residual bank is no longer required in connection with the private sector |
| 5 |
purchaser or bridge bank. |
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(2) | A bank administrator who thinks that Objective 1 is no longer required may |
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apply to the court for directions under paragraph 63 of Schedule B1 to the |
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Insolvency Act 1986 (applied by section 139 below); and the court may direct |
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the Bank of England to consider whether to give notice under subsection (1) |
| 10 |
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(3) | If immediately upon the making of a bank administration order the Bank of |
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England thinks that the residual bank is not required in connection with the |
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private sector purchaser or bridge bank, the Bank of England may give a notice |
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(4) | A notice under subsection (1) is referred to in this Part as an “Objective 1 |
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134 | Objective 2: “normal” administration |
| |
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(a) | rescue the residual bank as a going concern (“Objective 2(a)”), or |
| 20 |
(b) | achieve a better result for the residual bank’s creditors as a whole than |
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would be likely if the residual bank were wound up without first being |
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in bank administration (“Objective 2(b)”). |
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(2) | In pursuing Objective 2 a bank administrator must aim to achieve Objective |
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2(a) unless of the opinion either— |
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(a) | that it is not reasonably practicable to achieve it, or |
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(b) | that Objective 2(b) would achieve a better result for the residual bank’s |
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(3) | In pursuing Objective 2(b) in bank administration following transfer to a |
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bridge bank, the bank administrator may not realise any asset unless— |
| 30 |
(a) | the asset is on a list of realisable assets agreed between the bank |
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administrator and the Bank of England, or |
| |
(b) | the Bank of England has given an Objective 1 Achievement Notice. |
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135 | Bank administration order |
| 35 |
(1) | A bank administration order is an order appointing a person as the bank |
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(2) | A person is eligible for appointment as a bank administrator if qualified to act |
| |
as an insolvency practitioner. |
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(3) | An appointment may be made only if the person has consented to act. |
| 40 |
(4) | A bank administration order takes effect in accordance with its terms; and— |
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(a) | the process of a bank administration order having effect may be |
| |
described as “bank administration” in relation to the bank, and |
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(b) | while the order has effect the bank may be described as being “in bank |
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(1) | An application for a bank administration order may be made to the court by |
| |
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(2) | An application must nominate a person to be appointed as the bank |
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(3) | The bank must be given notice of an application, in accordance with rules |
| 10 |
under section 411 of the Insolvency Act 1986 (as applied by section 154 below). |
| |
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(1) | The Bank of England may apply for a bank administration order in respect of |
| |
a bank if the following conditions are met. |
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(2) | Condition 1 is that the Bank of England has made or intends to make a property |
| 15 |
transfer instrument in respect of the bank in accordance with section 11(2) or |
| |
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(3) | Condition 2 is that the Bank of England is satisfied that the residual bank — |
| |
(a) | is unable to pay its debts, or |
| |
(b) | is likely to become unable to pay its debts as a result of the property |
| 20 |
transfer instrument which the Bank intends to make. |
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(1) | The court may make a bank administration order if satisfied that the conditions |
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(2) | On an application for a bank administration order the court may— |
| 25 |
(a) | grant the application, |
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(b) | adjourn the application (generally or to a specified date), or |
| |
(c) | dismiss the application. |
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139 | General powers, duties and effect |
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(1) | A bank administrator may do anything necessary or expedient for the pursuit |
| 30 |
of the Objectives in section 131. |
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(2) | The following provisions of this section provide for— |
| |
(a) | general powers and duties of bank administrators (by application of |
| |
provisions about administrators), and |
| |
(b) | the general process and effects of bank administration (by application |
| 35 |
of provisions about administration). |
| |
(3) | The provisions set out in the Tables apply in relation to bank administration as |
| |
in relation to administration, with— |
| |
(a) | the modifications set out in subsection (4), |
| |
(b) | any other modification specified in the Tables, and |
| 40 |
|
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|
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(c) | any other necessary modification. |
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(4) | The modifications are that— |
| |
(a) | a reference to the administrator is a reference to the bank administrator, |
| |
(b) | a reference to administration is a reference to bank administration, |
| |
(c) | a reference to an administration order is a reference to a bank |
| 5 |
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(d) | a reference to a company is a reference to the bank, |
| |
(e) | a reference to the purpose of administration is a reference to the |
| |
Objectives in section 131, and |
| |
(f) | in relation to provisions of the Insolvency Act 1986 other than Schedule |
| 10 |
B1, the modifications in section 97 above apply (but converting |
| |
references into references to bank administration or administrators |
| |
rather than to bank insolvency or liquidators). |
| |
(5) | Powers conferred by this Act, by the Insolvency Act 1986 (as applied) and the |
| |
Companies Acts are in addition to, and not in restriction of, any existing |
| 15 |
powers of instituting proceedings against a contributory or debtor of a bank, |
| |
or the estate of any contributory or debtor, for the recovery of any call or other |
| |
| |
(6) | A reference in an enactment or other document to anything done under a |
| |
provision applied by this Part includes a reference to the provision as applied. |
| 20 |
TABLE 1 OF APPLIED PROVISIONS |
| |
SCHEDULE B1 TO THE INSOLVENCY ACT 1986 |
| |
| | | | | | | | | | | | | | Dismissal of pending winding- |
| | | 25 | | | | | | | | | Dismissal of administrative or |
| | | | | | | | | | | | | Ignore sub-paras. (4) and (5). |
| | | | | | | | 30 | | | Moratorium on other legal |
| (a) | In the case of bank administration |
| | | | | | following transfer to a bridge bank, |
| | | | | | unless the Bank of England has |
| | | | | | given an Objective 1 Achievement |
| | | | | | Notice consent of the bank |
| | 35 | | | | administrator may not be given for |
| | | | | | the purposes of para. 43 without the |
| | | | | | approval of the Bank of England. |
| | | | | | (b) | In the case of bank administration |
| | | | | | following transfer to a bridge bank, |
| | 40 | | | | unless the Bank of England has |
| | | | | | given an Objective 1 Achievement |
| | | | | | Notice, in considering whether to |
| | | | | | give permission under sub-para. (6) |
| | | | | | to a winding-up the court must have |
| | 45 | | | | regard to the Objectives in section |
| | | | | | | | | | | | (c) | In considering whether to give |
| | | | | | permission for the purposes of para. |
| | | | | | 43 the court must have regard to the |
| | 50 | | | | Objectives in section 131. |
| | |
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