Banking Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Banking Bill

Banking Bill
Part 3 — Bank Administration
71

Process
138
Bank administration order
(1)
A bank administration order is an order appointing a person as the bank
administrator of a bank.
(2)
A person is eligible for appointment as a bank administrator if qualified to act
5
as an insolvency practitioner.
(3)
An appointment may be made only if the person has consented to act.
(4)
A bank administration order takes effect in accordance with its terms; and—
(a)
the process of a bank administration order having effect may be
described as “bank administration” in relation to the bank, and
10
(b)
while the order has effect the bank may be described as being “in bank
administration”.
139
Application
(1)
An application for a bank administration order may be made to the court by
the Bank of England.
15
(2)
An application must nominate a person to be appointed as the bank
administrator.
(3)
The bank must be given notice of an application, in accordance with rules
under section 411 of the Insolvency Act 1986 (as applied by section 157 below).
140
Grounds for applying
20
(1)
The Bank of England may apply for a bank administration order in respect of
a bank if the following conditions are met.
(2)
Condition 1 is that the Bank of England has made or intends to make a property
transfer instrument in respect of the bank in accordance with section 11(2) or
12(2).
25
(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
transfer instrument which the Bank intends to make.
141
Grounds for making
30
(1)
The court may make a bank administration order if satisfied that the conditions
in section 140 were met.
(2)
On an application for a bank administration order the court may—
(a)
grant the application,
(b)
adjourn the application (generally or to a specified date), or
35
(c)
dismiss the application.

Banking Bill
Part 3 — Bank Administration
72

142
General powers, duties and effect
(1)
A bank administrator may do anything necessary or expedient for the pursuit
of the Objectives in section 134.
(2)
The following provisions of this section provide for—
(a)
general powers and duties of bank administrators (by application of
5
provisions about administrators), and
(b)
the general process and effects of bank administration (by application
of provisions about administration).
(3)
The provisions set out in the Tables apply in relation to bank administration as
in relation to administration, with—
10
(a)
the modifications set out in subsection (4),
(b)
any other modification specified in the Tables, and
(c)
any other necessary modification.
(4)
The modifications are that—
(a)
a reference to the administrator is a reference to the bank administrator,
15
(b)
a reference to administration is a reference to bank administration,
(c)
a reference to an administration order is a reference to a bank
administration order,
(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
20
Objectives in section 134, and
(f)
in relation to provisions of the Insolvency Act 1986 other than Schedule
B1, the modifications in section 100 above apply (but converting
references into references to bank administration or administrators
rather than to bank insolvency or liquidators).
25
(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
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
sum.
30
(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.
TABLE 1 OF APPLIED PROVISIONS
SCHEDULE B1 TO THE INSOLVENCY ACT 1986

Provision of
Subject
Modification or comment

35

Schedule B1

Para.
Dismissal of pending winding-

40(1)(a)
up petition

Para. 41
Dismissal of administrative or

other receiver

40

Para. 42
Moratorium on insolvency
Ignore sub-paras. (4) and (5).

proceedings

Banking Bill
Part 3 — Bank Administration
73

Provision of
Subject
Modification or comment

Schedule B1

Para. 43
Moratorium on other legal
(a)
In the case of bank administration

process
following transfer to a bridge bank,

unless the Bank of England has

5

given an Objective 1 Achievement

Notice consent of the bank

administrator may not be given for

the purposes of para. 43 without the

approval of the Bank of England.

10

(b)
In the case of bank administration

following transfer to a bridge bank,

unless the Bank of England has

given an Objective 1 Achievement

Notice, in considering whether to

15

give permission under sub-para. (6)

to a winding-up the court must have

regard to the Objectives in section

134.

(c)
In considering whether to give

20

permission for the purposes of para.

43 the court must have regard to the

Objectives in section 134.

Para.
Interim moratorium

44(1)(a) and

25

(5)

Para. 46
Announcement of appointment
Ignore sub-para. (6)(b) and (c).

Paras. 47 &
Statement of affairs

48

Para. 49
Administrator’s proposals
(a)
Para. 49 does not apply unless the

30

Bank of England has given an

Objective 1 Achievement Notice; for

bank administrator’s proposals before

the Bank of England has given an

Objective 1 Achievement Notice, see

35

section 144.

(b)
Treat the reference in sub-para. (1) to

the purpose of administration as a

reference to Objective 2.

(c)
Before making proposals under sub-

40

para. (1) in the case of bank

administration following transfer to

a bridge bank, the bank

administrator must consult the Bank

of England about the chances of a

45

payment to the residual bank from a

scheme established by resolution

fund order under section 49(3).

(d)
Treat the reference in sub-para.

(2)(b) to the objective mentioned in

50

para. 3(1)(a) or (b) as a reference to

Objective 2(a).

(e)
Ignore sub-para.(3)(b).

(f)
Treat references in sub-para. (5) to

the company’s entering

55

administration as references to

satisfaction of the condition in para.

(a) above.

Banking Bill
Part 3 — Bank Administration
74

Provision of
Subject
Modification or comment

Schedule B1

Paras. 50 -
Creditors’ meeting
(a)
Treat references in para. 51(2) to the

58

company’s entering administration

as references to the giving of an

5

Objective 1 Achievement Notice.

(b)
The bank administrator may comply

with a request under para. 56(1)(a)

only if satisfied that it will not

prejudice pursuit of Objective 1 in

10

section 134.

(c)
A creditors’ meeting may not

establish a creditors’ committee in

reliance on para. 57 until the Bank of

England has given an Objective 1

15

Achievement Notice.

(d)
Until that time the Bank of England

shall have the functions of the

creditors’ committee.

Para. 59
General powers
A bank administrator may not rely on para.

20

59 (or subsection (1) above) for the purpose of

recovering property transferred by property

transfer instrument.

Para. 60 and
General powers
(a)
The exercise of powers under

Schedule 1

Schedule 1 is subject to section

25

134(2).

(b)
In the case of bank administration

following transfer to a bridge bank,

until the Bank of England has given

an Objective 1 Achievement Notice

30

powers under the following

paragraphs of Schedule 1 may be

exercised only with the Bank of

England’s consent: 2, 3, 11, 14, 15,

16, 17, 18 and 21.

35

Para. 61
Directors

Para. 62
Power to call meetings of

creditors

Para. 63
Application to court for
(a)
Before the Bank of England has

directions
given an Objective 1 Achievement

40

Notice, the bank administrator may

apply for directions if unsure

whether a proposed action would

prejudice the pursuit of Objective 1;

and before making an application in

45

reliance on this paragraph the bank

administrator must give notice to

the Bank of England, which shall be

entitled to participate in the

proceedings.

50

(b)
In making directions the court must

have regard to the Objectives in

section 134.

Para. 64.
Management powers.

Para. 65
Distribution to creditors
(a)
In the case of administration

55

following transfer to a bridge bank,

until the Bank of England has given

an Objective 1 Achievement Notice a

bank administrator may make a

distribution only with the Bank of

60

England’s consent.

(b)
Ignore sub para. (3).

Banking Bill
Part 3 — Bank Administration
75

Provision of
Subject
Modification or comment

Schedule B1

Para. 66
Payments

Para. 67
Taking custody of property

Para. 68
Management
Before the approval of proposals under para.

5

53 a bank administrator shall manage the

bank’s affairs, business and property in

accordance with principles agreed between

the bank administrator and the Bank of

England.

10

Para. 69
Agency

Para. 70
Floating charges
The bank administrator may take action only

if satisfied that it will not prejudice pursuit of

Objective 1 in section 134.

Para. 71
Fixed charges
The court may make an order only if satisfied

15

that it will not prejudice pursuit of Objective

1 in section 134.

Para. 72
Hire-purchase property
In the case of administration following

transfer to a bridge bank, until the Bank of

England has given an Objective 1

20

Achievement Notice an application may be

made only with the Bank of England’s

consent.

Para. 73
Protection for secured and
(a)
Treat a reference to proposals as

preferential creditors
including a reference to the

25

principles specified in the

modification of para. 68 set out

above.

(b)
Para. 73(1)(a) does not apply until

the Bank of England has given an

30

Objective 1 Achievement Notice.

Para. 74
Challenge to administrator’s
(a)
The Bank of England may make an

conduct
application to the court, on any

grounds, including grounds of

insufficient pursuit of Objective 1 in

35

section 134 (in addition to

applications that may anyway be

made under para. 74).

(b)
Until the Bank of England has given

an Objective 1 Achievement Notice,

40

an order may be made on the

application of a creditor only if the

court is satisfied that it would not

prejudice pursuit of Objective 1 in

section 134.

45

Para. 75
Misfeasance
In addition to applications that may anyway

be made under para. 75, an application may

be made by the bank administrator or the

Bank of England.

Para. 80
Termination: successful rescue
See section 150.

50

Para. 84
Termination: no more assets for
See section 151.

distribution

Para. 85
Discharge of administration

order

Para. 86
Notice to Companies Registrar
See section 150.

55

of end of administration

Banking Bill
Part 3 — Bank Administration
76

Provision of
Subject
Modification or comment

Schedule B1

Para. 87
Resignation
A bank administrator may resign only by

notice in writing—

(a)
to the court, copied to the Bank of

5

England, or

(b)
in the case of a bank administrator

appointed by the creditors’

committee under para. 90, to the

creditors’ committee.

10

Para. 88
Removal
Until the Bank of England has given an

Objective 1 Achievement Notice, an

application for an order may be made only

with the Bank of England’s consent.

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

15

to the Bank of England.

Paras. 90 &
Replacement
(a)
Until an Objective 1 Notice has been

91

given, the Bank of England, and

nobody else, may make an

application under para. 91(1).

20

(b)
After that, either the Bank of

England or a creditors’ committee

may apply.

(c)
Ignore para. 91(1)(b) to (e) and (2).

Para. 96
Substitution of floating charge-
Para. 96 applies to a bank administrator,

25

holder
but—

(a)
only after an Objective 1

Achievement Notice has been given,

and

(b)
ignoring references to priority of

30

charges.

Para. 98
Discharge
Discharge takes effect—

(a)
where the person ceases to be bank

administrator before an Objective 1

Achievement Notice has been given,

35

at a time determined by the Bank of

England, and

(b)
otherwise, at a time determined by

resolution of the creditors’

committee (for which purpose

40

ignore sub-para. (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

Bank of England, and

45

(b)
if the Bank is satisfied that they will

not prejudice Objective 1 in section

134.

Paras. 100-
Joint administrators
Until an Objective 1 Achievement Notice has

103

been given, an application under para. 103

50

may be made only by the Bank of England.

Para. 104
Validity

Para. 106
Fines

(and section

430 and

55

Schedule 10)

Banking Bill
Part 3 — Bank Administration
77

Provision of
Subject
Modification or comment

Schedule B1

Paras. 107 -
Extension of time limits
(a)
Until an Objective 1 Achievement

109

Notice has been given, an

application under para. 107 may be

5

made only with the Bank of

England’s consent.

(b)
In considering an application under

para. 107 the court must have regard

to Objective 1 in section 134.

10

(c)
In para. 108(1) “consent” means

consent of the Bank of England.

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

time
of the Schedule as it applies by virtue of this

section (whether or not in the same way as it

15

amends the provision as it applies otherwise).

Para. 111
Interpretation

Paras. 112 -
Scotland

116

TABLE 2 OF APPLIED PROVISIONS
20
OTHER PROVISIONS OF THE INSOLVENCY ACT 1986

Section
Subject
Modification or comment

Section 135
Provisional appointment
(a)
Treat the reference to the

presentation of a winding-up

petition as a reference to the making

25

of an application for a bank

administration order.

(b)
Subsection (2) applies in relation to

England and Wales and Scotland

(and subsection (3) does not apply).

30

(c)
Ignore the reference to the official

receiver.

(d)
Only a person who is qualified to act

as an insolvency practitioner and

who consents to act may be

35

appointed.

(e)
The court may only confer on a

provisional bank administrator

functions in connection with the

pursuance of Objective 1; and

40

section 135(2)(a) does not apply

before a bank administration order

is made.

(f)
A provisional bank administrator

may not pursue Objective 2.

45

(g)
The appointment of a provisional

bank administrator lapses on the

appointment of a bank

administrator.