Session 2010 - 11
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Health and Social Care Bill


Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 6 — Insolvency and health special administration

122

 

“company” includes a company not registered under the Companies Act

2006;

“court”—

(a)   

in relation to an NHS foundation trust, means the High Court;

(b)   

in relation to a company, means the court—

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(i)   

having jurisdiction to wind up the company, or

(ii)   

that would have such jurisdiction apart from section

221(2) or 441(2) of the Insolvency Act 1986 (exclusion of

winding up jurisdiction in case of companies

incorporated in, or having principal place of business in,

10

Northern Ireland);

“member”, in relation to a company, is to be read in accordance with

section 250 of the Insolvency Act 1986;

“non-GB company” means a company incorporated outside Great Britain;

“relevant provider” means an NHS foundation trust, or a company, which

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is providing designated services;

“wholly-owned subsidiary” has the meaning given by section 1159 of the

Companies Act 2006.

127     

Objective of a health special administration

(1)   

The objective of a health special administration is to secure—

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(a)   

the continued provision of the designated services provided by the

NHS foundation trust or company subject to the health special

administration order, and

(b)   

that it becomes unnecessary, by one or both of the means set out in

subsection (2), for the health special administration order to remain in

25

force for that purpose.

(2)   

Those means are—

(a)   

the rescue as a going concern of the NHS foundation trust or company

subject to the health special administration order, and

(b)   

one or more transfers falling within subsection (3).

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(3)   

A transfer falls within this subsection if it is a transfer as a going concern—

(a)   

to another licence holder, or

(b)   

as respects different parts of the undertaking of the NHS foundation

trust or company subject to the health special administration order, to

two or more other licence holders,

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of so much of that undertaking as it is appropriate to transfer for the purpose

of achieving the objective of the health special administration.

(4)   

The means by which a transfer falling within subsection (3) may be effected in

the case of a company include in particular—

(a)   

a transfer of the undertaking of the company subject to the health

40

special administration order, or of part of its undertaking, to a wholly-

owned subsidiary of that company, and

(b)   

a transfer to a company of securities of a wholly-owned subsidiary to

which there has been a transfer falling within paragraph (a).

(5)   

The objective of a health special administration may be achieved by transfers

45

to the extent only that—

 
 

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 6 — Insolvency and health special administration

123

 

(a)   

the rescue as a going concern of the NHS foundation trust or company

subject to the health special administration order is not reasonably

practicable or is not reasonably practicable without such transfers,

(b)   

the rescue of the trust or company as a going concern will not achieve

that objective or will not do so without such transfers,

5

(c)   

such transfers would produce a result for the trust’s or company’s

creditors as a whole that is better than the result that would be

produced without them, or

(d)   

in the case of a company, such transfers would, without prejudicing the

interests of its creditors as a whole, produce a result for its members as

10

a whole that is better than the result that would be produced without

them.

128     

Health special administration regulations

(1)   

Regulations (referred to in this Chapter as “health special administration

regulations”) must make further provision about health special administration

15

orders.

(2)   

Health special administration regulations may apply (with or without

modifications)—

(a)   

any provision of Part 2 of the Insolvency Act 1986 (administration) or

any related provision of that Act, and

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(b)   

any other enactment which relates to insolvency or administration or

makes provision by reference to anything that is or may be done under

that Act.

(3)   

Health special administration regulations may in particular provide that the

court may make a health special administration order in relation to a relevant

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provider if it is satisfied, on a petition by the Secretary of State under section

124A of the Insolvency Act 1986 (petition for winding up on grounds of public

interest), that it would be just and equitable (disregarding the objective of the

health special administration) to wind up the provider in the public interest.

(4)   

Health special administration regulations may make provision about—

30

(a)   

the application of procedures under the Insolvency Act 1986 in relation

to relevant providers, and

(b)   

the enforcement of security over property of relevant providers.

(5)   

Health special administration regulations may modify this Chapter or any

enactment mentioned in subsection (6) in relation to any provision made by

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virtue of this Chapter.

(6)   

The enactments are—

(a)   

the Insolvency Act 1986,

(b)   

any other enactment which relates to insolvency or administration or

makes provision by reference to anything that is or may be done under

40

that Act, and

(c)   

section 242 of the National Health Service Act 2006 (NHS foundation

trusts etc: public involvement and consultation duties).

(7)   

The power to make rules under section 411 of the Insolvency Act 1986

(company insolvency rules) applies for the purpose of giving effect to

45

provision made by virtue of this Chapter as it applies for the purpose of giving

effect to Parts 1 to 7 of that Act.

 
 

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 6 — Insolvency and health special administration

124

 

(8)   

For that purpose—

(a)   

the power to make rules in relation to England and Wales is exercisable

by the Lord Chancellor with the concurrence of the Secretary of State

and, in the case of rules that affect court procedure, with the

concurrence of the Lord Chief Justice;

5

(b)   

references in section 411 of that Act to those Parts are to be read as

including a reference to this Chapter.

(9)   

Before making health special administration regulations the Secretary of State

must consult—

(a)   

Monitor, and

10

(b)   

such other persons as the Secretary of State considers appropriate.

129     

Transfer schemes

(1)   

Health special administration regulations may make provision about transfer

schemes to achieve the objective of a health special administration (see

section 127).

15

(2)   

Health special administration regulations may in particular include

provision—

(a)   

for the making of a transfer scheme to be subject to the consent of

Monitor and the licence holder to whom the transfer is being made, and

(b)   

for Monitor to have power to modify a transfer scheme with the consent

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of parties to the transfers effected by the scheme.

(3)   

Health special administration regulations may in particular provide that a

transfer scheme may include provision—

(a)   

for the transfer of property, rights and liabilities from an NHS

foundation trust or company subject to a health special administration

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order to another licence holder (including property, rights and

liabilities which would not otherwise be capable of being transferred or

assigned),

(b)   

for the transfer of property acquired, and rights and liabilities arising,

after the making of the scheme,

30

(c)   

for the creation of interests or rights, or the imposition of liabilities, and

(d)   

for the transfer, or concurrent exercise, of functions under enactments.

130     

Indemnities

Health special administration regulations may make provision about the

giving by Monitor of indemnities in respect of—

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(a)   

liabilities incurred in connection with the discharge by health special

administrators of their functions, and

(b)   

loss or damage sustained in that connection.

131     

Modification of this Chapter under Enterprise Act 2002

(1)   

The power to modify or apply enactments conferred on the Secretary of State

40

by each of the sections of the Enterprise Act 2002 mentioned in subsection (2)

includes power to make such consequential modifications of provision made

by virtue of this Chapter as the Secretary of State considers appropriate in

connection with any other provision made under that section.

 
 

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 7 — Financial assistance in health special administration cases

125

 

(2)   

Those sections are—

(a)   

sections 248 and 277 (amendments consequential on that Act), and

(b)   

section 254 (power to apply insolvency law to foreign companies).

Chapter 7

Financial assistance in health special administration cases

5

Establishment of mechanisms

132     

Duty to establish mechanisms for providing financial assistance

(1)   

Monitor must establish, and secure the effective operation of, one or more

mechanisms for providing financial assistance in cases where a provider is

subject to a health special administration order (within the meaning of

10

Chapter 6).

(2)   

Mechanisms that Monitor may establish under this section include, in

particular—

(a)   

mechanisms for raising money to make grants or loans or to make

payments in consequence of indemnities given by Monitor by virtue of

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section 130;

(b)   

mechanisms for securing that providers arrange, or are provided with,

insurance facilities.

(3)   

Monitor may secure that a mechanism established under this section operates

so as to enable it to recover the costs it incurs in establishing and operating the

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mechanism.

(4)   

Monitor may establish different mechanisms for different providers or

providers of different descriptions.

(5)   

Monitor does not require permission under any provision of the Financial

Services and Markets Act 2000 as respects activities carried out under this

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Chapter.

(6)   

In this Chapter—

“commissioner” means a person who arranges for the provision of

designated services;

“provider” means a person who provides designated services.

30

(7)   

An order under section 297 providing for the commencement of this Chapter

may require Monitor to comply with the duty to establish under subsection (1)

before such date as the order specifies.

133     

Power to establish fund

(1)   

Monitor may, for the purposes of section 132, establish and maintain a fund.

35

(2)   

In order to raise money for investment in a fund it establishes under this

section, Monitor may impose requirements on providers or commissioners.

(3)   

Monitor must appoint at least two managers for a fund it establishes under this

section.

(4)   

A manager of a fund may be an individual, a firm or a body corporate.

40

 
 

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 7 — Financial assistance in health special administration cases

126

 

(5)   

Monitor must not appoint an individual as manager of a fund unless it is

satisfied that the individual has the appropriate knowledge and experience for

managing investments.

(6)   

Monitor must not appoint a firm or body corporate as manager of a fund unless

it is satisfied that arrangements are in place to secure that any individual who

5

will exercise functions of the firm or body corporate as manager will, at the

time of doing so, have the appropriate knowledge and experience for

managing investments.

(7)   

Monitor must not appoint an individual, firm or body corporate as manager of

a fund unless the individual, firm or body is an authorised or exempt person

10

within the meaning of the Financial Services and Markets Act 2000.

(8)   

Monitor must secure the prudent management of any fund it establishes under

this section.

Applications for financial assistance

134     

Applications

15

(1)   

Monitor may, on an application by a health special administrator, provide

financial assistance to the health special administrator by using a mechanism

established under section 132.

(2)   

An application under this section must be in such form, and must be supported

by such evidence or other information, as Monitor may require (and a

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requirement under this subsection may be imposed after the receipt, but before

the determination, of the application).

(3)   

If Monitor grants an application under this section, it must notify the applicant

of—

(a)   

the purpose for which the financial assistance is being provided, and

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(b)   

the other conditions to which its provision is subject.

(4)   

The health special administrator must secure that the financial assistance is

used only—

(a)   

for the purpose notified under subsection (3)(a), and

(b)   

in accordance with the conditions notified under subsection (3)(b).

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(5)   

Financial assistance under this section may be provided only in the period

during which the provider in question is in health special administration.

(6)   

If Monitor refuses an application under this section, it must notify the applicant

of the reasons for the refusal.

(7)   

Monitor must, on a request by an applicant whose application under this

35

section has been refused, reconsider the application; but no individual

involved in the decision to refuse the application may be involved in the

decision on the reconsideration of the application.

(8)   

For the purposes of reconsidering an application, Monitor may request

information from the applicant.

40

(9)   

Monitor must notify the applicant of its decision on reconsidering the

application; and—

 
 

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 7 — Financial assistance in health special administration cases

127

 

(a)   

if Monitor grants the application, it must notify the applicant of the

matters specified in subsection (3), and

(b)   

if Monitor refuses the application, it must notify the applicant of the

reasons for the refusal.

(10)   

In this Chapter, “health special administrator” has the meaning given in

5

Chapter 6 (see section 126(3)).

135     

Grants and loans

(1)   

Monitor may not provide financial assistance under section 134 in the form of

a grant or loan unless it is satisfied that—

(a)   

it is necessary for the provider—

10

(i)   

to be able to continue to provide designated services, or

(ii)   

to be able to secure a viable business in the long term, and

(b)   

no other source of funding which would enable it do so and on which

it would be reasonable for it to rely is likely to become available to it.

(2)   

The terms of a grant or loan must include a term that the whole or a specified

15

part of the grant or loan becomes repayable in the event of a breach by the

provider or health special administrator of the terms of the grant or loan.

(3)   

Subject to that, where Monitor makes a grant or loan under section 134, it may

do so in such manner and on such terms as it may determine.

(4)   

Monitor may take such steps as it considers appropriate (including steps to

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adjust the amount of future payments towards the mechanism established

under section 132 to raise funds for grants or loans under section 134) to

recover overpayments in the provision of a grant or loan under that section.

(5)   

The power to recover an overpayment under subsection (4) includes a power

to recover interest, at such rate as Monitor may determine, on the amount of

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the overpayment for the period beginning with the making of the overpayment

and ending with its recovery.

Charges on commissioners

136     

Power to impose charges on commissioners

(1)   

The Secretary of State may by regulations confer power on Monitor to require

30

commissioners to pay charges relating to such of Monitor’s functions that

relate to securing the continued provision of designated services.

(2)   

The regulations must provide that the amount of a charge imposed by virtue

of this section is to be such amount—

(a)   

as may be prescribed, or

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(b)   

as is determined by reference to such criteria, and by using such

method, as may be prescribed.

(3)   

The regulations must—

(a)   

prescribe to whom the charge is to be paid;

(b)   

prescribe when the charge becomes payable;

40

(c)   

where the amount of the charge is to be determined in accordance with

subsection (2)(b), require Monitor to carry out consultation in

accordance with the regulations before imposing the charge;

 
 

Health and Social Care Bill
Part 3 — Economic regulation of health and adult social care services
Chapter 7 — Financial assistance in health special administration cases

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(d)   

provide for any amount that is not paid by the time prescribed for the

purposes of paragraph (b) to carry interest at the rate for the time being

specified in section 18 of the Judgments Act 1838;

(e)   

provide for any unpaid balance and accrued interest to be recoverable

summarily as a civil debt.

5

(4)   

Where the person that the regulations prescribe for the purposes of subsection

(3)(a) is a provider, the regulations may confer power on Monitor to require the

provider to pay Monitor the amount of the charge in question in accordance

with the regulations.

(5)   

Before making regulations under this section, the Secretary of State must

10

consult—

(a)   

Monitor, and

(b)   

the National Health Service Commissioning Board.

(6)   

Regulations under this section may apply with modifications provision made

by sections 139 to 141 in relation to charges imposed by virtue of this section.

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Levy on providers

137     

Imposition of levy

(1)   

The power under section 133(2) includes, in particular, power to impose a levy

on providers for each financial year.

(2)   

Before deciding whether to impose a levy under this section for the coming

20

financial year, Monitor must estimate—

(a)   

the amount that will be required for the purpose of providing financial

assistance in accordance with this Chapter,

(b)   

the amount that will be collected from commissioners by way of

charges imposed by virtue of section 136 during that year, and

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(c)   

the amount that will be standing to the credit of the fund at the end of

the current financial year.

(3)   

Before the start of a financial year in which Monitor proposes to impose a levy

under this section, it must determine—

(a)   

the factors by reference to which the rate of the levy is to be assessed,

30

(b)   

the time or times by reference to which those factors are to be assessed,

and

(c)   

the time or times during the year when the levy, or an instalment of it,

becomes payable.

(4)   

Where the determinations under subsection (3) reflect changes made to the

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factors by reference to which the levy is to be assessed, the notice under section

141(1)(b) must include an explanation of those changes.

(5)   

A levy under this section may be imposed at different rates for different

providers.

138     

Power of Secretary of State to set limit on levy and charges

40

(1)   

Before the beginning of each financial year, the Secretary of State may, with the

approval of the Treasury, specify by order—

 
 

 
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Revised 1 April 2011