OpenLegislation

Section 164 Disclaimer of property, rescission of contracts, &c.I1C1

England, Wales and Scotland

(1)

Sections 178, 186, 315 and 345 of the Insolvency Act 1986 (power to disclaim onerous property and court’s power to order rescission of contracts, &c.) do not apply in relation to—

(a)

a market contract, F1...

F2(aa)

a qualifying collateral arrangement,

(ab)

a transfer of a clearing member client contract, a client trade or a qualifying collateral arrangement, as mentioned in paragraphs (c) to (e) of section 158(1),

(ac)

a qualifying property transfer, or

(b)

a contract effected by F3the recognised body for the purpose of realising property provided as margin in relation to market contracts F4or as default fund contribution.

In the application of this subsection in Scotland, the reference to sections 178, 315 and 345 shall be construed as a reference to any rule of law having the like effect as those sections.

(2)

In Scotland, a F5trustee in the sequestration of the estate of a defaulter or a liquidator is bound by any market contract to which that defaulter is a party and by any contract as is mentioned in subsection (1)(b) above notwithstanding section F6110 of the Bankruptcy (Scotland) Act 2016 or any rule of law to the like effect applying in liquidations.

(3)

Sections 127 and 284 of the Insolvency Act 1986 (avoidance of property dispositions effected after commencement of winding up F7, submission of bankruptcy application or or presentation of bankruptcy petition), and section F887(4) of the Bankruptcy (Scotland) Act 2016 (effect of dealing with debtor relating to estate vested in F9... trustee), do not apply to—

(a)

a market contract, or any disposition of property in pursuance of such a contract,

(b)

the provision of margin in relation to market contracts,

F10(ba)

the provision of default fund contribution to F11the recognised body,

F12(bb)

a qualifying collateral arrangement,

(bc)

a transfer of a clearing member client contract, a client trade or a qualifying collateral arrangement, as mentioned in paragraphs (c) to (e) of section 158(1),

(bd)

a qualifying property transfer

(c)

a contract effected by the recognised body for the purpose of realising property provided as margin in relation to a market contract F13or as default fund contribution, or any disposition of property in pursuance of such a contract, or

(d)

any disposition of property in accordance with the rules of the recognised body as to the application of property provided as margin F14or as default fund contribution.

C2(4)

However, where—

(a)

a market contract is entered into by a person who has notice that F15a bankruptcy application has been submitted or a petition has been presented for the winding up or bankruptcy or sequestration of the estate of the other party to the contract, or

(b)

margin in relation to a market contract F16or default fund contribution is accepted by a person who has notice that F17such an application has been made or petition presented in relation to the person by whom or on whose behalf the margin F18or default fund contribution is provided,

the value of any profit to him arising from the contract or, as the case may be, the amount or value of the margin or default fund contribution is recoverable from him by the relevant office-holder unless the court directs otherwise.

F19(5)

Subsection (4)(a) does not apply where the person entering into the contract is F20a recognised body acting in accordance with its rules, or where the contract is effected under the default rules of such F21a recognised body; but subsection (4)(b) applies in relation to the provision of—

(a)

margin in relation to any such contract, unless the contract has been transferred in accordance with the default rules of the central counterparty, or

(b)

default fund contribution.

(6)

Any sum recoverable by virtue of subsection (4) ranks for priority, in the event of the insolvency of the person from whom it is due, immediately before preferential or, in Scotland, preferred debts.

Annotations

Textual amendments

F1

Word in s. 164(1)(a) omitted (1.4.2013) by virtue of The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 4(9)(a) (with regs. 52-58)

F2

S. 164(1)(aa)-(ac) inserted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 4(9)(b) (with regs. 52-58)

F3

Words in s. 164(1)(b) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(11)(a) (with regs. 7(4), 9(1))

F4

Words in s. 164(1)(b) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(a) (with reg. 1(2)(3))

F5

Words in s. 164(2) substituted (30.11.2016) by The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 6(5)(a)(i)

F6

Words in s. 164(2) substituted (30.11.2016) by The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 6(5)(a)(ii)

F7

Words in s. 164(3) inserted (6.4.2016) by The Enterprise and Regulatory Reform Act 2013 (Consequential Amendments) (Bankruptcy) and the Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) Regulations 2016 (S.I. 2016/481), reg. 1, Sch. 1 para. 9(5)(a)

F8

Words in s. 164(3) substituted (30.11.2016) by The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 6(5)(b)(i)

F9

Word in s. 164(3) omitted (30.11.2016) by virtue of The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 6(5)(b)(ii)

F10

S. 164(3)(ba) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(b)(i) (with reg. 1(2)(3))

F11

Words in s. 164(3) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(11)(b) (with regs. 7(4), 9(1))

F12

S. 164(3)(bb)-(bd) inserted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 4(9)(c) (with regs. 52-58)

F13

Words in s. 164(3)(c) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(b)(ii) (with reg. 1(2)(3))

F14

Words in s. 164(3)(d) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(b)(iii) (with reg. 1(2)(3))

F15

Words in s. 164(4)(a) inserted (6.4.2016) by The Enterprise and Regulatory Reform Act 2013 (Consequential Amendments) (Bankruptcy) and the Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) Regulations 2016 (S.I. 2016/481), reg. 1, Sch. 1 para. 9(5)(b)

F16

Words in s. 164(4) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(c)(i) (with reg. 1(2)(3))

F17

Words in s. 164(4)(b) substituted (6.4.2016) by The Enterprise and Regulatory Reform Act 2013 (Consequential Amendments) (Bankruptcy) and the Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) Regulations 2016 (S.I. 2016/481), reg. 1, Sch. 1 para. 9(5)(c)

F18

Words in s. 164(4) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(c)(ii) (with reg. 1(2)(3))

F19

S. 164(5) substituted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 4(9)(d) (with regs. 52-58)

F20

Words in s. 164(5) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(11)(c)(i) (with regs. 7(4), 9(1))

F21

Words in s. 164(5) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(11)(c)(ii) (with regs. 7(4), 9(1))

Modifications

C1

S. 164 amended by S.I. 1991/880, reg. 19(1)

C2

S. 164(4)-(6) excluded in part (11.12.1999) by S.I. 1999/2979, reg. 21(2)(b)

Commencement

I1

S. 164 wholly in force at 25.4.1991 see s. 215 and S.I. 1991/878, art. 2, Sch.

Notes on Part VII

Modifications

C1

Pt. VII (ss. 154-191): functions of the Secretary of State transferred (7.6.1992) to the Treasury by S.I. 1992/1315, art. 2(1)(c) (with art. 6)

Pt. VII (ss. 154-191) applied (E.W.S.) (15.8.1995) by S.I. 1995/2049, reg.3; and applied (with modifications) (E.W.S.) (15.8.1995) by S.I. 1995/2049, regs.3,4,5,19, 26; and applied (with modifications) (15.7.1996) by S.I. 1996/1469, regs.3, 4, 5

C2

Pt. VII: power to apply conferred (1.12.2001) by 2000 c. 8, s. 301(1)(a); S.I. 2001/3538, art. 2(1)

Notes on Recognised bodies

Textual amendments

F1

S. 155 cross-heading substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(2) (with regs. 7(4), 9(1))