Rule 164 Mutual credit and set-offI1
England and Wales
This rule applies where the administrator, being authorised to make the distribution in question, has, pursuant to rule 175, given notice of a proposal to make the distribution.
In this rule, “mutual dealings” means mutual credits, mutual debts or other mutual dealings between the investment bank and a creditor of the investment bank proving or claiming to prove for a debt in the special administration, but does not include any of the following—
any debt arising out of an obligation incurred after the investment bank entered special administration;
any debt arising out of an obligation incurred at a time when the creditor had notice that an application for a special administration order was pending;
any debt which has been acquired by a creditor by assignment or otherwise, pursuant to an agreement between the creditor and any other party where that agreement was entered into—
after the investment bank entered administration, or
at a time when the creditor had notice that an application for a special administration order was pending.
An account shall be taken as at the date of the notice referred to in paragraph (1) of what is due from each party to the other in respect of the mutual dealings and the sums due from one party shall be set off against the sums due from the other.
A sum shall be regarded as being due to or from the investment bank for the purposes of paragraph (3) whether—
it is payable at present or in the future;
the obligation by virtue of which it is payable is certain or contingent; or
its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion.
Rule 160 shall apply for the purposes of this rule to any obligation to or from the investment bank which, by reason of its being subject to any contingency or for any other reason, does not bear a certain value.
Rules 166 to 168 shall apply for the purposes of this rule in relation to any sums due to the investment bank which—
are payable in a currency other than sterling;
are of a periodical nature; or
bear interest.
Rule 186 shall apply for the purposes of this rule to any sum due to or from the investment bank which is payable in the future.
Only the balance (if any) of the account owed to the creditor is provable in the special administration. Alternatively the balance (if any) owed to the investment bank shall be paid to the administrator as part of the assets except where all or part of the balance results from a contingent or prospective debt owed by the creditor and in such a case the balance (or that part of it which results from the contingent or prospective debt) shall be paid if and when that debt becomes due and payable.
In this rule, “obligation” means an obligation however arising, whether by virtue of an agreement, rule of law or otherwise.