Rule 110 Order of priority of expenses of the special administration

(1)

Subject to rule 111, the expenses of the special administration are payable out of the assets of the investment bank in the following order of priority—

(a)

any outlays properly chargeable or incurred by a person appointed under section 135 or the administrator in carrying out the administrator’s functions in the special administration, except those outlays specifically mentioned in the following sub-paragraphs;

(b)

the cost, or proportionate cost, of any caution provided by the administrator or by a person appointed under section 135 in accordance with the Regulations or these Rules;

(c)

in a special administration (bank insolvency) or special administration (bank administration) the remuneration of the person appointed under section 135 (if any);

(d)

the expenses of the applicant for a special administration order, and of any other party whose expenses are allowed by the court;

(e)

any allowance made by the administrator under rule 38 (expenses of statement of affairs);

(f)

the remuneration or emoluments of any person who has been employed by the administrator to perform any services for the investment bank, as required or authorised by or under the Regulations or these Rules;

(g)

the administrator’s remuneration for services in pursuit of—

(i)

Objective A in a special administration (bank insolvency),

(ii)

Objective A in a special administration (bank administration), and

(iii)

Objectives 2 and 3,

the basis of which has been fixed under rule 16, 29, or 135, and

(iv)

unpaid pre-administration costs for work done in pursuit of these Objectives approved under rule 112; and

(h)

the amount of any corporation tax on chargeable gains accruing on the realisation of any asset of the investment bank (without regard to whether the realisation is effected by the administrator, a secured creditor or otherwise).

(2)

Where a special administration order, a special administration (bank insolvency) order or a special administration (bank administration) order is made and a voluntary arrangement under Part 1 of the 1986 Act is in force for the investment bank, any expenses properly incurred as expenses of the administration of the arrangement in question shall be payable after the expenses set out in paragraph (1).

(3)

Nothing in this rule applies to or affects the power of any court, in proceedings by or against the investment bank, to order expenses to be paid by the investment bank or the administrator nor does it affect the rights of any person to whom such expenses are ordered to be paid.

(4)

The priorities laid down by virtue of paragraph (1) are subject to the power of the court to make orders under paragraph (5) where the assets are insufficient to satisfy the liabilities.

(5)

The court may, in the event of the assets being insufficient to satisfy the liabilities, make an order as to the payment out of the assets of the expenses incurred in the special administration in such order of priority as the court thinks just.

(6)

For the purposes of paragraph 99(3), the former administrator’s remuneration and expenses shall comprise all those items set out in paragraph (1).

(7)

In this rule, a reference to “section 135” is to section 135 of the 1986 Act (appointment and powers of provisional liquidator) as modified by—

(a)

in a special administration (bank insolvency), Schedule 1; or

(b)

in a special administration (bank administration), Schedule 2,

to the Regulations.