The Credit Institutions (Reorganisation and Winding up) Regulations 2004

In these Regulations—

• F1...

• “the 1986 Act” means the Insolvency Act 1986 M1;

• “the 2000 Act” means the Financial Services and Markets Act 2000 M2;

• F2“the 2006 Act” means the Companies Act 2006;

• “the 1989 Order” means the Insolvency (Northern Ireland) Order 1989 M3;

• “administrator” has the meaning given by paragraph 13 of Schedule B1 to the 1986 Act F3, paragraph 14 of Schedule B1 to the 1989 Order, section 8(2) of the 1986 Act F4or Article 21(2) of the 1989 Order as the case may be;

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• F9...

• F10“capital requirements regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012;

• “claim” means a claim submitted by a creditor of a UK credit institution in the course of—

  1. (a)

     a winding up,

  2. (b)

     an administration, or

  3. (c)

     a voluntary arrangement,

  with a view to recovering his debt in whole or in part, and includes F11a proof within the meaning given in rule 1.2 of the Insolvency Rules, a proof of debt within the meaning given in Rule 4.079(4) of the Insolvency Rules (Northern Ireland) or in Scotland a claim made in accordance with rule 7.16 of the Insolvency (Scotland) (Receivership and Winding up) Rules 2018 (in relation to a winding up) or rule 3.105 of the Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 (in relation to an administration);

• F12...

• “creditors' voluntary winding up” has the meaning given by section 90 of the 1986 Act or Article 76 of the 1989 Order as the case may be;

• “debt”—

  1. (a)

     in relation to a winding up or administration of a UK credit institution, has the meaning given by F13rule 14.1(3) of the Insolvency Rules or Article 5(1) of the 1989 Order except that where the credit institution is not a company, references in rule 14.1(3) or Article 5(1) to a company are to be read as references to the credit institution, and

  2. (b)

     F14in a case where a voluntary arrangement has effect in relation to a UK credit institution, means a debt which would constitute a debt in relation to the winding up (not immediately preceded by an administration) of that credit institution, except that in paragraph (c) of the definition of “relevant date” in rule 14.1(3) of the Insolvency Rules and in paragraph (1A) of Article 5 of the 1989 Order the reference to the date on which the company went into liquidation has effect as a reference to the date on which the voluntary arrangement had effect;

  3. (c)

     in Scotland—

     1. (i)

        F15in relation to a winding up of a UK credit institution, shall be interpreted in accordance with rule 7.22 of the Insolvency (Scotland) (Receivership and Winding up) Rules 2018, and, in relation to an administration of a UK credit institution, has the meaning given in rule 1.2 of the Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 and

     2. (ii)

        F16in a case where a voluntary arrangement has effect in relation to a UK credit institution, means a debt which would constitute a debt in relation to the winding up (not immediately preceded by an administration) of that insurer, except that references in rule 7.22 of the Insolvency (Scotland) (Receivership and Winding up) Rules 2018 to the date on which the company went into liquidation has effect as a reference to the date on which the voluntary arrangement had effect;

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• F24“the FCA” means the Financial Conduct Authority;

• F25...

• F26“the Insolvency Rules” means the Insolvency (England and Wales) Rules 2016;

• “the Insolvency Rules (Northern Ireland)” means the Insolvency Rules (Northern Ireland) 1991 M4;

• F27...

• “liquidator”F28... includes any person or body appointed by the administrative or judicial authorities whose task is to administer winding-up proceedings in respect of a UK credit institution which is not a body corporate;

• “officer”, in relation to a company, has the meaning given by F29section 1173(1) of the Companies Act 2006;

• F30...

• “the PRA” means the Prudential Regulation Authority;

• “PRA-authorised person” has the meaning given in section 2B of the 2000 Act;

• F31“recovery and resolution directive” means Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms F32...F33, as it had effect immediately before IP completion day;

• F34...

• F35“section 899 compromise or arrangement” means a compromise or arrangement sanctioned by the court in relation to a UK credit institution under section 899 of the 2006 Act but does not include a compromise or arrangement falling within section 900 (powers of court to facilitate reconstruction or amalgamation) or Part 27 (mergers and divisions of public companies) of that Act;

• “stabilisation instrument” means any of the following—

  1. (a)

     a “mandatory reduction instrument” made under section 6B of the Banking Act 2009;

  2. (b)

     a “resolution instrument” made under section 12A of the Banking Act 2009;

  3. (c)

     a “share transfer instrument” as defined in section 15 of the Banking Act 2009;

  4. (d)

     a “share transfer order” as defined in section 16 of the Banking Act 2009;

  5. (e)

     a “property transfer instrument” as defined in section 33 of the Banking Act 2009; or

  6. (f)

     a “third country instrument” made under section 89H of the Banking Act 2009;

• “supervisor” has the meaning given by section 7 of the 1986 Act or Article 20 of the 1989 Order as the case may be;

• “UK credit institution” means an undertaking whose head office is in the United Kingdom with permission under Part 4 of the 2000 Act to accept deposits or to issue electronic money as the case may be but does not include—

  1. (a)

     an undertaking which also has permission under Part 4 of the 2000 Act to effect or carry out contracts of insurance; or

  2. (b)

     a credit union within the meaning of section 1 of the Credit Unions Act 1979 M5;

• “voluntary arrangement” means a voluntary arrangement which has effect in relation to a UK credit institution in accordance with section 4A of the 1986 Act or Article 17A of the 1989 Order as the case may be; and

• “winding up” means—

  1. (a)

     winding up by the court, or

  2. (b)

     a creditors' voluntary winding up.

In the definition of “capital requirements regulation” the reference to Regulation (EU) No. 575/2013 is to be treated as a reference to that EU Regulation as it forms part of F37assimilated law.

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In these Regulations, references to the law of insolvency of the United Kingdom include references to every provision made by or under the 1986 Act or the 1989 Order as the case may be; and in relation to partnerships, limited liability partnerships or building societies, references to the law of insolvency or to any provision of the 1986 Act or the 1989 Order are to that law as modified by the Insolvent Partnerships Order 1994 M6, the Insolvent Partnerships Order (Northern Ireland) 1995 M7, the Limited Liability Partnerships Regulations 2001 M8 F39, the Limited Liability Partnerships Regulations (Northern Ireland) 2004 or the Building Societies Act 1986 M9 (as the case may be).

References in these Regulations to “accepting deposits” and a “contract of insurance” must be read with—

For the purposes of the 2000 Act, functions imposed or falling on the F40FCA or the PRA under these Regulations shall be deemed to be functions under the 2000 Act.

Where, on or after 5th May 2004, a UK credit institution (“the institution”) intends to pass a resolution to wind up the institution under paragraph (b) or (c) of section 84(1) of the 1986 Act or sub-paragraph (b) or (c) of Article 70(1) of the 1989 Order, the institution must give written notice of the resolution to the FCA and, if the institution is a PRA-authorised person, the PRA before it passes the resolution.

Where notice is given under paragraph (1), the resolution may be passed only after the end of the period of five business days beginning with the day on which the notice was given.

Where on or after 5th May 2004 the court makes a decision, order or appointment of any of the following kinds—

it must immediately inform the F4FCA and, if the institution is a PRA-authorised person, the PRA, or cause the FCA and, if the institution is a PRA-authorised person, the PRA to be informed, of the order or appointment which has been made.

Where a decision with respect to the approval of a voluntary arrangement has effect, and the arrangement which is the subject of that decision is a qualifying arrangement, the supervisor must forthwith inform the FCA and, if the institution is a PRA-authorised person, the PRA of the arrangement which has been approved.

Where a liquidator is appointed as mentioned in section 100 of the 1986 Act, paragraph 83 of Schedule B1 to the 1986 Act F5, paragraph 84 of Schedule B1 to the 1989 Order or Article 86 of the 1989 Order (appointment of liquidator in a creditors' voluntary winding up), the liquidator must inform the FCA and, if the institution is a PRA-authorised person, the PRA forthwith of his appointment.

Where in the case of a members' voluntary winding up, section 95 of the 1986 Act (effect of company’s insolvency) or Article 81 of the 1989 Order applies, the liquidator must inform the FCA and, if the institution is a PRA-authorised person, the PRA forthwith that he is of that opinion.

Paragraphs (1), (2) and (3) do not require the FCA to be informed in any case where the FCA was represented at all hearings in connection with the application in relation to which the decision, order or appointment is made.

Paragraphs (1), (2) and (3) do not require the PRA to be informed in any case where the PRA was represented at all hearings in connection with the application in relation to which the decision, order or appointment is made.

For the purposes of paragraph (2), a “qualifying arrangement” means a voluntary arrangement which—

A supervisor, administrator or liquidator who fails without reasonable excuse to comply with paragraph (2), (3), or (4) (as the case may be) commits an offence and is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

For the purposes of this regulation—

The prescribed circumstances are where, after the appointment of an administrator, the administrator concludes that it is not reasonably practicable to achieve the objective specified in paragraph 3(1)(a) of Schedule B1 to the 1986 Act F3or paragraph 4(1)(a) of Schedule B1 to the 1989 Order.

When F4the FCA or the PRA is informed of a qualifying decision, qualifying order or qualifying appointment, F5that authority will as soon as reasonably practicable exercise its power under F6section 55J of the 2000 Act to vary or to cancel the UK credit institution’s permission under Part 4 of that Act to accept deposits or to issue electronic money as the case may be.

When a relevant order or appointment is made, or a relevant decision is taken, in relation to a UK credit institution on or after 5th May 2004, the appointed officer must, as soon as is reasonably practicable, notify in writing all known creditors of that credit institution—

The appointed officer may comply with the requirement in paragraphs (1)(a) and the requirement in paragraph (1)(b) by separate notifications.

For the purposes of this regulation—

The matters which must be notified to all known creditors in accordance with paragraph (1)(a) are as follows—

The matters which must be notified to all known creditors in accordance with paragraph (1)(b) are as follows—

Where a creditor is notified in accordance with paragraph (1)(b), the notification must be headed with the words “Invitation to lodge a claim. Time limits to be observed”F3....

The obligation under paragraph (1)(b) may be discharged by sending a form of proof in accordance with F4... Rule 4.080 of the Insolvency Rules (Northern Ireland) F5in cases where those rules apply, provided that the form of proof complies with paragraph (6).

The prescribed circumstances are where the administrator includes in the statement required under F7rule 3.3 of the Insolvency Rules or under Rule 2.003 of the Insolvency Rules (Northern Ireland) a statement to the effect that the objective set out in paragraph 3(1)(a) of Schedule B1 to the 1986 Act or in paragraph 4(1)(a) of Schedule B1 to the 1989 Order is not reasonably likely to be achieved

Where, after the appointment of an administrator, the administrator concludes that it is not reasonably practicable to achieve the objective specified in paragraph 3(1)(a) of Schedule B1 to the 1986 Act F8or paragraph 4(1)(a) of Schedule B1 to the 1989 Order, he shall inform the court F9, the FCA and, if the institution is a PRA-authorised person, the PRA in writing of that conclusion and upon so doing the order by which he was appointed shall be a relevant order for the purposes of this regulation and the obligation under paragraph (1) shall apply as from the date on which he so informs the court and the Authority.

An appointed officer commits an offence if he fails without reasonable excuse to comply with a requirement under paragraph (1) of this regulation, and is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

For the purposes of this regulation—

For the purposes of paragraph (3), a voluntary arrangement is a qualifying voluntary arrangement if its purposes include a realisation of some or all of the assets of the UK credit institution to which the order relates with a view to terminating the whole or any part of the business of that credit institution.

This regulation applies where, on or after 5th May 2004—

The liquidator, provisional liquidator or administrator (as the case may be) must send a report to every known creditor once in every 12 months beginning with the date when his appointment has effect.

The requirement in paragraph (2) does not apply where a liquidator, provisional liquidator or administrator is required by order of the court to send a report to creditors at intervals which are more frequent than those required by this regulation.

This regulation is without prejudice to any requirement to send a report to creditors, imposed by the court on the liquidator, provisional liquidator or administrator, which is supplementary to the requirements of this regulation.

A liquidator, provisional liquidator or administrator commits an offence if he fails without reasonable excuse to comply with an applicable requirement under this regulation, and is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

For the purposes of this regulation—

This regulation applies to any notification, report or other document which is required to be sent to a creditor of a UK credit institution by a provision of this Part (“a relevant notification”).

A relevant notification may be sent to a creditor by one of the following methods—

For the purposes of paragraph (2)(a), the proper address of a creditor is any current address provided by that person as an address for service of a relevant notification and, if no such address is provided—

A relevant notification may be transmitted electronically only if it is sent to—

Any requirement in this Part to send a relevant notification to a creditor shall also be treated as satisfied if the conditions set out in paragraph (6) are satisfied.

The conditions of this paragraph are satisfied in the case of a relevant notification if—

Where, in a case in which paragraph (5) is relied on for compliance with a requirement of regulation 14 or 16—

no offence is committed under regulation 14(10) or regulation 16(5) (as the case may be) by reason of that failure.

In this regulation—

This Part applies as follows—

For the purposes of paragraph (1)(a), a voluntary arrangement has a qualifying purpose if it—

For the purposes of paragraph (1)(c), a winding up is a relevant winding up if—

For the purposes of this Part, the insolvent estate of a UK credit institution shall not include any assets which at the commencement date are subject to F1a relevant compromise or arrangement.

In this regulation—

For the purposes of this Part—

In this Part, references to the opening of a relevant reorganisation or a relevant winding up mean—

and references to the time of an opening must be construed accordingly.

A relevant reorganisation or a relevant winding up shall not affect the right of creditors to demand the set-off of their claims against the claims of the affected credit institution, where such a set-off is permitted by the law applicable to the affected credit institution’s claim.

Paragraph (1) does not preclude actions for voidness, voidability or unenforceability of legal acts detrimental to creditors under the general law of insolvency of the United Kingdom.

F1... The effects of a relevant reorganisation or winding up on transactions carried out in the context of F2UK regulated market must be determined in accordance with the law applicable to those transactions.

For the purposes of this regulation “UK regulated market” has the meaning given by point (13A) of Article 2(1) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012.

The effects of a relevant reorganisation or a relevant winding up on a netting agreement shall be determined in accordance with the law applicable to that agreement.

Nothing in paragraph (1) affects the application of—

F2... The effects of a relevant reorganisation or a relevant winding up on a repurchase agreement shall be determined in accordance with the law applicable to that agreement.

Nothing in paragraph (1) affects the application of—

In this Part—

In paragraph (1), the definition of “third country credit institution” must be read with—

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“UK investment firm” means an investment firm as defined in subsections (1) and (2)(a) of section 258A of the Banking Act 2009.

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“UK group company” means—

the head office of which is in the United Kingdom and which is not otherwise subject to these Regulations.