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The Investment Bank Special Administration Regulations 2011

Type Statutory-Instrument

Publication 2011-02-07

Last updated 2025-04-06

State In force

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Made: 7th February 2011

Coming into force in accordance with regulation 1

The Treasury make the following Regulations in exercise of the powers conferred by sections 233, 234 and 259(1) of the Banking Act 2009 (the power in section 233 having not yet lapsed under section 235(4)).

Before laying these Regulations before Parliament in draft, the Treasury consulted in accordance with section 235(3) of that Act.

A draft of these Regulations has been laid before and approved by resolution of each House of Parliament in accordance with section 235(2) of that Act.

Citation and commencement

1

These Regulations may be cited as the Investment Bank Special Administration Regulations 2011 and shall come into force on the day after the day on which they are made.

Interpretation

2

(1) In these Regulations, except where the context otherwise requires—

“the Act” means the Banking Act 2009;

“administrator” has the meaning set out in regulation 4;

“Authorities” means the Bank of England, the Treasury , the FCA and the PRA;

“business day” has the meaning set out in section 251 of the Insolvency Act;

“client” means a person for whom the investment bank has undertaken to receive or hold client assets (whether or not on trust and whether or not that undertaking has been complied with);

“client money account” means an account which the investment bank maintains in accordance with client money rules, including an account with any person which the investment bank maintains for the purpose of—any transaction with or by that person for a client’s benefit; ormeeting a client’s obligation to provide collateral for a transaction;

“client money” means client assets which are money received or held by an investment bank for, or on behalf of, clients;

“client money pool” means the pool of client money which is held on trust by the investment bank in accordance with client money rules and has been pooled in accordance with those rules for the purpose of distribution;

“client money rules” means rules made under Part 9A of FSMA (rules and guidance) which make provision relating to the handling and distribution of money held by a person who is authorised for the purposes of FSMA;

“contributory” has the meaning set out in section 79 of the Insolvency Act ;

“court” means—in England and Wales, the High Court,in Scotland, the Court of Session, andin Northern Ireland, the High Court;

“deposit-taking bank” means an investment bank to which the definition set out either in section 2 or in section 91 of the Act applies;

“the Disqualification Act” means the Company Directors Disqualification Act 1986 ;

“enactment” includes—an enactment comprised in or in an instrument made under an Act of the Scottish Parliament;Acts and Measures of the National Assembly for Wales and instruments made such an Act or Measure;Northern Ireland legislation;and any EU Instrument (as defined in Part 2 of Schedule 1 of the European Communities Act 1972 );

“fair” is to be construed in accordance with section 93(8) of the Act;

“FCA” means the Financial Conduct Authority;

“foreign property” has the meaning given by section 39(2) of the Act;

“FSCS” means the scheme manager of the Financial Services Compensation Scheme (established under Part 15 of FSMA);

“FSMA” means the Financial Services and Markets Act 2000 ;

“the Insolvency Act” means the Insolvency Act 1986 ;

“insolvency rules” means rules made under section 411 of the Insolvency Act as applied and modified by regulation 15;

“market charge” means a charge to which Part 7 of the Companies Act 1989 applies as a result of the operation of section 173 of that Act ;

“market contract” means a contract to which Part 7 of the Companies Act 1989 applies as a result of the operation of section 155 of that Act ;

“market infrastructure body” means a recognised clearing house, recognised CSD, recognised investment exchange ..., third country central counterparty, recognised overseas clearing house ..., third country CSD or recognised overseas investment exchange in relation to which the investment bank is a counterparty in a market contract or to a market charge or is a member or participant;

“Objective 1”, “Objective 2” and “Objective 3” have the meanings set out in regulation 10;

“PRA” means the Prudential Regulation Authority;

“PRA-authorised person” has the meaning given by FSMA;

“prescribed” means prescribed by insolvency rules;

“recognised clearing house” has the meaning set out in section 285 of FSMA;

“recognised CSD” has the meaning set out in section 285 of FSMA;

“recognised investment exchange” has the meaning set out in section 285 of FSMA;

“recognised overseas clearing house” means an overseas person in respect of whom a recognition order has been made under section 292 of FSMA declaring them to be a recognised clearing house;

“recognised overseas investment exchange” means an overseas person in respect of whom a recognition order has been made under section 292 of FSMA declaring them to be a recognised investment exchange;

“the regulators” means the FCA and the PRA, and references to a regulator are to be read accordingly;

“Schedule B1” means Schedule B1 to the Insolvency Act ;

“Schedule B1 administration” means the administration procedure set out in Schedule B1;

“securities” means financial instruments as defined in regulation 3 of the Financial Collateral Arrangements (No.2) Regulations 2003 ;

“security interest” means any legal or equitable interest or any other right in security (other than a title transfer financial collateral arrangement) created or otherwise arising by way of security including—a pledge,a mortgage,a fixed charge,a charge created as a floating charge, ora lien;

“special administration” has the meaning set out in regulation 3;

“special administration (bank insolvency)” has the meaning set out in paragraph 1 of Schedule 1;

“special administration (bank administration)” has the meaning set out in paragraph 1 of Schedule 2;

“special administration objectives” has the meaning set out in regulation 10;

“special administration order” has the meaning set out in regulation 4;

“statement of proposals” means the statement of proposals drawn up by the administrator in accordance with—paragraph 49 of Schedule B1 (as applied by regulation 15);where the FCA or, where relevant, the PRA has given a direction, regulation 17; orin relation to Schedule 2, paragraph 7 of that schedule; and

“third country central counterparty” has the meaning set out in section 285 of FSMA;

“third country CSD” has the meaning set out in section 285 of FSMA;

“title transfer financial collateral arrangement” has the meaning set out in regulation 3 of the Financial Collateral Arrangements (No.2) Regulations 2003.

(2) In the definition of “security interest”, in sub-paragraph (c), in its application to Scotland, “fixed charge” means a fixed security within the meaning given by section 47(1) of the Bankruptcy and Diligence etc. (Scotland) Act 2007 .

(2A) In these Regulations a reference to the investment bank’s own bank accounts includes a reference to any account, other than a client money account, opened by the administrator for the purposes of the special administration.

(3) References in these Regulations to a regulated activity must be read with—

(a) section 22 of FSMA (classes of regulated activity and categories of investment);

(b) any relevant order under that section; and

(4) For the purposes of a reference in these Regulations to inability to pay debts—

(a) an investment bank that is in default on an obligation to pay a sum due and payable under an agreement is to be treated as unable to pay its debts; and

(b) section 123 of the Insolvency Act (inability to pay debts) also applies,

and for the purposes of sub-paragraph (a), “agreement” means an agreement the making or performance of which constitutes or is part of a regulated activity carried on by the investment bank.

(5) Expressions used in these Regulations and in the Insolvency Act have the same meaning as in that Act, and the provision made by paragraphs 100 and 101 of Schedule B1 (as applied by regulation 15) in respect of the effect of the references in that Schedule also apply in respect of the same references where used in these Regulations.

(6) Expressions used in these Regulations and in the Companies Act 2006 have the same meaning as in that Act.

(7) Regulation 26 applies with respect to the application of these Regulations to Northern Ireland.

Overview

3

(1) These Regulations provide for a procedure to be known as investment bank special administration (“special administration”).

(2) The main features of special administration are that—

(a) an investment bank enters the procedure by court order;

(b) the order appoints an administrator;

(c) the administrator is to pursue the special administration objectives in accordance with the statement of proposals approved by the meeting of creditors and clients and, in certain circumstances, the FCA or, where relevant, the PRA; and

(d) in other respects the procedure is the same as for Schedule B1 administration under the Insolvency Act, subject to specific modifications, and the inclusion of certain liquidation provisions of the Insolvency Act.

(3) Where the investment bank is a deposit-taking bank with eligible depositors (within the meaning of section 93(3) of the Act)—

(a) regulations 4 to 8 do not apply; and

(b) in addition to the insolvency procedures established under Parts 2 and 3 of the Act, the Bank of England , the FCA or, in certain cases, the PRA, may apply for an order to put the bank into—

(i) special administration (bank insolvency) as set out in Schedule 1 (as applied by regulation 9); or

(ii) special administration (bank administration) as set out in Schedule 2 (as applied by regulation 9).

(4) Where the investment bank is a deposit-taking bank but has no eligible depositors, the investment bank must not be put into special administration (bank insolvency); instead the investment bank may be put into either—

(a) special administration (bank administration), (in which case regulations 4 to 8 do not apply); or

(b) special administration.

Special administration order

4

(1) An investment bank special administration order (“special administration order”) is an order appointing a person as the investment bank administrator (“administrator”) of an investment bank.

(2) A person is eligible for appointment as administrator under a special administration order if qualified to act as an insolvency practitioner in relation to the investment bank.

(3) An appointment may be made only if the person has consented to act.

(4) For the purpose of these Regulations—

(a) an investment bank is “in special administration” while the appointment of the administrator has effect;

(b) an investment bank “enters special administration” when the appointment of the administrator takes effect;

(c) an investment bank ceases to be in special administration when the appointment of the administrator ceases to have effect in accordance with these Regulations; and

(d) an investment bank does not cease to be in special administration merely because an administrator vacates office (by reason of resignation, death or otherwise) or is removed from office.

Application

5

(1) An application to the court for a special administration order may be made to the court by—

(a) the investment bank;

(b) the directors of the investment bank;

(d) the designated officer for a magistrates' court in the exercise of the power conferred by section 87A of the Magistrates' Courts Act 1980 (fines imposed on companies);

(e) (subject to paragraph (7)), a contributory of the investment bank;

(f) a combination of persons listed in sub-paragraphs (a) to (e);

(g) the Secretary of State; ...

(h) the FCA; or

(i) if the investment bank is a PRA-authorised person, the PRA.

(2) Where an application is made by a person other than the FCA, the FCA is entitled to be heard at—

(a) the hearing of the application for special administration; and

(b) any other hearing of the court in relation to the investment bank under these Regulations.

(2A) Where an application is made by a person other than the PRA in relation to an investment bank which is a PRA-authorised person, the PRA is entitled to be heard at—

(a) the hearing of the application for special administration; and

(b) any other hearing of the court in relation to the investment bank under these Regulations.

(3) An application must nominate a person to be appointed as the administrator.

(4) As soon as is reasonably practicable after making the application, the applicant shall notify—

(a) a person who gave notice to the appropriate regulator in accordance with Condition 1 of regulation 8; and

(b) such other persons as may be prescribed.

(5) An application may not be withdrawn without the permission of the court.

(6) In sub-paragraph (1)(c), “creditor” includes a contingent creditor and a prospective creditor.

(7) A contributory (“C”) is not entitled to make an application for special administration unless either—

(a) the number of members is reduced below 2; or

(b) the shares in respect of which C is a contributory, or some of them, either were originally allotted to C, or have been held by C and registered in C's name, for at least 6 months during the 18 months before the commencement of the special administration, or have devolved on C through the death of a former holder.

Grounds for applying

6

(1) In this regulation—

(a) Ground A is that the investment bank is, or is likely to become, unable to pay its debts;

(b) Ground B is that it would be fair to put the investment bank into special administration; and

(2) The FCA or, where relevant, the PRA or the persons listed in regulation 5(1)(a) to (e) may apply for a special administration order only if they consider that Ground A or Ground B is met.

(3) The Secretary of State may apply for a special administration order only if it appears to the Secretary of State that Grounds B and C are met.

(4) The sources of information on the basis of which the Secretary of State may reach a decision on Ground C include those listed in section 124A(1) of the Insolvency Act (petition for winding up on grounds of public interest).

Powers of the court

7

(1) On an application for a special administration order the court may—

(a) grant the application in accordance with paragraph (2);

(b) dismiss the application;

(d) make an interim order;

(e) on the application of the FCA, treat the application as an administration application by the FCA under Schedule B1 in accordance with section 359(1) of FSMA ; or

(ea) on the application of the PRA, treat the application as an administration application by the PRA under Schedule B1 in accordance with section 359(1A) of FSMA;

(f) make any other order which the court thinks appropriate.

(2) The court may make a special administration order if it is satisfied that the company is an investment bank and—

(a) (on the application of persons listed in regulation 5(1)(a) to (e) , the FCA or PRA) that Ground A or Ground B in regulation 6 is satisfied;

(b) (on the application of the Secretary of State) if satisfied that Grounds B and C in regulation 6 are satisfied.

(3) Where the application for a special administration order is made by members of the investment bank as contributories on the basis that Ground B in regulation 6 is satisfied, the court, if it is of the opinion that—

(a) the applicants are entitled to relief either by a special administration order being made in respect of the investment bank or by some other means; and

(b) in the absence of any other remedy it would be fair that the special administration order be made in respect of the investment bank,

shall make a special administration order; but this does not apply if the court is also of the opinion that an alternative remedy is available to the applicants and that they are acting unreasonably in applying for a special administration order instead of pursuing that other remedy.

(4) A special administration order takes effect in accordance with its terms.

Notice to FSA of preliminary steps to other insolvency proceedings

8

(1) An application for an administration order in respect of an investment bank may not be made unless the conditions in paragraph (5) are satisfied.

(1A) An application for an order under regulation 8 of the Payment and Electronic Money Institution Insolvency Regulations 2021 in respect of an investment bank may not be made unless the conditions in paragraph (5) are satisfied.

(2) A petition for a winding up order in respect of an investment bank may not be made unless the conditions in paragraph (5) are satisfied.

(3) A resolution for the voluntary winding up of an investment bank may not be made unless the conditions in paragraph (5) are satisfied.

(4) An administrator of an investment bank may not be appointed unless the conditions in paragraph (5) are satisfied.

(5) The conditions are as follows—

(a) Condition 1 is that the appropriate regulator has been notified of the preliminary steps taken in respect of an insolvency procedure;

(b) Condition 2 is that a copy of the notice complying with Condition 1 has been filed (in Scotland, lodged) with the court (and made available for public inspection by the court);

(i) the period of 2 weeks, beginning with the day on which the notice is received by the appropriate regulator, has ended, or

(ii) the appropriate regulator has informed the person who gave the notice that it consents to the insolvency procedure to which the notice relates going ahead; and

(d) Condition 4 is that no application for a special administration order is pending.

(6) Where the appropriate regulator receives notice under Condition 1, it shall inform the person who gave the notice, within the period in Condition 3—

(a) whether or not it consents to the insolvency procedure to which the notice relates going ahead;

(b) whether or not it intends to apply for that (or an alternative) insolvency procedure itself; or

(7) Arranging for the giving of the notice in order to satisfy Condition 1 may be treated as a step with a view to minimising the potential loss to the investment bank's creditors for the purpose of section 214 of the Insolvency Act (as applied by regulation 15).

(8) In this regulation—

“appropriate regulator” means—in relation to an investment bank which is a PRA-authorised person, the FCA and the PRA (and any references in this regulation to the “appropriate regulator” are to be read as references to each of the FCA and PRA);in any other case, the FCA;

“investment bank” does not include an investment bank that is a deposit-taking bank; and

“preliminary steps taken in respect of an insolvency procedure” means that—an application for an administration order has been made; an application for an order under regulation 8 of the Payment and Electronic Money Institution Insolvency Regulations 2021 has been made; a petition for a winding up order has been presented;a resolution for voluntary winding up has been proposed by the investment bank; ora resolution for the appointment of an administrator has been proposed.

Application where investment bank is a deposit-taking bank

9

Subject to regulation 3(4), where the investment bank is a deposit-taking bank then Schedule 1 (Special administration (bank insolvency)) and Schedule 2 (Special administration (bank administration)) apply.

Special administration objectives

10

(1) The administrator has three special administration objectives (“the special administration objectives”)—

(a) Objective 1 is to ensure the return of client assets as soon as is reasonably practicable;

(b) Objective 2 is to ensure timely engagement with market infrastructure bodies and the Authorities pursuant to regulation 13; and

(i) rescue the investment bank as a going concern, or

(ii) wind it up in the best interests of the creditors.

(2) In relation to sub-paragraph (1)(a), the administrator is entitled to deal with and return client assets in whatever order the administrator thinks best achieves Objective 1.

(3) The order in which the special administration objectives are listed in this regulation is not significant: subject to regulation 16, the administrator must—

(a) commence work on each objective immediately after appointment, prioritising the order of work on each objective as the administrator thinks fit, in order to achieve the best result overall for clients and creditors; and

(b) set out, in the statement of proposals made under paragraph 49 of Schedule B1 (as applied by regulation 15), the order in which the administrator intends to pursue the objectives once the statement has been approved.

(4) The administrator must work to achieve each objective, in accordance with the priority afforded to the objective as provided in paragraph (3), as quickly and efficiently as is reasonably practicable.

(5) For the purposes of Objective 1, “return of client assets” or where the client assets are “returned” to the client means that the investment bank relinquishes full control over the assets for the benefit of the client to the extent of—

(a) the client's beneficial entitlement to those assets (where the assets in question have been held on trust by the investment bank); or

(b) the client's right to those assets as bailor or otherwise (where the investment bank has been holding those assets as bailee (in Scotland, as custodier of those assets) or by some other means to the order of the client);

(6) In relation to paragraph (5)—

(a) where client assets are returned to a person other than the client, for “client” substitute “ claimant ”; and

(b) where the claimant is the investment bank, for “relinquishes control over the assets for the benefit of the client” substitute “ takes full title to the assets for its benefit ”.

Objective 1 – distribution of client assets

11

(1) If the administrator thinks it necessary in order to expedite the return of client assets, the administrator may set a bar date for the submission of—

(a) claims to the beneficial ownership, or other form of ownership, of the client assets; or

(b) claims of persons in relation to a security interest asserted over, or other entitlement to, those assets.

(2) Claims under paragraph (1) include claims that are contingent or disputed.

(3) In setting a bar date, the administrator must allow a reasonable time after notice of the special administration has been published (in accordance with insolvency rules) for persons to be able to calculate and submit their claims.

(4) Subject to paragraph (4A), where the administrator sets a bar date—

(a) the administrator must return client assets in accordance with the prescribed procedure; but

(b) no client assets may be returned after the bar date has been set unless the court has given its approval on an application made by the administrator in accordance with the prescribed procedure.

(4A) The administrator may, at any time after setting a bar date, return client assets without the approval of the court if (and only if)—

(a) at that time the administrator has not made any application for court approval to return client assets;

(b) the administrator has identified the person who is beneficially entitled to the assets or has a right to the assets as bailor or otherwise; and

(c) the assets are not held by the investment bank in a client omnibus account (within the meaning given in regulation 12(9)).

(5) Where the administrator, after setting a bar date, has returned client assets with the approval of the court, if the administrator then receives a late claim of a type described in paragraph (1) in respect of assets that have been returned—

(a) there shall be no disruption to those client assets that have already been returned;

(b) the person to whom the assets have been returned acquires good title to them as against the late-claiming claimant,

and insolvency rules shall prescribe how the late claim is to be treated by the administrator.

(6) The restrictions in paragraph (5) shall not apply where—

(a) the client assets were returned to a person (“P”) by the administrator in bad faith in which P was complicit; or

(b) P is later found to have made a false claim to those assets.

(7) In this regulation, “bar date” means a date by which claims as described in paragraph (1) must be submitted.

(8) This regulation does not apply to client money.

Objective 1 - shortfall in client assets held in omnibus account

12

(1) This regulation applies if—

(a) the administrator becomes aware that there is a shortfall in the amount available for distribution of securities of a particular description held by the investment bank as client assets in a client omnibus account;

(b) the shortfall cannot be remedied following the resolution of on-going disputes; and

(2) The administrator, in making the distribution, shall ensure (subject to the treatment of late claims as described in regulation 11(5)) that the shortfall referred to in paragraph (1) be borne pro rata by all clients for whom the investment bank holds securities of that particular description in that same account in proportion to their beneficial interest in those securities.

(3) A person (including the investment bank) (“a security holder”) with a security interest over securities held in the client omnibus account on behalf of a particular client shall be entitled to participate in distributions and shortfall claims in respect of those securities in accordance with their entitlement as against that client (subject to the treatment of late claims as described in regulation 11(5)).

(4) Security holders shall not, at any time, be entitled to claim in aggregate in excess of the distribution which the client would have been entitled to if there had been no claim by that client.

(5) Any reduction of the client's beneficial interest as a result of the application of paragraph (2) shall limit correspondingly the rights of the security holder in respect of the distribution, (but this shall not affect the right of the security holder in respect of the client's shortfall claim as described in paragraph (7)).

(6) Where there is a dispute between persons as to their respective share of a distribution, the administrator may—

(a) make the distribution in accordance with an agreement drawn up between the parties in dispute; or

(b) lodge the securities that are the subject of the dispute with the court,

and if the administrator pursues either course of action, the administrator's obligations in respect of Objective 1 with regard to these securities shall be deemed to be discharged.

(7) The shortfall borne by a client under paragraph (2) is that client's shortfall claim against the investment bank (“shortfall claim”) and shall rank as an unsecured claim.

(8) The value of a client's shortfall claim shall be based on the market price for those securities to which the shortfall claim relates on the date the investment bank entered special administration or, if that is not a business day, on the last business day prior to the investment bank entering special administration.

(9) In this regulation—

“client omnibus account” means an account held by the investment bank, or another institution in the name of the investment bank, made up of multiple accounts of clients of the investment bank;

“distribution” means the return of client assets that are securities of a particular description;

“market price” means—the value of the securities on the day in question as determined by a reputable source used by the investment bank, immediately prior to the investment bank entering special administration, for valuing or reporting in respect of those securities; orif this is not practicable, the value of those securities on the day in question as determined by the administrator which reflects, in the administrator's opinion, a fair and reasonable price for those securities; and

“securities of a particular description” means securities issued by the same issuer which are of the same class of shares or stock; or in the case of securities other than shares or stock, which are of the same currency and denomination and treated as forming part of the same issue.

Objective 2 – engaging with market infrastructure bodies and the Authorities

13

(1) The administrator shall work with—

(a) a market infrastructure body to—

(i) facilitate the operation of that body's default rules or default arrangements,

(ii) resolve issues arising from the operation of those rules or arrangements, and

(iii) facilitate the transfer, settlement or prompt cancellation of non-settled market contracts or, as the case may be, of unsettled settlement instructions; and

(b) the Authorities, to facilitate any actions the Authorities propose to take to minimise the disruption of businesses and the markets as a consequence of a special administration order being made in respect of the investment bank.

(2) In paragraph (1), “work with” means to—

(a) comply, as soon as reasonably practicable, with a written request from such a body or from any of the Authorities for the provision of information or the production of documents (in hard copy or in electronic format) relating to the investment bank;

(b) allow that body or any of the Authorities, on reasonable request, access to the facilities, staff and premises of the investment bank for the purposes set out in paragraph (1),

but no action need be taken in accordance with this paragraph to the extent that, in the opinion of the administrator, such action would lead to a material reduction in the value of the property of the investment bank.

(3) In the event that the administrator receives a request under paragraph (2) from a market infrastructure body based overseas, no action needs to be taken in accordance with paragraph (2) if that request conflicts with a request from any of the Authorities.

(4) Where a market infrastructure body has made a request of the type referred to in paragraph (2), that body shall provide the administrator with such information as the administrator may reasonably require in pursuit of Objective 2.

(5) Under this regulation a person or body shall not be required to provide any information—

(a) which they would be entitled to refuse to provide on grounds of legal professional privilege in proceedings in the High Court or on grounds of confidentiality of communications in the Court of Session; or

(b) if such provision by the body holding it would be prohibited by or under any enactment.

(6) In this regulation—

“default arrangements” has the meaning set out in regulation 2(1) of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 ; and

“default rules” has the meaning set out in section 188 of the Companies Act 1989 .

Continuity of supply

14

(1) This regulation applies where, before the commencement of special administration, the investment bank had entered into arrangements with a supplier for the provision of a supply to the investment bank.

(2) After the commencement of special administration, the supplier—

(a) shall not terminate a supply unless—

(i) any charges in respect of the supply, being charges for a supply given after the commencement of special administration, remain unpaid for more than 28 days,

(ii) the administrator consents to the termination, or

(iii) the supplier has the permission of the court, which may be given if the supplier can show that the continued provision of the supply shall cause the supplier to suffer hardship; and

(b) shall not make it a condition of a supply, or do anything which has the effect of making it a condition of the giving of a supply, that any outstanding charges in respect of the supply, being charges for a supply given before the commencement of special administration, are paid.

(3) Where, before the commencement of special administration, a contractual right to terminate a supply has arisen but has not been exercised, then, for the purposes of this regulation, the commencement of special administration shall cause that right to lapse and the supply shall only be terminated if a ground in paragraph (2)(a) applies.

(4) Any provision in a contract between the investment bank and the supplier that purports to terminate the agreement if any action is taken to put the investment bank into special administration is void.

(5) Any expenses incurred by the investment bank on the provision of a supply after the commencement of special administration are to be treated as necessary disbursements in the course of the special administration.

(6) In this regulation—

“accredited network provider” means a person accredited with a relevant system who operates a secure data network through which the investment bank communicates with the relevant system;

“commencement of special administration” means the making of the special administration order;

“relevant system” has the meaning set out in regulation 2(1) of the Uncertificated Securities Regulations 2001 ;

“sponsoring system participant” has the meaning set out in regulation 3 of the Uncertificated Securities Regulations 2001 (in the definition of “system participant”);

“supplier” means the person controlling the provision of a supply to the investment bank under a licence, sub-licence or other arrangement, and includes a company that is a group undertaking (within the meaning of section 1161(5) of the Companies Act 2006) in respect of the investment bank, but does not include market infrastructure bodies; and

“supply” means a supply of— services relating to the safeguarding or administration of client assets; computer hardware or software or other hardware used by the investment bank in connection with the trading of securities or derivatives;financial data;infrastructure permitting electronic communication services;data processing;secure data networks provided by an accredited network provider; oraccess to a relevant system by a sponsoring system participant,but does not include any services provided for in the contract between the investment bank and the supplier beyond the provision of the supply.

General powers, duties and effect

15

(1) Without prejudice to any specific powers conferred on an administrator by these Regulations, an administrator may do anything necessary or expedient for the pursuit of the special administration objectives.

(2) The administrator is an officer of the court.

(3) The following provisions of this regulation provide for —

(a) general powers and duties of administrators (by application of provisions about administrators in Schedule B1 administration); and

(b) the general process and effect of special administration (by application of provisions about Schedule B1 administration).

(4) The provisions of Schedule B1 and other provisions of the Insolvency Act set out in the Tables apply in relation to special administration as in relation to other insolvency proceedings with the modifications set out—

(a) in paragraph (5) (in respect of the provisions listed in Table 1);

(b) in paragraph (6) (in respect of the provisions listed in Table 2),

and any other modification specified in the Tables.

(5) The modifications in respect of the provisions referred to in Table 1 are that—

(a) a reference to the administrator is a reference to the administrator appointed under a special administration order;

(b) a reference to administration is a reference to special administration;

(d) a reference to a company is a reference to an investment bank;

(e) a reference to the purpose of administration is a reference to the special administration objectives; and

(f) a reference to a provision of the Insolvency Act is a reference to that provision as applied by this regulation.

(6) The modifications in respect of the provisions referred to in Table 2 are that—

(a) a reference to the liquidator is a reference to the administrator appointed under a special administration order;

(b) a reference to winding up is a reference to special administration;

(c) a reference to winding up by the court is a reference to the imposition of special administration by order of the court;

(d) a reference to being wound up under Part 4 or 5 of the Insolvency Act is a reference to an investment bank being in special administration;

(e) a reference to the commencement of winding up is a reference to the commencement of special administration;

(f) a reference to going into liquidation is a reference to entering special administration;

(g) a reference to liquidation or to insolvent liquidation is a reference to special administration;

(h) a reference to a winding up order is a reference to a special administration order;

(i) except where otherwise specified in Table 2, a reference to a company is a reference to an investment bank; and

(j) a reference to a provision of the Insolvency Act is a reference to that provision as applied by this regulation.

(7) In the Tables “Schedule 9 to the 2015 Act” means Schedule 9 to the Small Business, Enterprise and Employment Act 2015 (further amendments relating to the abolition of requirements to hold meetings: company insolvency).

Schedule B1	Subject	Modification or comment
Para 40(1)(a)	Dismissal of pending winding up petition
Para 42	Moratorium on insolvency proceedings	Sub-paragraphs (4)(a) and (4)(aa) are not applied.
Para 43	Moratorium on other legal processes
Para 44(1) and (5)	Interim moratorium
Para 45	Publicity
Para 46	Announcement of administrator's appointment	(a) In sub-paragraph (3)(a), in addition to obtaining the list of creditors, the administrator shall also obtain as complete a list as possible of the clients of the investment bank.(b) In sub-paragraph (3)(b), the administrator shall send a notice of their appointment to each client of whose claim and address the administrator is aware.(c) Where the special administration application has not been made by the FCA, notice of the administrator's appointment shall also be sent under sub-paragraph (5) to the FCA. (ca) Where the special administration application relates to a PRA-authorised person and has not been made by the PRA, notice of the administrator’s appointment shall also be sent under sub-paragraph (5) to the PRA. (d) Sub-paragraphs (6)(b) and (c) are not applied.
Para 47	Statement of company's affairs	In sub-paragraph (2), the statement must also include particulars (to the extent prescribed) of the client assets held by the investment bank.
Para 48	Statement of company's affairs
Para 49	Statement of proposals	Paragraphs 49(1) to (3), 51, 53, 54 and 55 do not apply where the FCA or, where relevant, the PRA gives a direction under regulation 16 and the direction has not been withdrawn: see regulations 16 - 19.
Para 49		(a) Sub-paragraph (2)(b) is not applied. (aa) Ignore the amendment made by paragraph 10(2) of Schedule 9 to the 2015 Act. (b) Under sub-paragraph (4), the administrator shall also send a copy of the statement of proposals to—(i) every client of whose claim the administrator is aware and has a means of contacting; and(ii) the FCA and, where the investment bank concerned is a PRA-authorised person, the PRA.(c) The administrator shall also give notice in the prescribed manner that the statement of proposals is to be provided free of charge to a market infrastructure body who applies in writing to a specified address.
Para 50	Creditors' meeting	(za) Ignore the repeal of Para 50 by paragraph 10(3) of Schedule 9 to the 2015 Act. (a) In sub-paragraph (1), the administrator shall also summon the clients referred to in paragraph 49(4) to the meeting of creditors and such clients shall be given the prescribed period of notice under sub-paragraph (1)(b).(b) The FCA and, where the investment bank concerned is a PRA-authorised person, the PRA may appoint a person to attend a meeting of creditors and make representations as to any matter for decision.
Para 51	Requirement for initial creditors' meeting	(za) Ignore the amendments made by paragraph 10(4) and (5) of Schedule 9 to the 2015 Act. (a) Each copy of an administrator's proposals sent to a client under paragraph 49 shall be accompanied by an invitation to the initial creditors' meeting.(b) The administrator's proposals sent to the FCA and, where the investment bank concerned is a PRA-authorised person, the PRA must also be accompanied by an invitation to the initial creditors' meeting.
Para 53	Business and result of initial creditors' meeting	(za) Ignore the amendments made by paragraph 10(8) to (10) of Schedule 9 to the 2015 Act. (a) Insolvency rules shall prescribe how clients shall vote at meetings of creditors.(b) Under sub-paragraph (2), if the FCA has not appointed a person to attend the meeting, the administrator must also report any decision taken to the FCA. (c) If the investment bank concerned is a PRA-authorised person, and if the PRA has not appointed a person to attend the meeting under sub-paragraph (2), the administrator must also report any decision taken to the PRA.
Para 54	Revision of administrator's proposals	(za) Ignore the amendments made by paragraph 10(11) to (16) of Schedule 9 to the 2015 Act. (a) If the revision proposed by the administrator affects both creditors and clients, then every reference in paragraph 54 to creditors includes clients.(b) If the administrator thinks that the revision proposed only affects either creditors or clients, then this paragraph only applies to the affected party, however the party not affected must be informed of the revision in a manner prescribed in insolvency rules.(c) The FCA and, where the investment bank concerned is a PRA-authorised person, the PRA must be invited to the creditors' meeting mentioned in sub-paragraph (2)(a).(d) The statement of the proposed revision mentioned in sub-paragraph (2)(b) must also be sent to the FCA and, where the investment bank concerned is a PRA-authorised person, the PRA.
Para 55	Failure to obtain approval of administrator's proposals	(za) Ignore the amendment made by paragraph 10(17) of Schedule 9 tothe2015Act. (a) In making an order under sub-paragraph (2) the court must have regard to the special administration objectives.(b) Sub-paragraph (2)(d) is not applied.
Para 56	Further creditors' meetings	(a) Ignore the amendments made by paragraph 10(18) to (20) of Schedule 9 to the 2015 Act. (b) The FCA and, where the investment bank concerned is a PRA-authorised person, the PRA must be invited to any meeting summoned under this paragraph.
Para 57	Creditors' committee	(za) Ignore the amendment made by paragraph 10(21) of Schedule 9 to the 2015 Act. (a) A creditors' committee can only be established by a creditors' meeting to which creditors and clients have both been given notice.(b) The FCA and, where the investment bank concerned is a PRA-authorised person, the PRA may appoint a person to attend a meeting of the creditors' committee and make representations as to any matter for decision.(c) Insolvency rules shall ensure that, where a meeting of creditors resolves to establish a creditors' committee, the makeup of the creditors' committee is a reflection of all parties with an interest in the achievement of the special administration objectives.
Para 58	Correspondence instead of creditors' meeting	Para 58 applies as it applied before its repeal by paragraph 10(22) of Schedule 9 to the 2015 Act.
Para 59	Functions of an administrator
Para 60 (and Schedule 1 to the Insolvency Act)	General powers	Certain powers in Schedule 4 of the Insolvency Act are also applied (see Table 2).
Para 61	Directors
Para 62	Power to call meetings	(a) Ignore the amendment made by paragraph 10(23) of Schedule 9 to the 2015 Act. (b) The administrator may also call a meeting of clients or contributories.
Para 63	Application to court for directions
Para 64	Management powers
Para 65	Distribution to creditors	Sub-paragraph (3) is not applied in England and Wales.
Para 66	Payments
Para 67	Property
Para 68	Management	In this paragraph, references to proposals approved under paragraphs 53 or 54 include—(a) proposals agreed with the FCA or, where relevant, the PRA under regulations 17 or 18; or(b) proposals in respect of which the court has made an order dispensing with the need for agreement in accordance with those regulations,without need for approval.
Para 69	Agency
Para 70	Floating charge
Para 71	Fixed charge
Para 72	Hire purchase property
Para 73	Protection for secured or preferential creditors	Sub-paragraph (2)(d) is not applied.
Para 74	Challenge to administrator's conduct	(za) Ignore the amendment made by paragraph 10(24) of Schedule 9 to the 2015 Act. (a) The FCA and, where the investment bank concerned is a PRA-authorised person, the PRA may also make an application under this paragraph on the grounds that—(i) the administrator is acting or has acted so as unfairly to harm the interests of some or all of the members, creditors or clients; or(ii) the administrator is proposing to act in a way which would unfairly harm the interests of some or all of the members, creditors or clients.(b) A client may also make an application under sub-paragraph (1) or (2).(c) Where the FCA or the PRA has given a direction under regulation 16 which has not been withdrawn, an order may not be made under this paragraph if it would impede or prevent compliance with the direction.(d) Any of the following persons may make an application under this paragraph on the grounds that the administrator is not taking any action in response to a request from that person under regulation 13(2) and that the person is of the opinion that the action requested would not lead to a material reduction in the value of the property of the investment bank—(i) the Bank of England,(ii) the Treasury,(iii) the FCA or the PRA, or(iv) a market infrastructure body.(e) FSCS may make an application under this paragraph on the grounds that the administrator is not performing the duties set out in regulation 10A as quickly or as efficiently as is reasonably practicable.(f) Any of the following persons may make an application under this paragraph on the grounds that the administrator has made, or proposes to make, a partial property transfer (within the meaning given in regulation 10B(13)) (“relevant transfer”) in contravention of regulation 10E, 10F or 10G—(i) the Bank of England;(ii) the FCA;(iii) where the investment bank is a PRA-authorised person, the PRA.(g) Any person, other than the investment bank, who is party to an arrangement of a kind referred to in regulation 10E(1) or 10F(1) may make an application under this paragraph on the grounds that the administrator has made, or proposes to make, a relevant transfer in contravention of that regulation.(h) A recognised investment exchange, a recognised clearing house , a recognised CSD or any person, other than the investment bank, who is party to a market contract may make an application under this paragraph on the grounds that the administrator has made, or proposes to make, a relevant transfer in contravention of regulation 10G.(i) Where an application is made under this paragraph on the grounds that the administrator has made a relevant transfer in contravention of regulation 10G—(i) sub-paragraphs (3)(a), (d) and (e) and (4) are not applied;(ii) the court may make an order declaring that the transfer was made in contravention of the regulation concerned.(j) Where an application is made under this paragraph on the grounds that the administrator has made a relevant transfer in contravention of regulation 10E or 10F, the court may make such order as it thinks fit for restoring the position to what it would have been if the transfer had been made in contravention of the regulation concerned.(k) The FCA and, where the investment bank is a PRA-authorised person, the PRA may make an application under this paragraph on the grounds that the administrator has failed to carry out a client money reconciliation in accordance with regulation 10H(2) or to transfer an amount in accordance with regulation 10H(3) or (4).
Para 75	Misfeasance	A client and the FCA and, where the investment bank concerned is a PRA-authorised person, the PRA shall be included in the list of persons who may make an application under sub-paragraph (2).
Para 79	Court ending administration on application of administrator	Sub-paragraph (2) is not applied.See regulation 20
Para 81	Court ending administration on application of a creditor	This paragraph is not applied where the administrator was appointed by the court on the application of the FCA or the PRA or the Secretary of State.
Para 84	Termination: no more assets for distribution	(a) The administrator shall only send a notice under sub-paragraph (1) if the investment bank no longer holds client assets. (aa) Ignore the amendment made by paragraph 10(33) of Schedule 9 to the 2015 Act. (b) In sub-paragraph (5), a copy of the notice should also be sent to every client of the investment bank of whom the administrator is aware and the FCA and, where the investment bank concerned is a PRA-authorised person, the PRA.See regulation 21
Para 85	Discharge of administration order
Para 86	Notice to Companies Registrar at the end of administration
Para 87	Resignation	(a) Where the administrator was appointed by the court on the application of the FCA or the PRA or the Secretary of State, the notice of the resignation given in accordance with sub-paragraph (2)(a) must be also given to the applicant.(b) Sub-paragraphs (2)(b) to (d) are not applied.
Para 88	Removal
Para 89	Disqualification	(a) Where the administrator was appointed by the court on the application of the FCA or the PRA or the Secretary of State, the notice given in accordance with sub-paragraph (2)(a) must be also given to the applicant.(b) Sub-paragraphs (2)(b) to (d) are not applied.
Para 90	Replacement	The reference to paragraphs 91 to 95 is to paragraph 91.
Para 91	Replacement	The FCA and, where the investment bank concerned is a PRA-authorised person, the PRA is added to the list of persons who may make an application to appoint an administrator but to whom the restrictions in sub-paragraph (2) apply.
Para 98	Discharge	(a) Ignore the amendment made by paragraph 10(38) of Schedule 9 to the 2015 Act. (b) Sub-paragraphs (2)(b) and (ba) and (3) are not applied.
Para 99	Vacation of office: charges and liabilities	(a) In sub-paragraph (3), the former administrator's remuneration and expenses incurred in respect of the pursuit of Objective 1 will be charged on and payable out of the client assets.(b) In sub-paragraph (4)(b), the reference to any charge arising under sub-paragraph (3) does not include a charge on client assets.
Para 100	Joint administrators
Para 101	Joint administrators	In sub-paragraph (3), the reference to paragraphs 87 to 99 is to paragraphs 87 to 91 and 98 to 99.
Para 102	Joint administrators
Para 103	Joint administrators	(a) In sub-paragraph (2), the reference to paragraph 12(1)(a) to (e) is to regulation 5(1).(b) Sub-paragraphs (3) to (5) are not applied.
Para 104	Presumption of validity
Para 105	Majority decision of directors
Para 106 (and section 430 of and Schedule 10 to the Insolvency Act)	Fines	(a) Ignore the amendments made by paragraph 11 of Schedule 9 to the 2015 Act. (b) Sub-paragraphs (2)(a), (2)(b) and (2)(l) to (2)(n) are not applied.
Para 107	Extension of time limit	In considering an application under paragraph 107, the court must have regard to the special administration objectives.
Para 108	Extension of time limit	(za) Ignore the amendments of Para 108 made by paragraph 10(39), (40), (42) and (43) of Schedule 9 to the 2015 Act. (a) To obtain consent under this paragraph, the administrator must also obtain consent of those clients whose claims amount to more than 50% of the total amount of claims for client assets, disregarding the claims of those clients who were sent a copy of the statement of proposals but who did not respond to an invitation to give or withhold consent.(b) Sub-paragraph (3) is not applied.
Para 109	Extension of time limit
Para 111	Interpretation	(a) Ignore the amendment made by paragraph 10(44) of Schedule 9 to the 2015 Act. (b) The definition of “administrator” and sub-paragraph (1A)(b) and (c) and sub-paragraph (1B) are not applied.
Paras 112- 116	Scotland
Insolvency Act	Subject	Modification or comment
---	---	---
Sections 74 and 76- 83	Contributories
Section 167 (and Schedule 4)	Powers of the liquidator	(a) In subsection (2) the reference to “liquidation committee” is to “creditors' committee”.(b) A client may also apply to the court under subsection (3).(c) In Schedule 4, paragraphs 4 to 10 and 12 shall not apply, and in paragraph 13, the reference to “winding up the company's affairs and distributing its assets” is to “pursuing the special administration objectives”.
Section 168(4)	Discretion in managing and distributing assets
Section 176	Preferential charges on goods distrained
Section 176ZB	Application of proceeds of office-holder claims
Section 176A	Unsecured creditors
Section 178	Disclaimer of onerous property
Section 179	Disclaimer of leaseholds
Section 180	Land subject to rent charge
Section 181	Disclaimer: powers of court
Section 182	Powers of court (leaseholds)
Section 183	Effect of execution or attachment (England and Wales)	Subsection (2)(a) is not applied.
Section 184	Duties of officers	In subsection (1), ignore the reference to a resolution having been passed for voluntary winding up.
Section 185	Effect of diligence (Scotland)	In the application of section 37(1) of the Bankruptcy (Scotland) Act 1985 (c. 66), the reference to an order of the court awarding winding up is a reference to the making of the special administration order.
Section 186	Rescission of contracts by the court
Section 187	Power to make over assets to employees
Section 193	Unclaimed dividends (Scotland)
Section 194	Resolutions passed at adjourned meetings	Section 194 applies as it applied before its repeal by paragraph 46 of Schedule 9 to the 2015 Act.
Section 196	Judicial notice of court documents
Section 197	Commission for receiving evidence
Section 198	Court order for examination of persons in Scotland
Section 199	Costs of application for leave to proceed (Scottish companies)
Section 206	Fraud in anticipation of winding up	In subsection (1), omit the reference to passing a resolution for voluntary winding up.
Section 207	Transactions in fraud of creditors	In subsection (1), omit the reference to passing a resolution for voluntary winding up.
Section 208	Misconduct in course of winding up	(a) In subsection (1), omit “whether by the court or voluntarily”. (b) Ignore the amendment made by paragraph 52 of Schedule 9 to the 2015 Act.
Section 209	Falsification of company's books
Section 210	Material omissions from statement	(a) In subsection (1) omit “whether by the court or voluntarily”.(b) In subsection (2), omit “or has passed a resolution for voluntary winding up”.
Section 211	False representation to creditors	In subsection (1)—(a) omit “whether by the court or voluntarily”; and(b) a reference to the company's creditors includes a reference to clients of the investment bank.
Section 212	Summary remedy
Section 213	Fraudulent trading
Section 214	Wrongful trading	Subsection (6) is not applied.
Section 215	Proceedings under section 213 or 214
Section 216	Restriction on re-use of company names	(a) The reference to “liquidating company” shall be to “company in special administration”.(b) Subsections (7) and (8) are not applied.
Section 217	Personal liability for debts following contravention of section 216	Subsection (6) is not applied.
Section 218	Prosecution of delinquent officers and members of company	(a) In subsection (3), ignore the first reference to the official receiver and treat the second reference as a reference to the Secretary of State.(b) In subsection (5) treat the reference to subsection (4) as a reference to subsection (3).(c) Subsections (4) and (6) are not applied.
Section 219	Obligations arising under section 218	Treat the reference to section 218(4) in subsection (1) as a reference to section 218(3).
Section 233	Utilities
Section 233A	Further protection of utilities
Section 234	Getting in the company's property	(a) Subsection (1) is not applied.(b) “Office holder” means the administrator.
Section 235	Co-operation with the administrator	(a) Subsections (1) and (4)(b) to (d) are not applied.(b) “Office holder” means the administrator.
Section 236	Inquiry into company's dealings	(a) Subsection (1) is not applied.(b) “Office holder” means the administrator.
Section 237	Enforcement by the court
Section 238	Transactions at an undervalue (England and Wales)
Section 239	Preferences (England and Wales)
Section 240	Sections 238 and 239: relevant time	(a) In subsection (2)(a), the reference to being unable to pay its debts has the meaning given by regulation 2.(b) Sub-paragraphs (1)(d) and (3)(a) to (d) are not applied.
Section 241	Orders under sections 238 and 239	Subsections (3A) and (3B) are not applied.
Section 242	Gratuitous alienations (Scotland)
Section 243	Unfair preferences (Scotland)
Section 244	Extortionate credit transactions
Section 245	Avoidance of floating charges	(a) In subsection (3)(c), the reference to—(i) administration application is to be read as an application for special administration, and(ii) administration order is to a special administration order.(b) In subsection (4)(a) and (b),the reference to being unable to pay its debts has the meaning given by regulation 2.(c) Subsections (3)(d) and (5)(a) to (c) are not applied.
Section 246	Unenforceability of liens	(a) Subsection (1) is not applied.(b) “Office holder” means the administrator.
Section 246ZD	Power to assign certain causes of action	(a) Subsection (1) is not applied.(b) “Office holder” means the administrator.
Section 246A	Remote attendance at meetings	(a) Ignore the amendments made by paragraph 54 of Schedule 9 to the 2015 Act. (b) Treat every reference to creditors as including clients.
Section 246B	Use of websites
Section 386 (and Schedule 6 as read with Schedule 4 to the Pensions Schemes Act 1993)	Preferential debts
Section 387, subsections (1) and (3A).	“The relevant date”	Treat the reference to “administration” as a reference to special administration.
Section 389	Offence of acting without being qualified	(a) Treat the reference to acting as an insolvency practitioner as a reference to acting as the administrator.(b) Subsection (2) is not applied.
Sections 390 to 391T	Authorisation and regulation of insolvency practitioners	(a) In section 390 treat references to acting as an insolvency practitioner as references to acting as the administrator.(b) Read subsection (2) of that section (as so modified) as if after “authorised” there were inserted “to act as an insolvency practitioner”.(c) An order under section 391 has effect in relation to any provision applied for the purposes of special administration.(d) In sections 390A, 390B(1) and (3), 391O(1)(b) and 391R(3)(b), in a reference to authorisation or permission to act as an insolvency practitioner in relation to (or only in relation to) companies the reference to companies has effect without the modification in paragraph (6)(i) of this regulation.(e) In sections 391Q(2)(b) and 391S(3)(e) the reference to a company has effect without the modification in paragraph (6)(i) of this regulation.
Section 411	Insolvency rules	The reference in subsections (1A), (2C) and (3) to Part 2 of the Banking Act 2009 includes a reference to these Regulations.
Section 414	Fees orders	(a) The reference in subsection (1) to “Parts I to VII of this Act” includes these Regulations.(b) Ignore the reference to the official receiver.
Section 423	Transactions defrauding creditors	Subsection (4) is not applied.
Sections 424 and 425	Transactions defrauding creditors
Section 426	Co-operation between courts	References to “insolvency law” includes provisions made by or under these Regulations.
Sections 430 and 431 (and Schedule 10)	Offences
Section 432	Offences by bodies corporate	In subsection (4) ignore all the provisions of the Insolvency Act listed there except for sections 206 to 211.
Section 433	Statements: admissibility	In subsection (1)(a), a statement of affairs prepared “for the purposes of any provision of this Act” includes any statement made for the purposes of a provision of that Act as applied by these Regulations.
Sections 434B – 434D	Supplementary provisions	Ignore the amendments of section 434B made by paragraph 57 of Schedule 9 to the 2015 Act.

FSA direction

16

(1) The appropriate regulator may direct the administrator to prioritise one or more special administration objectives.

(2) A direction under paragraph (1) may only be given if that regulator is satisfied that the giving of the direction is necessary, having regard to the public interest in—

(a) the stability of the financial systems of the United Kingdom; or

(b) the maintenance of public confidence in the stability of the financial markets of the United Kingdom.

(3) A direction under paragraph (1) must be given in writing and should set out reasons for giving the direction.

(4) Before giving such a direction the appropriate regulator must consult the Treasury and the Bank of England.

(4A) Where the investment bank concerned is a PRA-authorised person, the appropriate regulator must also consult the other regulator before giving such a direction.

(5) If the appropriate regulator thinks that the circumstances that gave rise to the need for it to give a direction have passed, it shall withdraw its direction.

(6) Paragraphs 49(1) to (3), 51, 53, 54 and 55 of Schedule B1 (as applied by regulation 15) shall not apply where the appropriate regulator has given a direction under this regulation and the direction has not been withdrawn.

(7) In this regulation, “appropriate regulator” means—

(a) in relation to an investment bank which is a PRA-authorised person, the FCA or the PRA;

(b) in any other case, the FCA.

Administrator's proposals in the event of Appropriate regulator direction

17

(1) Where the FCA or the PRA has given a direction under regulation 16, the administrator shall make a statement setting out proposals for achieving the special administration objectives in accordance with the ... direction.

(2) The statement under paragraph (1) must deal with such matters as may be prescribed and may include—

(a) a proposal for a voluntary arrangement under Part 1 of the Insolvency Act (although this regulation is without prejudice to section 4(3) of that Act); or

(b) a proposal for a compromise or arrangement to be sanctioned under Part 26 of the Companies Act 2006 (arrangements and reconstructions).

(3) The statement shall be agreed with the regulator which has given the direction.

(4) If the administrator is unable to agree the statement with the regulator which has given the direction, the administrator may apply to the court for directions under paragraph 63 of Schedule B1 (as applied by regulation 15).

(5) Following an application under sub-paragraph (4), the court may—

(a) make an order dispensing with the need for agreement;

(b) adjourn the hearing conditionally or unconditionally; or

(6) The court may make an order under sub-paragraph (5)(a) only if it considers that the proposals set out in the statement are reasonably likely to ensure that the administrator acts in accordance with the ... direction.

(7) Where the court makes an order, the administrator shall as soon as possible send a copy of the order to the registrar of companies.

(8) After—

(a) the statement has been agreed with the regulator which has given the direction; or

(b) the court has made an order dispensing with the need for agreement,

paragraph 49(4) to (8) of Schedule B1 (as applied by regulation 15) shall then apply to the statement, but the administrator need not send the FSA a copy of the statement of proposals.

(9) Where, before the FCA or the PRA gives its direction under regulation 16, a meeting of creditors has approved the statement of proposals in accordance with paragraph 53 of Schedule B1 (as applied by regulation 15), that statement of proposals shall be ignored for the purposes of regulation 16, this regulation and paragraph 68 of Schedule B1 (as applied by regulation 15).

Revision of proposals in the event of FSA direction

18

(1) This regulation applies where—

(a) the administrator's statement of proposals under regulation 17 has been agreed with the regulator which gave the direction under regulation 16 (or the court has made an order dispensing with the need for agreement);

(b) the administrator proposes a revision to the proposals;

(d) that regulator has not withdrawn its direction given under regulation 16.

(2) The administrator shall agree the revised statement with that regulator.

(3) Regulation 17(4) to (7) shall apply where the administrator is unable to agree the revised statement with that regulator.

(4) After the revised statement has been agreed with that regulator (or the court has made an order dispensing with the need for agreement) the administrator shall send the revised statement to—

(a) every creditor of the investment bank of whose claim and address the administrator is aware;

(b) every client of the investment bank of whose claim the administrator is aware and has a means of contacting;

(5) The administrator shall be taken to have complied with paragraph (4)(c) if the administrator publishes a notice undertaking to provide a copy of the revised statement free of charge to any member of the investment bank who applies in writing to a specified address.

(6) A notice under paragraph (5) shall be published in the prescribed manner and within the prescribed period.

(7) The administrator shall send a copy of the revised statement to—

(a) the court; and

(b) the registrar of companies.

FSA direction withdrawn

19

(1) This regulation applies if, after the administrator's statement of proposals has been agreed with the regulator which gave the direction under regulation 16 or the court has made an order dispensing with the need for agreement under regulation 17, the ... direction is then withdrawn.

(2) If the administrator proposes a revision to the statement of proposals and the administrator thinks that the proposed revision is substantial, then paragraphs 54 and 55 of Schedule B1 (as applied by regulation 15) apply.

Successful rescue

20

(1) This regulation applies if the administrator has pursued the first part of Objective 3 (as set out in regulation 10(1)(c)(i)) and thinks that it has been sufficiently achieved.

(2) The administrator shall make an application under paragraph 79 of Schedule B1 (as applied by regulation 15).

(3) An administrator who makes an application in accordance with paragraph (2) must send a copy to the FCA and, where the investment bank concerned is a PRA-authorised person, the PRA.

Dissolution or voluntary arrangement

21

(1) This section applies if—

(a) the administrator believes that Objectives 1 and 2 have been sufficiently achieved, and

(b) the administrator pursues the second part of Objective 3 (as set out in regulation 10(1)(c)(ii)).

(2) The administrator may—

(a) give a notice which is to be treated as a notice under paragraph 84 of Schedule B1 (as applied by regulation 15); or

(b) make a proposal in accordance with Part 1 of the Insolvency Act (company voluntary arrangement).

(3) Part 1 of the Insolvency Act shall apply to a proposal made by an administrator with the following modifications.

(4) In section 3 (summoning of meetings), subsection (2) (and not (1)) applies.

(5) The action that may be taken by a court under section 5(3) (effect of approval) includes suspension of the special administration order.

(5A) Sections 2 to 6 and 7 ... have effect without the amendments of those provisions made by paragraphs 2 to 8 of Schedule 9 to the Small Business, Enterprise and Employment Act 2015 (further amendments relating to the abolition of requirements to hold meetings: company voluntary arrangements).

(6) On the termination of a company voluntary arrangement the administrator may apply to the court to lift the suspension of the special administration order.

(7) For the purposes of this regulation, references in Part 1 of the Insolvency Act to “administration” include special administration.

Special administration order as an alternative order

22

(1) On a petition for a winding up order , an application for an administration order or an order under regulation 8 of the Payment and Electronic Money Institution Insolvency Regulations 2021 in respect of an investment bank the court may instead make a special administration order.

(2) Paragraph (1) is subject to regulation 3.

(3) A special administration order may be made under paragraph (1) only on the application of the FCA or, where the investment bank concerned is a PRA-authorised person, the PRA.

Disqualification of directors

23

(1) In the Disqualification Act—

(a) a reference to liquidation includes a reference to special administration;

(b) a reference to the winding up of a company includes a reference to an investment bank being subject to a special administration order;

(d) a reference to a liquidator includes a reference to an administrator.

(2) Section 6(2) is not applied.

(3) For the purposes of the application of section 7A of the Disqualification Act (office-holder’s report on conduct of directors) to an investment bank which is in special administration—

(a) the “office-holder” is the administrator;

(b) the “insolvency date” means the date on which the special administration order is made; and

(4) In section 21 of the Disqualification Act (interaction with the Insolvency Act), the references to the provisions of the Insolvency Act include those provisions as applied by these Regulations.

Limited liability partnerships

24

Where an investment bank is formed as a limited liability partnership, Schedule 3 (application of these Regulations to limited liability partnerships) has effect.

Partnerships

25

(1) Where an investment bank is formed as a partnership, Schedule 4 (application of these Regulations to partnerships) has effect.

(2) This regulation does not apply to investment banks formed as a partnership constituted under the law of Scotland.

Northern Irish equivalent enactments

26

(1) In the application of these Regulations to Northern Ireland, a reference to an enactment is to be treated as a reference to the equivalent enactment having effect in relation to Northern Ireland (“equivalent Northern Ireland enactment”).

(2) The table in Schedule 5 shows the enactments referred to in these Regulations together with the equivalent Northern Ireland enactments.

(3) Where these Regulations provide for an enactment to apply with an amendment or modification, the equivalent Northern Ireland enactment is to apply with an equivalent amendment or modification (with any necessary modification being made and subject to what is said in relation to that enactment in the third column of the table in Schedule 5).

Modifications and consequential amendments to legislation

27

Schedule 6 (modifications and consequential amendments) applies as follows—

(a) Parts 1 and 2 apply in relation to a case where an investment bank which is a company is in special administration; and

(b) Part 3 makes amendments to legislation in consequence of these Regulations.

SCHEDULE 1 — Special administration (bank insolvency)

1

This Schedule provides for a procedure known as special administration (bank insolvency) to be used as an alternative to bank insolvency (as set out in Part 2 of the Act) where the investment bank is a deposit-taking bank.

2

A special administration (bank insolvency) order is an order appointing a person as the administrator for the purpose of this Schedule.

3

A special administration (bank insolvency) order is to be treated as a special administration order and an administrator appointed under a special administration (bank insolvency) order is to be treated as if they were appointed under a special administration order for all purposes, save that—

(a) the modifications set out in this Schedule shall apply; and

(b) in regulation 22, the Bank of England may also make an application under paragraph (1) and the FCA or the PRA can only make an application with the consent of the Bank of England.

4

(1) An administrator appointed under a special administration (bank insolvency) order has the following objectives—

(a) Objective A is to work with the FSCS so as to ensure that as soon as is reasonably practicable each eligible depositor—

(i) has the relevant account transferred to another financial institution, or

(ii) receives payments from (or on behalf of) the FSCS; and

(b) the special administration objectives as set out in regulation 10.

(2) Objective A takes precedence over the special administration objectives until a full payment resolution is passed (but the administrator is to begin working towards the special administration objectives immediately on appointment, in accordance with regulation 10).

(3) The administrator must not comply with a direction of the FCA or the PRA given under regulation 16 in a way which prejudices the achievement of Objective A.

5

(1) The provisions of the Insolvency Act as applied by regulation 15 shall apply to special administration (bank insolvency) subject to the following additional modifications to Schedule B1—

(a) the FSCS shall be appointed as a member of the creditors' committee referred to in paragraph 57 unless it informs the administrator that it does not wish to be appointed;

(b) the Objective A committee may also make an application under paragraph 74(2));

(d) in the application of paragraph 87, before the Objective A committee has passed a full payment resolution, the administrator may only resign with the consent of the Bank of England and the notice of resignation shall be copied to the Bank of England;

(e) before the Objective A committee has passed a full payment resolution, only the Bank of England or the Objective A committee may make an application to remove the administrator from office under paragraph 88;

(f) the notice given under paragraph 89(2)(a) must also be copied to the Bank of England;

(g) before the passing of the full payment resolution, paragraph 91 has effect as if it provided for the Bank of England to appoint a replacement administrator as soon as is reasonably practicable;

(h) the Bank of England may also make an application under paragraph 103(2); and

(i) a reference to a provisional liquidator is to a person appointed under section 135 of the Insolvency Act as applied by paragraph 8.

(2) If any application is made to the court under these Regulations (including under the Insolvency Act as applied by these Regulations) before the Objective A committee has passed a full payment resolution, the court, in giving directions, must have regard to the achievement of Objective A.

6

(1) The provisions of Part 2 of the Act (bank insolvency) set out in the Table apply in relation to special administration (bank insolvency) with the following modifications—

(a) the modifications set out in sub-paragraph (2); and

(b) any other modification specified in the Table.

(2) The modifications are that a reference to—

(a) a bank is to a deposit-taking bank;

(b) bank insolvency is to special administration (bank insolvency);

(d) the bank liquidator is to the administrator;

(e) Objective 1 in section 99 of the Act or Objective 1 is to Objective A;

(f) the liquidation committee is to the Objective A committee;

(g) rules made under section 411 of the Insolvency Act 1986 is to insolvency rules; and

(h) section 168(5) of the Insolvency Act is to paragraph 74(2) of Schedule B1 (as applied by regulation 15).

Provision of Part 2 of the Act	Subject	Modification or comment
Section 94(2) to (4)	The order
Section 95	Application	Subsection (1)(c) is not applied.
Section 96	Grounds for applying
Section 97	Grounds for making	In making a special administration (bank insolvency) order, the court must also be satisfied that the company is an investment bank.
Section 98	Commencement
Section 100	Liquidation committee	(a) This committee is established only for the purpose of ensuring that the administrator works towards the achievement of Objective A.(b) Subsections (6) and (7) are not applied.
Section 101	Liquidation committee: supplemental	(a) In subsection (2) ignore the words from “While the liquidation” to “nominated replacements)”.(b) The references in subsection (5)(b) to sections 168(3) or 169(2) of the Insolvency Act are to paragraph 63 of Schedule B1 (as applied by regulation 15).(c) On the passing of the full payment resolution, the Objective A committee ceases to exist but the FSCS shall have the right to be a member of the creditors' committee.(d) Subsections (7) to (9) are not applied
Section 102	Objective 1: (a) or (b)	(a) The references to “Objective 1 (a)” and to “Objective 1(b)” are to Objective A(a) and Objective A(b) respectively.(b) The reference to Objective 2 is a reference to the special administration objectives.
Section 123	Role of the FSCS	Ignore subsection (3).
Section 124	Transfer of accounts

7

Section 120 of the Act is applied with the following modifications—

(a) in subsection (7)(b), the reference to a bank insolvency order includes a special administration order;

(b) in subsection (8), the reference to bank insolvency order includes a special administration order or a special administration (bank insolvency) order;

(c) in subsection (10)(b), the reference to bank insolvency order includes a special administration order or a special administration (bank insolvency) order; and

(d) in subsection (10)(c), the reference to bank insolvency order includes a special administration (bank insolvency) order.

8

(1) Section 135 of the Insolvency Act is applied with the following modifications where an application is made for a special administration (bank insolvency) order—

(a) in subsection (1), the reference to the presentation of a winding up petition is to an application for a special administration (bank insolvency) order;

(b) in subsection (2)—

(i) the reference to England and Wales includes Scotland,

(ii) the reference to a winding up order is to a special administration order,

(iii) “other fit person” means a person qualified to act as an insolvency practitioner in relation to the investment bank and who consents to act, and

(iv) ignore the reference to the official receiver; and

(2) A person appointed under section 135 (as applied by this paragraph)—

(a) must not pay dividends to creditors;

(b) may only be removed by order of the court; and

(c) shall vacate office if they cease to be qualified to act as a insolvency practitioner in relation to the investment bank.

(3) The appointment of the person appointed under section 135 (as applied by this paragraph) lapses on the appointment of an administrator under a special administration (bank insolvency) order.

9

In this Schedule—

“eligible depositor” has the meaning set out in section 93(3) of the Act;

“full payment resolution” has the meaning set out in section 100(5) of the Act as applied by paragraph 6;

“Objective A” has the meaning set out in paragraph 4; and

“Objective A committee” means the committee set up to oversee the achievement of Objective A in paragraph 4, (see paragraph 6(2) and the modification to section 100 of the Act in paragraph 6).

SCHEDULE 2 — Special administration (bank administration)

General provisions

1

This Schedule provides for a procedure known as special administration (bank administration) to be used as an alternative to bank administration (as set out in Part 3 of the Act) where part of the business of the investment bank is sold to a commercial purchaser in accordance with section 11 of the Act, or transferred to a bridge bank in accordance with section 12 (and it can also be used in certain cases of multiple transfers under Part 1 of the Act).

2

A special administration (bank administration) order is an order appointing a person as an administrator for the purposes of this Schedule.

3

(1) An administrator appointed under a special administration (bank administration) order has the following objectives—

(a) Objective A: to provide support for a private sector purchaser or bridge bank (see section 138 of the Act as applied by paragraph 6), and

(b) the special administration objectives as set out in regulation 10.

(2) Objective A takes precedence over the special administration objectives until the Bank of England notifies the administrator that the residual bank is no longer required in connection with the private sector purchaser or bridge bank, but the administrator is to begin working on the special administration objectives immediately on appointment in accordance with regulation 10.

(3) A notice under sub-paragraph (2) is referred to as an “Objective A Achievement Notice”.

(4) The administrator must not comply with a direction of the FCA or the PRA given under regulation 16 in a way which prejudices the achievement of Objective A.

(5) In pursuing the special administration objectives following transfer to a bridge bank, the administrator may not realise any asset unless—

(a) the asset is on a list of realisable assets agreed between the administrator and the Bank of England; or

(b) the Bank of England has given an Objective A Achievement Notice.

(6) The reference to ‘asset’ in sub-paragraph (5) does not include client assets.

4

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