Companies Act 1989

164 Disclaimer of property, rescission of contracts, &c.E+W+S

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

(a)a market contract, F1...

[F2(aa)a qualifying collateral arrangement,

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

(ac)a qualifying property transfer, or]

(b)a contract effected by the exchange or clearing house for the purpose of realising property provided as margin in relation to market contracts [F3or as default fund contribution].

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

(2)In Scotland, a permanent trustee on the sequestrated estate of a defaulter or a liquidator is bound by any market contract to which that defaulter is a party and by any contract as is mentioned in subsection (1)(b) above notwithstanding section 42 of the M1Bankruptcy (Scotland) Act 1985 or any rule of law to the like effect applying in liquidations.

(3)Sections 127 and 284 of the Insolvency Act 1986 (avoidance of property dispositions effected after commencement of winding up or presentation of bankruptcy petition), and section 32(8) of the Bankruptcy (Scotland) Act 1985 (effect of dealing with debtor relating to estate vested in permanent trustee), do not apply to—

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

(b)the provision of margin in relation to market contracts,

[F4(ba)the provision of default fund contribution to the exchange or clearing house,]

[F5(bb)a qualifying collateral arrangement,

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

(bd)a qualifying property transfer]

(c)a contract effected by the exchange or clearing house for the purpose of realising property provided as margin in relation to a market contract [F6or as default fund contribution], or any disposition of property in pursuance of such a contract, or

(d)any disposition of property in accordance with the rules of the exchange or clearing house as to the application of property provided as margin [F7or as default fund contribution].

(4)However, where—

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

(b)margin in relation to a market contract [F8or default fund contribution] is accepted by a person who has notice that such a petition has been presented in relation to the person by whom or on whose behalf the margin [F9or default fund contribution] is provided,

the value of any profit to him arising from the contract or, as the case may be, the amount or value of the margin [F9or default fund contribution] is recoverable from him by the relevant office-holder unless the court directs otherwise.

[F10(5)Subsection (4)(a) does not apply where the person entering into the contract is a recognised investment exchange or recognised clearing house acting in accordance with its rules, or where the contract is effected under the default rules of such an exchange or clearing house; but subsection (4)(b) applies in relation to the provision of—

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

(b)default fund contribution.]

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

Textual Amendments

F1Word in s. 164(1)(a) omitted (1.4.2013) by virtue of The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 4(9)(a) (with regs. 52-58)

F2S. 164(1)(aa)-(ac) inserted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 4(9)(b) (with regs. 52-58)

F3Words in s. 164(1)(b) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(a) (with reg. 1(2)(3))

F4S. 164(3)(ba) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(b)(i) (with reg. 1(2)(3))

F5S. 164(3)(bb)-(bd) inserted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 4(9)(c) (with regs. 52-58)

F6Words in s. 164(3)(c) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(b)(ii) (with reg. 1(2)(3))

F7Words in s. 164(3)(d) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(b)(iii) (with reg. 1(2)(3))

F8Words in s. 164(4) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(c)(i) (with reg. 1(2)(3))

F9Words in s. 164(4) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(8)(c)(ii) (with reg. 1(2)(3))

F10S. 164(5) substituted (1.4.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) Regulations 2013 (S.I. 2013/504), regs. 1(2), 4(9)(d) (with regs. 52-58)

Modifications etc. (not altering text)