Water Industry Act 1991

23 Meaning and effect of special administration order. E+W

(1) A special administration order is an order of the High Court made in accordance with section 24 or 25 below in relation to a company holding an appointment under Chapter I of this Part [F1 or which is a qualifying licensed water supplier] and directing that, during the period for which the order is in force, the affairs, business and property of the company shall be managed, by a person appointed by the High Court—

(a) for the achievement of the purposes of such an order; and

(b) in a manner which protects the respective interests of the members and creditors of the company.

(2) The purposes of a special administration order made in relation to any company [F2 holding an appointment under Chapter 1 of this Part] shall be-

(a) the transfer to another company, or (as respects different parts of the area to which the company’s appointment relates, or different parts of its undertaking) to two or more different companies, as a going concern, of so much of the company’s undertaking as it is necessary to transfer in order to ensure that the functions which have been vested in the company by virtue of its appointment may be properly carried out; and

(b) the carrying out of those functions pending the making of the transfer and the vesting of those functions in the other company or companies (whether by virtue of the transfer or of an appointment or variation which replaces the former company as a relevant undertaker).

[F3 (2A) The purposes of a special administration order made in relation to any company which is a qualifying licensed water supplier shall be—

(a) the transfer to another company or companies, as a going concern, of so much of the company’s undertaking as it is necessary to transfer in order to ensure that activities relating to the introduction or introductions of water mentioned in subsection (6)(b) below may be properly carried on; and

(b) the carrying on of those activities pending the making of the transfer.]

[F4 (2B) Where a company is in special administration as a result of an order made on the grounds that the company is or is likely to be unable to pay its debts—

(a) a purpose of the special administration order is to rescue the company as a going concern, and

(b) the transfer purpose under subsection (2)(a) or (2A)(a) applies only if the special administrator thinks that—

(i) it is not likely to be possible to rescue the company as a going concern, or

(ii) transfer is likely to secure more effective performance of the functions or activities mentioned in subsection (2)(a) or (2A)(a).

(2C) Where subsection (2B) applies, subsections (2)(b) and (2A)(b) have effect as if they referred to carrying out functions, or carrying on activities, pending rescue or transfer.

(2D) For the purpose of rescuing the company as a going concern a special administrator may propose—

(a) a company voluntary arrangement under Part 1 of the Insolvency Act 1986, or

(b) a compromise or arrangement in accordance with Part 26 of the Companies Act 2006.

(2E) The Secretary of State may by regulations made by statutory instrument—

(a) modify a provision of the Insolvency Act 1986 or the Companies Act 2006 in respect of the arrangements and compromises mentioned in subsection (2D) in so far as they apply to a company which is or has been in special administration;

(b) make other supplemental provision about those arrangements and compromises (which may, in particular, apply or modify the effect of an enactment about insolvency or companies).

(2F) Provision under subsection (2E)(a) or (b) may, in particular, confer a function on—

(a) the Secretary of State,

(b) the Welsh Ministers, or

(c) the Authority.

(2G) Regulations under subsection (2E) may not be made unless—

(a) the Welsh Ministers have consented to the making of the regulations, and

(b) a draft has been laid before and approved by resolution of each House of Parliament (and section 213(1) shall not apply).]

[F5 (2H) A transfer under subsection (2) or (2A) may be effected by—

(a) transferring all or part of the company's undertaking to a wholly-owned subsidiary of the company, and

(b) then transferring securities in the subsidiary to another company.]

[F6 (3) Schedule 3 to this Act shall have effect for applying provisions of the Insolvency Act 1986 where a special administration order is made.]

[F6 (3) Schedule B1 to the Insolvency Act 1986 (administration) applies to special administration (subject to regulations under subsection (3A)).

(3A) The Secretary of State may make regulations about special administration which—

(a) apply (with or without modification) an insolvency provision;

(b) disapply an insolvency provision;

(c) modify the effect of an insolvency provision;

(d) make provision similar to, and in place of, an insolvency provision.

(3B) In subsection (3A) “insolvency provision” means a provision of the Insolvency Act 1986 or another enactment about insolvency (including (i) a provision about administration, (ii) a provision about consequences of insolvency, and (iii) a provision conferring power to make rules).

(3C) A reference in an enactment to Part II of the Insolvency Act 1986 includes a reference to that Part as applied by or under this section (subject to regulations under subsection (3A)).

(3D) Regulations under subsection (3A) shall be made by statutory instrument and may not be made unless—

(a) the Welsh Ministers have consented to the making of the regulations, and

(b) a draft has been laid before and approved by resolution of each House of Parliament (and section 213(1) shall not apply).]

(4) Schedule 2 to this Act shall have effect for enabling provision to be made with respect to cases in which

[F7 (a) a company is replaced by another as a relevant undertaker without an appointment or variation under Chapter 1 of this Part; or

(b) a company carries on activities relating to the introduction or introductions of water mentioned in subsection (6)(b) below formerly carried on by another company,

in pursuance of a special administration order.]

(5) In this section “business” and “property” have the same meanings as in the M1 Insolvency Act 1986.

[F8 (6) For the purposes of this section, sections 24 to 26 below and Schedule 2 to this Act, a licensed water supplier is a qualifying licensed water supplier if—

(a) it is the holder of a combined licence (within the meaning of Chapter 1A of this Part); and

(b) the introduction of water by it which is permitted under section 66B or 66C below is designated as a strategic supply under section 66G below or the introductions of water by it which are so permitted are designated as a collective strategic supply under section 66H below.]

Textual Amendments

F1 Words in s. 23(1) inserted (1.12.2005) by Water Act 2003 (c. 37), ss. 101(1), 105(3), Sch. 8 para. 8(2); S.I. 2005/2714, art. 3(c) (with Sch. para. 8)

F2 Words in s. 23(2) inserted (1.12.2005) by Water Act 2003 (c. 37), ss. 101(1), 105(3), Sch. 8 para. 8(3); S.I. 2005/2714, art. 3(c) (with Sch. para. 8)

F3 S. 23(2A) inserted (1.12.2005) by Water Act 2003 (c. 37), ss. 101(1), 105(3), Sch. 8 para. 8(3); S.I. 2005/2714, art. 3(c) (with Sch. para. 8)

F4 S. 23(2B)-(2G) inserted (1.10.2010 for specified purposes, 12.1.2024 in so far as not already in force) by Flood and Water Management Act 2010 (c. 29), s. 49(3), Sch. 5 para. 3 (with s. 49(1)(6)); S.I. 2010/2169, art. 4; S.I. 2024/35, art. 2(b)

F5 S. 23(2H) inserted (1.10.2010 for specified purposes, 12.1.2024 in so far as not already in force) by Flood and Water Management Act 2010 (c. 29), s. 49(3), Sch. 5 para. 5(1) (with s. 49(1)(6), Sch. 5 para. 5(4)); S.I. 2010/2169, art. 4; S.I. 2024/35, art. 2(b)

F6 S. 23(3)-(3D) substituted for s. 23(3) (1.10.2010 for specified purposes, 15.3.2024 in so far as not already in force) by Flood and Water Management Act 2010 (c. 29), s. 49(3), Sch. 5 para. 6(1) (with s. 49(1)(6)); S.I. 2010/2169, art. 4; S.I. 2024/363, art. 2(b)

F7 Words in s. 23(4) substituted (1.12.2005) by Water Act 2003 (c. 37), ss. 101(1), 105(3), Sch. 8 para. 8(5); S.I. 2005/2714, art. 3(c) (with Sch. para. 8)

F8 S. 23(6) inserted (1.12.2005) by Water Act 2003 (c. 37), ss. 101(1), 105(3), Sch. 8 para. 8(6); S.I. 2005/2714, art. 3(c) (with Sch. para. 8)

Modifications etc. (not altering text)

C1 S. 23 applied (with modifications) (28.6.2013) by The Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013 (S.I. 2013/1582), reg. 1(1)(b), Sch. 1 para. 7(2) (with reg. 1(1)(c))

C2 S. 23(1) restricted (15.11.1999) by S.I. 1999/2787, art. 4

Marginal Citations

M1 1986 c. 45.