The Water Industry (Special Administration) (England and Wales) Rules 2024

EXPLANATORY NOTE

(This note is not part of these Rules)

These Rules apply and modify insolvency provisions as they apply to the special administration procedure which relates to water industry companies. These Rules form part of the updated framework for the water industry special administration regime, specifically created for such companies. Similar regimes exist for other kinds of company that provide major infrastructure services, for example the special administration procedure that covers energy supply companies.

The original framework for the water industry special administration regime was set out in sections 23 to 26 and Schedule 3 to the Water Industry Act 1991 (c. 56) (“the 1991 Act”). The accompanying Water Industry (Special Administration) Rules 2009 (2009/2477) (“the 2009 Rules”) set out a detailed procedure for the conduct of special administration proceedings under that regime. This original water industry special administration framework was based upon a modified version of the administration regime contained in Part 2 of the Insolvency Act 1986 (c. 45) (“the 1986 Act”) and the accompanying Insolvency Rules 1986 (1986/1925) (“the 1986 Rules”), as they were both in force at the relevant time.

The administration regime in Part 2 of the 1986 Act was significantly updated by the Enterprise Act 2002 (c. 40) to take account of changes in modern day business practices. It underwent further updates pursuant to the Small Business, Enterprise and Employment Act 2015 (c. 26) and Deregulation Act 2015 (c. 20). The 1986 Rules were also updated and replaced by the Insolvency (England and Wales) Rules 2016 (2016/1024) (“the 2016 Rules”).

The Flood and Water Management Act 2010 (c. 29) (“the 2010 Act”) introduced special administration-related modernising changes to the 1991 Act. The parts of Schedule 5 to the 2010 Act which had not previously been commenced were brought into force by the Flood and Water Management Act 2010 (Commencement No. 10) Order 2024 (2024/35) and have the effect of updating the 1991 Act to, among other things, apply the modern version of administration contained in Schedule B1 to the 1986 Act in place of old Part 2 of the 1986 Act. The Water Industry (Special Administration) Regulations 2024 (2024/205) apply, disapply and modify provisions of Schedule B1, the rest of the 1986 Act and other enactments in relation to water industry special administration.

These Rules complete the update of the water industry special administration regime. They apply the 2016 Rules with specified modifications and replace the 2009 Rules, which are revoked. They set out a modernised and revised procedure for the conduct of special administration proceedings for water industry companies.

Part 1 contains introductory and revocation provisions and provisions on construction and interpretation.

Part 2 contains provisions on scope, interpretation, time and rules about documents.

Part 3 contains provisions relating to the appointment of the special administrator, to the statement of affairs and to the special administrator’s proposals. Part 3 also contains provisions on the extension and ending of a special administration and on replacing a special administrator when needed.

Part 4 contains provisions on court procedure and practice including provisions relating to costs, enforcement and appeals.

Part 5 contains provisions relating to claims by and distributions to creditors in special administration.

Part 6 contains provisions relating to decision-making including provisions relating to decision procedures, meetings and voting.

Part 7 contains provisions relating to proxies and corporate representation.

Part 8 contains provisions relating to the reporting by, and remuneration of, special administrators.

Part 9 contains provisions relating to permission to act as director etc. of a company with a prohibited name.

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.