Companies Act 1989

Changes over time for: Section 164

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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 [F3the recognised body] for the purpose of realising property provided as margin in relation to market contracts [F4or 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 [F5trustee in the sequestration of the] 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 [F6110 of the Bankruptcy (Scotland) Act 2016] 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 [F7, submission of bankruptcy application or] or presentation of bankruptcy petition), and section [F887(4) of the Bankruptcy (Scotland) Act 2016] (effect of dealing with debtor relating to estate vested in F9... 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,

[F10(ba)the provision of default fund contribution to [F11the recognised body],]

[F12(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 [F11the recognised body] for the purpose of realising property provided as margin in relation to a market contract [F13or 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 [F11the recognised body] as to the application of property provided as margin [F14or as default fund contribution].

(4)However, where—

(a)a market contract is entered into by a person who has notice that [F15a bankruptcy application has been submitted or] 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 [F16or default fund contribution] is accepted by a person who has notice that [F17such an application has been made or petition presented] in relation to the person by whom or on whose behalf the margin [F18or 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 [F18or default fund contribution] is recoverable from him by the relevant office-holder unless the court directs otherwise.

[F19(5)Subsection (4)(a) does not apply where the person entering into the contract is [F20a recognised body] acting in accordance with its rules, or where the contract is effected under the default rules of such [F21a recognised body]; 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) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(11)(a) (with regs. 7(4), 9(1))

F4Words 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))

F5Words in s. 164(2) substituted (30.11.2016) by The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 6(5)(a)(i)

F6Words in s. 164(2) substituted (30.11.2016) by The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 6(5)(a)(ii)

F7Words in s. 164(3) inserted (6.4.2016) by The Enterprise and Regulatory Reform Act 2013 (Consequential Amendments) (Bankruptcy) and the Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) Regulations 2016 (S.I. 2016/481), reg. 1, Sch. 1 para. 9(5)(a)

F8Words in s. 164(3) substituted (30.11.2016) by The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 6(5)(b)(i)

F9Word in s. 164(3) omitted (30.11.2016) by virtue of The Bankruptcy (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016 (S.I. 2016/1034), art. 1, Sch. 1 para. 6(5)(b)(ii)

F10S. 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))

F11Words in s. 164(3) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(11)(b) (with regs. 7(4), 9(1))