Companies Act 1989

Changes over time for: Section 159

Alternative versions:

Changes to legislation:

There are currently no known outstanding effects for the Companies Act 1989, Section 159.

Changes to Legislation

Revised legislation carried on this site may not be fully up to date. At the current time any known changes or effects made by subsequent legislation have been applied to the text of the legislation you are viewing by the editorial team. Please see ‘Frequently Asked Questions’ for details regarding the timescales for which new effects are identified and recorded on this site.

159[F1Proceedings of recognised bodies take precedence over insolvency procedures].E+W+S

(1)None of the following shall be regarded as to any extent invalid at law on the ground of inconsistency with the law relating to the distribution of the assets of a person on bankruptcy, winding up or sequestration, or [F2in the administration of a company or other body or] in the administration of an insolvent estate—

(a)a market contract,

(b)the default rules of [F3a recognised body],

(c)the rules of [F4a recognised body other than a recognised central counterparty] as to the settlement of market contracts not dealt with [F5under its default rules,]

[F6(d)the rules of a recognised central counterparty on which the recognised central counterparty relies to give effect to the transfer of a clearing member client contract, or the settlement of a clearing member client contract or clearing member house contract, in accordance with its default rules,

(e)a transfer of a clearing member client contract, or the settlement of a clearing member client contract or a clearing member house contract, in accordance with the default rules of a recognised central counterparty,

(f)where a clearing member client contract transferred in accordance with the default rules of a recognised central counterparty was entered into by the clearing member [F7or client] as principal, a transfer of [F8a client trade] or group of client trades corresponding to that clearing member client contract,

(g)a transfer of a qualifying collateral arrangement in conjunction with the transfer of clearing member client contract as mentioned in paragraph (e) or of a client trade as mentioned in paragraph (f), or

(h)a qualifying property transfer.]

(2)The powers of a relevant office-holder in his capacity as such, and the powers of the court under the M1Insolvency Act 1986[F9, the Bankruptcy (Scotland) Act [F102016], Part 10 of the Building Societies Act 1986, Parts 2 and 3 of the Banking Act 2009 or under regulations made under section 233 of that Act,] shall not be exercised in such a way as to prevent or interfere with—

(a)the settlement in accordance with the rules of [F11a recognised body other than a recognised central counterparty] of a market contract not dealt with under its default rules, F12...

(b)any action taken under the default rules of [F13a recognised body other than a recognised central counterparty],

[F14(c)the transfer of a clearing member client contract, or the settlement of a clearing member client contract or a clearing member house contract, in accordance with the default rules of a recognised central counterparty,

(d)where a clearing member client contract transferred in accordance with the default rules of a recognised central counterparty was entered into by the clearing member [F15or client] as principal, the transfer of [F16a client trade] or group of client trades corresponding to that clearing member contract,

(e)the transfer of a qualifying collateral arrangement in conjunction with a transfer of a clearing member client contract as mentioned in paragraph (c), or a transfer of a client trade as mentioned in paragraph (d),

(f)any action taken to give effect to any of the matters mentioned in paragraphs (c) to (e), or

(g)any action taken to give effect to a qualifying property transfer.]

This does not prevent a relevant office-holder from afterwards seeking to recover any amount under section 163(4) or 164(4) or prevent the court from afterwards making any such order or decree as is mentioned in section 165(1) or (2) (but subject to subsections (3) and (4) of that section).

(3)Nothing in the following provisions of this Part shall be construed as affecting the generality of the above provisions.

(4)A debt or other liability arising out of a market contract which is the subject of default proceedings may not be proved in a winding up or bankruptcy [F17or in the administration of a company or other body], or in Scotland claimed in a winding up or sequestration [F17or in the administration of a company or other body], until the completion of the default proceedings.

A debt or other liability which by virtue of this subsection may not be proved or claimed shall not be taken into account for the purposes of any set-off until the completion of the default proceedings.

F18[(4A)However, prior to the completion of default proceedings—

(a)where it appears [F19to the convener] that a sum will be certified under section 162(1) to be payable, subsection (4) shall not prevent any proof or claim including or consisting of an estimate of that sum which has been lodged or, in Scotland, submitted, from being admitted or, in Scotland, accepted, for the purpose only of determining the entitlement of a creditor to vote [F20in a decision procedure]; and

(b)a creditor whose claim or proof has been lodged and admitted or, in Scotland, submitted and accepted, for the purpose of determining the entitlement of a creditor to vote [F21in a decision procedure] and which has not been subsequently wholly withdrawn, disallowed or rejected, is eligible as a creditor to be a member of a liquidation committee or, in bankruptcy proceedings in England and Wales, [F22or in the administration of a company or other body] a creditors’ committee.]

(5)For the purposes of [F23subsections (4) and (4A)] the default proceedings shall be taken to be completed in relation to a person when a report is made under section 162 stating the sum (if any) certified to be due to or from him.

Textual Amendments

F1S. 159 heading substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(6)(a) (with regs. 7(4), 9(1))

F2Words in s. 159(1) inserted (15.6.2009) by The Financial Markets and Insolvency Regulations 2009 (S.I. 2009/853), regs. 1(1), 2(5)(a) (with reg. 1(2)(3))

F3Words in s. 159(1)(b) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(6)(b) (with regs. 7(4), 9(1))

F4Words in s. 159(1)(c) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(6)(c) (with regs. 7(4), 9(1))

F5Words in s. 159(1)(c) 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(6)(a)(ii) (with regs. 52-58)

F6S. 159(1)(d)-(h) 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(6)(b) (with regs. 52-58)

F7Words in s. 159(1)(f) inserted (26.8.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) (No. 2) Regulations 2013 (S.I. 2013/1908), regs. 1(3)(c), 2(5)(a)(i)

F8Words in s. 159(1)(f) substituted (26.8.2013) by The Financial Services and Markets Act 2000 (Over the Counter Derivatives, Central Counterparties and Trade Repositories) (No. 2) Regulations 2013 (S.I. 2013/1908), regs. 1(3)(c), 2(5)(a)(ii)

F9Words in s. 159(2) 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(6)(c) (with regs. 52-58)

F10Word in s. 159(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(2)

F11Words in s. 159(2)(a) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 3(6)(d) (with regs. 7(4), 9(1))