SCHEDULES

F1SCHEDULE 17A Further provision in relation to exercise of Part 18 functions by Bank of England

Part 3Winding up, administration or insolvency of F2recognised clearing houses

Notice to Bank of England of preliminary steps

34

(1)

An application for an administration order in respect of a F3recognised clearing house F4or a recognised CSD may not be determined unless the conditions below are satisfied.

(2)

A petition for a winding up order in respect of a F3recognised clearing house F4or a recognised CSD may not be determined unless the conditions below are satisfied.

(3)

A resolution for voluntary winding up of a F3recognised clearing house F4or a recognised CSD may not be made unless the conditions below are satisfied.

(4)

An administrator of a F3recognised clearing house F4or a recognised CSD may not be appointed unless the conditions below are satisfied.

(5)

Condition 1 is that the Bank of England has been notified—

(a)

by the applicant for an administration order, that the application has been made,

(b)

by the petitioner for a winding up order, that the petition has been presented,

(c)

by the F3recognised clearing house F5or the recognised CSD, that a resolution for voluntary winding up may be made, or

(d)

by the person proposing to appoint an administrator, of the proposed appointment.

(6)

Condition 2 is that a copy of the notice complying with Condition 1 has been filed (in Scotland, lodged) with the court (and made available for public inspection by the court).

(7)

Condition 3 is that—

(a)

the period of 2 weeks, beginning with the day on which the notice is received, has ended, or

(b)

the Bank of England has informed the person who gave the notice that—

(i)

it has no objection to the order, resolution or appointment being made, and

(ii)

it does not intend to exercise a stabilisation power under Part 1 of the Banking Act 2009.

(8)

Arranging for the giving of notice in order to satisfy Condition 1 can be a step with a view to minimising the potential loss to a F3recognised clearing house's F6or a recognised CSD’s creditors for the purpose of section 214 of the Insolvency Act 1986 (wrongful trading).

(9)

In this paragraph “the court” means—

(a)

in England and Wales, the High Court,

(b)

in Scotland, the Court of Session, and

(c)

in Northern Ireland, the High Court.

Power to give directions to insolvency practitioner

35

(1)

This paragraph applies where a person has been appointed to act as an insolvency practitioner (within the meaning of section 388 of the Insolvency Act 1986 or Article 3 of the Insolvency (Northern Ireland) Order 1989) in relation to a company which is, or has been, a F7recognised clearing house F8or a recognised CSD.

(2)

The Bank of England may give directions to the person if satisfied that it is desirable to give the directions, having regard to the public interest in—

(a)

protecting and enhancing the stability of the UK financial system,

(b)

protecting and enhancing public confidence in the stability of the UK financial system, F9...

(c)

F10in the case of a company which is, or has been, a recognised clearing house, maintaining the continuity of F11... clearing services F12and

F13(d)

in the case of a company which is, or has been, a recognised CSD, maintaining the continuity of the services referred to in section 285(3D).

(3)

Before giving directions the Bank of England must consult—

(a)

the Treasury, F14and

F15(b)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)

the FCA.

(4)

Directions are enforceable, on an application by the Bank of England, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

(5)

A person is not liable for damages in respect of action or inaction in accordance with directions.

(6)

The immunity does not extend to action or inaction—

(a)

in bad faith, or

(b)

in contravention of section 6(1) of the Human Rights Act 1998.