Part 2Bank Insolvency
Process of bank liquidation
100Liquidation committee
1
Following a bank insolvency order a liquidation committee must be established, for the purpose of ensuring that the bank liquidator properly exercises the functions under this Part.
2
The liquidation committee shall consist initially of 3 individuals, one nominated by each of—
a
the Bank of England,
b
the FSA, and
c
the FSCS.
3
The bank liquidator must report to the liquidation committee about any matter—
a
on request, or
b
which the bank liquidator thinks is likely to be of interest to the liquidation committee.
4
In particular, the bank liquidator—
a
must keep the liquidation committee informed of progress towards Objective 1 in section 99, and
b
must notify the liquidation committee when in the bank liquidator’s opinion Objective 1 in section 99 has been achieved entirely or so far as is reasonably practicable.
5
As soon as is reasonably practicable after receiving notice under subsection (4)(b) the liquidation committee must either—
a
resolve that Objective 1 in section 99 has been achieved entirely or so far as is reasonably practicable (a “full payment resolution”), or
b
apply to the court under section 168(5) of the Insolvency Act 1986 (as applied by section 103 below).
6
Where a liquidation committee passes a full payment resolution—
a
the bank liquidator must summon a meeting of creditors,
b
the meeting may elect 2 or 4 individuals as new members of the liquidation committee,
c
those individuals replace the members nominated by the Bank of England and the FSA,
d
the FSCS may resign from the liquidation committee (in which case 3 or 5 new members may be elected under paragraph (b)), and
e
if no individuals are elected under paragraph (b), or the resulting committee would have fewer than 3 members or an even number of members, the liquidation committee ceases to exist at the end of the meeting.
7
Subject to provisions of this section, rules under section 411 of the Insolvency Act 1986 (as amended by section 125 below) may make provision about—
a
the establishment of liquidation committees,
b
the membership of liquidation committees,
c
the functions of liquidation committees, and
d
the proceedings of liquidation committees.