The Water Industry (Special Administration) Rules 2009

Explanatory Note

(This note is not part of the Rules)

These Rules apply the Insolvency Rules 1986, with modifications. They set out the procedure for the conduct of special administration proceedings for companies that are “relevant companies” within the meaning of the Water Industry Act 1991. “Relevant companies” are water undertakers, sewerage undertakers or companies that are qualifying licensed water suppliers under that Act. Special administration is a special insolvency regime specifically created for such companies. Similar regimes exist for other kinds of companies that provide major infrastructure services, for example energy suppliers.

The framework for the special administration regime is set out in sections 23 to 26 of, and Schedules 2 and 3 to, the Water Industry Act 1991. Schedule 3 applies with modifications certain provisions of the Insolvency Act 1986 M1 including Part 2 of that Act which, before 15 September 2003, governed administration proceedings in relation to most companies. From that date, section 248 of the Enterprise Act 2002 M2 repealed Part 2 and replaced it with a new Schedule 1B to govern administration proceedings in relation to such companies. However, section 249 of the Enterprise Act 2002 preserves Part 2 insofar as it applies to certain types of company, including relevant companies under the Water Industry Act 1991.

The special administration process is commenced by petition to the court for a special administration order. Such an application can be made by the Secretary of State, the Welsh Ministers, or the Water Services Regulation Authority.

Part 1 of the Rules contains the construction and interpretation provisions.

Part 2 of the Rules sets out the procedure to be followed to begin special administration proceedings, including the information that must be included in a petition for a special administration order and how much notice of that petition must be given and to whom. It also contains provisions on the notification and advertisement of a special administrator's appointment.

Part 3 of the Rules contains provisions relating to the special administrator, including how his remuneration is fixed and the procedures to be followed if the special administrator resigns or dies.

Part 4 of the Rules sets out the steps to be taken in a special administration. These include the preparation of a statement of the relevant company's affairs and the provision of information to creditors about the special administrator's proposals.

Part 5 of the Rules governs the conduct of creditors' and members' meetings called by the special administrator.

Part 6 of the Rules contains provisions for the use of proxies at creditors' or members' meetings held during a special administration, including the rights of inspection of proxies and the procedure to be followed if a proxy-holder has a financial interest in the outcome of a resolution to be voted on at the meeting.

Part 7 of the Rules sets out the court procedure and practice for special administration proceedings. In particular, this Part sets out the general requirements for court applications made during a special administration, the cost assessment procedure for special administration proceedings and the appeals process to be used in such proceedings.

Part 8 of the Rules sets out procedure for the examination of persons if a special administrator has made an application to court under section 236 of the Insolvency Act 1986. Section 236 allows a special administrator to apply to the court for an order requiring a person to appear before the court to be questioned by the special administrator about the relevant company.

Part 9 of the Rules contains miscellaneous provisions, including provisions relating to the punishment of contraventions of the Rules.

The Schedule to the Rules contains the forms that are to be used in special administration proceedings.

A full impact assessment has not been produced for this instrument because no effect on the private or voluntary sectors is foreseen.