SCHEDULE 1Modifications to the law of insolvency

Regulation 29

Interpretation1

In this Schedule, a reference to backing assets is a reference to the backing assets of an authorised bank, other than backing assets that have been returned to the bank or an appointed insolvency practitioner under regulation 11(2)(b) or 23(3)(b).

PART 1Modifications to primary legislation

Modifications to the Insolvency Act 1986 and the Insolvency (Northern Ireland) Order 19892

The provisions of the Insolvency Act 19863 and the Insolvency (Northern Ireland) Order 19894 apply in relation to an authorised bank—

a

with any reference to “property” or “asset” modified so that it does not include a reference to the bank’s backing assets; and

b

with the modifications specified in the following table;

but sub-paragraph (a) does not apply to the reference to “assets” in section 123(2) of the Insolvency Act 1986 or article 103(2) of the Insolvency (Northern Ireland) Order 1989.

Provision of Insolvency Act 1986

Provision of Insolvency (Northern Ireland) Order 1989

Subject

Modification

Section 4

Article 17

Company Voluntary Proposal - Decisions of meetings

A meeting may not approve any proposal or modification which affects—

  1. a

    the rights of the noteholders under regulations 9(1)(b) and 22;

  2. b

    the rights of the Bank of England in relation to the backing assets; or

  3. c

    the backing assets.

–

Article 52

Receivers and managers – General powers

A receiver may do anything necessary or expedient for the purpose of ensuring that an authorised bank complies with the directions referred to in regulation 23(1).

Section 55

–

Receivers (Scotland) – Powers

A receiver may do anything necessary or expedient for the purpose of ensuring that an authorised bank complies with the directions referred to in regulation 23(1).

Section 126

Article 106

Liquidation – power to stay or restrain proceedings against company

This section and article do not prevent the Bank of England from bringing or continuing any action or proceedings under or by virtue of these Regulations in relation to the backing assets.

Section 128

Article 108

Liquidation – avoidance of attachments

This section and article do not apply to anything done by the Bank of England in relation to the backing assets.

Section 130(2) and (3)

Article 110(2) and (3)

Liquidation – Consequences of Winding-up order

These subsections and paragraphs do not apply to any action or proceedings brought by the Bank of England under or by virtue of these Regulations in relation to the backing assets.

Section 143

Article 121

Liquidation – General Functions

A liquidator must also ensure that an authorised bank complies with the directions referred to in regulation 23(1).

Section 144

–

Liquidation – custody of company’s property

The reference in this section to “things in action” does not include a reference to an account designated by the Bank of England for the purposes of regulation 6(2)(c).

Section 165

Article 140

Liquidators – Voluntary winding up

A liquidator—

  1. a

    must also ensure that an authorised bank complies with the directions referred to in regulation 23(1); and

  2. b

    may do anything necessary or expedient to ensure such compliance.

Sections 167

Article 142

Liquidators – Winding up by the court

A liquidator—

  1. a

    must also ensure that an authorised bank complies with the directions referred to in regulation 23(1); and

  2. b

    may do anything necessary or expedient to ensure such compliance.

Section 436

Article 2

Expressions used generally

The definition of “property” shall be modified in accordance with paragraph 2(a) of this Schedule.

Part 3 of Schedule A15

Part 3 of Schedule A16

Company Voluntary Arrangements – Effects of Moratorium

Nothing in Part 3 shall prevent the Bank of England from—

  1. a

    taking any step; or

  2. b

    bringing or continuing an action or proceedings brought under or by virtue of these Regulations;

against an authorised bank in relation to its backing assets.

Paragraph 43 of Schedule B17

Paragraph 44 of Schedule B18

Administration – Moratorium on other legal process

Nothing in this paragraph shall prevent the Bank of England from—

  1. a

    taking any step; or

  2. b

    bringing or continuing an action or proceedings brought under or by virtue of these Regulations;

against an authorised bank in relation to its backing assets.

Paragraph 59 of Schedule B1

Paragraph 60 of Schedule B1

Administration – General powers of administrators

An administrator may do anything necessary or expedient for the purpose of ensuring that an authorised bank complies with the directions referred to in regulation 23(1).

Paragraphs 67 and 68 of Schedule B1

Paragraphs 68 and 69 of Schedule B1

Administration – General duties of administrators

An administrator must ensure that an authorised bank complies with the directions referred to in regulation 23(1).

Modifications to the Companies Act 20063

1

Section 899 of the Companies Act 20069 (Court sanction for compromise or arrangement) applies in relation to an authorised bank with the modifications specified in paragraph (2).

2

The court may not sanction any composition between an authorised bank and its creditors, or any arrangement of an authorised bank’s affairs, if the composition or arrangement would affect—

a

the rights of the noteholders under regulations 9(1)(b) and 22;

b

the rights of the Bank of England in relation to the backing assets; or

c

the backing assets.

Modifications to the Banking Act 20094

The provisions of the Act specified in the following table apply in relation to an authorised bank with the modifications specified in the table.

Provision

Subject

Modification

Section 103

Bank insolvency – General Powers, duties and effect

1

A bank liquidator—

a

must also ensure that an authorised bank complies with the directions referred to in regulation 23(1);

b

may do anything necessary or expedient to ensure such compliance;

c

may only exercise the powers conferred by this section in relation to the backing assets for the purpose of securing such compliance.

2

The provisions of the Insolvency Act 1986 specified in this section apply subject to the additional modifications to those provisions specified in paragraph 2 of this Schedule.

Section 104

Bank insolvency – Additional general powers

The reference to “property” does not include a reference to the backing assets.

Section 134

Northern Ireland

Where a provision of the Insolvency (Northern Ireland) Order 1989 is an equivalent enactment for the purposes of this section, then that provision shall apply subject to the additional modifications to the Insolvency (Northern Ireland) Order 1989 specified in paragraph 2 of this Schedule.

Section 145

Bank administration – General powers, duties and effect

1

A bank administrator—

a

must ensure that the insolvent bank complies with the directions referred to in regulation 23(1);

b

may do anything necessary or expedient to ensure such compliance;

c

may only exercise the powers conferred by this section in relation to the backing assets for the purpose of securing such compliance.

2

The provisions of the Insolvency Act 1986 specified in this section apply subject to the additional modifications to those provisions specified in paragraph 2 of this Schedule.

Section 167

Northern Ireland

Where a provision of the Insolvency (Northern Ireland) Order 1989 is an equivalent enactment for the purposes of this section, then that provision shall apply subject to the additional modifications to the Insolvency (Northern Ireland) Order 1989 specified in paragraph 2 of this Schedule.

PART 2Modifications to secondary legislation

Modifications to the Insolvency (Scotland) Rules 19865

The provisions of the Insolvency (Scotland) Rules 198610 apply in relation to an authorised bank with any reference to “asset”, “property”, “estate”, “sum” or “fund” modified so that it does not include a reference to the backing assets.

Modifications to the Insolvency Rules (Northern Ireland) 19916

The provisions of the Insolvency Rules (Northern Ireland) 199111 apply in relation to an authorised bank with any reference to “insolvent estate”, “property” or “asset” modified so that it does not include a reference to the backing assets.

Modifications to the Bank Administration Rules (Northern Ireland) 20097

The provisions of the Bank Administration Rules (Northern Ireland) 200912 apply in relation to an authorised bank—

a

with any reference to “insolvent estate”, “property” or “asset” modified so that it does not include a reference to the backing assets; and

b

with any reference to the “1991 Rules” modified so that it is a reference to the Insolvency Rules (Northern Ireland) 1991 as modified by paragraph 6 of this Schedule.

Modifications to the Bank Insolvency (No. 2) Rules (Northern Ireland) 20098

The provisions of the Bank Insolvency (No. 2) Rules (Northern Ireland) 200913 apply in relation to an authorised bank—

a

with any reference to “insolvent estate”, “property” or “asset” modified so that it does not include a reference to the backing assets; and

b

with any reference to the “1991 Rules” modified so that it is a reference to the Insolvency Rules (Northern Ireland) 1991 as modified by paragraph 6 of this Schedule.

Modifications to the Bank Administration (Scotland) Rules 20099

The provisions of the Bank Administration (Scotland) Rules 200914 apply in relation an authorised bank—

a

with any reference to “asset”, “property” or “fund” modified so that it does not include a reference to the backing assets; and

b

with any reference to the “1986 Rules” modified so that it is a reference to the Insolvency (Scotland) Rules 1986 as modified by paragraph 5 of this Schedule.

Modifications to the Bank Insolvency (Scotland) Rules 200910

The provisions of the Bank Insolvency (Scotland) Rules 200915 apply in relation to an authorised bank—

a

with any reference to “asset”, “property”, “sum” or “fund” modified so that it does not include a reference to the backing assets; and

b

with any reference to the “1986 Rules” modified so that it is a reference to the Insolvency (Scotland) Rules 1986 as modified by paragraph 5 of this Schedule.