The Investment Bank Special Administration (England and Wales) Rules 2011

Claim that remuneration is excessive

202.—(1) The following persons may apply to the court for one or more of the orders in paragraph (7) in respect of the administrator’s remuneration for services set out in rule 196(1)(a) —

(a) a secured creditor;

(b) an unsecured creditor with either the concurrence of at least 10% in value of the unsecured creditors (including that creditor) or the permission of the court; or

(c) a client with the concurrence of clients representing at least 10% of the total claims in respect of client assets held by the investment bank or with the permission of the court; or

(d) the FSA.

(2) A client, with the concurrence of clients representing at least 10% of the total claims in respect of client assets held by the investment bank, or with the permission of the court, may apply to the court for one or more of the orders in paragraph (7) in respect of the administrator’s remuneration for services set out in rule 196(1)(b).

(3) Application under paragraphs (1) and (2) may be made on the grounds that—

(a) the remuneration charged by the administrator;

(b) the basis fixed for the administrator’s remuneration; or

(c) expenses incurred by the administrator,

is or are, in all the circumstances, excessive or, in the case of an application under sub-paragraph (b), inappropriate.

(4) The application must, subject to any order of the court under rule 201(4), be made no later than 8 weeks after receipt by the applicant of the progress report which first reports the charging of the remuneration or the incurring of the expenses in question (“the relevant report”).

(5) The court may, if it thinks that no sufficient cause is shown for a reduction, dismiss it without a hearing but it shall not do so without giving the applicant at least 5 business days’ notice, upon receipt of which the applicant may require the court to list the application for a without notice hearing. If the application is not dismissed, the court shall fix a venue for it to be heard, and give notice to the applicant accordingly.

(6) The applicant shall, at least 14 days before the hearing, send to the administrator a notice stating the venue and accompanied by a copy of the application, and of any evidence which the applicant intends to adduce in support of it.

(7) If the court considers the application to be well-founded, it must make one or more of the following orders—

(a) an order reducing the amount of remuneration which the administrator was entitled to charge;

(b) an order fixing the basis of remuneration at a reduced rate or amount;

(c) an order changing the basis of remuneration;

(d) an order that some or all of the remuneration or expenses in question be treated as not being expenses of the administration;

(e) an order that the administrator or the administrator’s personal representative pay to the investment bank the amount of the excess of remuneration or expenses or such part of the excess as the court may specify;

and may make any other order that it thinks just; but an order under sub-paragraph (b) or (c) may be made only in respect of periods after the period covered by the relevant report.

(8) Unless the court orders otherwise, the costs of the application shall be paid by the applicant, and are not payable as an expense of the special administration.

(9) In a special administration (bank administration), this rule only applies after the Bank of England has given an Objective A Achievement Notice.