120.—(1) This rule applies where after setting a bar date and making the notification required by rule 119, the administrator proposes to return client assets.
(2) The administrator shall draw up a distribution plan setting out—
(a)subject to paragraph (3), a schedule of dates on which the client assets are to be returned (“a distribution”);
(b)the unencumbered assets to be returned and to whom;
(c)in respect of encumbered client assets, how the amount of client assets to be returned to a particular client is to be calculated (“the net asset claim”), taking into account—
(i)any liabilities owed by the client to the investment bank in respect of financial contracts,
(ii)any liabilities owed to the client by the investment bank in respect of financial contracts, and
(iii)any shortfall claim of the client (as defined in regulation 12(7));
(d)in respect of a client’s net assets claim, whether the administrator intends to pay the client money or money’s worth in lieu of returning the assets to the client (but a client cannot be paid money or money’s worth out of the investment bank’s estate in lieu of assets unless the estate is able to retain assets the value of which is equivalent to that paid out); and
(e)the amount and identity of client assets that are to be retained by the administrator to pay the expenses of the special administration in accordance with rule 113 and how the retention of these assets will affect the amount of client assets to be returned to clients.
(3) In setting out the schedule of dates for the return of the client assets, no date shall be sooner than the date which is 3 months after the bar date.
(4) In setting out the schedule for the return of encumbered client assets—
(a)where a person (“P”) notified under rule 119(2) has failed to respond to that notice, the administrator shall make provision in the distribution plan—
(i)for client assets to be returned to P according to the information available to the administrator in respect of the amount of client assets held for P by the investment bank; or
(ii)to take into account any security interest that according to the information available to the administrator, P is entitled to assert over certain client assets held by the investment bank,
as the case may be;
(b)the administrator shall make provision in respect of any security interest asserted over those assets by another person; and
(c)the administrator shall set out the extent to which a proportion of securities are to be held back from the initial distributions and the reasons why.
(5) The distribution plan will also set out—
(a)where any liabilities under paragraph (2)(c) are contingent, how the administrator intends to value the liability; and
(b)where any liabilities are disputed, whether the administrator intends to make an assumption as to the outcome of the dispute,
for the purpose of calculating the client’s net asset claim so that the claim can be paid out (or partly paid out) or assets returned (or returned in part) before the contingency occurs or the dispute is resolved, and the arrangements by which the administrator may revise such valuations or assumptions when further information becomes known.
(6) In this rule, “encumbered client assets” means client assets over which a third party or the investment bank exerts a security interest.