Order of priority of distribution
131.—(1) The funds of the investment bank’s assets shall be distributed by the administrator to meet the following expenses and debts in the order in which they are mentioned—
(a)the expenses of the special administration;
(b)where a special administration order, a special administration (bank insolvency) order or a special administration (bank administration) order is made and a voluntary arrangement under Part 1 of the 1986 Act is in force for the investment bank, any expenses properly incurred as expenses of the administration of the arrangement in question;
(c)any preferential debts within the meaning of section 386 of the 1986 Act(1) (excluding any interest which has been accrued thereon to the date of commencement of the special administration);
(d)ordinary debts, that is to say a debt which is neither a secured debt nor a debt mentioned in any other sub-paragraph of this paragraph;
(e)interest at the official rate on—
(i)the preferential debts, and
(ii)the ordinary debts,
between the date of the commencement of the special administration and the date of the payment of the debt; and
(f)any postponed debt.
(2) In the above paragraph—
“official rate” in respect of any debt is whichever is the greater of—
15 per centum per annum; and
the rate applicable to that debt apart from the effect of the special administration; and
“postponed debt” means a creditor’s right to any alienation which has been reduced or restored to the investment bank’s assets under section 242 of the 1986 Act(2) or to the proceeds of sale of such an alienation.
(3) The expenses of the special administration mentioned in sub-paragraph (a) of paragraph (1) are payable in the order of priority mentioned in rule 110.
(4) Subject to the provisions of section 175 of the 1986 Act (as applied by paragraph 65(2)), any debt falling within any of sub-paragraphs (b) to (e) of paragraph (1) shall have the same priority as any other debt falling within the same sub-paragraph and, where the funds of the investment bank’s assets are inadequate to enable the debts mentioned in this sub-paragraph to be paid in full, they shall abate in equal proportions.
(5) Any surplus remaining, after all expenses and debts mentioned in paragraph (1) have been paid in full, shall (unless the articles of the investment bank otherwise provide) be distributed among the members according to their rights and interests in the investment bank.
(6) Nothing in this rule shall effect—
(a)the right of a secured creditor which is preferable to the rights of the administrator; or
(b)any preference of the holder of a lien over a title deed or other document which has been delivered to the administrator.
Section 386 has been amended by section 251 of the Enterprise Act 2002 (c.40) and Schedule 8 to the Pension Schemes Act 1993 (c.48).
Section 242 has been amended by Schedule 17 to the Enterprise Act 2002.