The Energy Supply Company Administration Rules 2013

PART 7 Distribution to creditors

CHAPTER 1 Application of Part and general

Distribution to creditors generally

38.—(1) This Part applies where the energy administrator makes, or proposes to make, a distribution to any class of creditors other than secured creditors. Where the distribution is to a particular class of creditors, references in this Part to creditors shall, in so far as the context requires, be a reference to that class of creditors only.

(2) The energy administrator must give notice to the creditors of the energy administrator’s intention to declare and distribute a dividend in accordance with Rule 64.

(3) Where it is intended that the distribution is to be a sole or final dividend, the energy administrator must, after the date specified in the notice referred to in paragraph (2)—

(a) defray any items payable in accordance with the provisions of paragraph 99 of Schedule B1 to the 1986 Act;

(b) defray any amounts (including any debts or liabilities and the energy administrator’s own remuneration and expenses) which would, if the energy administrator were to cease to be the energy administrator of the energy supply company, be payable out of the property of which the energy administrator had custody or control in accordance with the provisions of paragraph 99 of Schedule B1 to the 1986 Act; and

(c) declare and distribute that dividend without regard to the claim of any person in respect of a debt not already proved.

(4) The court may, on the application of any person, postpone the date specified in the notice.

Debts of insolvent energy supply company to rank equally

39.  Debts other than preferential debts rank equally between themselves in the energy supply company administration and, after the preferential debts, must be paid in full unless the assets are insufficient for meeting them, in which case they abate in equal proportions between themselves.

Supplementary provisions as to dividend

40.—(1) In the calculation and distribution of a dividend the energy administrator must make provision for—

(a) any debts which appear to the energy administrator to be due to persons who, by reason of the distance of their place of residence, may not have had sufficient time to tender and establish their proofs;

(b) any debts which are the subject of claims which have not yet been determined; and

(c) disputed proofs and claims.

(2) A creditor who has not proved the creditor’s debt before the declaration of any dividend is not entitled to disturb, by reason that the creditor has not participated in it, the distribution of that dividend or any other dividend declared before the creditor’s debt was proved, but—

(a) when the creditor has proved that debt the creditor is entitled to be paid, out of any money for the time being available for the payment of any further dividend, any dividend or dividends which the creditor has failed to receive; and

(b) any dividends payable under sub-paragraph (a) must be paid before the money is applied to the payment of any such further dividend.

(3) No action lies against the energy administrator for a dividend, but if the energy administrator refuses to pay a dividend the court may, if it thinks just, order the energy administrator to pay it and also to pay, out of the energy administrator’s own money—

(a) interest on the dividend, at the rate for the time being specified in section 17 of the Judgments Act 1838(1), from the time when it was withheld; and

(b) the costs of the proceedings in which the order to pay is made.

Division of unsold assets

41.—(1) The energy administrator may, with the permission of the creditors, divide in its existing form amongst the energy supply company’s creditors, according to its estimated value, any property which from its peculiar nature or other special circumstances cannot be readily or advantageously sold.

(2) The energy administrator must—

(a) in the receipts and payments account included in the final progress report under Chapter 1 of Part 4, state the estimated value of the property divided amongst the creditors of the energy supply company during the period to which the report relates, and

(b) as a note to the account, provide details of the basis of the valuation.

CHAPTER 2 Machinery of proving a debt

Proving a debt

42.—(1) A person claiming to be a creditor of the energy supply company and wishing to recover the person’s debt in whole or part must (subject to any order of the court to the contrary) submit the person’s claim in writing to the energy administrator.

(2) A creditor who claims is referred to as “proving” for their debt and a document by which the creditor seeks to establish their claim is the creditor’s “proof”.

(3) Subject to the next paragraph, a proof must—

(a) be made out by, or under the direction of, the creditor and authenticated by the creditor or a person authorised in that behalf; and

(b) state the following matters—

(i) the creditor’s name and address;

(ii) if the creditor is a company, its registered number;

(iii) the total amount of the creditor’s claim (including value added tax) as at the date on which the energy supply company entered energy supply company administration, less any payments made after that date in respect of the claim, any deduction under Rule 53 and any adjustment by way of set off in accordance with Rule 54;

(iv) whether or not the claim includes outstanding uncapitalised interest;

(v) particulars of how and when the debt was incurred by the energy supply company;

(vi) particulars of any security held, the date on which it was given and the value which the creditor puts on it;

(vii) details of any reservation of title in respect of goods to which the debt refers; and

(viii) the name, address and authority of the person signing the proof (if a person other than the creditor).

(4) There must be specified in the proof details of any documents by reference to which the debt can be substantiated; but (subject as follows) it is not essential that such document be attached to the proof or submitted with it.

(5) The energy administrator may call for any document or other evidence to be produced to the energy administrator, where the energy administrator thinks it necessary for the purpose of substantiating the whole or any part of the claim made in the proof.

Costs of proving

43.  Unless the court otherwise orders—

(a) every creditor bears the cost of proving the creditor’s own debt, including costs incurred in providing documents or evidence under Rule 42(5); and

(b) costs incurred by the energy administrator in estimating the quantum of a debt under Rule 50 are payable out of the assets as an expense of the energy supply company administration.

Energy administrator to allow inspection of proofs

44.  The energy administrator must, so long as proofs lodged with the energy administrator are in the energy administrator’s hands, allow them to be inspected, at all reasonable times on any business day, by any of the following persons—

(a) any creditor who has submitted a proof of debt (unless the creditor’s proof has been wholly rejected for purposes of dividend or otherwise);

(b) any contributory of the energy supply company; and

(c) any person acting on behalf of either of the above.

New energy administrator appointed

45.—(1) If a new energy administrator is appointed in place of another, the former energy administrator must as soon as reasonably practicable transmit to the new energy administrator all proofs which the former energy administrator has received, together with an itemised list of them.

(2) The new energy administrator must authenticate the list by way of receipt for the proofs, and return it to the former energy administrator.

(3) From then on, all proofs of debt must be sent to and retained by the new energy administrator.

Admission and rejection of proofs for dividend

46.—(1) A proof may be admitted for dividend either for the whole amount claimed by the creditor, or for part of that amount.

(2) If the energy administrator rejects a proof in whole or in part, the energy administrator must prepare a written statement of the energy administrator’s reasons for doing so, and send it as soon as reasonably practicable to the creditor.

Appeal against decision on proof

47.—(1) If a creditor is dissatisfied with the energy administrator’s decision with respect to the creditor’s proof (including any decision on the question of preference), the creditor may apply to the court for the decision to be reversed or varied. The application must be made within 21 days of the creditor receiving the statement sent under Rule 46(2).

(2) A member or any other creditor may, if dissatisfied with the energy administrator’s decision admitting or rejecting the whole or any part of a proof, make such an application within 21 days of becoming aware of the energy administrator’s decision.

(3) Where application is made to the court under this Rule, the court must fix a venue for the application to be heard, notice of which must be sent by the applicant to the creditor who lodged the proof in question (if the applicant is not the creditor who lodged the proof) and the energy administrator.

(4) The energy administrator must, on receipt of the notice, file in court the relevant proof, together (if appropriate) with a copy of the statement sent under Rule 46(2).

(5) Where the application is made by a member, the court must not disallow the proof (in whole or in part) unless the member shows that there is (or would be but for the amount claimed in the proof), or that it is likely that there will be (or would be but for the amount claimed in the proof), a surplus of assets to which the energy supply company would be entitled.

(6) After the application has been heard and determined, the proof must, unless it has been wholly disallowed, be returned by the court to the energy administrator.

(7) The energy administrator is not personally liable for costs incurred by any person in respect of an application under this Rule unless the court otherwise orders.

Withdrawal or variation of proof

48.  A creditor’s proof may at any time, by agreement between the creditor and the energy administrator, be withdrawn or varied as to the amount claimed.

Expunging of proof by the court

49.—(1) The court may expunge a proof or reduce the amount claimed—

(a) on the energy administrator’s application, where the energy administrator thinks that the proof has been improperly admitted, or ought to be reduced; or

(b) on the application of a creditor, if the energy administrator declines to interfere in the matter.

(2) Where application is made to the court under this Rule, the court must fix a venue for the application to be heard, notice of which must be sent by the applicant—

(a) in the case of an application by the energy administrator, to the creditor who made the proof; and

(b) in the case of an application by a creditor, to the energy administrator and to the creditor who made the proof (if that creditor is not the applicant).

CHAPTER 3 Quantification of claims

Estimate of quantum

50.—(1) The energy administrator must estimate the value of any debt which, by reason of its being subject to any contingency or for any other reason, does not bear a certain value; and the energy administrator may revise any estimate previously made, if the energy administrator thinks fit by reference to any change of circumstances or to information becoming available.

(2) The energy administrator must inform the creditor as to the estimate under paragraph (1) and any revision of it.

(3) Where the value of a debt is estimated under this Rule, the amount provable in the energy supply company administration in the case of that debt is that of the estimate for the time being.

Negotiable instruments, etc

51.  Unless the energy administrator allows, a proof in respect of money owed on a bill of exchange, promissory note, cheque or other negotiable instrument or security cannot be admitted unless there is produced the instrument or security itself or a copy of it, certified by the creditor or the creditor’s authorised representative to be a true copy.

Secured creditors

52.—(1) If a secured creditor realises the secured creditor’s security, the secured creditor may prove for the balance of the secured creditor’s debt, after deducting the amount realised.

(2) If a secured creditor voluntarily surrenders a security for the general benefit of creditors, the secured creditor may prove for the secured creditor’s whole debt, as if it were unsecured.

Discounts

53.  There shall in every case be deducted from the claim all trade and other discounts which would have been available to the energy supply company but for its energy supply company administration except any discount for immediate, early or cash settlement.

Mutual credits and set off

54.—(1) This Rule applies where the energy administrator, being authorised to make the distribution in question, has pursuant to Rule 65, given notice that the energy administrator proposes to make it.

(2) In this Rule “mutual dealings” means mutual credits, mutual debts or other mutual dealings between the energy supply company and any creditor of the energy supply company proving or claiming to prove for a debt in the energy supply company administration but does not include—

(a) any debt arising out of an obligation incurred after the energy supply company entered energy supply company administration;

(b) any debt arising out of an obligation incurred at a time when the creditor had notice that—

(i) a meeting of creditors had been summoned under section 98 of the 1986 Act,

(ii) a petition for the winding up of the energy supply company was pending,

(iii) an application for an administration order under the 1986 Act was pending;

(iv) an application for an esc administration order was pending; or

(v) any person had given notice of intention to appoint an administrator under the 1986 Rules;

(c) any debt which has been acquired by a creditor by assignment or otherwise, pursuant to an agreement between the creditor and any other party where that agreement was entered into—

(i) at a time when the creditor had notice that an application for an esc administration order was pending;

(ii) after the commencement of energy supply company administration,

(iii) at a time when the creditor had notice that a meeting of creditors had been summoned under section 98 of the 1986 Act, or

(iv) at a time when the creditor had notice that a winding up petition was pending, or

(v) at a time when the creditor had notice that an application for an administration order under the 1986 Act was pending.

(3) An account shall be taken as at the date of the notice referred to in paragraph (1) of what is due from each party to the other in respect of the mutual dealings and the sums due from one party shall be set off against the sums due from the other.

(4) A sum shall be regarded as being due to or from the energy supply company for the purposes of paragraph (3) whether—

(a) it is payable at present or in the future;

(b) the obligation by virtue of which it is payable is certain or contingent; or

(c) its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion.

(5) Rule 50 shall apply for the purposes of this Rule to any obligation to or from the energy supply company which, by virtue of its being subject to any contingency or for any other reason, does not bear a certain value.

(6) Rules 55 to 57 shall apply for the purposes of this Rule in relation to any sums due to the energy supply company which—

(a) are payable in a currency other than sterling;

(b) are of a periodical nature; or

(c) bear interest.

(7) Rule 75 shall apply for the purposes of this Rule to any sum due or from the energy supply company which is payable in the future.

(8) Only the balance (if any) of the account owed to the creditor is provable in the energy supply company administration.

(9) Alternatively the balance (if any) owed to the energy supply company shall be paid to the energy administrator as part of the assets except where all or part of the balance results from a contingent or prospective debt owed by the creditor and in such a case the balance (or that part of it which results from the contingent or prospective debt) must be paid if and when the debt becomes due and payable.

(10) In this Rule “obligation” means an obligation however arising, whether by virtue of an agreement, rule of law or otherwise.

Debt in foreign currency

55.  For the purpose of proving a debt incurred or payable in a currency other than sterling, the amount of the debt shall be converted into sterling at such rate as is agreed between the relevant creditor and the energy administrator or, where no agreement can be reached, as the court determines.

Payments of a periodical nature

56.—(1) In the case of rent and other payments of a periodical nature, the creditor may prove for any amounts due and unpaid up to the date when the energy supply company entered energy supply company administration.

(2) Where at that date any payment was accruing due, the creditor may prove for so much as would have fallen due at that date, if accruing from day to day.

Interest

57.—(1) Where a debt proved in the energy supply company administration bears interest, that interest is provable as part of the debt except in so far as it is payable in respect of any period after the energy supply company entered energy supply company administration.

(2) In the following circumstances the creditor’s claim may include interest on the debt for periods before the energy supply company entered energy supply company administration, although not previously reserved or agreed.

(3) If the debt is due by virtue of a written instrument, and payable at a certain time, interest may be claimed for the period from that time to the date when the energy supply company entered energy supply company administration.

(4) If the debt is due otherwise, interest may only be claimed if, before that date, a demand for full payment of the debt was made in writing by or on behalf of the creditor, and notice given that interest would be payable from the date of the demand to the date of payment.

(5) Interest under paragraph (4) may only be claimed for the period from the date of the demand to that of the energy supply company’s entering energy supply company administration and for all the purposes of the 1986 Act and these Rules shall be chargeable at a rate not exceeding that mentioned in paragraph (6).

(6) The rate of interest to be claimed under paragraphs (3) and (4) is the rate specified in section 17 of the Judgments Act 1838 on the date when the energy supply company entered energy supply company administration.

(7) Any surplus remaining after payment of the debts proved shall, before being applied for any purpose, be applied in paying interest on those debts in respect of the periods during which they have been outstanding since the energy supply company entered energy supply company administration.

(8) All interest payable under paragraph (7) ranks equally whether or not the debts on which it is payable rank equally.

(9) The rate of interest payable under paragraph (7) is whichever is the greater of the rate specified under paragraph (6) or the rate applicable to the debt apart from the energy supply company administration.

Debt payable at future time

58.  A creditor may prove for a debt of which payment was not yet due on the date when the energy supply company entered energy supply company administration, subject to Rule 75 (adjustment of dividend where payment made before time).

Value of security

59.—(1) A secured creditor may, with the agreement of the energy administrator or the permission of the court, at any time alter the value which the secured creditor’s proof of debt puts upon the secured creditor’s security.

(2) However, if a secured creditor has voted in respect of the unsecured balance of the secured creditor’s debt the secured creditor may re-value the secured creditor’s security only with permission of the court.

Surrender for non-disclosure

60.—(1) If a secured creditor omits to disclose a security in the secured creditor’s proof of debt, the secured creditor must surrender that security for the general benefit of creditors, unless the court, on application by the secured creditor, relieves the secured creditor from the effect of this Rule on the ground that the omission was inadvertent or the result of honest mistake.

(2) If the court grants that relief, it may require or allow the creditor’s proof of debt to be amended, on such terms as may be just.

(3) Nothing in this Rule or the following two Rules may affect rights in rem of creditors or third parties in respect of tangible or intangible, moveable or immoveable assets (including both specific assets and collections of indefinite assets as a whole which change from time to time) belonging to the debtor that are situated outside the United Kingdom.

Redemption by energy administrator

61.—(1) The energy administrator may at any time give notice to a creditor whose debt is secured that the energy administrator proposes, at the expiration of 28 days from the date of the notice, to redeem the security at the value put upon it in the creditor’s proof.

(2) The creditor then has 21 days (or such longer period as the energy administrator may allow) in which, if the creditor so wishes, to exercise the right to revalue the creditor’s security (with the permission of the court, where Rule 60(2) applies). If the creditor re-values the creditor’s security, the energy administrator may only redeem at the new value.

(3) If the energy administrator redeems the security, the cost of transferring it is payable out of the assets.

(4) A secured creditor may at any time, by notice in writing, call on the energy administrator to elect whether the energy administrator will or will not exercise the power to redeem the security at the value then placed on it; and the energy administrator then has 3 months in which to exercise the power or determine not to exercise it.

Test of security’s value

62.—(1) Subject as follows, the energy administrator, if dissatisfied with the value which a secured creditor puts on the creditor’s security (whether in the creditor’s proof or by way of revaluation under Rule 59), may require any property comprised in the security to be offered for sale.

(2) The terms of the sale shall be such as may be agreed, or as the court may direct; and if the sale is by auction, the energy administrator on behalf of the energy supply company, and the creditor on the creditor’s own behalf, may appear and bid.

(3) This Rule does not apply if the security has been re-valued and the revaluation has been approved by the court.

Realisation of security by creditor

63.  If a creditor who has valued the creditor’s security subsequently realises it (whether or not at the instance of the energy administrator)—

(a) the net amount realised shall be substituted for the value previously put by the creditor on the security; and

(b) that amount shall be treated in all respects as an amended valuation made by the creditor.

Notice of proposed distribution

64.—(1) Where an energy administrator is proposing to make a distribution to creditors the energy administrator must give notice of the fact.

(2) The notice given pursuant to paragraph (1) must—

(a) be sent to all creditors whose addresses are known to the energy administrator;

(b) state whether the distribution is—

(i) to preferential creditors; or

(ii) preferential creditors and unsecured creditors; and

(c) where the energy administrator proposes to make a distribution to unsecured creditors, state the value of the prescribed part, except where the court has made an order under section 176A(5) of the 1986 Act(2).

(3) Subject to paragraph (5)(b), before declaring a dividend the energy administrator must by notice invite the creditors to prove their debts. Such notice—

(a) must be gazetted; and

(b) may be advertised in such other manner as the energy administrator thinks fit.

(4) A notice pursuant to paragraph (1) or (3) must, in addition to the standard contents—

(a) state that it is the intention of the energy administrator to make a distribution to creditors within the period of 2 months from the last date for proving;

(b) specify whether the proposed dividend is interim or final;

(c) specify a date up to which proofs may be lodged being a date which—

(i) is the same date for all creditors; and

(ii) is not less than 21 days from that of the notice.

(5) Where a dividend is to be declared for preferential creditors—

(a) the notice pursuant to paragraph (1) need only be given to those creditors in whose cases the energy administrator has reason to believe that their debts are preferential; and

(b) the notice pursuant to paragraph (3) need only be given if the energy administrator thinks fit.

Admission or rejection of proofs

65.—(1) Unless the energy administrator has already dealt with them, within 5 business days of the last date for proving, the energy administrator must—

(a) admit or reject (in whole or in part) proofs submitted to the energy administrator; or

(b) make such provision in respect of them as the energy administrator thinks fit.

(2) The energy administrator is not obliged to deal with proofs lodged after the last day for proving, but may do so, if the energy administrator thinks fit.

(3) In the declaration of a dividend no payment shall be made more than once by virtue of the same debt.

Postponement or cancellation of dividend

66.  If in the period of 2 months referred to in Rule 64(4)(a)—

(a) the energy administrator has rejected a proof in whole or in part and application is made to the court for that decision to be reversed or varied, or

(b) application is made to the court for the energy administrator’s decision on a proof to be reversed or varied, or for a proof to be expunged, or for a reduction of the amount claimed,

the energy administrator may postpone or cancel the dividend.

Declaration of dividend

67.—(1) Subject to paragraph (2), within the 2 month period referred to in Rule 64(4)(a), the energy administrator must proceed to declare the dividend to one or more classes of creditor of which the energy administrator gave notice.

(2) Except with the permission of the court, the energy administrator must not declare a dividend so long as there is pending any application to the court to reverse or vary a decision of the energy administrator’s on a proof, or to expunge a proof or to reduce the amount claimed.

(3) If the court gives permission under paragraph (2), the energy administrator must make such provision in respect of the proof in question as the court directs.

Notice of declaration of a dividend

68.—(1) Where the energy administrator declares a dividend the energy administrator must give notice of that fact to all creditors who have proved their debts.

(2) The notice must include the following particulars relating to the energy supply company administration—

(a) amounts raised from the sale of assets, indicating (so far as is practicable) amounts raised by the sale of particular assets;

(b) payments made by the energy administrator when acting as such;

(c) where the energy administrator proposed to make a distribution to unsecured creditors, the value of the prescribed part, except where the court has made an order under section 176A(5) of the 1986 Act;

(d) provision (if any) made for unsettled claims, and funds (if any) retained for particular purposes;

(e) the total amount of dividend and the rate of dividend;

(f) whether, and if so when, any further dividend is expected to be declared.

Payments of dividends and related matters

69.—(1) The dividend may be distributed simultaneously with the notice declaring it.

(2) Payment of the dividend may be made by post, or arrangements may be made with any creditor for it to be paid to the creditor in another way, or held for the creditor’s collection.

(3) Where a dividend is paid on a bill of exchange or other negotiable instrument, the amount of the dividend shall be endorsed on the instrument, or on a certified copy of it, if required to be produced by the holder for that purpose.

Notice of no dividend, or no further dividend

70.  If the energy administrator gives notice to creditors that the energy administrator is unable to declare any dividend or (as the case may be) any further dividend, the notice must contain a statement to the effect either—

(a) that no funds have been realised; or

(b) that the funds realised have already been distributed or used or allocated for defraying the expenses of energy supply company administration.

Proof altered after payment of dividend

71.—(1) If after payment of dividend the amount claimed by a creditor in the creditor’s proof is increased, the creditor is not entitled to disturb the distribution of the dividend; but the creditor is entitled to be paid, out of any money for the time being available for the payment of any further dividend, any dividend or dividends which the creditor has failed to receive.

(2) Any dividend or dividends payable under paragraph (1) must be paid before the money there referred to is applied to the payment of any such further dividend.

(3) If, after a creditor’s proof has been admitted, the proof is withdrawn or expunged, or the amount is reduced, the creditor is liable to repay to the energy administrator any amount overpaid by way of dividend.

Secured creditors

72.—(1) The following applies where a creditor re-values the creditor’s security at a time when a dividend has been declared.

(2) If the revaluation results in a reduction of the creditor’s unsecured claim ranking for dividend, the creditor must as soon as reasonably practicable repay to the energy administrator, for the credit of the energy supply company administration, any amount received by the creditor as dividend in excess of that to which the creditor would be entitled having regard to the revaluation of the security.

(3) If the revaluation results in an increase of the creditor’s unsecured claim, the creditor is entitled to receive from the energy administrator, out of any money for the time being available for the payment of a further dividend, before any such further dividend is paid, any dividend or dividends which the creditor has failed to receive, having regard to the revaluation of the security. However, the creditor is not entitled to disturb any dividend declared (whether or not distributed) before the date of the revaluation.

Disqualification from dividend

73.  If a creditor contravenes any provision of the 1986 Act or these Rules relating to the valuation of securities, the court may, on the application of the energy administrator, order that the creditor be wholly or partly disqualified from participation in any dividend.

Assignment of right to dividend

74.—(1) If a person entitled to a dividend gives notice to the energy administrator that the person wishes the dividend to be paid to another person, or that the person has assigned the person’s entitlement to another person, the energy administrator must pay the dividend to that other accordingly.

(2) A notice under this Rule must specify the name and address of the person to whom payment is to be made.

Adjustment where dividend paid before time

75.—(1) Where a creditor has proved for a debt of which payment is not due at the date of the declaration of dividend, the creditor is entitled to dividend equally with other creditors, but subject as follows.

(2) For the purpose of dividend (and no other purpose), the amount of the creditor’s admitted proof (or, if a distribution has previously been made to the creditor, the amount remaining outstanding in respect of the creditor’s admitted proof) shall be reduced by applying the following formula—

where—

(a)

“X” is the value of the admitted proof; and

(b)

“n” is the period beginning with the date that the energy supply company entered energy supply company administration and ending with the date on which the payment of the creditor’s debt would otherwise be due expressed in years and months in a decimalised form.

(1)

1838 c. 110, as amended by the Civil Procedure Acts Repeal Act 1879, section 2, Schedule 1, Part 1, the Statute Law Revision (No. 2) Act 1888, S.I. 1993/564, article 2, 1998/2940, article 3(a), (b) and (c).

(2)

1986 c. 45; section 176A inserted by the Enterprise Act 2002 (c. 40), section 252.