Part 6Distribution of Assets
Order of priority in distribution
46.—(1) If the funds of the energy supply company’s assets are to be distributed then they shall be distributed by the energy administrator to meet the following expenses and debts in the order in which they are mentioned—
(a)the expenses of the energy supply company administration;
(b)any preferential debts within the meaning of section 386 of the 1986 Act (categories of preferential debts)(1) (excluding any interest which has been accrued thereon to the date on which the energy supply company entered energy supply company administration);
(c)ordinary debt, that is to say a debt which is neither a secured debt nor a debt mentioned in any other sub-paragraph of this paragraph;
(d)interest at the official rate on—
(i)the preferential debts, and
(ii)the ordinary debts,
between the said date on which the energy supply company entered energy supply company administration and the date of payment of the debt; and
(e)any postponed debt.
(2) In the above paragraph—
(a)“postponed debt” means a creditor’s right to any alienation which has been reduced or restored to the energy supply company’s assets under section 242 of the 1986 Act (gratuitous alienations)(2) or to the proceeds of sale of such an alienation; and
(b)“official rate” shall be construed in accordance with subsection (4) of section 189 of the 1986 Act (interest on debts) and, for the purposes of paragraph (a) of that subsection, as applied to Scotland by subsection (5), the rate specified in these Rules shall be 15 per centum per annum.
(3) The expenses of the energy supply company administration mentioned in sub-paragraph (a) of paragraph (1) above are payable in the order of priority mentioned in Rule 47.
(4) Subject to the provisions of paragraph (5), 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 energy supply company’s assets are inadequate to enable the debts mentioned in this paragraph to be paid in full, they shall abate in equal proportions.
(5) So far as the assets of the energy supply company available for payment of general creditors are insufficient to meet them, preferential debts have priority over the claims of holders of debentures secured by, or holders of, any floating charge created by, the energy supply company, and shall be paid accordingly out of any property comprised in or subject to that charge.
(6) Any surplus remaining, after all expenses and debts mentioned in paragraph (1) have been paid in full, shall (unless the articles of the energy supply company otherwise provide) be distributed among the members according to their rights and interests in the company.
(7) Nothing in this Rule shall affect—
(a)the right of a secured creditor which is preferable to the rights of the energy administrator; or
(b)any preference of the holder of a lien over a title deed or other document which has been delivered to the energy administrator.
Expenses of the energy supply company administration
47.—(1) The expenses of the energy supply company administration are payable out of the assets in the following order of priority—
(a)any outlays properly chargeable or incurred by the energy administrator in carrying out the energy administrator’s functions in the energy supply company administration, except those outlays specifically mentioned in the following sub-paragraphs;
(b)the cost, or proportionate cost, of any caution provided by the energy administrator in accordance with the 1986 Act or these Rules;
(c)the expenses of the applicant and any person appearing on the hearing of the application for the energy supply company administration order whose expenses are allowed by the court;
(d)any amount payable to a person employed or authorised, under Part 3 of these Rules, to assist in the preparation of a statement of affairs or statement of concurrence;
(e)any allowance made, by order of the court, towards expenses on an application for release from the obligation to submit a statement of affairs or statement of concurrence;
(f)the remuneration or emoluments of any person who has been employed by the energy administrator to perform any services for the energy supply company, as required or authorised under the 1986 Act, the 2004 Act or these Rules;
(g)the remuneration of the energy administrator determined under Rule 50; and
(h)the amount of any corporation tax on chargeable gains accruing on the realisation of any asset of the energy supply company (without regard to whether the realisation is effected by the energy administrator, a secured creditor, or otherwise).
(2) Nothing in this Rule applies to or affects the power of any court in proceedings by or against the energy supply company, to order expenses to be paid by the energy supply company or the energy administrator, nor does it affect the rights of any person to whom such expenses are ordered to be paid.
(3) The priorities laid down by paragraph (1) of this Rule are subject to the power of the court to make orders under paragraph (4) of this Rule where the assets are insufficient to satisfy the liabilities.
(4) The court may, in the event of the assets being insufficient to satisfy the liabilities, make an order as to the payment out of the assets of the expenses incurred in the energy supply company administration in such order of priority as the court thinks just.
Pre-energy supply company administration costs
48. Where the energy administrator has made a statement of pre-energy supply company administration costs under Rule 15, the energy administrator (where the fees were charged or expenses incurred by the energy administrator) or other insolvency practitioner (where the fees were charged or expenses incurred by that practitioner) may apply to the court for a determination of whether and to what extent the unpaid pre-energy supply company administration costs are approved for payment.
Assets to be distributed
49.—(1) The energy administrator shall make up accounts of the energy administrator’s intromissions with the energy supply company’s assets in respect of each accounting period.
(2) Subject to the following paragraphs, the energy administrator may, if the funds of the energy supply company are sufficient and after making allowance for future contingencies, pay under Rule 51(1) a dividend out of the assets of the energy supply company to the creditors in respect of each accounting period.
(3) The energy administrator may make a distribution to secured or preferential creditors or, where the energy administrator has the permission of the court, to unsecured creditors only if—
(a)the energy administrator has sufficient funds for the purpose;
(b)the energy administrator does not intend to give notice pursuant to paragraph 83 of Schedule B1 to the 1986 Act;
(c)the energy administrator’s statement of proposals contains a proposal to make a distribution to the class of creditors in question; and
(d)the payment of a dividend is consistent with the functions and duties of, and any proposals made by (or intended to be made by), the energy administrator.
(4) The energy administrator may at any time pay—
(a)the expenses of the energy supply company administration mentioned in Rule 47(1)(a), other than the energy administrator’s own remuneration; and
(b)the preferential debts.
(5) If the energy administrator—
(a)is not ready to pay a dividend in respect of an accounting period; or
(b)considers it would be inappropriate to pay such a dividend because the expense of doing so would be disproportionate to the amount of the dividend,
the energy administrator may postpone such payment to a date not later than the time for payment of a dividend in respect of the next accounting period.
(6) Where an appeal is taken under Rule 39(5) against the acceptance or rejection of a creditor’s claim, the energy administrator shall, at the time of payment of dividends and until the appeal is determined, set aside an amount which would be sufficient, if the determination in the appeal were to provide for the claim being accepted in full, to pay a dividend in respect of that claim.
(7) Where a creditor—
(a)has failed to produce evidence in support of the creditor’s claim earlier than eight weeks before the end of an accounting period on being required by the energy administrator to do so under Rule 40(1); and
(b)has given a reason for such failure which is acceptable to the energy administrator,
the energy administrator shall set aside, for such time as is reasonable to enable the creditor to produce that evidence or any other evidence that will enable the energy administrator to be satisfied under that Rule, an amount which would be sufficient, if the claim were accepted in full, to pay a dividend in respect of that claim.
(8) Where a creditor submits a claim to the energy administrator later than eight weeks before the end of an accounting period but more than eight weeks before the end of a subsequent accounting period in respect of which, after making allowance for contingencies, funds are available for the payment of a dividend, the energy administrator shall, if the energy administrator accepts the claim in whole or in part, pay to the creditor—
(a)the same dividend or dividends as has or have already been paid to creditors of the same class in respect of any accounting period or periods; and
(b)whatever dividend may be payable to the creditor in respect of the said subsequent accounting period,
provided that sub-paragraph (a) above shall be without prejudice to any dividend which has already been paid.
(9) In the declaration of and payment of a dividend, no payments shall be made more than once by virtue of the same debt.
(10) 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 has assigned entitlement to another person, the energy administrator shall pay the dividend to that other accordingly, provided that such notice specifies the name and address of that other.
Determination of outlays and remuneration
50.—(1) Within two weeks after the end of an accounting period, the energy administrator shall in respect of that period submit to the court—
(a)the energy administrator’s accounts of the energy administrator’s intromissions with the assets of the energy supply company for audit and, where funds are available after making allowance for contingencies, a scheme of division of the divisible funds; and
(b)a claim for the outlays reasonably incurred by the energy administrator and for the energy administrator’s remuneration.
(2) The energy administrator may, at any time before the end of an accounting period, submit to the court an interim claim in respect of that period for the outlays reasonably incurred by the energy administrator and for the energy administrator’s remuneration and the court may make an interim determination in relation to the amount of the outlays and remuneration payable to the energy administrator and, where it does so, it shall take into account that interim determination when making its determination under paragraph (3)(a)(ii).
(3) Within six weeks after the end of an accounting period—
(a)the court—
(i)may audit the accounts; and
(ii)shall issue a determination fixing the amount of the outlays and the remuneration payable to the energy administrator; and
(b)the energy administrator shall make the audited accounts, scheme of division and the said determination available for inspection by the members and the creditors.
(4) The basis for fixing the amount of the remuneration payable to the energy administrator may be a commission calculated by reference to the value of the company’s assets which have been realised by the energy administrator, but there shall in any event be taken into account—
(a)the work which, having regard to that value, was reasonably undertaken by the energy administrator; and
(b)the extent of the energy administrator’s responsibilities in administering the energy supply company’s assets.
(5) In fixing the amount of such remuneration in respect of any accounting period, the court may take into account any adjustment which it may wish to make in the amount of the remuneration and outlays fixed in respect of any earlier accounting period.
(6) Not later than eight weeks after the end of an accounting period, the energy administrator or any creditor may appeal against a determination issued under paragraph (2) or (3)(a)(ii) above and the decision of the court on such appeal shall be final.
(7) The court may, if it appears to be a proper case, order the expenses in relation to any such appeal of the energy administrator or any creditor appearing or being represented to be paid as an expense of the administration.
(8) Where there are joint energy administrators—
(a)it is for them to agree between themselves as to how the remuneration payable should be apportioned;
(b)if they cannot agree as to how the remuneration payable should be apportioned, any one of them may refer the issue for determination by the court.
Payment of dividends
51.—(1) On the expiry of the period within which an appeal may be taken under rule 50(6) or, if an appeal is so taken, on the final determination of the last such appeal, the energy administrator shall pay to the creditors their dividends in accordance with the scheme of division.
(2) Any dividend—
(a)allocated to a creditor which is not cashed or uplifted; or
(b)dependent on a claim in respect of which an amount has been set aside under Rule 49(6) or (7),
shall be deposited by the energy administrator in an appropriate bank or institution.
(3) If a creditor’s claim is revalued, the energy administrator may—
(a)in paying any dividend to that creditor, make such adjustment to it as the energy administrator considers necessary to take account of that revaluation; or
(b)require the creditor to repay the energy administrator the whole or part of a dividend already paid to the creditor.
(4) The energy administrator shall insert in the sederunt book the audited accounts, the scheme of division and final determination in relation to the energy administrator’s outlays and remuneration.
(5) For the purposes of paragraph 99(3) of Schedule B1 to the 1986 Act, the former energy administrator’s remuneration and expenses shall comprise all those items set out in Rule 47(1).
Unclaimed Dividends
52.—(1) Any person, producing evidence of the person’s right, may apply to the court to receive a dividend deposited under Rule 51(2), if the application is made not later than seven years after the date of such deposit.
(2) If the court is satisfied of the applicant’s right to the dividend, it shall authorise the appropriate bank or institution to pay to the applicant the amount of that dividend and of any interest which accrued thereon.
(3) The court shall, at the expiry of seven years from the date of deposit of any unclaimed dividend or unapplied balance under Rule 51, hand over the deposit receipt or other voucher relating to such dividend or balance to the Secretary of State, who shall thereupon be entitled to payment of the amount due, principal and interest, from the bank or institution in which the deposit was made.
New energy administrator appointed
53.—(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 the creditors’ claims 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 creditors’ claims, and return it to the former energy administrator.
(3) From then on, all creditors’ claims must be sent to and retained by the new energy administrator.
Section 386 was amended by the Enterprise Act 2002 (c.40), section 251 and by the Pension Schemes Act 1993 (c.48), Schedule 8 paragraph 18..
Section 242 was amended by the Enterprise Act 2002 (c.40), Schedule 17 paragraph 28.