Insolvency Service consultation response documents published and some new insolvency legislation

The Insolvency Service (IS) have published two important documents on insolvency law and policy. The documents contain a summary of responses to two recent consultations:
A number of new pieces of legislation have also been published:
"(a) provide that the reference to the Insolvency Rules 1986 (S.I. 1986/1925) in the Bank
Insolvency Rules includes all amendments to the Insolvency Rules 1986 up to and
including those made by the Insolvency (Amendment) Rules 2009 (S.I. 2009/642) and
the Insolvency (Amendment) (No.2) Rules 2009 (S.I. 2009/2472) (“the 2009 amending
instruments”) (rule 4);
(b) reflect amendments made to the Insolvency Rules 1986 by the 2009 amending instruments
(rules 49, 51, 60, 62, 63, 65-67, 74, 75, 78 and 82);
(c) make other minor amendments to the Bank Insolvency Rules; and
(d) correct minor drafting errors."

  • The Building Society Insolvency (Scotland) Rules 2010 - "These Rules set out the procedure for the building society insolvency process under Part 2 of the Banking Act 2009 (as applied to building societies by the Building Societies (Insolvency and Special Administration) Order 2009 (S.I. 2009/805, amended by S.I. 2010/1189). The main features of building society insolvency are as follows. In the event of a building society becoming insolvent, it enables those depositors who are eligible for compensation under the Financial Services Compensation Scheme (“the FSCS”) to either—

(a) receive compensation for their lost deposits as soon as possible after the building society
goes into building society insolvency; or
(b) have their account transferred to a different building society.

This is the first objective of the building society insolvency process.

The procedure can only be initiated by the Bank of England or the Financial Services Authority
(“the FSA”) by application to the court. The court then makes a building society insolvency order,
appointing a building society liquidator. In the initial stages, the building society liquidator is
accountable to a liquidation committee formed of the FSA, the Bank of England and the FSCS.

Once the building society liquidator considers that the first objective is achieved, the liquidation
committee will pass a resolution to that effect and the building society insolvency will move to the
second objective which is to wind up the affairs of the building society so as to achieve the best
results for the creditors as a whole.

The Rules are based on the Insolvency (Scotland) Rules 1986 and certain provisions of the 1986
Rules are applied to these Rules, subject to a number of general and specific modifications."

Picture Credit: