The following Financial Services guidance note provides comprehensive and up to date legal information covering:
The three administration procedures covered by this Practice Note (bank administration, building society special administration and investment bank special administration) are procedures for the rescue or transfer of the business of a failing UK bank, building society or investment bank, respectively.
Each procedure is broadly based on the administration procedure contained in Schedule B1 of the Insolvency Act 1986(IA 1986)) (Schedule B1 administration), with modifications to reflect the legal and practical differences between the three types of financial institution.
Following the collapse of the investment bank Lehman Brothers International (Europe) (LBIE) in September 2008, the issues faced by the administrators of LBIE highlighted a requirement for bespoke administration procedures for certain financial institutions. It became apparent that the IA 1986, Sch B1 administration procedures were not sufficient to deal with the unravelling of large and complex financial institutions.
In the LBIE example, LBIE held considerable amounts of money and assets on behalf of its clients (client assets). The assets were held by LBIE through a number of third parties including nominee companies, custodians, sub-custodians, depositories, exchanges and clearing systems. Following LBIE’s collapse, the administrators of LBIE had significant difficulties identifying, reconciling, recovering and returning client assets promptly. The ensuing litigation pursued by LBIE’s clients to recover their
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