Special Administration for financial institutions
Produced in partnership with Dominic McCahill of Skadden Arps Slate Meagher & Flom LLP

The following Restructuring & Insolvency practice note produced in partnership with Dominic McCahill of Skadden Arps Slate Meagher & Flom LLP provides comprehensive and up to date legal information covering:

  • Special Administration for financial institutions
  • Why these Regulations were introduced
  • When a special administration will be used
  • Interaction with the FCA
  • Entering administration
  • Listed or traded securities
  • The conduct of the special administration
  • Communications with customers
  • The claims process
  • The return of client assets
  • More...

Special Administration for financial institutions

Why these Regulations were introduced

The financial crisis, commencing in 2007 and marked notably by the collapse of Lehman Brothers in September 2008, has highlighted the severe impact which the failure of significant financial institutions may have on the economy. In response, The Investment Bank Special Administration Regulations 2011 (the Regulations), SI 2011/245 came into force on 8 February 2011 pursuant to powers contained in the Banking Act 2009 (BA 2009). The Investment Bank Special Administration (England and Wales) Rules 2011 (the Rules), SI 2011/1301 came into effect on 30 June 2011.

Following the Bloxham review (see below) and a consultation in 2016, HM Treasury published the Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017, SI 2017/443 to update the Regulations. While these were not, as expected, brought into force in February 2017, they became effective from 6 April 2017 onwards. These regulations:

  1. make it easier for an administrator to transfer client assets

  2. strengthen the bar date mechanism

  3. provide that client money claimants cannot claim interest from the general estate except in respect of any shortfall which they would have had if they had made a claim on the client money pool. This is to discourage claimants from waiting to see which estate they are likely to get more out of before making their claim

  4. include a duty

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