# The Building Society Special Administration Rules (Northern Ireland) 2014

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N.I.

Statutory Rules of Northern Ireland

# 2014 No. 40

Building Societies

Insolvency

# The Building Society Special Administration Rules (Northern Ireland) 2014

Made

13th February 2014

Coming into operation

13th March 2014

The Department of Justice makes the following Rules in the exercise of powers conferred by Article 359(1D), (2), (2D), (3)                           and (3A) of the Insolvency (Northern Ireland) Order 1989 F1.                        

The Department of Finance and Personnel concurs in the making of the Rules.

The Lord Chief Justice of Northern Ireland concurs in the making of the Rules in so far as they affect court procedure.

The Department of Justice has not consulted the Committee existing for the purposes of Article 360 of the Insolvency (Northern                           Ireland) Order 1989: this is the first set of Rules made in relation to building society insolvency and the duty to consult                           does not therefore apply to these Rules by virtue of Article 16 of the Building Societies (Insolvency and Special Administration)                           Order 2009 F2.                        

F1S.I. 1989/2405 (N.I. 19). Article 359 was amended by section 160 of the Banking Act 2009 (2009 c. 1) (applied by section 167) and by the Northern Ireland Act 1998 (Devolution of Policing and Justice Functions) Order 2010 (S.I. 2010/976), **Article 15(1)** and Schedule 18, paragraph 142. Paragraph 3(A) was inserted by S.I. 2009/805.

F2S.I. 2009/805, amended by S.I. 2010/1189 and S.I. 2013/496.

## **PART 1**N.I.Introduction

### CitationN.I.

1.  These Rules may be cited as the Building Society Special Administration Rules (Northern Ireland) 2014.                  

### CommencementN.I.

2.  These Rules shall come into operation on 13th March 2014.                  

### Application of RulesN.I.

3.  These Rules apply in relation to a building society undergoing the procedure in Part 3 of the Banking Act 2009 F3, as applied and modified by section 90C of the Building Societies Act 1986 F4.                  

F32009 c.1.

F41986 c.53; section 90C was inserted by Article 2 of the Building Societies (Insolvency and Special Administration) Order 2009 (S.I. 2009/805).

### InterpretationN.I.

4.—(1) In these Rules—                  

“the 1989 Order” means the Insolvency (Northern Ireland) Order 1989;                  

“the 1991 Rules” means the Insolvency Rules (Northern Ireland)1991 F5 including all amendments to them up to and including those made by the Insolvency (Amendment) Rules (Northern Ireland) 2013                     F6;                  

“the 2009 Order” means the Building Societies (Insolvency and Special Administration) Order 2009;                  

“the 2014 Rules” means these Rules;                  

“an affidavit” means an affidavit as provided for by Article 165 of the 1989 Order;                  

“the appropriate regulator”, in relation to a building society, means—                  

if the building society is a PRA-authorised person (within the meaning of the Financial Services and Markets Act 2000), the                              Prudential Regulation Authority and, where relevant, the Financial Conduct Authority; and                           

in any other case, the Financial Conduct Authority;

“the Banking Act” means the Banking Act 2009 (and includes those provisions as applied by Part 3 of Schedule 1 to the 2009 Order;                  

“the Building Societies Act” means the Building Societies Act 1986 F7;                  

“building society” means a building society incorporated (or deemed to be incorporated) under the Building Societies Act;                  

“building society special administration”, “building society special administration order” and “building society special administrator” have the same meaning as in the Building Societies Act (see sections 90C(2) and 119(1) of that Act) F8;                  

“business day” means any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday in any part of                     Northern Ireland under or by virtue of the Banking and Financial Dealings Act 1971 F9;                  

“contributory”, in relation to a building society—                  

means every person liable to contribute to the assets of the society in the event of its being wound up, and

for the purposes of all proceedings for determining, and all proceedings prior to the determination of, the persons who are                              deemed to be contributories, includes any person alleged to be a contributory, and                           

includes persons who are liable to pay or contribute to the payment of any debt or liability of the building society, or any                              sum for the adjustment of rights of members among themselves, or the expenses of the winding up,                           

but does not include persons liable to contribute by virtue of a declaration by the court under Article 177 (fraudulent trading)                     or 178 (wrongful trading) of the 1989 Order;                  

“the Department” means the Department of Enterprise, Trade and Investment F10;                  

“principal office” means—                  

the place which is specified in a building society's memorandum sent to the appropriate regulator under paragraph 1(1)(c)                              of Schedule 2 to the Building Societies Act as the address of its principal office, or                           

if notice has been given by a building society to the appropriate regulator under paragraph 11(2) of that Schedule (change                              of principal office), the place specified in that notice or, as the case may be, in the last such notice;                           

“registered name”, in relation to a building society, means the name of the society which is for the time being registered with the appropriate                     regulator; and                  

“society”, “special administration”, “special administration order” and “special administrator” mean respectively building                     society, building society special administration, building society special administration order and building society special                     administrator;                  

(2) (a) the following expressions have the same meaning as in Part 1 or Part 3 of the Banking Act—

(i)“bridge bank” (s. 136(2)),                  

(ii)“the court” (the High Court– s. 166(1)),                  

(iii)“the FCA” (the Financial Conduct Authority—s 166(2)),                  

(iv)“Objective 1” (support for commercial purchaser or bridge bank– ss. 137 and 138),                  

(v)“Objective 1 Achievement Notice” (s. 139(4)),                  

(vi)“Objective 2” (normal administration– ss. 137 & 140),                  

(vii)“the PRA” (the Prudential Regulation Authority—s 166(2)),                  

(viii)“private sector purchaser” (s. 136(2)),                  

(ix)“property transfer instrument” (s. 33),                  

(x)“residual building society” (s. 136(2)) F11,                  

(xi)“resolution fund order” (s. 49(3)).                  

(b)any reference to Part 1 of the Banking Act (Special Resolution Regime), or to any provision in that Part, is a reference to                        that Part or to that provision as applied, with modifications, by section 84 of that Act;                  

(c)any reference to Part 3 of the Banking Act (Bank Administration), or to any provision in that Part, is a reference to that                        Part or to that provision as applied by section 167 of that Act and as applied and modified by section 90C of the Building                        Societies Act and by any order made under section 158 of the Banking Act F12; and                  

(d)any reference to any provision of the Building Societies (Insolvency and Special Administration) Order 2009 is a reference                        to that provision as applied by Article 17 of that Order.                  

(3) Other expressions used in these Rules, where used in relation to building societies, have the same meaning as in the Building                     Societies Act.                  

F5The Insolvency Rules (Northern Ireland) 1991 (S.R. 1991 No. 364), as amended by S.R. 1994 No. 26, S.R. 1995 No. 291, S.R. 2000 No. 247, S.R. 2002 No. 261, S.R. 2003 No. 549, S.R. 2006 No. 47, S.R. 2008 No. 118, S.R. 2009 No. 404, S.R. 2011 No. 151, **S.I**. 2004/355 and S.R. 2013 No. 278.

F6S.R. 2013 No. 278.

F71986 c.53.

F8Section 90C was inserted, and section 119(1) amended, by S.I. 2009/805.

F91971 c.80.

F10Formerly the Department of Economic Development, see the Departments (Northern Ireland) Order 1999 (S.I. 1999/283 (N.I. 1)).

F11In the application of Parts 2 and 3 of the Banking Act 2009 to building societies, references to “bank” (with certain exceptions)                              have effect as references to “building society”: see section 90C(2) of the Building Societies Act 1986, inserted by S.I. 2009/805.

F12Section 90C was inserted by S.I. 2009/805, which also modifies the application of Part 3 in relation to building societies. S.I. 2009/805 was modified by S.I. 2010/1189 and S.I. 2013/496.

### 

5.  In these Rules—                  

(a)“the FSCS” means the scheme manager of the Financial Services Compensation Scheme (established under Part 15 of the Financial Services                        and Markets Act 2000 F13);                  

(b)“the Objective 1 Stage” means the period during which a building society special administration order is in force before the Bank of England gives                        an Objective 1 Achievement Notice;                  

(c)“the Objective 2 Stage” means the period during which a building society special administration order is in force after the Bank of England gives                        an Objective 1 Achievement Notice;                  

(d)a reference to personal service is a reference to personal service in accordance with Order 65 of the Rules of the Court of                        Judicature (Northern Ireland) 1980 F14;                  

(e)a reference to an affidavit (including a reference implied by the application of an enactment) is a reference to an affidavit,                        if made by a special administrator, stating that the affidavit is made in that capacity and giving the address at which the                        special administrator works; and                  

(f)a reference to “the purpose of the special administration” is a reference to the objectives of building society administration in section 137 of the Banking Act.                  

F132000 c.8.

F14S.R. 1980 No. 346, as amended by the Constitutional Reform Act 2005 (c.4), **section 59** and Schedule 11.

### OverviewN.I.

6.  The purpose of these Rules is to prescribe a procedure for the appointment of a special administrator, and the operation of                     special administration, under Part 3 of the Banking Act in Northern Ireland.                  

### FormsN.I.

7.—(1) This rule applies where a provision of these rules—                  

(a)applies a provision of the 1991 Rules which requires the use of a prescribed form, or                  

(b)makes provision similar to that made by a provision of those Rules which requires the use of a prescribed form.                  

(2) The form prescribed for the purposes of those Rules is to be used with any modification that the person using the form thinks                     desirable to reflect the nature of building society insolvency.                  

## **PART 2**N.I.Application for Building Society Special Administration Order

### IntroductionN.I.

8.  This Part makes specific provision for a number of aspects of applications for special administration orders; Part 5 applies                     a number of provisions of the 1991 Rules to applications for special administration orders (with specified modifications).                  

### Content of applicationN.I.

9.  An application by the Bank of England for a special administration order in respect of a building society shall specify—                  

(a)the registered name of the society;                  

(b)any other trading names of the society;                  

(c)the address of the society's principal office;                  

(d)an e-mail address for the society;                  

(e)the address of the Bank of England; and                  

(f)the identity of the person (or persons) nominated for appointment as building society special administrator.                  

### 

10.  If the society has notified the Bank of England of an address for service which is, because of special circumstances, to be                     used in place of the principal office, that address shall be specified under Rule 9(c).                  

### Statement of proposed special administratorN.I.

11.  An application shall be accompanied by a statement by the proposed special administrator—                  

(a)specifying the name and address of any person proposed to be appointed;                  

(b)giving that person's consent to act;                  

(c)giving details of the person's qualification to act as an insolvency practitioner; and                  

(d)giving details of any prior professional relationship that the person has had with the society.                  

### Bank of England affidavitN.I.

12.—(1) An application for a special administration order in respect of a society shall be accompanied by an affidavit made on behalf                     of the Bank of England—                  

(a)certifying that the conditions for applying for a special administration order, set out in section 143 of the Banking Act,                        are met in respect of the society;                  

(b)stating the society's current financial position to the best of the Bank of England's knowledge and belief (including actual,                        contingent and prospective assets and liabilities);                  

(c)specifying any security which the Bank of England knows or believes to be held by a creditor of the building society;                  

(d)specifying whether any security confers power to appoint an administrative receiver (and whether an administrative receiver                        has been appointed);                  

(e)specifying any insolvency proceedings which have been instituted in respect of the society (including any process notified                        to the FCA and where relevant the PRA under section 90D of the Building Societies Act) F15;                  

(f)giving details of the property transfer instrument which the Bank of England has made or intends to make in respect of the                        society;                  

(g)where the property transfer instrument has not yet been made, explaining what effect it is likely to have on the society's                        financial position;                  

(h)specifying how functions are to be apportioned where more than one person is to be appointed as special administrator (stating,                        in particular, whether functions are to be exercisable jointly or concurrently); and                  

(i)including any other material which the Bank of England thinks may help the court to decide whether to make the special administration                        order.                  

(2) The affidavit shall identify the person making it and shall include the capacity in which that person makes the affidavit                     and the basis for that person's knowledge of the matters set out in it.                  

F15Section 90D was inserted by S. I. 2009/805 and amended by S.1. 2013/496.

### FilingN.I.

13.  The application, and its accompanying documents, shall be filed with the court, together with enough copies of the application                     and accompanying documents for service under Rule 15.                  

### 

14.  Each filed copy shall—                  

(a)have the seal of the court applied to it;                  

(b)be endorsed with the date and time of filing;                  

(c)be endorsed with the venue for the hearing of the application (fixed by the court under Rule 21); and                  

(d)be issued to the Bank of England.                  

### ServiceN.I.

15.  The Bank of England shall serve the application on—                  

(a)the society;                  

(b)any person nominated for appointment as special administrator;                  

(c)any person whom the Bank of England knows to be entitled to appoint an administrative receiver;                  

(d)any person who has given notice to the FCA and where relevant the PRA in respect of the society under section 90D of the Building                        Societies Act (notice of preliminary steps); and                  

(e)each transferee, if the property transfer instrument was made or is to be made under section 11(2)(b) of the Banking Act 2009                        (transfer to commercial purchaser).                  

### 

16.  Service under Rule 15 shall be service of a sealed and endorsed copy of the application and its accompanying documents issued                     under Rule 14.                  

### 

17.  Service shall be effected as soon as is reasonably practicable, having regard in particular to the need to give the society's                     representatives a reasonable opportunity to attend the hearing.                  

### 

18.—(1) Service shall be effected—                  

(a)by personal service to an address that the person has notified to the Bank of England as an address for service;                  

(b)by personal service to the person's registered office or principal office (where no address for service has been notified);                  

(c)by personal service to the person's usual or last known principal place of business in Northern Ireland (where there is no                        registered office or principal office and no address for service has been notified); or                  

(d)in such other manner and at such a place as the court may direct.                  

(2) If the Bank of England knows of an email address that is habitually used for business purposes by a person on whom service                     is required, the Bank shall (in addition to personal service) as soon as is reasonably practicable send by email an electronic                     copy of a sealed and endorsed copy of the application and its accompanying documents.                  

### 

19.—(1) Service of the application shall be verified by an affidavit specifying the date on which, and the manner in which, service                     was effected.                  

(2) The affidavit, with a sealed copy of the application attached to it, shall be filed with the court—

(a)as soon as is reasonably practicable; and                  

(b)in any event, before the hearing of the application.                  

### Other notificationN.I.

20.  As soon as is reasonably practicable after filing the application the Bank of England shall notify—                  

(a)the Enforcement of Judgements Office;                  

(b)any person whom the Bank of England knows to have distrained against the society or its property; and                  

(c)the FCA and where relevant the PRA.                  

### VenueN.I.

21.—(1) The court shall fix the venue for the hearing when the application is filed.                  

(2) In fixing the venue the court shall have regard to—

(a)the desirability of the application being heard as soon as is reasonably practicable; and                  

(b)the need to give the building society a reasonable opportunity to attend.                  

### HearingN.I.

22.  At the hearing of the application, any of the following may appear or be represented—                  

(a)the Bank of England;                  

(b)the appropriate regulator;                  

(c)the society;                  

(d)a director of the society;                  

(e)any person nominated for appointment as special administrator;                  

(f)any person who has given notice to the FCA and where relevant the PRA in respect of the society under section 90D of the Building                        Societies Act (notice of preliminary steps); and                  

(g)with the permission of the court, any other person who appears to have an interest.                  

### The orderN.I.

23.  A special administration order shall be in the form specified in Rule 2.012(2) of the 1991 Rules.                  

### Notice of orderN.I.

24.  If the court makes a special administration order, it shall send four or, if the building society is a PRA-authorised person                     (within the meaning of the Financial Services and Markets Act 2000), five sealed copies to the Bank of England.                  

### 

25.  The Bank of England shall as soon as is reasonably practicable send one sealed copy of the special administration order to                     each of the following—                  

(a)the special administrator;                  

(b)the FCA and where relevant the PRA; and                  

(c)the FSCS.                  

### CostsN.I.

26.  If the court makes a special administration order, the following are payable as an expense of the special administration—                  

(a)the Bank of England's costs of making the application; and                  

(b)any other costs allowed by the court.                  

## **PART 3**N.I.Process of Building Society Special Administration

### IntroductionN.I.

27.  This Part makes specific provision for a number of aspects of special administration; Part 5 applies a number of provisions                     of the 1991 Rules to special administration (with specified modifications).                  

### Building society special administrator's proposals: Objective 1 StageN.I.

28.—(1) This Rule makes provision about the statement of proposals which the special administrator is required to make in the Objective                     1 Stage under section 147 of the Banking Act.                  

(2) In addition to the information required by section 147 the statement shall include—

(a)details of the court where the proceedings are and the court reference number;                  

(b)the registered name, any other trading names and the address of the principal office of the building society;                  

(c)details of the appointment of the special administrator (including the date);                  

(d)in the case of joint special administrators, details of the apportionment of functions;                  

(e)the names of the directors, secretary and chief executive of the society and details of any shares they hold in the society;                  

(f)an account of the circumstances giving rise to the application for the appointment of the special administrator;                  

(g)if a statement of the society's affairs has been submitted, a copy or summary of it with the comments of the special administrator,                        if any;                  

(h)if an order limiting the disclosure of the statement of affairs has been made under Rule 2.031 of the 1991 Rules (as applied                        by Rule 60), a statement of that fact, as well as—                  

(i)details of who provided the statement of affairs,                  

(ii)the date of the order for limited disclosure, and                  

(iii)the details or a summary of the details that are not subject to that order;                  

(i)if a full statement of affairs is not provided—                  

(i)the names, addresses and debts of the creditors including details of any security held (or, in the case of depositors, a single                        statement of their aggregate debt), and                  

(ii)details of the shares issued by the society (including the types of shares issued and the number of each type in issue);                  

(j)if no statement of affairs has been submitted—                  

(i)details of the financial position of the society at the latest practicable date (which shall, unless the court otherwise orders,                        be a date not earlier than that on which the society entered special administration),                  

(ii)a list of the society's creditors including their names, addresses and details of their debts, including any security held                        (or, in the case of depositors, a single statement of their aggregate debt),                  

(iii)details of the shares issued by the society (including the types of shares issued and the number of each type in issue), and                  

(iv)an explanation as to why there is no statement of affairs;                  

(k)the basis upon which it is proposed that the remuneration of the special administrator should be fixed under Rule 2.107 of                        the 1991 Rules (as applied by Rule 60);                  

(l)how the special administrator proposes to pursue Objective 1;                  

(m)whether the special administrator proposes to pursue Objective 2(a) or Objective 2(b);                  

(n)if the special administrator proposes to pursue Objective 2(a), how it is envisaged the purpose of the special administration                        will be achieved in the Objective 2 Stage;                  

(o)if the special administrator proposes to pursue Objective 2(b)—                  

(i)how it is envisaged the purpose of the special administration will be achieved in the Objective 2 Stage, and                  

(ii)how it is proposed that the special administration shall end (winding-up or voluntary arrangement, in accordance with section                        154 of the Banking Act F16;                  

(p)the manner in which the affairs and business of the society have been managed and financed since the date of the appointment                        of the special administrator (including the reasons for and terms of any disposal of assets); and                  

(q)the manner in which the affairs and business of the society will be managed and financed if the proposals of the special administrator                        are approved.                  

(3) The statement—

(a)may exclude information, the disclosure of which could seriously prejudice the commercial interests of the society or of the                        bridge bank or private sector purchaser; and                  

(b)shall include a statement of any exclusion.                  

F16Paragraph 33 of Schedule 1 to S.I. 2009/805 modifies the application of section 154.

### Building society special administrator's proposals: Objective 2 StageN.I.

29.—(1) This Rule makes provision about the statement of proposals which the special administrator is required to make under paragraph                     50 of Schedule B1 to the 1989 Order F17 as it applies during the Objective 2 Stage (in accordance with Table 1 in section 145(6) of the Banking Act).                  

(2) The statement shall include—

(a)details of the court where the proceedings are and the court reference number;                  

(b)the registered name, any other trading names and the principal office of the society;                  

(c)details of the appointment of the special administrator (including the date);                  

(d)in the case of joint special administrators, details of the apportionment of functions;                  

(e)the names of the directors, secretary and chief executive of the society and details of any shares they hold in the society;                  

(f)an account of the circumstances giving rise to the application for the appointment of the special administrator;                  

(g)if a statement of the society's affairs has been submitted, a copy or summary of it with the comments of the special administrator,                        if any;                  

(h)if an order limiting the disclosure of the statement of affairs has been made under Rule 2.031 of the 1991 Rules (as applied                        by Rule 60), a statement of that fact, as well as—                  

(i)details of who provided the statement of affairs,                  

(ii)the date of the order for limited disclosure,                  

(iii)the details or a summary of the details that are not subject to that order;                  

(i)if a full statement of affairs is not provided—                  

(i)the names, addresses and debts of the creditors including details of any security held (or, in the case of depositors, a single                        statement of their aggregate debt), and                  

(ii)details of the shares issued by the society (including the types of shares issued and the number of each type in issue);                  

(j)if no statement of affairs has been submitted—                  

(i)details of the financial position of the society at the latest practicable date (which shall, unless the court otherwise orders,                        be a date not earlier than that on which the society entered special administration),                  

(ii)a list of the society's creditors including their names, addresses and details of their debts, including any security held                        (or, in the case of depositors, a single statement of their aggregate debt),                  

(iii)details of the shares issued by the society (including the types of shares issued and the number of each type in issue), and                  

(iv)an explanation as to why there is no statement of affairs;                  

(k)the basis upon which it is proposed that the remuneration of the special administrator should be fixed under Rule 2.107 of                        the 1991 Rules (as applied by Rule 60);                  

(l)details of whether (and why) the special administrator proposes to apply to the court under Article 150A(5) of the 1989 Order                        F18 (omission of distribution to unsecured creditors: as applied by Table 2 in section 145(6) of the Banking Act) (unless the                        special administrator intends to propose a voluntary arrangement);                  

(m)an estimate of the value of the prescribed part for the purposes of Article 150A (unless the special administrator intends                        to propose a voluntary arrangement) certified as being made to the best of the special administrator's knowledge and belief;                  

(n)an estimate of the value of the society's net property (unless the special administrator intends to propose a voluntary arrangement)                        certified as being made to the best of the special administrator's knowledge and belief;                  

(o)whether the special administrator proposes to pursue Objective 2(a) or Objective 2(b);                  

(p)if the special administrator proposes to pursue Objective 2(a), how it is envisaged the purpose of the special administration                        will be achieved;                  

(q)if the special administrator proposes to pursue Objective 2(b)—                  

(i)how it is envisaged the purpose of the special administration will be achieved, and                  

(ii)how it is proposed that the special administration shall end (winding-up or voluntary arrangement, in accordance with section                        154 of the Banking Act);                  

(r)if the special administrator has decided not to call a meeting of creditors, the reasons for that decision;                  

(s)the manner in which the affairs and business of the society have been managed and financed since the date of the special administrator's                        appointment (including the reasons for and terms of any disposal of assets);                  

(t)the manner in which the affairs and business of the society will be managed and financed if the proposals of the special administrator                        are approved; and                  

(u)any other information which the special administrator thinks necessary to enable creditors to decide whether or not to vote                        for the approval of the proposals.                  

(3) In the case of special administration following transfer to a bridge bank under section 12(2) of the Banking Act—

(a)the statement under paragraph 50 of Schedule B1 to the 1989 Order shall state whether any payment is to be made to the society                        from a scheme under a resolution fund order; or                  

(b)if that information is unavailable when the statement under paragraph 50 is made, the special administrator shall issue a                        supplemental statement as soon as reasonably practicable after the information becomes available.                  

(4) The statement—

(a)may exclude information, the disclosure of which could seriously prejudice the commercial interests of the society; and                  

(b)shall include a statement of any exclusion.                  

F17Paragraph 50 of Schedule B1 was amended by S.I. 2008/948.

F18Article 150A(5) was inserted by Article 7 of the Insolvency (Northern Ireland) Order 2005 (S.I. 2005/1455 (N.I. 10)).

### 

30.  If the special administrator thinks that the statement made under section 147 of the Banking Act in accordance with Rule 28                     contains information required by Rule 29(2), the statement under paragraph 50 of Schedule B1 to the 1989 Order (as applied                     by Table 1 in section 145(6) of the Banking Act) may consist of the statement under section 147, with such additions, modifications                     and supplemental information as the special administrator thinks necessary—                  

(a)to comply with Rule 29(2); and                  

(b)to bring the statement under section 147 up to date.                  

### 

31.  Where the statement of proposals is sent to creditors, in accordance with paragraph 50(4)(b) of Schedule B1 (as applied by                     Table 1 in section 145(6) of the Banking Act 2009), it shall be sent to the FCA and where relevant the PRA and the FSCS at                     the same time.                  

### 

32.  Where the court orders an extension of the period of time under paragraph 50(5) of Schedule B1 to the 1989 Order on an application                     by the special administrator under paragraph 108 of that Schedule (as applied by Table 1 in section 145(6) of the Banking                     Act), the special administrator shall notify the persons set out in paragraph 50(4) of that Schedule as soon as is reasonably                     practicable after the making of the order.                  

### 

33.  Where the special administrator has made a statement under paragraph 50(1) of Schedule B1 (as applied by Table 1 in section                     145(6) of the Banking Act) and has not called an initial meeting of creditors, the proposals issued in accordance with Rule                     29 will be deemed to have been approved by the creditors (if no meeting has been requisitioned under paragraph 53(2) of that                     Schedule within the period set out in Rule 2.038(1) of the 1991 Rules, as applied by Rule 60).                  

### 

34.  Where the special administrator intends to apply to the court under paragraph 80 of Schedule B1 (as applied by the 2009 Order)                     F19 for the special administration to cease before the statement of proposals is sent to creditors in accordance with paragraph                     50 of Schedule B1, the special administrator shall, at least 10 days before making the application send to all known creditors                     of the society a report containing the information required by Rule 29(2).                  

F19S.I. 2009/805, as amended by S.I. 2010/1189 and S.I. 2013/496, modifies the application of paragraph 80 of Schedule B1.

### 

35.—(1) Where the special administrator wishes to publish a notice under paragraph 50(6) of Schedule B1 (as applied by Table 1 in                     section 145(6) of the Banking Act) the notice shall be advertised in such manner as the special administrator thinks fit.                  

(2) The notice shall—

(a)state the full name of the society;                  

(b)state the full name and address of the special administrator;                  

(c)give details of the appointment of the special administrator; and                  

(d)specify an address to which members can write for a copy of the statement of proposals.                  

(3) The notice shall be published as soon as is reasonably practicable after the special administrator sends the statement of                     proposals to the society's creditors, but no later than 8 weeks (or such other period as may be agreed by the creditors or                     as the court may order) from the date that the society entered special administration.                  

### Reports to creditorsN.I.

36.—(1) “Progress report” means a report which includes—                  

(a)details of the court where the proceedings are and the relevant court reference number;                  

(b)full details of the society's registered name and principal office and other trading names;                  

(c)full details of the special administrator's name and address and date of appointment, including any changes in office-holder;                  

(d)in the case of joint special administrators, details of the apportionment of functions;                  

(e)details of any extensions of the initial period of appointment;                  

(f)details of progress during the period of the report, including a receipts and payments account (as detailed in paragraph (2));                  

(g)details of any assets that remain to be realised;                  

(h)details of any amounts received from a scheme under a resolution fund order; and                  

(i)any other information likely to be relevant to the creditors.                  

(2) A receipts and payments account shall state what assets of the society have been realised, for what value, and what payments                     have been made to creditors or others.                  

(3) The account shall be in the form of an abstract showing receipts and payments during the period of the report; and where the                     special administrator has ceased to act, the receipts and payments account shall include a statement as to the amount paid                     to unsecured creditors by virtue of the application of Article 150A of the 1989 Order (share of assets for unsecured creditors).                  

(4) During the Objective 1 Stage, a progress report shall include details of—

(a)the extent of the business of the society that has been transferred;                  

(b)any property, rights or liabilities that have been transferred, or which the special administrator expects to be transferred,                        under a power in Part 1 of the Banking Act (Special Resolution Regime);                  

(c)any requirements imposed on the residual building society, for the purpose of the pursuit of Objective 1, under a power in                        Part 1; and                  

(d)the arrangements for managing and financing the society during the Objective 1 Stage.                  

(5) In complying with paragraphs (4)(c) and (4)(d) a report—

(a)may exclude information, the disclosure of which could seriously prejudice the commercial interests of the building society                        or of the bridge bank or private sector purchaser; and                  

(b)shall include a statement of any exclusion.                  

### 

37.  A progress report shall be produced for—                  

(a)the first period of 6 months of the special administration;                  

(b)every subsequent period of 6 months; and                  

(c)when the special administrator ceases to act, the period from the date of the previous report (or, if there was none, from                        the beginning of the special administration) until the special administrator ceases to act.                  

### 

38.—(1) The special administrator shall send a copy of each progress report within 28 days of the end of the period covered by the                     report, to—                  

(a)the creditors and shareholding members of the society;                  

(b)the court;                  

(c)the Bank of England;                  

(d)the FCA and where relevant the PRA; and                  

(e)the FSCS.                  

(2) Instead of complying with paragraph(1)(a) the special administrator may publish the progress report on the special administrator's                     internet website (and take appropriate steps to draw attention to it) and send a copy of it to any creditors and shareholding                     members on request.                  

(3) The court may, on the application of the special administrator—

(a)extend the period specified in paragraph (1); or                  

(b)make any other order about the content of a progress report.                  

### 

39.—(1) A special administrator who fails to comply with Rules 37 and 38 is liable to a fine and, for continued contravention, to                     a daily default fine.                  

(2) For that purpose, failure to comply with Rules 37 and 38 shall be treated in the same way as failure to comply with Rule 2.048                     of the 1991 Rules.                  

### Removal of special administrator in Objective 1 StageN.I.

40.—(1) This Rule is about an application for removal of a special administrator made by the Bank of England during the Objective                     1 Stage (in accordance with the modifications for the application of paragraph 92 of Schedule B1 to the 1989 Order in Table                     1 in section 145(6) of the Banking Act).                  

(2) The Rules for service of notice of the application, other notification of the application and for the hearing shall be as                     for the application to appoint a special administrator under Part 2 of these Rules.                  

(3) Both the person proposed to be appointed as a replacement and the existing special administrator are entitled to be served                     and to be heard.                  

### Appointment of provisional special administratorN.I.

41.  An application to the court for the appointment of a provisional special administrator under Article 115 of the 1989 Order                     (as applied by Table 2 in section 145(6) of the Banking Act) may be made by the Bank of England.                  

### 

42.  The application shall be supported by an affidavit stating—                  

(a)why the Bank of England thinks that a provisional special administrator should be appointed;                  

(b)that the person to be appointed has consented to act;                  

(c)that the person to be appointed is qualified to act as an insolvency practitioner;                  

(d)whether, to the Bank of England's knowledge, a voluntary arrangement under Part II of the 1989 Order (as applied in relation                        to building societies by section 90A of, and Schedule 15A to, the Building Societies Act) has been proposed or is in force                        in respect of the society;                  

(e)whether, to the Bank of England's knowledge, an administrative receiver is acting in respect of the society; and                  

(f)the Bank of England's estimate of the value of the assets in respect of which the provisional special administrator is to                        be appointed.                  

### 

43.  If satisfied that sufficient grounds are shown for the appointment, the court may make it on such terms as it thinks fit.                  

### 

44.  An order appointing a provisional special administrator shall specify the functions to be carried out in relation to the society's                     affairs.                  

### 

45.  If the court makes an order appointing a provisional special administrator as soon as reasonably practicable the court shall                     send four or, if the building society is a PRA-authorised person (within the meaning of the Financial Services and Markets                     Act 2000), five sealed copies of the order to the person appointed (and one additional copy by email if possible).                  

### 

46.—(1) As soon as is reasonably practicable after appointment a provisional special administrator shall send a copy of the order                     of appointment to—                  

(a)the society;                  

(b)any administrative receiver of the society;                  

(c)the FCA and where relevant the PRA (together with the form specified in Rule 4.029(3)(ii) of the 1991 Rules); and                  

(d)the FSCS.                  

(2) Notice to the society shall be given by service in accordance with Rule 18.

(3) Unless the court otherwise directs, on receipt of the order of appointment, as soon as reasonably practicable the provisional                     special administrator shall give notice of that appointment; and such notice—                  

(a)shall be gazetted; and                  

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

### 

47.  The Bank of England may disclose the fact and terms of an order appointing a provisional special administrator to any person                     whom the Bank thinks has a sufficient business interest.                  

### Additional joint special administratorN.I.

48.—(1) The process for the appointment of an additional joint special administrator is the same as for the initial appointment of                     a special administrator.                  

(2) The existing special administrator (or each of them) is entitled to a copy of the application and may—

(a)file written representations; and                  

(b)be heard at the hearing.                  

(3) An application for the appointment of an additional joint special administrator may be made during the Objective 1 Stage only                     by the Bank of England.                  

(4) Rule 60 applies Rules 2.127 and 2.128 of the 1991 Rules (notification and advertisement of the appointment of joint administrator).

### Disapplication of set-off for protected depositsN.I.

49.—(1) This rule applies if—                  

(a)The appropriate regulator's rules allow the FSCS to make gross payments of compensation in respect of protected deposits;                        and                  

(b)all or part of a creditor's claim against the building society is in respect of protected deposits.                  

(2) In respect of protected deposits Rule 2.086 of the 1991 Rules (as applied by Rule 60) shall apply and, for the purpose of                     determining the sums due from the building society to an eligible depositor under rule 2.086(3)—                  

(a)where the total of the sums held by the building society for the eligible depositor in respect of protected deposits is no                        more than the prescribed limit then paragraph (3) applies; and                  

(b)where the sums held exceed the prescribed limit, then paragraph (4) applies.                  

(3) Where this paragraph applies, there shall be deemed to have been no mutual dealings, regardless of whether there are any sums                     due from the eligible depositor to the building society, and the sum due to the eligible depositor from the building society                     in respect of the protected deposits will be the total of the sums held by the building society for that depositor in respect                     of those deposits.                  

(4) Where this paragraph applies then—

(a)any mutual dealings shall be treated as being mutual dealings only in relation to the amount by which the total of the sums                        due to the eligible depositor exceeds the prescribed limit, and                  

(b)the sums due from the building society to the eligible depositor in respect of protected deposits will be—                  

(i)the amount by which that total exceeds the prescribed limit, set off in accordance with rule 2.086(3); and                  

(ii)the sums held by the bank for the eligible depositor in respect of protected deposits up to the prescribed limit.                  

(5) Any arrangements with regard to set-off between the building society and the eligible depositor in existence before the date                     of the notice referred to in rule 2.086(1) shall be subject to this rule in so far as they relate to protected deposits.                  

(6) In this rule—

“eligible depositor” has the meaning given to it by section 93(3) of the Banking Act;                  

“the appropriate regulator's rules” means the rules, as amended from time to time, made under section 213 of the Financial Services and Markets Act 2000 by—                  

if the building society is a PRA-authorised person (within the meaning of that Act), the PRA or the FCA; and

in any other case, the FCA;

“prescribed limit” means the amount prescribed as the maximum compensation payable in respect of protected deposits under Part 15 of the Financial                     Services and Markets Act 2000; and                  

“protected deposit” means a protected deposit within the meaning given by the appropriate regulator's rules held by the building society at                     the date of the notice referred to in rule 2.086(1) but does not include a share in the society held by an eligible depositor.                  

### End of special administration: successful rescueN.I.

50.—(1) This Rule supplements section 153 of the Banking Act 2009 (successful rescue) F20.                  

(2) The special administrator's application under paragraph 80 of Schedule B1 to the 1989 Order (as applied by section 153 of                     the Banking Act 2009 F21 (the “application”) shall have attached to it a progress report for the period from the date of the previous report (or,                     if there was none, from the beginning of the special administration) and a statement indicating what the special administrator                     thinks should be the next step for the society.                  

(3) Before making the application the special administrator shall send a copy of the application and the progress report to—

(a)the Bank of England;                  

(b)the FCA and where relevant the PRA; and                  

(c)the FSCS.                  

(4) Notice under paragraph (3)(b) and (c) shall be sent at least 7 days before the hearing of the application.

(5) Within 5 business days of filing the application with the court, the special administrator shall gazette a notice undertaking                     to provide a copy of the application to any creditor or shareholding member of the society.                  

(6) The notice in paragraph (5) may also be published in such other manner as the special administrator thinks fit.

(7) The application shall certify compliance with paragraphs (1) to (6) of this Rule.

(8) If the court is satisfied that the conditions in section 153(1) of the Banking Act 2009 have been met it shall—

(a)discharge the special administration order; and                  

(b)notify the special administrator, who shall notify the FCA and where relevant the PRA.                  

F20Paragraph 32A of S.I. 2009/805, inserted by S.I. 2010/1189 and amended by S.I. 2013/496, modifies the application of section 153 of the Banking Act 2009.

F21S.I. 2009/805, as amended by S.I. 2010/1189 and S.I. 2013/496, modifies the application of paragraph 80 of Schedule B1.

### End of special administration: dissolutionN.I.

51.—(1) This Rule supplements section 154(2)(a) of the Banking Act (no more assets for distribution).                  

(2) The special administrator's notice under paragraph 30 of Schedule 1 to the 2009 Order—

(a)shall be filed with the court in Form 2.36B (the form specified in rule 2.119(4) of the 1991 Rules subject to Rule 7(2));                        and                  

(b)shall be accompanied by a final progress report.                  

(3) The notice shall not take effect until the court discharges the special administration order on the application of the special                     administrator.                  

(4) Before applying for discharge the special administrator shall send a copy of the notice referred to in paragraph (2) and the                     final progress report to—                  

(a)the FCA and where relevant the PRA; and                  

(b)each person who received notice of the appointment of the special administrator.                  

(5) After the expiry of the period mentioned in paragraph 30(7) of Schedule 1 to the 2009 Order (and subject to extension under                     paragraph 30(8) of that Schedule) if the court discharges the special administration order—                  

(a)the notice takes effect as specified in paragraph 30(7) of that Schedule; and                  

(b)the court shall notify the special administrator, who shall notify the FCA and where relevant the PRA.                  

(6) If the court makes an order under paragraph 30(8) of Schedule 1 to the 2009 Order it shall notify the special administrator                     (in Form 2.36B (the form specified in rule 2.119(4) of the 1991 Rules subject to Rule 7(2)), who shall notify the FCA and                     where relevant the PRA.                  

## **PART 4**N.I.Court Procedure and Practice

### IntroductionN.I.

52.  This Part makes specific provision for a number of aspects of proceedings for building society special administration under                     Part 3 of the Banking Act; Part 5 of these Rules applies a number of provisions of the 1991 Rules to proceedings for building                     society special administration under the Banking Act (with specified modifications).                  

### Title of proceedingsN.I.

53.  Proceedings for special administration under Part 3 of the Banking Act shall be entitled “IN THE MATTER OF ... (naming the                     building society to which the proceedings relate) AND IN THE MATTER OF PART 3 OF THE BANKING ACT 2009”.                  

### Right to inspect fileN.I.

54.—(1) The court shall open and maintain a file for each set of building society special administration proceedings.                  

(2) All documents relating to the special administration are to be placed on the file, subject to any direction of the Master.

(3) No special administration proceedings shall be filed in the Central Office of the High Court.

(4) The following have the right, at all reasonable times, to inspect the court's file in respect of special administration proceedings—

(a)the special administrator or provisional special administrator;                  

(b)a person who is or was a director or officer of the society;                  

(c)a member of the society;                  

(d)any person stating himself in writing to be a creditor of the society;                  

(e)any person stating himself in writing to be a contributory in respect of the society;                  

(f)the Bank of England;                  

(g)the FCA and where relevant the PRA; and                  

(h)the FSCS.                  

### 

55.  A right of inspection may be exercised on a person's behalf by anyone authorised by that person in writing.                  

### 

56.  Any person may, with permission of the court, inspect the court's file in respect of special administration proceedings.                  

### 

57.  A right of inspection is not exercisable in the case of documents, or parts of documents, as to which the court directs that                     they are not to be made open to inspection without the Court's permission; and an application for a direction may be made                     by—                  

(a)the special administrator or provisional special administrator; or                  

(b)any person appearing to the court to have an interest.                  

### 

58.  Rule 7.25(2) and (3) of the 1991 Rules (as applied by Rule 60) applies in respect of the court's file of special administration                     proceedings as it applies in respect of court records.                  

### 

59.  Proceedings under Articles 177 and 178 of the 1989 Order (fraudulent and wrongful trading) shall be conducted in accordance                     with Article 179 of that Order subject to the modifications specified in section 145 of the Banking Act.                  

## **PART 5**N.I.Application of the 1991 Rules

### General applicationN.I.

60.  The provisions of the 1991 Rules listed in the Table in Rule 63 apply for the purposes of special administration and applications                     for special administration.                  

### 

61.  For that purpose the Rules apply with—                  

(a)the general modifications set out in Rule 62;                  

(b)any specific modification set out in the Table in Rule 63; and                  

(c)any other necessary modification.                  

### General modificationsN.I.

62.  The general modifications are that—                  

(a)a reference to an administrator or liquidator is to be treated as a reference to a building society special administrator;                  

(b)a reference to administration or liquidation is to be treated as a reference to building society special administration;                  

(c)a reference to a provisional liquidator is to be treated as a reference to a provisional building society special administrator;                  

(d)a reference to a winding-up order is to be treated as a reference to a building society special administration order;                  

(e)a reference to a petition for a winding-up order is to be treated as a reference to an application for a building society                        special administration order;                  

(f)a reference to insolvency proceedings is to be treated as a reference to building society special administration (or proceedings                        for special administration);                  

(g)a reference to the responsible insolvency practitioner is to be treated as a reference to the building society special administrator                        or provisional special administrator;                  

(h)all references to the Official Receiver are to be ignored;                  

(i)all references to the EC regulation or to the appointment of a member State liquidator are to be ignored;                  

(j)a reference to the company is to be treated as a reference to the building society;                  

(k)a reference to the officers, or to a particular officer, of a company is to be treated as a reference to the officers, or                        to the corresponding officer, of a building society and as including a person holding himself out as such an officer;                  

(l)a reference to a contributory is to be treated as a reference to a contributory within the meaning of these Rules (see Rule                        4(1)(d));                  

(m)a reference to the registered office of the company is to be treated as a reference to the principal office of the building                        society;                  

(n)a reference to sending or giving a document or notice to, or filing it with, the registrar of companies is to be treated as                        a reference to sending the document or notice to the FCA for placing on the public file of the building society;                  

(o)a reference to a voluntary arrangement under Part II of the 1989 Order is to be treated as a reference to a voluntary arrangement                        under that Part as applied in relation to building societies by section 90A of, and Schedule 15A to, the Building Societies                        Act;                  

(p)a reference to a paragraph of Schedule B1 to the 1989 Order is to be treated as a reference to that paragraph as applied and                        modified by section 145 of the Banking Act, by section 90C of the Building Societies Act and by any order made under section                        158 of the Banking Act; and                  

(q)a reference to the 1989 Order includes a reference to Part 3 of the Banking Act.                  

### Table of applications and specific modificationsN.I.

63.  This Rule contains the Table of applied provisions of the 1991 Rules.                  

F22S.I. 2009/805 modifies the application of paragraph 66 of Schedule B1

F23S.R. 1980 No. 346, as amended by the Constitutional Reform Act 2005 (c.4), **section 59** and Schedule 11.

Sealed with the Official Seal of the Department of Justice on 13th February 2014

L.S.

David Ford

 Minister of Justice

I concur

Declan Morgan

 The Lord Chief Justice of Northern Ireland

The Department of Finance and Personnel concurs

Sealed with the Official Seal of the Department of Finance and Personnel on 13th February 2014

L.S.

John McKibbin

 A senior officer of the

Department of Finance and Personnel

## Explanatory Note

(This note is not part of the Rules)

These Rules set out the procedure for the building society special administration process under Part 3 of the Banking Act                        2009 (c.1) as applied in relation to building societies by the Building Societies (Insolvency and Special Administration)                        Order 2009 (S.I. 2009/805).                     

The main features of building society special administration are that:

it is used where part of the business of a building society is sold to a commercial purchaser or transferred to a bridge bank                                 in accordance with section 12 of the Banking Act 2009;                              

the court appoints a building society special administrator on the application of the Bank of England;

the special administrator ensures that the non-sold or non-transferred part of the building society provides services or facilities                                 to enable the commercial purchaser or bridge bank to operate effectively;                              

the special administrator has two objectives (Objective 1 – supporting the private purchaser or bridge bank; and Objective                                 2 – “normal administration”); and                              

in other respects the process is the same as for normal administration under the Insolvency (Northern Ireland) Order 1989,                                 subject to specified modifications.                              

Part 2 of the Rules sets out provisions about applications for building society special administration.

Part 3 of the Rules sets out provisions about the special administration process.

Part 4 of the Rules sets out provisions about court procedure and practice in connection with special administration.

Part 5 of the Rules applies specified provisions of the Insolvency Rules (Northern Ireland) 1991 for general purposes in connection                        with building society special administration, subject to a number of general and specific modifications.                     

An Impact Assessment relating to the rules for building society insolvency and special administration has been prepared and                        may be obtained from the Financial Regulatory Strategy Team, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ. It is also available on HM Treasury's website (www.hm-treasury.gov.uk).