ENF 10.11 Statutory background: the FSA's rights to information in insolvency regimes

Under section 361 of the Act (Administrator's duty to report to the FSA), if an administration order is in force in relation to a company or partnership as a result of a petition presented by a person other than the FSA, and it appears to the administrator that the company or partnership is carrying on, or has carried on, a regulated activity in contravention of the general prohibition, the administrator must report the matter to the FSA without delay.

Under section 362 of the Act (FSA's powers to participate in proceedings), if a person other than the FSA petitions the court for an administration order in relation to a company or partnership which:

1. (1)

   is, or has been, an authorised person; or

2. (2)

   is, or has been, an appointed representative; or

3. (3)

   is carrying on, or has carried on, a regulated activity in contravention of the general prohibition;

then the FSA is entitled to be heard at the hearing of the petition and at any other hearing of the court in relation to the company's or partnership's administration.

Under section 362(3), any notice or other document required to be sent to a creditor of such a company or partnership in administration (see ENF 10.11.2 G) must also be sent to the FSA.

Under section 362(4), the FSA may apply to the court, under section 27 of the 1986 Act or article 39 of the 1989 Order, if it believes that the company's affairs, business and property are being or have been managed by the administrator in a manner which is unfairly prejudicial to the interest of its creditors and members generally, or to some part of its creditors and members, or that any act or proposed act or omission of the administrator is or would be prejudicial.

Under section 362(5), the FSA may appoint a person to:

1. (1)

   attend any meeting of creditors of the company or partnership summoned under any enactment;

2. (2)

   attend any meeting of a creditors' committee established in the administration, under section 26 of the 1986 Act or article 38 of the 1989 Order;

3. (3)

   make representations as to any matter for decision at such a meeting.

Under section 362(6), if, during the course of the administration of a company, a compromise or arrangement is proposed between the company and its creditors, or any class of creditors, the FSA may apply to the court under section 425 of the Companies' Act 1985 or article 418 of the Companies' (Northern Ireland) Order 1986, for an order requiring a meeting of the creditors or class of creditors to be summoned.

Under section 369 of the Act (Insurers: service of petition etc. on the FSA), if a person other than the FSA presents a petition for the winding up of an insurance company which is an authorised person, the petitioner must serve a copy of the petition on the FSA. In addition, if a person other than the FSA applies to have a provisional liquidator appointed in respect of an insurance company which is an authorised person, that person must serve a copy of the application on the FSA.

Under section 370 of the Act (Liquidator's duty to report to the FSA), if a company or partnership is in voluntary liquidation, or is being wound up on a petition presented by a person other than the FSA, and it appears to the liquidator that the company or partnership is carrying on, or has carried on, a regulated activity in contravention of the general prohibition, the liquidator must report the matter to the FSA without delay.

Under section 371 of the Act (FSA's powers to participate in proceedings), if a person other than the FSA presents a petition for the winding up of a body which is, or has been, an authorised person or appointed representative, or is carrying on, or has carried on, a regulated activity in contravention of the general prohibition, the FSA is entitled to be heard on the petition and any other hearing of the court in relation to the body under or by virtue of Part IV or V of the 1986 Act or Part V or VI of the 1989 Order .

Under section 371(3) of the Act, any notice or other document required to be sent to a creditor of the body must also be sent to the FSA.

Under section 371(4) of the Act, a person appointed for the purpose by the FSA is entitled:

1. (1)

   to attend any meeting of creditors of the body;

2. (2)

   to attend any meeting of a creditors' committee established under section 101, 141 or 142 of the 1986 Act or article 87 or 120 of the 1989 Order; and

3. (3)

   to make representations about any matter which is to be decided at such a meeting.

Under section 371(5), if, during the winding up of a company, a compromise or arrangement is proposed between a company and its creditors or any class of creditors, the FSA may apply to the court under section 425 of the Companies Act 1985 or article 418 of the Companies (Northern Ireland) Order 1989 for an order requiring a meeting of the creditors or class of creditors to be summoned.

Under section 365(4) of the Act, in the case of a company which is being wound up voluntarily and is an authorised person (not an insurer) carrying on long term insurance business, any notice or other document required to be sent to a creditor of the company must also be sent to the FSA.

Also, section 365(5) of the Act permits a person appointed for the purpose by the FSA:

1. (1)

   to attend any meeting of creditors of the company summoned under any enactment;

2. (2)

   to attend any meeting of a creditors' committee summoned under section 101 of the 1986 Act or article 87 of the 1989 Order;

3. (3)

   to make representations as to any matter for decision at that meeting.

Section 363 of the Act (FSA's powers to participate in proceedings) entitles the FSA to be heard on applications and to receive reports about receiverships, where a receiver has been appointed in relation to a company which:

1. (1)

   is, or has been, an authorised person; or

2. (2)

   is, or has been, an appointed representative; or

3. (3)

   is carrying on, or has carried on, a regulated activity in contravention of the general prohibition.

Under section 363(2) of the Act, the FSA is entitled to be heard on an application, under section 35 or 63 of the 1986 Act or article 45 of the 1989 Order, by a receiver, or a person by whom or on whose behalf the receiver has been appointed, for directions in relation to any particular matter arising in connection with the performance of the receiver's functions.

Under section 363(3) of the Act, the FSA is entitled to apply to the court, under sections 41(1)(a) or 69(1)(a) of the 1986 Act or article 51(1)(a) of the 1989 Order, if the Receiver:

1. (1)

   defaults in filing, delivering or making any return, account or other document or in giving any notice which a receiver is, by law, required to file, deliver, make or give; or

2. (2)

   (when the company is in liquidation) fails to render appropriate accounts of his receipts or payments and to vouch them and pay over to the liquidator the amount of property payable to him, when required by the liquidator to do so.

Under section 363(4) of the Act, where the receiver makes a report under section 48(1) or 67(1) of the 1986 Act or article 15(1) of the 1989 Order, that report must be sent to the FSA by the receiver.

Under section 363(5), a person appointed for the purpose by the FSA is entitled to:

1. (1)

   attend any meeting of creditors of the company under any enactment;

2. (2)

   attend any meeting of a creditors' committee established under sections 49 or 68 of the 1986 Act or article 59 of the 1989 Order;

3. (3)

   make representations as to any matter for decision at such meetings.

Under section 364 of the Act (Receiver's duty to report to the FSA), if a receiver has been appointed in relation to a company and it appears to the receiver that the company is carrying on, or has carried on, a regulated activity in contravention of the general prohibition, the receiver must report this to the FSA without delay.

Under section 373 of the Act (Insolvency practitioner's duty to report to the FSA), if a bankruptcy order or, in Scotland, a sequestration award is in force in relation to an individual, following a petition presented by a person other than the FSA, and it appears to the insolvency practitioner that the individual is carrying on, or has carried on, a regulated activity in contravention of the general prohibition, the insolvency practitioner must report this to the FSA without delay. For these purposes 'individual' includes, in Scotland, an entity under section 6(1) of the 1985 Act.

Under section 374 of the Act (FSA's powers to participate in proceedings), if a person other than the FSA presents a petition to the court for:

1. (1)

   a bankruptcy order to be made against an individual; or

2. (2)

   the sequestration of an individual's estate; or

3. (3)

   the sequestration of the estate belonging to or held jointly by an entity mentioned in section 6(1) of the 1985 Act;

and that individual or entity is or has been an authorised person, or is carrying on or has carried on a regulated activity in contravention of the general prohibition, then the FSA is entitled to be heard at the hearing of the petition and at any other hearing relating to the bankruptcy or sequestration under Part IX of the 1986 Act, Part IX of the 1989 Order or the 1985 Act. A copy of the insolvency practitioner's report prepared under section 274 of the 1986 Act or article 248 of the 1989 Order must be sent to the FSA.

Section 374(4) of the Act permits a person appointed for the purpose by the FSA:

1. (1)

   to attend any meeting of creditors of the individual or entity;

2. (2)

   to attend any meeting of a creditors' committee established under section 301 of the 1986 Act or article 274 of the 1989 Order;

3. (3)

   to attend any meeting of commissioners held under paragraph 17 or 18 of Schedule 6 to the 1985 Act;

4. (4)

   to make representations as to any matter for decision at such meetings.

Under paragraph 44 of schedule A1 to the 1986 Act, where a moratorium is in place or a voluntary arrangement has been approved under that schedule in relation to a company to which the schedule applies (see ENF 10.7.5 G) and which is or has been an authorised person or an appointed representative or is carrying on or has carried on a regulated activity in contravention of the general prohibition, the FSA has the right:

1. (1)

   To receive any notice or other documents required by schedule A1 to the 1986 Act to be sent to a creditor;

2. (2)

   To be heard in any application for leave in relation to disposal of charged property (paragraph 20 of schedule A1);

3. (3)

   To be heard in any application made other than by the FSA to challenge the actions or omissions of a nominee (paragraphs 26 and 27 of schedule A1 to the 1986 Act);

4. (4)

   To attend and participate in but not vote at any meeting of creditors of the company or of the moratorium committee ;

5. (5)

   To be heard in any application by a member of the company in relation to a decision taken by the creditors' meeting under paragraph 36 of schedule A1 to the 1986 Act;

6. (6)

   To be heard in any application made other than by the FSA to challenge a decision to approve a voluntary arrangement in relation to the company under paragraph 38 of schedule A1 to the 1986 Act;

7. (7)

   To apply to the court and be heard in an application by a person other than the FSA to challenge any act, omission or decision of the supervisor under paragraph 39 of schedule A1 to the 1986 Act;

8. (8)

   To apply to the court and to be heard on any application to the court by a person other than the FSA to challenge the actions of the company's directors under paragraph 40 of schedule A1 to the 1986 Act.