2024 No. 205
Insolvency, England And Wales
Water Industry, England And Wales
Companies, England And Wales
The Water Industry (Special Administration) Regulations 2024
Made
22nd February 2024
Coming into force in accordance with regulation 2
The Secretary of State makes these Regulations in exercise of the powers conferred by sections 23(2E) and (3A) and 213(2)(e) and (f) of the Water Industry Act 1991 (“the 1991 Act”).
In accordance with section 23(2G)(a) and (3D)(a) of the 1991 Act, the Welsh Ministers have consented to the making of these Regulations.
In accordance with section 23(2G)(b) and (3D)(b) of the 1991 Act, a draft of this instrument has been laid before and approved by resolution of each House of Parliament.
(1) For the purposes of regulation 49, these Regulations come into force on the day after the day on which they are made.
(2) For all other purposes, these Regulations come into force at the end of a period of 21 days beginning with the day after the day on which these Regulations are made.
In these Regulations—
“the 1986 Act” means the Insolvency Act 1986;
“special administrator” means a person appointed by the court to manage the affairs, business and property of a water industry company under—
section 23(1) of the Water Industry Act 1991; or
paragraph 91 or 103 of Schedule B1 to the Insolvency Act 1986 as modified by Parts 3 and 4 of these Regulations; and
“water industry company” means a company of a kind mentioned in section 23(1) of the Water Industry Act 1991.
(1) The provisions of the 1986 Act mentioned in tables 1 and 2 apply in relation to special administration as they apply in relation to administration but with the modifications set out in Parts 3 and 4 of these Regulations.
Table 1 Schedule B1 to the 1986 Act
Paragraphs | Description
1 | Interpretation
4 to 6 | Administrator’s duties, status and qualifications
13 | Powers of court
40 to 49 | Effect of administration
54 | Revision of administrator’s proposals
59 to 75 | Administrators: powers, duties, agency, property, challenge, misfeasance
79 | Ending administration
83 to 91 | Moving to other insolvency procedures, discharge and replacement
95 | Appointment of replacement administrator by the court
98 to 104 | Discharge of administrator’s liability, general provisions
106 | Penalties
107 | Extension of time limits
109 to 111 | Provisions about time and interpretation
Table 2 Other provisions of the 1986 Act
Provisions | Description
section A16 | Company enters into insolvency procedure etc
section A43 | Challenges to monitor remuneration in insolvency proceedings
sections 1 to 7B | Company voluntary arrangements
section 72A | Floating charge holder not to appoint administrative receiver
section 133 | Public examination of officers
section 140 | Court appointment after administration or voluntary arrangement
section 214 | Wrongful trading
sections 233 to 237 | Management by administrators, liquidators etc
sections 238 to 241 | Transactions at an undervalue and preferences
section 244 | Extortionate credit transactions
section 245 | Avoidance of certain floating charges
section 246 | Unenforceability of liens on books etc
sections 246ZA to 246ZC | Fraudulent and wrongful trading
section 246ZD | Power to assign certain causes of action
sections 246A to 246C | Remote meetings, use of websites, creditors’ opt-out of notices
section 411 | Power to make insolvency rules
section 413 | Insolvency Rules Committee
section 424 | Those who may apply for an order under section 423
section 426 | Cooperation between courts exercising insolvency law jurisdiction
Schedule ZA1, paragraph 2 | Moratorium: eligible companies
Schedule 1 | Powers of administrator or administrative receiver
Schedule 8 | Provisions capable of inclusion in company insolvency rules
Schedule 10 | Punishment of offences under the 1986 Act
(2) The provisions of Schedule B1 to the 1986 Act that are not mentioned in table 1 do not apply to special administration.
6 General modifications to provisions about administration
(1) Subject to the following provisions of these Regulations, and except where the context demands otherwise, references in any enactment to any term specified in column 1 of the table include references to the term specified in column 2.
Table
Column 1 | Column 2
administration | special administration
administration application | special administration application
administration order | special administration order
administrator | special administrator
enters administration | enters special administration
purpose(s) of administration | purposes of special administration
(2) In any enactment modified under paragraph (1), the terms in column 2 of the table are to be construed in accordance with Schedule B1 to the 1986 Act as modified under Part 4 of these Regulations.
Paragraph 1 has effect as if—
(a) for sub-paragraph (1) there were substituted—
(1) For the purposes of this Act, a “special administrator” means a person appointed by the court to manage the affairs, business and property of a water industry company under—
(a) section 23(1) of the 1991 Act, or
(b) paragraph 91 or 103 of this Schedule.
; and
(b) after sub-paragraph (1) there were inserted—
(1A) Where the context requires, the definition of “special administrator” in sub-paragraph (1) includes a former special administrator.
.
Paragraph 40 has effect as if it were substituted with—
40. When a court makes a special administration order in respect of a company, it must dismiss any outstanding petition for the winding up of the company.
.
Paragraph 43 has effect as if—
(a) after sub-paragraph (5) there were inserted—
(5A) No proceedings under or for the purposes of section 18 of the 1991 Act may be instituted or continued against the company or property of the company except—
(a) with the consent of the special administrator, or
(b) with the permission of the court.
; and
(b) in sub-paragraph (6), after “No” there were inserted “other”.
Paragraph 44 has effect as if—
(a) sub-paragraphs (2), (3), (4) and (6) were omitted; and
(b) in sub-paragraph (7), paragraphs (a) to (c) were omitted.
15 Announcement of special administrator’s appointment
Paragraph 46 has effect as if—
(a) for sub-paragraph (4) there were substituted—
(4) Before the end of the period of seven days beginning with the date specified in sub-paragraph (6), the special administrator must send notice of their appointment to—
(a) the registrar of companies,
(b) in relation to a qualifying water supply licensee whose licence gives it a supplementary authorisation, the Welsh Ministers, and
(c) whichever of the following was not the applicant for the special administration order under which the special administrator was appointed—
(i) the relevant authority,
(ii) the Water Services Regulation Authority.
; and
(b) for sub-paragraph (6) there were substituted—
(6) The date for the purpose of sub-paragraphs (4) and (5) is the date of the special administration order.
.
Paragraph 49 has effect as if—
(a) for paragraph (2)(b) there were substituted—
(b) where applicable (see section 23 of the 1991 Act), explain why the special administrator thinks that—
(i) it is not likely to be possible to rescue the company as a going concern, or
(ii) transfer is likely to secure more effective performance of the functions or activities mentioned in section 23(2)(a), (2A)(a) or (2AA)(a) of the 1991 Act.
; and
(b) in sub-paragraph (4), before paragraph (a), there were inserted—
(za) to the relevant authority,
(zb) in the case of a qualifying water supply licensee whose licence gives it a supplementary authorisation, to the Welsh Ministers,
(zc) to the Water Services Regulation Authority,
.
Paragraph 54 has effect as if it were substituted with—
54. (1) The special administrator of a company may on one or more occasions revise the proposals included in the statement made under paragraph 49 in relation to the company.
(2) If the special administrator thinks that a revision is substantial, they must send a copy of the revised proposals to—
(a) the registrar of companies,
(b) the relevant authority,
(c) in the case of a qualifying water supply licensee whose licence gives it a supplementary authorisation, the Welsh Ministers,
(d) the Water Services Regulation Authority,
(e) every creditor of the company, other than an opted-out creditor, of whose claim and address the special administrator is aware, and
(f) every member of the company of whose address the special administrator is aware.
(3) A copy sent in accordance with sub-paragraph (2)—
(a) must be sent within the prescribed period, and
(b) must also, in the case of the copy under sub-paragraph (2)(f), be sent before the end of the period of five business days beginning with the day on which a copy is first sent to a creditor under sub-paragraph (2)(e).
(4) The special administrator is to be taken to have complied with sub-paragraph (2)(f) if they publish, in the prescribed manner, a notice undertaking to provide a copy of the revised proposals free of charge to any member of the company who applies in writing to a specified address.
(5) A special administrator who fails without reasonable excuse to comply with this paragraph commits an offence.
.
20 Special administrator’s general powers and dealings with protected land
Paragraph 60 has effect as if—
(a) after sub-paragraph (1), there were inserted—
(1A) The special administrator of a company has the power to act on behalf of the company for the purposes of provision contained in any legislation which confers a power on the company or imposes a duty on it.
(1B) In sub-paragraph (1A) “legislation” means any provision made by or under an Act.
; and
(b) after sub-paragraph (2), there were inserted—
(3) Subject to sub-paragraph (6), the special administrator must not dispose of any of the company’s protected land, or any interest or right in or over that land, except with the consent of the relevant authority.
(4) Consent for the purposes of sub-paragraph (3) may be given on such conditions as the relevant authority thinks appropriate.
(5) Consent for the purposes of sub-paragraph (3) and any conditions imposed under sub-paragraph (4) must be notified to the special administrator in writing.
(6) Paragraph (3) does not apply where the special administrator disposes of protected land under a scheme for the transfer of property under Schedule 2 to the 1991 Act.
.
Paragraph 68 has effect as if—
(a) for sub-paragraph (1) there were substituted—
(1) Subject to sub-paragraph (2), the special administrator of a company must manage its affairs, business and property in accordance with—
(a) proposals in the statement made under paragraph 49, and
(b) where applicable, any revision to the proposals under paragraph 54.
; and
(b) for paragraph (3) there were substituted—
(3) Directions given by the court under sub-paragraph (2) must be consistent with the purposes of the special administration order.
.
25 Challenge to special administrator’s conduct of company
Paragraph 74 has effect as if—
(a) for sub-paragraph (2), there were substituted—
(2) Where a company is in special administration, a person mentioned in sub-paragraph (2A) may apply to the court claiming that the special administrator is conducting the special administration in a way that is preventing its purposes from being achieved as quickly and efficiently as is reasonably practicable.
;
(b) after sub-paragraph (2), there were inserted—
(2A) The persons who may apply to the court under sub-paragraph (2) are—
(a) the relevant authority,
(b) the Water Services Regulation Authority, if it has the consent of the relevant authority,
(c) a creditor of the company,
(d) a member of the company.
(2B) Where a company is in special administration, the relevant authority or the Water Services Regulation Authority may apply to the court claiming that the special administrator has exercised or is exercising or is proposing to exercise their powers in relation to the company in a way which involves a contravention of—
(a) the conditions of the company’s appointment under Chapter 1 of Part 2 of the 1991 Act,
(b) the company’s licence granted under Chapter 1A of Part 2 of the 1991 Act, or
(c) any statutory or other requirement imposed on the company in consequence of that appointment or licence.
;
(c) sub-paragraph (6)(c) were omitted; and
(d) after sub-paragraph (6), there were inserted—
(7) In the case of a claim made by a creditor or member of the company, the court may not grant a remedy or relief under this paragraph unless it has given the relevant authority and the Water Services Regulation Authority a reasonable opportunity to make representations about the claim and the proposed remedy, relief or order.
(8) An order may not be made under this paragraph if it would be likely to prejudice, impede or prevent the achievement of the purposes of the special administration order concerned.
(9) Before making an order of the kind mentioned in sub-paragraph (4)(d)—
(a) the court must notify the special administrator of—
(i) the proposed order, and
(ii) a reasonable period during which the special administrator may take relevant steps (see sub-paragraphs (10) to (13)), and
(b) the period mentioned in paragraph (a)(ii) must have expired without the special administrator having taken such of those steps as the court thinks should have been taken.
(10) If the claim is made under sub-paragraph (1)(a), relevant steps are—
(a) ceasing to act in a way that unfairly harms the interests to which the claim relates,
(b) remedying any harm unfairly caused to those interests, and
(c) ensuring that there is no repetition of conduct unfairly causing harm to those interests.
(11) If the claim is made under sub-paragraph (1)(b), relevant steps are steps for ensuring that the interests to which the claim relates are not unfairly harmed.
(12) If the claim is made under sub-paragraph (2), relevant steps are—
(a) ceasing to act in a manner preventing the achievement of the purposes of the special administration as quickly and as efficiently as is reasonably practicable,
(b) remedying the consequences of the special administrator having acted in such a manner, and
(c) ensuring that there is no repetition of conduct preventing the achievement of the purposes of the special administration as quickly and as efficiently as is reasonably practicable.
(13) If the claim is made under sub-paragraph (2B), relevant steps are—
(a) ceasing to act in a manner contravening—
(i) the conditions of the appointment or licence, or
(ii) any statutory or other requirement imposed on the company in consequence of that appointment or licence,
(b) remedying the consequences of the special administrator having acted in such a manner, and
(c) ensuring that there is no repetition of conduct contravening—
(i) the conditions of the appointment or licence, or
(ii) any statutory or other requirement imposed on the company in consequence of that appointment or licence.
.
Paragraph 79 has effect as if—
(a) for sub-paragraph (1) there were substituted—
(1) (a) The special administrator of a company may apply to the court for the appointment of a special administrator of the company to cease to have effect from a specified time.
(b) The special administrator may only make an application under paragraph (a) on the ground that the purposes of the special administration have been achieved.
(c) The special administrator must obtain the consent of the relevant authority before making an application under paragraph (a).
(d) In a case where—
(i) the company in special administration is a qualifying water supply licensee whose licence gives it a supplementary authorisation, and
(ii) the relevant authority is the Secretary of State,
the Secretary of State must consult the Welsh Ministers before giving consent under paragraph (c).
(1A) (a) The relevant authority or the Water Services Regulation Authority may apply to the court for the appointment of a special administrator to cease to have effect from a specified time.
(b) An application may only be made under paragraph (a) on the ground that there is no longer a need to pursue the purposes of the special administration.
(c) The Water Services Regulation Authority must obtain the consent of the relevant authority before making an application under paragraph (a).
(d) In a case where the company in special administration is a qualifying water supply licensee whose licence gives it a supplementary authorisation, the Secretary of State or the Water Services Regulation Authority (as the case may be) must consult the Welsh Ministers before making an application under paragraph (a).
; and
(b) sub-paragraphs (2) and (3) were omitted.
27 Moving from special administration to creditors’ voluntary liquidation
Paragraph 83 has effect as if—
(a) sub-paragraph (2) were omitted; and
(b) in sub-paragraph (3), for “The administrator” there were substituted “The special administrator, with the consent of the relevant authority or the Water Services Regulation Authority,”.
28 Moving from special administration to dissolution
Paragraph 84 has effect as if—
(a) in sub-paragraph (1), for “If” there were substituted “Subject to sub-paragraph (1ZA), if”; and
(b) after sub-paragraph (1), there were inserted—
(1ZA) Before sending a notice under sub-paragraph (1), the special administrator must obtain the consent of the relevant authority or the Water Services Regulation Authority.
.
Paragraph 87 has effect as if, for sub-paragraph (2), there were substituted—
(2) Where a special administrator may resign, they may do so only by notice in writing to the court.
.
Paragraph 89(2) has effect as if—
(a) in the words before paragraph (a), after “in writing” there were inserted “to the court.”; and
(b) paragraphs (a) to (d) were omitted.
Paragraph 91 has effect as if—
(a) for sub-paragraph (1) there were substituted—
(1) The court may replace the special administrator on an application made—
(a) by the relevant authority,
(b) by the Water Services Regulation Authority, or
(c) where more than one person was appointed to act jointly or concurrently as the special administrator, by any of those persons who remain in office.
; and
(b) sub-paragraph (2) were omitted.
Paragraph 95 has effect as if—
(a) in the opening text, for “the court—” there were substituted “the court is satisfied that it is right to do so”; and
(b) paragraphs (a) and (b) were omitted.
Paragraph 99 has effect as if—
(a) in sub-paragraph (4), for the words from “A sum payable” to “before cessation” there were substituted “A sum falling within sub-paragraph (4A)”;
(b) after sub-paragraph (4) there were inserted—
(4A) A sum falls within this paragraph if it is—
(a) a sum payable in respect of a debt or liability arising out of a contract that was entered into before cessation by the former special administrator or a predecessor,
(b) a sum that must be repaid by the company in respect of a grant that was made before cessation under section 153 of the 1991 Act as is mentioned in subsection (3) of that section,
(c) a sum—
(i) that must be repaid by the company in respect of a loan made before cessation under that section, or
(ii) that must be paid by the company in respect of interest payable on such a loan,
(d) a sum payable in respect of an indemnity given by the Secretary of State under section 153 of the 1991 Act, or
(e) a sum payable by the company under section 154(5) of the 1991 Act in respect of a guarantee given before cessation.
; and
(c) in sub-paragraph (5), for “Sub-paragraph (4)” there were substituted “Sub-paragraph (4A)(a)”.
37 Appointment of joint and concurrent special administrators
Paragraph 103 has effect as if it were substituted with—
103. (1) Where a company is in special administration, a person may be appointed to act as a special administrator jointly or concurrently with the person or persons acting as the special administrator of the company.
(2) Subject to sub-paragraph (3), an appointment under sub-paragraph (1) must be made by the court on the application of—
(a) the relevant authority; or
(b) the Water Services Regulation Authority.
(3) An appointment made under sub-paragraph (1) may be made only with the consent of the person or persons acting as the special administrator of the company.
.