Northern Ireland Court Service

The Bank Insolvency (No. 2) Rules (Northern Ireland) 2009

The Lord Chancellor has made the following Rules in the exercise of powers conferred by Article 359 of the Insolvency (Northern Ireland) Order 1989 (“the Order”), with the concurrence of the Treasury and, in relation to those rules that effect court procedure, with the concurrence of the Lord Chief Justice of Northern Ireland under Article 359 (1A) of the Order:—

The Bank Insolvency (No. 2) Rules (Northern Ireland) 2009

These Rules revoke and replace the Bank Insolvency Rules (Northern Ireland) 2009 to correct drafting errors in that instrument. They set out the procedure for the bank insolvency process under Part 2 of the Banking Act 2009.

The main features of Bank Insolvency are that, in the event of a deposit-taking bank becoming insolvent, it enables those depositors who are eligible for compensation under the Financial Services Compensation Scheme (FSCS) to either—

(a)	receive compensation for their lost deposits as soon as possible after the bank goes into bank insolvency; or
(b)	have their account transferred to a different bank.

This is the first objective of the insolvency process.

The procedure can only be initiated by the Bank of England, the Financial Services Authority or the Department by application to the court. The court then makes a bank insolvency order, appointing a bank liquidator. In the initial stages, the bank liquidator is accountable to a liquidation committee formed of the FSA, the Bank of England and the FSCS.

Once the bank liquidator considers that the first objective is achieved, the liquidation committee will pass a resolution to that effect and the bank insolvency will move to the second objective which is to wind up the affairs of the bank so as to achieve the best results for the creditors as a whole.

These amendments shall come into operation on 1st April 2009.

Copies of the Rules – Statutory Rules of Northern Ireland 2009 No. 122 may be obtained from The Stationery Office, 16 Arthur Street, Belfast, BT1 4GD.