Michael Gibbon KC and Ryan James Turner appeared on behalf of the Special Administrators of Xpress Money Services Limited (the “company”) in the first application to approve a distribution plan under the Payment and Electronic Money Institution Insolvency Regulations 2021 (the “Regulations”).

The company is an authorised payment institution (“API”) that was the second such company to enter into special administration under the Regulations. As an API, the company was required to safeguard funds that it received in connection with certain payment transactions in one of two ways: either by segregating “relevant funds” or holding a policy of insurance that mimics the segregation option. The effect of this requirement is that funds should be available for distribution to certain types of creditors in the event that the company becomes insolvent.

The Regulations and the Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021 (the “Rules”) introduced a framework for the conduct of special administrations and the process by which the special administrators may deal with funds that have been safeguarded. The Rules and Regulations were modelled on existing statutory regimes that apply to other types of special administrations (most notably, the Investment Bank Special Administration Regulations 2011).

On 11 February 2022, the Court placed the company in special administration under the supervision of David Hudson and Philip Reynolds at FRP Advisory; and the special administration provided the first opportunity for the Court to consider the Rules and Regulations in a reported judgment.

On 9 February 2023, Mr Justice Leech made orders under reg. 21 of the Regulations to set a hard bar date for the submission of claims by entitled creditors and authorised a distribution plan under r. 114 of the Rules. The orders were necessary in order for the special administrators to conclude the administration and distribute assets that had been safeguarded in circumstances where there was no real prospect of claims to those assets by creditors entitled to them. Although this was the first occasion on which the Court has made these orders under the Rules and Regulations, Mr Justice Leech drew on the guidance previously given in relation to hard bar dates and distribution plans in connection with similar legislative regimes (see §§17-18, and 27), and approached the Rules and Regulations consistently with the approach taken to other special administration regimes. The judge’s approved judgment has recently been formally released and is available here.

Michael and Ryan were instructed by Douglas Hawthorn and David Antrobus of Osborne Clarke LLP.  The members of Maitland Chambers have particular expertise in relation to the different special administration regimes (such as those under the investment banking regulations) and electronic money institutions and authorised payment institutions.