Hartmann Capital Ltd & Ors, Re Investment Bank Special Administration Regulations 2011

An exemption for insolvency proceedings must be construed according to the statutory language used. Where an instrument refers specifically to administrators appointed under Part II of the Insolvency Act 1986, the exemption does not extend, by implication or a general purposive approach, to administrators appointed under a distinct special administration regime, even where that regime substantially corresponds with the ordinary administration procedure. Any extension of the exemption requires legislative intervention.

The joint administrators of Hartmann Capital Limited, an investment bank in special administration, applied for a declaration that they could use the funding regime available in insolvency proceedings generally. The issue arose under article 4 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No 5 and Saving Provisions) Order 2013, which preserved the pre-LASPO funding position for proceedings brought by administrators appointed pursuant to Part II of the Insolvency Act 1986, or by companies entering administration under that Part.

The applicants’ appointments were made under the Investment Bank Special Administration Regulations 2011. The central question was whether those appointments fell within the wording of article 4 despite the distinct statutory source of the special administration regime.

1. The application for the declaration was refused. The administrators of Hartmann Capital were not entitled to the funding possibilities preserved by article 4 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No 5 and Saving Provisions) Order 2013.

2. Article 4 refers specifically to an administrator appointed pursuant to Part II of the Insolvency Act 1986 and to a company entering administration under that Part. Part II comprises section 8, which gives effect to Schedule B1.

3. The Investment Bank Special Administration Regulations 2011 establish a separate investment bank special administration procedure. Although the Regulations cross-refer to Schedule B1 and the two regimes correspond in many respects, the distinction between them remains legally significant. The applicants’ administrators were appointed under the 2011 Regulations, rather than pursuant to Schedule B1 in the strict sense.

4. A purposive construction could arguably produce a sensible result by extending the exemption to special administrators. The wording of article 4 nevertheless prevented that construction. The court could not remedy the apparent gap consistently with the language enacted. Legislative intervention would be required to extend the exemption.