Reyker Securities Plc, Re (In Special Administration)

Approval of a distribution plan under the special administration regime requires the court to be satisfied that the statutory conditions and notification requirements have been met and that the plan provides a fair and reasonable means of returning client assets as soon as reasonably practicable.

The court must exercise its own judgment, but should give particular weight to the views of the administrators, the creditors’ committee, the FCA and the responses of affected clients. Where properly informed interested persons have had an opportunity to make representations, the court should be slow to withhold approval or substitute its own assessment. A date expressed as “ASAP” may satisfy the Rules where a certain date cannot practically be identified.

Reyker Securities Plc entered special administration under the Investment Bank Special Administration Regulations 2011. Its administrators applied under the Investment Bank Special Administration (England and Wales) Rules 2011 for approval of a distribution plan governing the return of approximately £919 million of client assets to 9,392 clients.

The plan provided for bulk transfers to nominated brokers, opt-out and reverse-transfer rights, treatment of potential claimants, and allocation of administration costs. The creditors’ committee unanimously approved the plan. The FCA and FSCS had been consulted and did not object. One client opposed approval, principally because of concerns about the original investment and the proposed transfer of her holdings.

The central issue was whether the statutory conditions were satisfied and whether the plan was a fair and reasonable means of achieving the objective of returning client assets as soon as reasonably practicable.

1. Application granted. The distribution plan was approved under Rule 146. The court was satisfied that the creditors’ committee had approved it and that the required notifications had been given.
2. The court adopted the approach stated by Miles J in Re SVS Securities Plc [2020] EWHC 1501 (Ch). The purpose of a distribution plan is to assist the return of client assets as early as possible. The plan must provide a fair and reasonable means of effecting that distribution.
3. The court must exercise its own judgment. However, particular weight should be given to the professional judgment of the administrators, the role and approval of the creditors’ committee, the views or objections of the FCA, and the representations or absence of representations from clients. Where interested persons have had a proper opportunity to make representations, the court should be slow to withhold approval or substitute its own assessment of fairness.
4. The plan’s provisions for bulk transfers, opt-out and reverse-transfer rights, residual assets, disputed liabilities, potential claimants and costs were fair and reasonable. The transfer of client assets to another broker did not prejudice the client’s rights against Reyker or other persons arising from any alleged mis-selling.
5. The requirement in Rule 144 concerning timing was broadly construed. In circumstances where practical considerations made a certain date impossible to identify, describing the proposed return date as “ASAP” was sufficient compliance.
6. The plan complied with the other requirements of Rule 144, including identification of assets, net asset claims, costs and treatment of potential claimants. The statutory conditions and notification requirements were satisfied, so the order sought by Reyker was made.

First instance decision. No prior appellate decision is stated in the judgment.