In the matter of Xpress Money Services Limited (in special administration)

The court considered applications by the joint special administrators under Rule 114 of The Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021 and Regulation 21 (with the court's powers under Regulation 22) of The Payment and Electronic Money Institution Insolvency Regulations 2021 to approve a Distribution Plan and to authorise the setting of a hard bar date for relevant funds claims. The judge applied the requirement in Rule 114 that the court be satisfied the administrators gave required notifications (including the Rule 111 notices) and the test in Regulation 22 that the administrators have taken all reasonable measures to identify and contact persons entitled to relevant funds and that there is no reasonable prospect of further claims after a hard bar date.

The court concluded the administrators had taken all reasonable measures to identify and contact eligible claimants and that there was no reasonable prospect of further relevant funds claims. The Distribution Plan was held to be a fair and reasonable means of effecting distribution and to further Objective 1 (the return of relevant funds as soon as is reasonably practicable) under Regulation 12.2. The court therefore approved the Distribution Plan under Rule 114 and authorised the setting of a hard bar date under Regulation 21/22.

Background and nature of the application: Xpress Money Services Limited (XMSL), an authorised payment institution, entered special administration under The Payment and Electronic Money Institution Insolvency Regulations 2021. The joint special administrators applied for (i) court approval of a Distribution Plan for return of "relevant funds" under Rule 114 of the Rules, (ii) authority to set a hard bar date under Regulation 21 (with court approval under Regulation 22), and (iii) an order that the costs of the application be treated as administrators' costs in pursuit of Objective 1.

Issues for the court: (i) whether the administrators had taken all reasonable measures to identify and contact persons entitled to relevant funds (Regulation 22(2)(a)); (ii) whether there was no reasonable prospect of relevant funds claims being received after a hard bar date (Regulation 22(2)(b)); and (iii) whether the proposed Distribution Plan should be approved as a fair and reasonable means to effect distribution under Rule 114(5).

Facts and procedural posture: XMSL held relevant funds totalling about $57,425,510 on 28 October 2021, with further smaller sums in other accounts. The administrators and XMSL had undertaken tracing exercises and communications, including a soft bar date and text-message notifications to customers. Few claims were received (seven claims between March 2022 and the soft bar date and one further claim thereafter), totalling a small sum. The Financial Conduct Authority was consulted and raised no objection.

Court's reasoning and decision: The judge applied the guidance in Re MF Global UK Ltd and Re Beaufort Asset Clearing Services Ltd that the court should be satisfied the Distribution Plan provides a fair and reasonable means of effecting distribution and should take into account the objective of returning client assets promptly. The judge found that XMSL and the administrators had undertaken extensive tracing and notifications, that the likely remaining claims were for small, often stale transactions, and that there was no reasonable prospect of further significant claims after a hard bar date. Given that no creditor objections had been received and the FCA raised no objection, the court approved the Distribution Plan without modification and authorised the administrators to set a hard bar date. The judge considered it unnecessary to specify timing or conditions for the hard bar date in this case but left open that courts may give more detailed directions in other cases.

Subsidiary findings: the judge accepted that Objective 1 includes not only returning client assets but doing so as quickly as reasonably practicable; the administrators had properly used Rule 111 notifications where applicable; and the Distribution Plan was conventional given the asset and creditor profile.

Relief not explicitly addressed: The judgment does not record a specific order or decision about the administrators' application on costs (the relief in paragraph (c) of the application).

The court approved the Distribution Plan under Rule 114 and authorised the administrators to set a hard bar date under Regulation 21 with the court's approval under Regulation 22. The rationale was that the administrators had taken all reasonable measures to identify and contact eligible claimants and there was no reasonable prospect of further relevant funds claims after a hard bar date; the Distribution Plan was fair and reasonable and advanced Objective 1 to return relevant funds as soon as is reasonably practicable.