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

When approving a hard bar date under the special administration regime for payment institutions, the court must be satisfied that the administrators have taken all reasonable measures to identify and contact potentially entitled persons and that there is no reasonable prospect of further claims after the date.

In exercising its discretion to approve a distribution plan, the court should consider whether the plan provides a fair and reasonable means of returning relevant funds and advances the statutory objective of doing so as soon as reasonably practicable. The court may approve a conventional plan without modification where the statutory conditions are met and there is no creditor opposition.

The joint special administrators of Xpress Money Services Limited, an authorised payment institution in special administration, applied for approval of a distribution plan under Rule 114 of the Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021 and approval to set a hard bar date under Regulation 21 of the Payment and Electronic Money Institution Insolvency Regulations 2021.

The applications concerned the return of safeguarded relevant funds to eligible claimants and the treatment of any undistributed balance. The central issues were whether the statutory preconditions for a hard bar date were satisfied and whether the proposed distribution plan should be approved.

1. Hard bar date. The court was satisfied that the administrators had taken all reasonable measures to identify and contact eligible claimants. It was also satisfied that there was no reasonable prospect of a relevant funds claim being received after the proposed hard bar date. The statutory conditions in Regulation 22(2) were therefore met.
2. The court accepted that fixing a hard bar date would further the statutory objectives, including returning relevant funds as soon as reasonably practicable and winding up the company in the best interests of its creditors. Approval was granted under Regulation 22.
3. Distribution plan. The court applied the approach in Re MF Global UK Ltd [2013] 1 WLR 3874: the court must consider whether the plan provides a fair and reasonable means of effecting the distribution of the assets to which it relates. That approach was applicable under the present statutory regime, with the additional emphasis that relevant funds should be returned as quickly as reasonably practicable.
4. The notification requirement in Rule 114(5)(a)(i) was satisfied by text messages sent to eligible customers who had not submitted claims, together with the other communication steps undertaken by the administrators. The court accepted that the proposed plan was conventional and straightforward, involved cash as the relevant asset, and provided for relevant funds claimants and unsecured creditors.
5. The distribution plan represented a fair and reasonable means of distributing the relevant funds and furthered Objective 1. It was approved without modification. The court declined to give directions about the timing of the hard bar date, while noting that more detailed directions might be appropriate in other cases.