Section 23: Meaning and effect of special administration order., Water Industry Act 1991

A special administration order is an order of the High Court made in accordance with section 24 or 25 below in relation to a company holding an appointment under Chapter I of this Part or which is a qualifying water supply licensee or a qualifying sewerage licensee and directing that, during the period for which the order is in force, the affairs, business and property of the company shall be managed, by a person appointed by the High Court—

for the achievement of the purposes of such an order; and

in a manner which protects the respective interests of the members and creditors of the company.

The purposes of a special administration order made in relation to any company holding an appointment under Chapter 1 of this Part shall be-

the transfer to another company, or (as respects different parts of the area to which the company's appointment relates, or different parts of its undertaking) to two or more different companies, as a going concern, of so much of the company's undertaking as it is necessary to transfer in order to ensure that the functions which have been vested in the company by virtue of its appointment may be properly carried out; and

the carrying out of those functions pending the making of the transfer and the vesting of those functions in the other company or companies (whether by virtue of the transfer or of an appointment or variation which replaces the former company as a relevant undertaker).

The purposes of a special administration order made in relation to any company which is a qualifying water supply licensee shall be—

the transfer to another company or companies, as a going concern, of so much of the company's undertaking as it is necessary to transfer in order to ensure that activities relating to the introduction or introductions of water mentioned in subsection (7) below may be properly carried on; and

the carrying on of those activities pending the making of the transfer.

Where a company is in special administration as a result of an order made on the grounds that the company is or is likely to be unable to pay its debts—

a purpose of the special administration order is to rescue the company as a going concern, and

the transfer purpose under subsection (2)(a) or (2A)(a) applies only if the special administrator thinks that—

it is not likely to be possible to rescue the company as a going concern, or

transfer is likely to secure more effective performance of the functions or activities mentioned in subsection (2)(a) or (2A)(a).

Where subsection (2B) applies, subsections (2)(b) and (2A)(b) have effect as if they referred to carrying out functions, or carrying on activities, pending rescue or transfer.

For the purpose of rescuing the company as a going concern a special administrator may propose—

a company voluntary arrangement under Part 1 of the Insolvency Act 1986, or

a compromise or arrangement in accordance with Part 26 or 26A of the Companies Act 2006.

The Secretary of State may by regulations made by statutory instrument—

modify a provision of the Insolvency Act 1986 or the Companies Act 2006 in respect of the arrangements and compromises mentioned in subsection (2D) in so far as they apply to a company which is or has been in special administration;

make other supplemental provision about those arrangements and compromises (which may, in particular, apply or modify the effect of an enactment about insolvency or companies).

Provision under subsection (2E)(a) or (b) may, in particular, confer a function on—

the Secretary of State,

the Welsh Ministers, or

the Authority.

Regulations under subsection (2E) may not be made unless—

the Welsh Ministers have consented to the making of the regulations, and

a draft has been laid before and approved by resolution of each House of Parliament (and section 213(1) shall not apply).

A transfer under subsection (2) or (2A) may be effected by—

transferring all or part of the company's undertaking to a wholly-owned subsidiary of the company, and

then transferring securities in the subsidiary to another company.

Schedule B1 to the Insolvency Act 1986 (administration) applies to special administration (subject to regulations under subsection (3A)).

The Secretary of State may make regulations about special administration which—

apply (with or without modification) an insolvency provision;

disapply an insolvency provision;

modify the effect of an insolvency provision;

make provision similar to, and in place of, an insolvency provision.

In subsection (3A) "insolvency provision" means a provision of the Insolvency Act 1986 or another enactment about insolvency (including (i) a provision about administration, (ii) a provision about consequences of insolvency, and (iii) a provision conferring power to make rules).

A reference in an enactment to Part II of the Insolvency Act 1986 includes a reference to that Part as applied by or under this section (subject to regulations under subsection (3A)).

Regulations under subsection (3A) shall be made by statutory instrument and may not be made unless—

the Welsh Ministers have consented to the making of the regulations, and

a draft has been laid before and approved by resolution of each House of Parliament (and section 213(1) shall not apply).

Schedule 2 to this Act shall have effect for enabling provision to be made with respect to cases in which

a company is replaced by another as a relevant undertaker without an appointment or variation under Chapter 1 of this Part; or

a company carries on activities relating to—

the introduction or introductions of water mentioned in subsection (7) formerly carried on by another company; or

the removal or removals of matter mentioned in subsection (9) formerly carried on by another company,

in pursuance of a special administration order.

In this section "business" and "property" have the same meanings as in the Insolvency Act 1986.

For the purposes of this section, sections 24 to 26 below and Schedule 2 to this Act, a water supply licensee is a qualifying water supply licensee if—

it is the holder of a water supply licence giving it a wholesale or supplementary authorisation (within the meaning of Chapter 1A of this Part), and

the condition in subsection (7) is satisfied in relation to it.

The condition in this subsection is that—

the introduction of water by the licence holder which is permitted under section 66B or 66C is designated as a strategic supply under section 66G, or

the introductions of water by the licence holder which are permitted under section 66B or 66C are designated as a collective strategic supply under section 66H.

Section 23: Meaning and effect of special administration order.

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