CR-2023-002766 - [2025] EWHC 2818 (Ch)

I mentioned that the hard bar date, which is an integral part of the distribution plan, has to be approved separately as well because Regulation 21 provides as follows:

“21.— Objective 1: hard bar date

(1)

The administrator may, if they think it necessary in order to further expedite the return of relevant funds from an asset pool after setting a bar date under regulation 20, set a hard bar date for the submission of final relevant funds claims.

(2)

The hard bar date must be set out in a notice.

(3)

The administrator may not set a hard bar date without the approval of the court given on application by the administrator.

(4)

The priority afforded to relevant funds claims under the following provisions does not apply to late claims—

(a)

regulation 18(3), and

(b)

any provision of the safeguarding provisions; and no late claim may be founded on a beneficial interest in property.

(5)

Immediately after the hard bar date, any relevant funds held in the asset pool which have not been claimed may also be distributed, in accordance with Objective 1, to users or holders who are entitled to them under their claims made before the hard bar date.

(6)

The administrator must, as soon as reasonably practicable after the hard bar date, make a final distribution of relevant funds from the asset pool to users or holders who are entitled to them under their claims made before the hard bar date.

(7)

Immediately after that final distribution, the ownership of any relevant funds which remain in the asset pool is vested in the institution and the administrator must, as soon as possible, transfer those funds to the institution's own bank accounts.

(8)

A notice under this regulation must—

(a)

specify the hard bar date, and

(b)

refer to paragraphs (4) to (6) and explain that (in accordance with paragraph (7)) following the distribution of relevant funds from the asset pool any remaining funds will be transferred to the institution's own bank accounts.

(9)

In this regulation—"late claim" means a relevant funds claim, in response to the setting of a hard bar date, received after the hard bar date; "safeguarding provisions" means—

(a)

regulation 23 of the PSR 2017, in the case of the following relevant funds—

(i)

those received by a payment institution, or

(ii)

those received by an electronic money institution for the execution of payment transactions which are not related to the issuance of electronic money, or

(b)

regulations 20 to 24 of the EMR 2011, in the case of relevant funds received by an electronic money institution apart from those in paragraph (a)(ii).”

The jurisdictional limitation on the court is set out in Regulation 22(2) as follows:

“(2)

The court may make an order under paragraph (1)(a) only if—

(a)

it is satisfied that the administrator has taken all reasonable measures to identify and contact persons who may be entitled to the return of relevant funds, and

(b)

it considers that, if a hard bar date is set, there is no reasonable prospect that the administrator will receive claims for the return of relevant funds after that date.”

As regards the jurisdictional requirement that the administrator has taken reasonable steps to identify and contact persons who may be entitled to return of Relevant Funds, I am satisfied from the very detailed evidence set out that there is little more that the JSAs could have done, certainly on a reasonable and proportionate basis and I am satisfied that that condition is met.

The second jurisdictional requirement is that the court must consider that there is no reasonable prospect that the administrator will receive claims for the return of Relevant Funds after the hard bar date. As regards that, the approach of the court is most helpfully set out in the decision of Miles J in Re Sova Capital Limited [2023] EWHC 2690 (Ch). In particular, he was dealing with the equivalent regime of Investment Bank special administration which (so far as immediately relevant) is in much the same terms and the matter can be picked up at paragraph 21 of the judgment:

“[21] (2) The court may make an order under paragraph (1)(a) only if—

(a)

it is satisfied that the administrator has taken all reasonable measures to identify and contact persons who may be entitled to the return of relevant funds, and

(b)

it considers that, if a hard bar date is set, there is no reasonable prospect that the administrator will receive claims for the return of relevant funds after that date.

22.

I was taken to the decision of Leech J in Re Xpress Money Services Limited (In Special Administration) [2023] EWHC 1120 (Ch), which concerned another set of regulations which are essentially in the same form as the Regulations (namely regulations made under the Payment and Electronic Money Institution Insolvency (England and Wales) Regulations 2021). In Re Xpress Money Services Limited, Leech J noted that those regulations provided no real guidance as to the proper interpretation of the phrase “reasonable prospect”. He did not think it necessary on that case to express any general views as to the threshold that needed to be reached as he decided that it was reached on the facts of that case.

23.

I was taken to various other statutory and procedural rules where a phrase such as “no reasonable prospect” is used. However I do not think that they cast any useful light on the interpretation or application of Regulation 12D(2). It seems to me that the court must read the phrase “no reasonable prospect” in the light of the policy behind the hard bar regime, namely the expedition of and assistance of the closure of the client money pool, and that the test should be applied or interpreted in a manner which makes these goals sensibly achievable.”

The key point is paragraph 23, where Miles J said, as set out, that one has to consider the phrase “no reasonable prospect” in the light of the policy behind the hard bar regime.

As regards that, I am satisfied, for the reasons put forward by Mr Willson, whose submissions I accept, that there is no reasonable prospect of further claims coming to light. The extensive steps taken to contact customers, coupled with the soft bar notice, coupled with the passage of time since the Company entered special administration, taken together with the evidence of Mr Conway from previous similar cases that he has been involved in all point to, in reality, it being unlikely that there will be further claims put forward.

So far as the court’s discretion is concerned, it is clear that on the facts of this a hard bar date trigger is needed. As I understand it, what is slightly unusual about this case is that I am being asked to approve the “Hard Bar Trigger Date” and the concept of imposing a hard bar in circumstances where the hard bar may not take effect immediately or comparatively shortly after approval. However, the short point is that all steps so far as the claimants are concerned have, in effect, been followed through. The only reason for delay is nothing to do with ascertaining claims to the funds. It is simply caused by the likelihood that there are further Company assets to be brought into the pot and used by way of top-up.

In those circumstances, Mr Willson submits, and I accept his submission, that it would be unfortunate if the court were not able now to approve the setting of a hard bar date and the adoption of a hard bar and that the JSAs would have to come back at a later date, put a whole lot of essentially the same evidence before the court, possibly with some updating information about recovery of assets and incur a lot more costs and risk of further delay to distribution. In the circumstances of this particular case, where, as it were, all that is needed in terms of evidence and steps to be taken by the JSAs has been undertaken and the evidence is available to the court so far as relevant to the question of claims, it seems to me a hard bar should be approved and the date put forward is appropriate one. Therefore, I give permission, so far as that is the right test, for the administrators to set a hard bar date in accordance with Regulations 21(3) and 22(1)(a) of the Regulations.

That leaves open the last two issues. The first is the question of inspection of the court file. Initially, it was proposed that Mr Conway’s second witness statement should be withheld from the right to inspect or take copies under the rules unless the court gave permission. Normally the permission of the court is not needed. So far as the content matter of the second witness statement is concerned, it seems to me fairly obvious that that information should be not openly available on an unrestricted basis. If a person needs that information, then they can make out their case to the court. However, as originally formulated, the suggestion was that the entirety of Mr Conway’s first and third witness statements would also be excluded.

On discussing the matter further with Mr Willson, it emerged that a solution would be to restrict access to those parts of the first witness statement that are of concern, comprising one of the documents in the exhibit to the first witness statement, which, as I understand it, is already subject to a similar restriction in the proceedings. Accordingly, subject to the precise form of words being put before me, in principle I order that the ordinary right of inspection/to copies should not apply to that part of the exhibit to Mr Conway’s witness statement, i.e., the witness statement of the third party, and that covers the matter off.

For the future, it seems to me that lawyers in the future might well consider that if there are circumstances where detailed parts of a witness statement (or exhibit) make it appropriate for them to apply for an order to restrict the normal right to obtain copies and/or inspect, they might put such parts of the witness statement and/or exhibit in a confidential annexure to the witness statement so that the court can easily make an order excluding that part of the witness statement from the right of inspection and copying which would otherwise apply.

There is also a question, it seems to me, of timing. Mr Willson tells me it was hoped this application would come on more rapidly than it has done, but the fact of the matter is that the witness statement has, in fact, been open on the court file since June or so and we are now in October. Consideration, I think, in other cases will need to be given to whether to make a more urgent application if necessary to the ICC judge to restrict the right of access to inspect and copy over until the effective hearing of the substantive application for setting the hard bar date and/or approval of a distribution plan.

The final matter I have to deal with is the costs of the application and I will simply make the usual order that the costs of and incidental to the application will be payable as an expense of the special administration in the usual way.