ABSTRACT

The United Kingdom is not typical of legal jurisdictions in that it does not have any special insolvency regime for banks. In previous chapters it has been seen that banks are subjected to a special supervisory regime and that the informal use of the lender of the last resort function can be used to support banks with short-term liquidity problems. When there is a need for the use of an insolvency procedure banks are simply subject to the same range of legal provisions as are available to any other type of company. When the new insolvency legislation was introduced in 1986 the administration order, which was the major corporate rescue procedure introduced by the legislation, was not available to banks in distress. However, this situation was changed in 1991 and, indeed, the administration order has since proved very useful for some troubled banks and will be considered in detail in this Chapter.