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The process is not the same as an Insolvency Act 1986 Administration and the objectives of the Special Administrator who is appointed, and the powers bestowed on them, are different from those in a standard company Administration.
Special Administrators are not appointed under the Insolvency Act, but under part of the legislation (statute) that governs that particular sector. For example, the Payment and Electronic Money Institution Insolvency Regulations introduces a Special Administration regime for electronic money institutions.
The Special Administration regime for investment banks was introduced to ensure that there is minimal disruption to financial markets as a result of their failure.
As another example, a Special Administration regime exists for a protected energy company within the meaning of the Energy Act 2004. An Energy Administration Order is an order of the court which directs that the affairs, business and property of the protected energy company are to be managed by an energy administrator, a type of Special Administrator.
Under the Insolvency Act 1986 Administration process, the Administrator must be able to achieve one of the three statutory objectives set out in paragraph 3 of Schedule B1 of the Act.
When considering a Special Administration the overall objectives are modified, and to achieve them the powers held by a Special Administrator differ slightly from a ‘standard’ Administration. Their primary objective is not to consider the position of and return to creditors, but to act in the public interest.
A company in Special Administration continues to operate, but under the control of the Special Administrator. The officeholder must proceed until the business is sold, rescued via restructuring or additional funding, or in the case of an energy company, its customers have been transferred to another supplier.
In some cases the Government may financially support the process in the form of loans, bonds, or guarantees. The aim is to resolve the situation as quickly as possible, however, and Special Administration is not intended to be a long-term solution.
[See ‘Administration’, ‘Insolvency Act’ and ‘Officeholder’.]
