• SCHEDULE 11 SCHEDULE 11 SUPPLEMENTAL PROVISIONS APPLICABLE TO PROTECTED CELL COMPANIES

    • 1. Interpretation

      In this schedule, the defined terms listed below shall have the following meanings —

      "cell" has the meaning given in the Companies Regulations 2015;

      "Cell Liquidator" means the person appointed as cell liquidator under a Cell Liquidation Order;

      "Cell Liquidation Order" means an order under paragraph 4 (Cell Liquidation Order) of this Schedule;

      "cellular assets" has the meaning given in the Companies Regulations 2015;

      "cell member" means the member of a cell; and

      "non-cellular assets" has the meaning given in the Companies Regulations 2015.

    • 2. Liquidation of a Protected Cell Company

      (1) The members of a Protected Cell Company shall not pass a resolution to appoint a liquidator to the Protected Cell Company under these Regulations or the Companies Regulations 2015 if any cell is subject to a Cell Liquidation Order.
      (2) Any resolution passed contrary to sub-paragraph (1) shall be void and of no effect.
      (3) In the liquidation of a Protected Cell Company, the liquidator —
      (a) shall, in the course of winding-up the Protected Cell Company, wind-up each cell of the Protected Cell Company;
      (b) shall be bound to deal with the Protected Cell Company's cellular assets and non-cellular assets in accordance with the requirements set out in Section 1057 (Application of the Insolvency Regulations 2015 to cell Companies) of Part 36 (Cell Companies) of the Companies Regulations 2015; and
      (c) in discharge of the claims of creditors of the Protected Cell Company, shall apply the Protected Cell Company's cellular assets and non-cellular assets to those entitled to have recourse thereto.
      (4) Parts 3 (Winding-Up) and 4 (Protection of Assets in Liquidation and Administration) of these Regulations shall apply to the liquidation of a Protected Cell Company with such modifications as are necessary to give effect to paragraph (3), and in the event of any conflict between the provisions of Parts 3 (Winding-Up) and 4 (Protection of Assets in Liquidation and Administration) and this Schedule the provisions of this Schedule shall prevail.

    • 3. Application of these Regulations to cells

      (1) Subject to sub-paragraph (2), these Regulations shall apply to a cell of a Protected Cell Company which is the subject of a Cell Liquidation Order as if, where the context admits —
      (a) the cell was a separate Company;
      (b) the cell members were members of that separate Company;
      (c) the cellular assets attributable to the cell were the assets of that separate Company;
      (d) references to liquidation or winding-up include a reference to a Cell Liquidation Order; and
      (e) references to Insolvency Proceedings include a reference to a Cell Liquidation Order.
      (2) Parts 1 (Administration), 2 (Receivership) and 6 (Cross-Border Insolvency) and Chapters 1 (General), 2 (Voluntary winding-up), 3 (Members' voluntary winding-up), 4 (Creditors' voluntary winding-up), 5 (Provisions applying to both kinds of voluntary winding-up) and 6 (Compulsory winding-up) of Part 3 (Winding-Up) of these Regulations shall not apply to a cell of a Protected Cell Company.
      (3) In the event of any conflict between the provisions of this Schedule and other provisions of these Regulations, the provisions of this Schedule shall prevail.

    • 4. Cell Liquidation Order

      (1) Subject to the provisions of this paragraph, if in relation to a Protected Cell Company the Court is satisfied —
      (a) that the cellular assets attributable to a particular cell of the Protected Cell Company are or are likely to be insufficient to discharge the claims of creditors in respect of that cell; and
      (b) that the making of an order under this paragraph would achieve the purposes set out in sub-paragraph (3),
      the Court may make a Cell Liquidation Order under this paragraph in respect of that cell.
      (2) A Cell Liquidation Order may be made in respect of one or more cells of a Protected Cell Company.
      (3) A Cell Liquidation Order is an order directing that the business and cellular assets attributable to a cell shall be managed by a Cell Liquidator specified in the order for the purposes of —
      (a) the orderly closing down of the business attributable to the cell; and
      (b) the distribution of the cellular assets attributable to the cell to those entitled to have recourse thereto.
      (4) Where the Court makes a Cell Liquidation Order it shall, at the same time, appoint a liquidator to act as Cell Liquidator under the Cell Liquidation Order.
      (5) A Cell Liquidator appointed under this paragraph must be a person registered as an insolvency practitioner under Part 9 (Insolvency Practitioners) of these Regulations.

    • 5. Application for a Cell Liquidation Order

      (1) An application for a Cell Liquidation Order in respect of a cell of a Protected Cell Company may be made by —
      (a) the Protected Cell Company;
      (b) the Directors of the Protected Cell Company;
      (c) any creditor of the Protected Cell Company in respect of that cell;
      (d) any cell member in respect of that cell; or
      (e) the Financial Services Regulator.
      (2) Notice of an application to the Court for a Cell Liquidation Order in respect of a cell of a Protected Cell Company shall be served upon —
      (a) the Protected Cell Company;
      (b) the Financial Services Regulator; and
      (c) such other persons, if any, as the Court may direct,
      each of whom shall be given an opportunity of making representations to the Court before the Cell Liquidation Order is made.
      (3) The Court, on hearing an application for a Cell Liquidation Order, may, instead of making the order sought or dismissing the application, make an interim order or adjourn the hearing, conditionally or unconditionally.
      (4) The Court may make a Cell Liquidation Order subject to such terms and conditions as it considers appropriate.
      (5) A Cell Liquidation Order shall —
      (a) not be made if a liquidator is appointed to the Protected Cell Company; and
      (b) be discharged upon the appointment of a liquidator in respect of the Protected Cell Company, unless the Court orders otherwise on being satisfied that it is desirable to do so in order to protect the interests of members or creditors, or potential members or creditors, of the cell.

    • 6. Functions and powers of a Cell Liquidator

      (1) The Cell Liquidator of a cell of a Protected Cell Company may —
      (a) do all such things as may be necessary or expedient for the purposes set out in paragraph 4(3) (Cell Liquidation Order) of this Schedule; and
      (b) exercise all the functions and powers of the Directors in respect of the business and cellular assets attributable to the cell.
      (2) The Cell Liquidator may at any time apply to the Court for —
      (a) directions as to the extent or exercise of any function or power; or
      (b) an order as to any matter arising in the course of the liquidation of the cell.
      (3) In exercising his functions and powers the Cell Liquidator shall be deemed to act as agent of the Protected Cell Company, and shall not incur personal liability except to the extent that he is fraudulent, reckless, negligent, or acts in bad faith.
      (4) Any person dealing with the Cell Liquidator in good faith and for value need not inquire whether the Cell Liquidator is acting within his powers.

    • 7. Effect of Cell Liquidation Order

      (1) When an application has been made for, and during the period of operation of, a Cell Liquidation Order —
      (a) no proceedings may be instituted or continued by, or against, the Protected Cell Company in relation to the cell in respect of which the Cell Liquidation Order was made, or against the business or cellular assets attributable to that cell; and
      (b) no steps may be taken to enforce any security or in the execution of legal process in respect of the business or cellular assets attributable to the cell in respect of which the Cell Liquidation Order was made,
      except with the consent of the Cell Liquidator or with leave of the Court.
      (2) During the period of operation of a Cell Liquidation Order, the Directors shall not exercise any powers or functions in respect of the business or the cellular assets attributable to the cell in respect of which the Cell Liquidation Order was made, without the consent of the Cell Liquidator.

    • 8. Distribution of Cellular Assets

      (1) Subject to Sections 263 (Insolvency of clearing and settlement intermediaries or authorised market institutions; client assets) of these Regulations, the cellular assets attributable to the cell in respect of which the Cell Liquidation Order was made shall be applied by the Cell Liquidator in satisfaction of the following liabilities in the order of priority of —
      (a) all remuneration and expenses properly incurred by the Cell Liquidator in winding-up the cell;
      (b) any preferential debts of the Protected Cell Company which are attributable to the business or cellular assets of the cell; and
      (c) the remainder of the cell's liabilities in accordance with sub-paragraph (3);
      subject to that application, any surplus shall be distributed in accordance with sub-paragraphs (4) and (5).
      (2) Creditors of a cell that is subject to a Cell Liquidation Order shall be regarded as preferential creditors of the cell to the extent they would be preferential creditors under Schedule 8 (Preferential Debts) of these Regulations if —
      (a) the cell was a Company; and
      (b) the Cell Liquidator was a liquidator under these Regulations.
      (3) The cell's unsecured debts (including all or any part of a secured debt which is treated as unsecured in accordance with Schedule 5 (Proofs and Distribution) in a winding-up) (other than the remuneration and expenses of the Cell Liquidator and preferential debts) rank equally between themselves in the Cell Liquidation and shall be paid in full unless the cellular assets are insufficient to meet them, in which case they abate in equal proportions among themselves.
      (4) Subject to the Articles of the Protected Cell Company, any surplus shall be distributed among the cell members in respect of the cell that is subject to the Cell Liquidation Order or the persons otherwise entitled to the surplus, in each case according to their respective rights and interests in or against the Protected Cell Company.
      (5) Where there are no cell members in respect of the cell and no persons otherwise entitled to the surplus, any surplus shall be paid to the Protected Cell Company and shall become a non-cellular asset of the Protected Cell Company.

    • 9. Discharge and variation of Cell Liquidation Orders

      (1) An application to Court may be made by a Cell Liquidator to —
      (a) discharge the Cell Liquidation Order if he thinks the purpose for which the order was made has been achieved or substantially achieved or is incapable of being achieved; or
      (b) vary the Cell Liquidation Order.
      (2) The Court, on hearing an application for the discharge or variation of a Cell Liquidation Order, may make such order as it considers appropriate, may dismiss the application, may make any interim order or may adjourn the hearing, conditionally or unconditionally.
      (3) Upon the Court discharging a Cell Liquidation Order in respect of a cell on the ground that the purpose for which the order was made has been achieved or substantially achieved —
      (a) the Court may direct that any payment made by the Cell Liquidator to any creditor of the Protected Cell Company in respect of that cell shall be deemed full satisfaction of the liabilities of the Protected Cell Company to that creditor in respect of that cell; and
      (b) the creditor's claims against the Protected Cell Company in respect of that cell shall be thereby deemed extinguished but nothing in this sub-paragraph (3) shall operate so as to affect or extinguish any right or remedy of a creditor against any other person, including any surety of the Protected Cell Company.
      (4) The Court may, upon discharging a Cell Liquidation Order in respect of a cell of a Protected Cell Company, direct that the cell shall be dissolved on such date as the Court may specify.
      (5) When a cell of a Protected Cell Company has been dissolved under sub-paragraph (4), the Protected Cell Company may not undertake business or incur liabilities in respect of that cell.

    • 10. Remuneration of Cell Liquidator

      The remuneration of a Cell Liquidator shall be fixed by the Court and shall be payable, in priority to all other claims, from —

      (a) the cellular assets attributable to the cell in respect of which the Cell Liquidator was appointed; and
      (b) to the extent that these may be insufficient, from the non-cellular assets of the Protected Cell Company,

      but not from any of the cellular assets attributable to any other cell of the Protected Cell Company.