Financial Services and Markets Bill - continued        House of Lords
PART XXIV, INSOLVENCY - continued

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Supplemental provisions concerning insurance companies
Continuation of long term business while in liquidation.     370. - (1) This section applies in relation to the winding up of an insurance company-
 
 
    (a) to which Part II of the Insurance Companies Act 1982 ("the 1982 Act") applies; and
 
    (b) which carries on long-term insurance business.
      (2) Unless the court otherwise orders, the liquidator must carry on the long-term business of the company with a view to its being transferred as a going concern to another insurance company (whether an existing company or a company formed for that purpose).
 
      (3) In carrying on the business, the liquidator-
 
 
    (a) may agree to the variation of any contracts of insurance in existence when the winding up order is made; but
 
    (b) must not effect any new contracts of insurance.
      (4) If the liquidator is satisfied that the interests of the creditors in respect of liabilities of the company attributable to its long-term business require the appointment of a special manager of the business, he may apply to the court.
 
      (5) On such an application, the court may appoint a special manager of the business to act during such time as the court may direct.
 
      (6) The special manager is to have such powers, including any of the powers of a receiver or manager, as the court may direct.
 
      (7) Section 177(5) of the 1986 Act (or Article 151(5) of the 1989 Order) applies to a special manager appointed under subsection (5) as it applies to a special manager appointed under section 177 of the 1986 Act (or Article 151 of the 1989 Order).
 
      (8) If the court thinks fit, it may reduce the value of one or more of the contracts made by the company in the course of carrying on its long-term business.
 
      (9) Any reduction is to be on such terms and subject to such conditions (if any) as the court thinks fit.
 
      (10) The court may, on the application of an official, appoint an independent actuary to investigate the long-term business of the company and to report to the official-
 
 
    (a) on the desirability or otherwise of that business being continued; and
 
    (b) on any reduction in the contracts made in the course of carrying on that business that may be necessary for its successful continuation.
      (11) "Official" means-
 
 
    (a) the liquidator;
 
    (b) a special manager appointed under subsection (5); or
 
    (c) the Authority.
      (12) The liquidator may make an application in the name of the company and on its behalf under Part VII without obtaining the permission that would otherwise be required by section 167 of, and Schedule 4 to, the 1986 Act (or Article 142 of, and Schedule 2 to, the 1989 Order).
 
Reducing the value of contracts instead of winding up.     371. - (1) This section applies in relation to an insurance company which has been proved to be unable to pay its debts.
 
      (2) If the court thinks fit, it may reduce the value of one or more of the company's contracts instead of making a winding up order.
 
      (3) Any reduction is to be on such terms and subject to such conditions (if any) as the court thinks fit.
 
Treatment of assets on winding up.     372. - (1) The Treasury may by regulations provide for the treatment of the assets of an insurance company on its winding up.
 
      (2) The regulations may, in particular, provide for-
 
 
    (a) assets representing a particular type of business of the company to be available only for meeting liabilities attributable to that business;
 
    (b) separate general meetings of the creditors to be held in respect of liabilities attributable to a particular type of business of the company.
Winding- up rules.     373. - (1) Winding-up rules may include provision-
 
 
    (a) for determining the amount of the liabilities of an insurance company to policyholders of any class or description for the purpose of proof in a winding up; and
 
    (b) generally for carrying into effect the provisions of this Part with respect to the winding up of insurance companies.
      (2) Winding-up rules may, in particular, make provision for all or any of the following matters-
 
 
    (a) the identification of assets and liabilities;
 
    (b) the apportionment, between assets of different classes or descriptions, of-
 
      (i) the costs, charges and expenses of the winding up; and
 
      (ii) any debts of the company of a specified class or description;
 
    (c) the determination of the amount of liabilities of a specified description;
 
    (d) the application of assets for meeting liabilities of a specified description;
 
    (e) the application of assets representing any excess of a specified description.
      (3) "Specified" means specified in winding up rules.
 
      (4) "Winding-up rules" means rules made under section 411 of the 1986 Act (or Article 359 of the 1989 Order).
 
      (5) Nothing in this section affects the power to make winding-up rules under the 1986 Act or the 1989 Order.
 
 
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