MF Global UK Limited In Special Administration

The Financial Services Authority (“FSA”) has confirmed that MF Global UK Limited (“MF Global UK”) has entered the Special Administration Regime created under the Investment Bank Special Administration Regulations 2011 (“Regulations”).¹ MF Global UK is the first investment bank to enter the Special Administration Regime. The decision to apply for special administration was initiated by the board of MF Global UK.

Historically, the United Kingdom has not had a specialised bankruptcy regime for dealing with the failures of financial institutions. Rather, these were handled under the same rules that applied to ordinary corporations.

This month we consider the court's view on the extent to which firms' activities in handling complaints are themselves subject to adjudication by the Financial Ombudsman Service; the exercise of the court's discretion in refusing an unopposed application to annul a bankruptcy order; and more cases and issues affecting the industry:

The High Court considers the remit of the FOS's jurisdiction

The UK Financial Services Authority (“FSA”) confirmed on 31 Oct. 2011 that MF Global UK Limited (“MF Global UK”) will be subject to the new Special Administration Regime (“SAR”).^[1] This is the first time that the new regime, set out in The Investment Bank Special Administration Regulations 2011 (“SAR Regulations”)^[2] has been invoked.

Background

The U.K. Court of Appeal (the “Court of Appeal”) on Aug. 2, 2010, handed down a long-awaited decision regarding an appeal related to the scope of, and eligibility to receive distributions from, the Lehman Brothers Europe (International) (“LBIE”) pool of client money. Lehman Bros. Int. (Europe) (In Administration) v CRC Credit Fund Ltd. & Ors, [2010] EWCA Civ 917 (appeal taken from the Chancery Division) (U.K.).

Yesterday, the United Kingdom’s Commercial Secretary to the Treasury launched a consultation on a new special-resolution regime, Special administration regime for investment firms, to strengthen the government’s ability to handle future insolvencies of failing investment banks to minimize cost and disruption of the overall national financial system.

Today, the U.K. Treasury and Northern Rock plc separatelyannounced that the restructuring of Northern Rock will take place on January 1, 2010 (Transfer Date).

The European Commission (EC) yesterday approved the restructuring plan of Northern Rock plc. The plan will split the company into two separate companies. The new Northern Rock plc will consist of a new savings and mortgage bank that will hold and service all customer savings accounts and some existing mortgage accounts.

Yesterday, Iceland’s Prime Minister announced that the government has decided not to bring suit against the UK authorities for the Freezing Order issued against Landsbanki by the UK authorities on October 8, 2008, on the basis of their Anti-Terrorism, Crime and Security Act.

FSA made five sets of new rules at its March board meeting: