Key updates on English special administration regime for payment and e-money institutions

Quick read

To date, there have been 11 special administrations under the Payment and Electronic Money Institution Insolvency Regulations 2021 (PESAR). The court has recently approved distribution plans for Silverbird Global Limited (Silverbird) and Rational Foreign Exchange Limited (Rational FX) - the third and fourth plans under the regime.

"Fair and Reasonable" test

In approving the plans, the courts applied the three-part test from Re SVS Securities Plc including:

whether the plan provides a fair and reasonable means of distribution
the progress of the special administration to date
whether all relevant persons have been consulted.

Rational FX

This is the first reported judgment addressing a distribution plan involving EU customer funds post-Brexit, examining the complex contractual arrangements Rational FX used to serve EU customers. The court approved the distribution plan and rejected the application of MLS-Multinational Logistics Services Limited, claiming to be a customer/creditor, concluding that it contracted with a different entity PayrNet, and not Rational FX.

Silverbird

Silverbird ceased trading after breaching Russia sanctions. The judgment focused on two unresponsive customers with potentially substantial claims. Given the special administrators' efforts to contact them, the court concluded there was no reasonable prospect of them submitting a claim following the hard bar date and approved the distribution plan without modification.

What's next?

The Government has implemented an independent Review of PESAR with initial conclusions due at the end of September 2025. The review must consider whether any changes could improve the effectiveness of the PESAR’s statutory objective for return of customer funds (see our previous alert). Given the paucity of approved distribution plans to date, accelerating the approval process could be on the agenda – watch this space!