DLA Piper advises on RFX’s successful distribution plan and declaratory relief application

DLA Piper advised Kristina Kicks and Ed Boyle of Interpath Ltd, the joint special administrators of Rational Foreign Exchange Limited, in relation to obtaining the approval of the distribution plan for the return of safeguarded funds and the declaratory relief sought concerning the status of EU customers.

The application is only the third distribution plan approved under the Payment and Electronic Money Institution Insolvency regime (pSAR) and the first reported case involving the treatment of European customers’ funds post the UK’s exit from the European Union (Brexit).

The Court’s consideration of and comments on the structures used by RFX to service EU customers post-Brexit will likely assist where reconciliation work is required to establish rights to safeguarded funds in similar cases.

RFX is an FCA-regulated authorised payment institution which provided foreign exchange and international payment services to corporate and retail clients. The group also operated in the EU through two separate Lithuanian subsidiaries and several counterparty agents/relationships.

A cross-border and multi-disciplinary DLA Piper team from the firm’s Finance (Restructuring), Intellectual Property and Technology, and Litigation & Regulatory practices based in the UK and Europe have advised in relation to this special administration. It was led Peter Manley, Restructuring partner in the firm’s Finance group, and associate, Aimee Harper.

Peter Manley commented: “The approval for the distribution plan under pSAR is a significant milestone and one of the handful of plans approved in relation to the current pSAR regulations. Regulated financial services businesses should ensure that governance and compliance practices are robust and operating effectively to comply with regulatory obligations in relation to customer funds. Where such business foresee or encounter commercial and/or financial challenges obtaining advice at an early stage will maximise optionality to enable the business to resolve such challenges.”