The long awaited Insolvency Rules 2016 will be brought into effect on 6 April 2017, modernising their 20 year old predecessor and incorporating a raft of recent amendments to the insolvency legislation. The new rules are designed to increase creditor engagement in the insolvency process and reduce the administrative burden on officeholders; they do not make broad substantive changes to the law, but (in theory at least) simplify its application.
Some of the more significant changes brought in by the new rules are summarised below.
- Physical creditors’ meetings (including section 98 meetings to appoint a liquidator in CVLs) will be abolished unless specifically requested by creditors for decision making purposes.
- Decision making will instead be encouraged through electronic voting, virtual meetings or by correspondence (and decisions can be passed using ‘deemed consent’ procedures).
- Insolvency practitioners are encouraged to communicate with creditors through websites and by email; creditors will also be able to opt out of certain unwanted communications.
- Prescribed forms, including statutory demands, petitions, administration appointment documents, applications and other court documents have been replaced with prescribed content (although the court and the Insolvency Service are preparing a number of templates which contain the prescribed content for public use). Companies House forms are also being updated to refer to the relevant new rules.
- Creditors with small debts (under £1000 in value) are no longer required to submit a proof of debt to receive dividends.
- Bankrupts will no longer be required to complete a statement of affairs unless the Official Receiver gives notice that one is required.
The new rules will apply to all existing insolvency processes as from 6 April 2017 and there are limited transitional provisions. In practice, there are bound to be various lacunas which insolvency practitioners will be forced to navigate until further guidance is produced. It is hoped that a common sense approach will prevail but if you have any queries in the meantime our insolvency specialists are happy to assist.