Are you prepared for the upcoming changes to the Insolvency Rules?

The Insolvency Team highlight some of the key changes to the long-waited Insolvency Rules which come into force on 6th April 2017. The Insolvency (England and Wales) Rules 2016 (“2016 Rules”) will repeal and replace the existing Insolvency Rules 1986 (“1986 Rules”) and will apply to all future insolvency appointments.

PURPOSE OF THE CHANGES

• To reflect modern business practice and to increase efficiency
• To modernise the 1986 Rules which have been amended 28 times in the last 30 years since being in force
• To reduce the red tape caused by many amendments since the 1986 Rules. The 2016 Rules will incorporate the further changes made the 1986 Rules by the Enterprise and Regulatory Reform Act 2011, the Deregulation Act 2015 and the Small Business, Enterprise and Employment Act 2015. These will all come into force on 6 April 2017. The changes include replacing creditors meetings in relation to decision making processes and using more effective methods of communication.

HIGHLIGHTS OF SOME OF THE KEY CHANGES

Creditors Meetings

The requirement for a creditors meeting has been removed by the 2016 Rules. Decisions that are normally taken by creditors at that meeting will now be approved by “deemed consent”. A physical meeting of creditors has been restricted so that a meeting can only be called by the office holder if requested. The office holder will have to send a proposal to the creditors, and if 10% or less object to that proposal, then the office holder will have a use different decision making process, such as a virtual meeting or electronic voting.

Creditors’ claims of less than £1,000

Debts of less than £1,000 shown on the accounting records or statement of affairs, the relevant office holder may take the view to class this debt as proved for the purposes of declaring a dividend. For the debt to be proved the office holder when sending out the notice of dividend, must include the information as set out in 14.31 IR 2016.

Electronic communication

Insolvency Practitioners will be able to use electronic means of communication when contacting creditors rather than paper communication.

Opting out of Correspondence

There is a chance for creditors to ‘Opt- Out’ of receiving further correspondence from the office holder, once an appointment has been made, unless the correspondence relates to the payment of a dividend.

Bankruptcy

The Official Receiver will be appointed as the Trustee in Bankruptcy upon the Court making the bankruptcy Order, as opposed to being appointed as a receiver or manager whilst waiting the appointment of a trustee. This will remove any delay between the making of the bankruptcy order and the automatic vesting of property in a trustee.

Bradley Haynes Solicitors have experienced team members who can provide the necessary advice. For further information, please contact any one our team members, Andrew Bradley, Jonathan Bustin or Shakira Zaman on 01905 900 919 or email welcome@bradleyhayneslaw.co.uk

DISCLAIMER

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at 3 February 2017. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.