On 6 April 2017, the Insolvency Rules 2016 came into force. The new rules aim to modernise the insolvency process; and make it more efficient. Physical meetings, as the default decision making process, have been abolished. Where the debtor ‘customarily’ communicated with a creditor by way of email notices can be served by email under deemed consent, rather than through the post. The rules also introduce the use of websites to publish notices, without the need to inform creditors of any postings.
Creditors will still be asked to appoint the liquidator in voluntary insolvent liquidations. However, the appointment will no longer take place at a physical meeting. Instead, creditors will be asked to attend a virtual meeting or the liquidator will be appointed by deemed consent, in the absence of sufficient objections against a deemed consent appointment.
If sufficient creditors object to a deemed consent appointment, only then will a physical meeting take place, but there is no longer any requirement on the directors to attend the creditors’ meeting, whether virtual or physical. The reason for abolishing the physical creditor meetings is cited as lack of creditor engagement. However, the abolition of meetings to appoint a voluntary liquidator as a forum for creditors to ask directors questions is regrettable, as it formed a part in the process where creditors were given the opportunity to voice their concerns.
We would encourage anyone who wishes to appoint a liquidator of their choice to get involved in the appointment process. The role of liquidators is an important one, as they have statutory duties to investigate and to report on directors’ conduct. Under the new rules, time-scales are tight, so it is important to act quickly upon the receipt of a notice, in order to make your voice heard. In addition, creditors should be encouraged to convey any particular concerns to the liquidator following the appointment, to ensure that issues are properly investigated and reported.