A set of new insolvency rules are coming into force, as of April 6 2017, as Stephen Young explains in the following bulletin. In short, the previous insolvency rules that have been in force since 1986 no longer apply and instead a whole new set of rules now must be used.
The new Insolvency (England & Wales) 2016 rules will apply to all cases, both existing and new.
In short, the main changes are as follows:
1. All of the Parts and Numbering of the old rules have been completely changed so each type of insolvency has its own new Part.
For example, where previously Part 6 and Rule 6.1 onwards in the 1986 Rules dealt with bankruptcy, the new 2016 Rules relating to bankruptcy are now in Part 10 and Rule 10.1 onwards.
- CVAs are now dealt with by Part 2
- Administrations are Part 3
- Receiverships are Part 4
- MVLs are Part 5
- CVLs are Part 6
- Compulsory Liquidations are Part 7
- Part 8 are IVAs
- Part 10 is Bankruptcy
2. All the insolvency forms whose format was prescribed under the 1986 Rules (e.g. Creditors Winding up petition or Statutory Demand) have all been abolished. Although there are no longer “prescribed” forms, PLC, the Insolvency Service and HMCTS have now all prepared new precedent forms that can be used in their place.
3. The new rules largely abolish physical creditors meetings. Instead decision making will largely be conducted through correspondence or virtual meetings (e.g. via SKYPE). For example, there is no longer a requirement to have a physical meeting of creditors when a company goes into CVL.
In addition, a new process called Deemed Consent is introduced, whereby a proposal will be deemed to be approved unless a certain amount or value of creditors object by a prescribed deadline.
4. The new rules also introduce the ability for insolvency officeholders to communicate more with creditors electronically and make more use of websites to provide information. Creditors do also have the ability to opt out, if they so wish, of receiving further correspondence
5. Creditors will no longer need to submit a proof of debt if they are owed less than £1,000
6. There are certain procedural changes made to Administrations, Liquidations and Bankruptcy that either take account of recent case law or to streamline the process