Out with the old and in with the new – Corporate Insolvency
As of today (Thursday 6th April 2017) the Insolvency (England & Wales) Rules 2016 come into force. The Rules introduce much needed significant reform and consolidation of the Insolvency Rules 1986. The 1986 Rules have been amended on numerous occasions and have increasingly become cumbersome, out-dated and unsuited to current corporate insolvency practice. The Rules provide the procedural framework for the Insolvency Act 1986.
Whilst the Rules only apply in England and Wales, corporate insolvency regimes are extremely similar North and South of the border and the ways in which the Office Holder in these regimes acts is also very similar.
It is expected that a new set of Rules will come into force in Scotland to replace the Insolvency (Scotland) Rules 1986, which like the Insolvency Rules 1986, are in need of reform and consolidation, probably sometime in later this year.
The Insolvency (England & Wales) Rules 2016 are lengthy and it is likely to take some time for practitioners to become familiar with the Rules and how to implement them in practice. Practitioners will in advance of 6thApril 2017 have been undergoing an arduous task of updating Forms, checklists and the like to ensure compliance with the new Rules.
An “Explanatory Memorandum” to the Rules has been published and is useful reading as to the background to the reform and as to the principal reasons why reform was required.
The Rules have been restructured to make them easier to follow and have distinct parts for each corporate insolvency regime, including separating out Rules relevant to voluntary liquidations and those relevant to Compulsory liquidations.
The Rules reflect current working practices and allow for, amongst other things, the ability for electronic communications with creditors, remove the automatic requirement to hold physical creditors meetings and abolish the requirement for certain other meetings, and allow creditors to opt out of communications.
The 2016 Rules represent possibly the most significant reform in corporate insolvency practice since 1986.
Ready, Steady, Go!
Almost in (and out again!) with the nearly new – Personal Insolvency.
The Bankruptcy (Fees) (Scotland) Regulations 2017 were due to come into force on Monday 3rd April, however did not! The Regulations were intended to revoke and replace the Bankruptcy (Fees) (Scotland) Regulations 2014. The fees which the Regulations govern are fees charged by the Accountant in Bankruptcy where he acts as interim Trustee or Trustee in sequestrations bankruptcy), and also those which are charged by the Accountant in Bankruptcy where other statutory functions are exercised.
In a rather unusual turn of events, on 28th March 2017, just days before the Regulations were due to come into force, the Bankruptcy (Fees) (Scotland) Revocation Regulations 2017 came into force. The 2014 Regulations will therefore remain in force.
Representations were made to the Scottish Parliament’s Economy, Jobs & Fair Work Committee by, amongst others, the Institute of Chartered Accountants in Scotland. Views were put forward that the proposed Regulations were ill-advised and unfair and that there should be a full review of how the Accountant in Bankruptcy is funded and operates. Further, representations were made that there required to be a fundamental review of the structure and setting of fees.
As a result of the debate and revocation of the Regulations, there is expected to be a full Consultation process as to any future reform as to the fees applicable in sequestrations.
If you are looking for advice on the new regulations, the Blackadders Dispute Resolution team are always here to help!