Modernisation and consolidation are the focus of The Insolvency (Amendment) (No. 3) Rules 2009, which are published in draft form by the Insolvency Service and are due to come into force on 6 April 2010.

Fortunately they are accompanied by a consolidated version of the Insolvency Rules 1986 showing tracked changes introduced by the "Modernisation Draft Rules". Also useful - and readable, at only 19 pages - is the Stakeholder Commentary.

There's a fair amount of detailed change for insolvency professionals to assimilate, but a few tasters from the Stakeholder Commentary are:

• The remuneration of office-holders may be set as a fixed amount instead of, or in addition to, a percentage of the value of property dealt with or a time charge. Remuneration may consist of a combination of any two, or all three, of these bases.
• Provision is made for an administrator or other qualified insolvency practitioner to be able to recover remuneration charged and expenses incurred before the formal start of the administration, of particular importance in what have become known as “pre-pack administrations”.
• One of the key facets of the modernisation reforms is to facilitate the delivery of documents electronically. With this in mind the amending Rules make a number of provisions facilitating the sending of documents by electronic means. The general principle found in Rules 12A.7 and 12A.10 is that documents may be delivered by electronic means provided that the recipient has consented and provides an electronic address.

The Insolvency Service notes:

• The Rules amendments have been prepared with the benefit of extensive stakeholder input and they are not issued now for further consultation, which would delay the delivery timetable. Instead, we are seeking comments concerning any errors or drafting difficulties that may be found within the draft Rules. Please note that the draft Rules being published here are currently under review with the Insolvency Rules Committee and therefore may be subject to some further revision.
• Any enquiries regarding the above should be directed towards Neil Ogilvie, Policy Unit, Area 5.7, 21 Bloomsbury Street, London WC1B 3QW; e-mail Neil.Ogilvie@insolvency.gsi.gov.uk

Chris Laughton is a Restructuring & Insolvency partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Chris you can call him on 020 7353 1597.

• Email This
• Print
• Comments (2)
• Share Link
• Mercer Hole Homepage
• Contact Us

As revealed in Insolvency reform - Bank Law Blog, the Insolvency Service has issued a consultation paper setting out its proposals to modernise and streamline the law governing insolvency procedure.

The broad aims are to bring insolvency law up to date with our current ability to communicate electronically, to move some decision-making process to insolvency practitioners and to remove some unnecessary burdens from insolvency practitioners. Replies to the consultation must be with the Insolvency Service by 10 December 2007.

The document's full title is:

"A consultation document on changes to the Insolvency Act 1986 and the Company Directors Disqualification Act 1986 to be made by a Legislative Reform Order for the modernisation and streamlining of insolvency procedures".

It is:

 "A Consultation Paper issued by The Insolvency Service on behalf of the Minister of State for Employment Relations and Postal Affairs"

and it is available for download (from the Insolvency Service website) here.

There are eight proposals, detailed below:

1. To modernise and make more flexible the means of communication, and the exchange of information, between insolvency office-holders and creditors (and others who send or receive information) in insolvency cases by:

1.Introducing a provision requiring creditors to “opt-in” if they wish to receive information issued by the insolvency office-holder during the conduct of the proceedings and/or who wish to participate in the insolvency process.
2.Updating insolvency legislation to make it explicit that communication can be effected electronically where the legislation requires it to be “in writing”.
3.Enabling insolvency office-holders to provide information by sending a link to a website on which information is posted.
4.Providing a legislative framework that will allow insolvency office-holders to hold meetings required to be held as part of their conduct of insolvency cases through media other than meetings held at a physical venue.

2. To remove a requirement that is imposed upon liquidators and trustees in bankruptcy requiring them to obtain sanction for certain actions they propose to take as part of their conduct of the case.

3. Moving to allow discretionary advertising of the appointment of a voluntary liquidator and to remove restrictions on the form any such advertisement can take.

4. Removing a requirement imposed upon liquidators to summon annual meetings of members and/or creditors for the purpose of laying an account of their acts and dealings and of the conduct of the winding up during the preceding year.

5. Removing the requirement for any document in insolvency proceedings to be sworn by affidavit and to replace it with a less burdensome requirement for such documents to be verified by a statement of truth in accordance with the Civil Procedure Rules 1998.

6. To remove the requirement for an insolvency practitioner, acting as liquidator, to submit a report to the Secretary of State on the conduct of the directors of a company if he has already submitted such a report as administrator of the same company.

7. To remove a requirement that exists for the Insolvency Services Account (“ISA”) kept by the Secretary of State to be held with the Bank of England.

8. To remove the power of the court to order that a person owing monies to a company in liquidation pay those monies into an account, in the liquidator’s name, at the Bank of England.

As an IP, I have to say that on first reading the proposals make good sense.

Comment below, or respond directly to the Insolvency Service on Annex B of the document.

• Email This
• Print
• Comments
• Share Link
• Mercer Hole Homepage
• Contact Us