Insolvency Rules 2016: A Modern Era27 Mar 2017
The new Insolvency Rules 2016 will come into force on 6 April 2017. In practice, the Rules should provide more efficiency, as they aim to modernise the insolvency procedures, resulting in reduced time and costs expended.
The significant changes brought by the Rules include:
Officeholder reports and remuneration
The format and the contents of the officeholder’s progress reports for administration, winding up and bankruptcy cases will be standardised. Remuneration information provided in the report will have to confirm the basis of remuneration (i.e. on a time basis, fixed on a percentage of property or on a fixed fee basis), expenses and whether estimates are likely to be exceeded. If the fee estimate is exceeded, approval of the creditors or court would have to be obtained in order to be paid. In most cases, it is for the creditor’s committee to approve the determined fees and, if not approved, a decision procedure is adopted. If both these steps fail to determine the fees, an application can be made to the Court to decide. Creditors have eight weeks from when the report is received to challenge fees.
Meetings for corporate insolvency procedures
In a move to modernise the process, the Rules have abolished the need to hold meetings for corporate insolvency procedures, except in cases where creditors representing 10% (in value or number) or 10 individual creditors have requested a meeting. In its place, certain prescribed decision procedures can be adopted, which include virtual meetings, electronic voting or correspondence. This process should allow all creditors to participate equally in decision-making.
Communicating with creditors
Communicating electronically with creditors, as permitted by the Rules, will ensure a more environmentally-friendly process being adopted. It should also be more cost-effective. It is important that the officeholders ensure that the creditors have either communicated electronically with the insolvent party or consented to electronic communication prior to the insolvency. Documents can also be delivered through websites by the officeholder, provided that notice of such method is given to creditors in advance. It is always open for creditors to request paper versions of documents.
Once the Rules have actually been implemented, we will find out whether the modernised objectives of the Rules have been achieved.
For more information on the new Insolvency Rules 2016 or how they may impact your activity, please contact Sharon Kelly on 0161 838 7807 or email firstname.lastname@example.org.