The New Insolvency Rules 2017: How they affect the Insolvency Profession

On the 6 April 2017, the new Insolvency Rules 2017 come into force introducing and consolidating the rules currently contained in the Insolvency Rules 1986.

Businesses unsure of their position in light of these amendments should contact our specialist lawyers and we can help guide you through the insolvency process, ensuring you remain compliant throughout, whilst finding a suitable solution that meets the needs of you and your business.

The New Rules

Although the fundamental procedures in Insolvency regimes have not altered significantly, the new rules aim to consolidate the existing instruments which comprise the 1986 Rules. By creating a single instrument this will simplify and better meet the needs of users, including the judiciary, insolvency office-holders, creditors and public officials.

Official Receiver as First Trustee

• Upon securing a bankruptcy order the Official Receiver will be automatically appointed as the first trustee rather than becoming the receiver/manager of the bankrupt’s estate pending appointment of a trustee.

Communication with Creditors

• Creditors will be able to ‘opt – out’ of future correspondence meaning that the Office Holder must not send any report accounts to a creditor who has opted out. Those creditors who choose to opt out can opt back in and receive further correspondence should they wish at any time.
• Creditors cannot opt out from receiving Notice of Intended Dividends.

Claims of less than £1,000

• If a Creditors Claim amounts to a small debt (less that £1,000), the Office Holder will be able to rely upon the debtors accounting records or statement of affairs in order to illustrate that the debt is proved for the purposes of payment of a dividend and in an attempt to save lengthy costs of investigating the debt.
• Should the Creditor dispute the debtor’s records than a Proof of Debt can still be

Removal of physical meetings held in Administration and Liquidation

• The new rules move away from the requirement to hold physical meetings by abolishing S.98 of the 1986 rules. The holding of a physical meeting will only be required if requested by 10% of the creditors.

Namely:-

• 10% of the total number of creditors;
• 10% or more by value of the creditors; Or
• 10% individual creditors.

• Company Voluntary Arrangements (CVA’s) and Individual Voluntary Arrangements (IVA’s) will still require a physical initial meeting.

Deemed Consent

• Unless an Officeholder’s proposals are met with objections from 10% of creditors in value then the proposal would be deemed approved. However, this will not apply in relation to fixing office holders remuneration or to approve a voluntary arrangement.

Paperless Communication

• The introduction of a secure portal means Creditors can now request to be kept informed and updated online or via e-mail correspondence.

What next?

We are happy to offer a free initial consultation for you and/or your business to discuss a strategy and a way forward in terms of improving your position or assisting your business.

If you would like to register your interest and/or receive some further information please call 0113 225 8811 or email zoeallen@chadlaw.co.uk