New insolvency rules come into effect from 6th April
Mark Taylor explains the new insolvency rules which came into effect on 6th April and how these rules will affect your rights in the majority of insolvency cases.
New insolvency rules come into effect from 6th April.
You will need to be aware of the aspects of the new rules as they will affect your rights in the majority of insolvency cases, including those that are already in place. (Rule changes in Scotland will be implemented on a different timetable.)
The new rules will do away with creditors’ meetings and introduce a range of decision making processes, deemed consent and a number of other measures designed to bring the rules up-to-date, streamline the statutory provisions and in theory aid creditor involvement. Some of these changes could catch creditors out, if you are not fully aware of the new processes to be adopted, so please read carefully.
An Insolvency Practitioner (IP) cannot convene a physical meeting of creditors unless requested to do so by 10% (of value or number) of the creditors in each case or by at least 10 Creditors. Where the IP writes to creditors with a proposal, creditors will have deemed to have accepted unless 10% (by value) object. If you fail to respond to such communications, please note that you may effectively have consented to such proposals.
In bankruptcy and compulsory winding up cases, the Official Receiver will not ordinarily convene a meeting of creditors and may retain the matter unless 25% (by value) of the creditors require a meeting to be held to consider appointing an IP as trustee. It will be vitally important for all creditors to review any proposals and seek advice where relevant.
There will be an opportunity to engage through correspondence, electronic voting or other media channels to assist in participation in the process.
Final meetings in liquidation and bankruptcy cases have been abolished, although there will still be some form of final report.
Email and Opt Out
Insolvency Practitioners may use email for communications with creditors in new cases post April 2017, where you agree or are deemed to have agreed by virtue of conducting email communication with either the insolvent company or individual pre-insolvency. All creditors will need to keep a look out for email or letters that advise you that future notices will be published on a website without any notice being sent. It will again be important to for creditors to track such cases through your own internal or external mechanisms. There will be an opt out option in relation to future emails or notices from an Insolvency Practitioner in each individual case.
Creditors with small claims (below £1k) may be advised that their claims are deemed to be agreed without the need for any formal process. If you receive such notices, you should check the amount outstanding and inform the Insolvency Practitioner immediately of any incorrect values that are recorded.