The new rules should lessen the regulatory burden on Insolvency Practitioners and also streamline the insolvency process by placing greater emphasis on the use of technology. There are also certain rule changes to reduce the administrative burden on all involved.
Here are some of the most significant changes:
Greater use of e-communication and online platforms throughout the insolvency process
Insolvency Practitioners will be encouraged to upload and share documents with creditors on websites to reduce the volume of paper going through the mail. This is part of a new, broader emphasis on the use of technology.
Creditors will be able opt out of further correspondence
If recovering a debt is quite clearly a lost cause, creditors can opt out of further correspondence regarding the insolvency.
‘Deemed consent’ for insolvency proposals
The new insolvency rules will replace formal, and often costly, creditors’ meetings with a process of ‘deemed consent’. The Insolvency Practitioner will write to creditors with proposals and include a deadline for registering objections.
The proposals will be deemed ‘approved’ provided that 10% or more of creditors by value do not object. If objections pass this threshold, modernised methods of communication such as email, virtual meetings and electronic voting will be used to resolve matters wherever possible (although a creditor can still request a formal, in-person meeting).
Creditors with ‘small debts’ (sub £1,000) will no longer need to submit a claim
The Insolvency Practitioner will determine the money owed from the debtor’s accounts and deem it to be ‘proved’ unless the creditor informs them the sum is incorrect.
The final creditors’ meeting will be replaced with email correspondence
The Insolvency practitioner will email final accounts to creditors and seek their release from office.
All of these practical changes are expected to reduce the costs of an insolvency, leaving more to be distributed to creditors.
If you would like to discuss this article in more detail or find out about our Insolvency-related services, please email Hannah Laithwaite at HannahLaithwaite@lambchambers.co.uk