New insolvency rules come into effect on April 6th 2017 which will replace the procedural framework contained in Insolvency Rules 1986 (as amended) for the Insolvency Act 1986.
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:
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.
If recovering a debt is quite clearly a lost cause, creditors can opt out of further correspondence regarding the insolvency.
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).
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 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
Hannah Laithwaite / 31st Oct 2016
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