The Insolvency (England and Wales) Rules 2016 ("the 2016 Rules") were published and laid before Parliament on 25 October 2016 and they come into force 6 April 2017. These Rules extend to England and Wales only.
In introducing the new Rules the Government stated that the aim of the new Rules were to:
- Increase creditor engagement in the insolvency process by encouraging the use of decision making processes fit for the 21st century.
- Encourage the use of more modern methods of communication between Insolvency Practitioners and creditors
- Remove administrative burdens that add no value for creditors.
The 2016 Rules look very different to the 1986 Rules, both in terms of language, which has been modernised and made gender neutral, and in terms of layout. They consolidate the existing 1986 rules and their amendments into one single piece of legislation. They also incorporate various changes in the law which are intended to reduce the burden of red tape, for example, those incorporated in the Deregulation Act 2015 and Small Business, Enterprise and Employment Act 2015.
Content
The 2016 Rules are comprised of 22 Parts and 11 Schedules.
Part 1 provides essential information including definitions of standard terms, the form, content, delivery and accessibility of notices and documents in insolvency procedures. Part 2 to 12 comprise the dedicated rules for each of the different insolvency procedures. Parts 14 to 21 are common to all insolvency proceedings and remove much of the repetition found in the 1986 Rules.
Key areas to look at include Part 1, Part 15 and Schedule 2
| Part 1 | Scope, interpretation, time and rules about documents |
| Part 2 | Company Voluntary Arrangements |
| Part 3 | Administration |
| Part 4 | Receivership |
| Part 5 | Members' Voluntary winding up |
| Part 6 | Creditors' Voluntary winding up |
| Part 7 | Winding up by the Court |
| Part 8 | Individual voluntary arrangements |
| Part 9 | Debt relief orders |
| Part 10 | Bankruptcy |
| Part 11 | Bankruptcy and debt relief restrictions orders and undertakings and the Insolvency registers |
| Part 12 | Court procedure and practice |
| Part 13 | Official receivers |
| Part 14 | Claims by and distributions to creditors in administration, winding up and bankruptcy |
| Part 15 | Decision making |
| Part 16 | Proxies and corporate representation |
| Part 17 | Creditors' and liquidation committees |
| Part 18 | Reporting and remuneration of office holders |
| Part 19 | Disclaimer in winding up and bankruptcy |
| Part 20 | Debtors and their families at risk of violence: orders not to disclose current address |
| Part 21 | The EC Regulation |
| Part 22 | Permission to act as director etc. of company with a prohibited name (section 216) |
| Schedule 1 | Revocations |
| Schedule 2 | Transitional and savings provisions |
| Schedule 3 | Punishment of offences under these Rules |
| Schedule 4 | Service of documents |
| Schedule 5 | Calculation of time periods (note, this will be subject to amendment provisions) |
| Schedule 6 | Insolvency jurisdiction of county court hearing centres |
| Schedule 7 | Information to be provided in the bankruptcy application |
| Schedule 8 | Additional information to be provided in the bankruptcy application |
| Schedule 9 | Information to be given to creditors |
| Schedule 10 | Destination of appeals from decisions of District Judges in corporate insolvency matters |
| Schedule 11 | Determination of insolvency office holder's remuneration |
A derivation table has been produced by the Insolvency Service which helpfully links the 2016 rules with the 1986 rules. This can be found on the Gov.uk website.
A destination table is also available on the Gov.uk website.
Changes to the Insolvency Act included in the Small Business, Enterprise and Employment Act 2015 ("SBEE") introduced by the Rules 2016
The main changes introduced by the SBEE are:
- Replacement of meetings of creditors and contributories by decision making procedures (s246ZE IA 86 (corporate insolvency) and s379ZB IA 86 (personal insolvency) and Part 15 of the 2016 Rules.
- Enabling creditors to opt out of receiving notice (s248A IA 86 (corporate insolvency) and s379C IA 86 (bankruptcy) Part 1 r1.37-r1.39.
- Removal of the requirement for a small creditor to formally prove.
- Extending fraudulent and wrongful trading powers to administrators s246ZA and s246ZB IA 86.
- Official receiver to be appointed as an individual's first trustee (Schedule 2 para 13)
Ben Luxford
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