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Explanatory note - The Insolvency (England and Wales) (Amendment) Rules 2017 SI 2017/366

Amendments to the Insolvency (England and Wales) Rules 2016 ("the 2016 Rules") were laid before Parliament 13 March 2017 and came into force 6 April 2017.

The amendments have effected minor corrections and clarifications and have resulted in the following changes to the 2016 Rules:

Chapter 2 Interpretation

1. The definition of 'attendance' and 'attending' have been amended to improve clarity.
'A person attends, or is in attendance at, a meeting who is present or attends remotely in accordance with section 246A IA 1986 or Rule 15.76, or who participates in a virtual meeting, whether that person attends the meeting or virtual meeting in person, by proxy, or by corporate representative (in accordance with section 434B or section 323 of the Companies Act, as applicable'.
2. Clarification has been provided that notices in the 2016 Rules are not sent to creditors who have opted out of receiving correspondence under rule 1.38, unless those rules require that they must.

Company voluntary arrangements

3. Clarification has been provided by when creditors must receive notice of a requisitioned physical meeting of creditors in company voluntary arrangement proceedings. Rule 2.31(3) has been amended to provide that a notice summoning a meeting of creditors must be delivered to creditors at least seven days before the day fixed for the meeting.
4. Clarification has been provided that Rule 2.38 will apply to both reports of the member's meeting and the creditors' decision where there is a requirement for both.
5. The content requirement of the report of the consideration on a company voluntary arrangement ("CVA") proposal has been extended and Rule 2.38(2) now requires that the report must state, in addition to recording how the creditors voted on each resolution, whether they abstained. This will ensure that all activity relating to voting in the creditors' decision in consideration of a CVA proposal is recorded.
6. The date by which the report of the outcome of the decision on the proposal must be filed with the court has been clarified. A copy of the report must be filed with the court within four business days of the company meeting.

Administration

7. The notice filed with the court by the administrator when an administrator is to be appointed outside court business hours has been amended so that it must now state that two days have elapsed since notice was given to relevant floating charge holders, rather than the date that notice of that was filed in court Rule 3.21(f).
8. Clarification has been provided that where a floating charge holder gives consent to the appointment of an administrator that consent must be in writing Rule 3.21(f).
9. Clarification has been provided that the five business days referred to in the notice of appointment of an administrator of a company runs from the date that the notice under paragraph 26 of Schedule B1 of the Act was delivered, rather than the date that a copy of that notice was filed in court Rule 3.24(1)(i)(i).
10. Rule 3.29(2)(b)(ii) has been amended so that the person nominated by the administrator must deliver a Statement of Affairs within 11 days of receiving notice that they must do so, rather than by a specified date.
11. Where an administrator has issued revised proposals, under Rule 3.42(6) the administrator must also deliver a copy of the statement of revised proposals to the Registrar of Companies, not later than five business days after the report is delivered to creditors.

Receivership

12. Clarification has been provided that Chapter 1 of Part 4 does not apply to receivers appointed under section 51 IA 86, which are those appointed in Scottish receiverships.

Members' voluntary winding up

13. Where the court removes a members' voluntary liquidator, the rules have been amended to provide that the liquidator must summon a company meeting (as opposed to a meeting of the company's creditors) to appoint a new liquidator.

Creditors' voluntary winding up

14. Where a liquidator is appointed by the creditors or by the company, the liquidator's appointment takes effect from the date of the passing of the resolution of the company or, where the creditors decide to appoint a person who is not the person appointed by the company, from the relevant decision date Rule 6.20(2).

Individual voluntary arrangement

15. Clarification has been provided that the report of the creditors' consideration of the proposal must include a list of, not only those creditors who voted in the decision procedure but also, if applicable, those who attended or who were represented at the meeting. In addition the report must set out, with their respective values, how each creditor voted on each decision or whether they abstained Rule 8.24(b).

Bankruptcy

16. A new rule has been inserted into Chapter 11 which allows the correct fee to be charged when a trustee agrees an income payments agreement with a bankrupt.
17. Amendments to Rule 10.137 ensure that the adjudicator is not liable for costs arising under an application to annul a bankruptcy order.
18. Clarification is provided in respect of Rule 10.149 which provides that expenses or costs which are properly chargeable include those incurred in the conduct of legal proceedings which the official receiver or trustee has the power to bring rather than the bankrupt.
19. Confirmation has been provided that Chapter 20, Criminal bankruptcy, applies to proceedings arising out of criminal bankruptcy orders.
20. Rule 10.158, Rules not applying in criminal bankruptcy, has been removed in its entirety.

Decision making

21. In determining whether the thresholds have been met under section 246ZE(7) or section 379ZA(7) for requesting physical meetings, the convenor must calculate the value of the creditor's debt by reference to Rule 15.31, that is, whether they were entitled to vote at the meeting.
22. The exception provided for in Rule 15.8(e), that a statement in a notice of a decision procedure about the latest date of delivery of a proof not having to be provided in respect of a decision in relation to a proposed CVA or IVA, has been withdrawn.
23. Clarification has been provided to Rule 15.21 that where a meeting (physical or virtual) of creditors has been held to consider the initial decision on the appointment of a liquidator in a creditors' voluntary liquidation, then it must be chaired by the convenor, which will be one of the company's directors.

Proxies and corporate representation

24. Clarification has been given that the person completing a blank proxy form must state whether the completed form is to be considered as a specific or continuing proxy Rule 16.3.

Reporting and remuneration of office holders

25. In a members' voluntary winding up clarification has been provided that a progress report need not be sent after a draft final report has been sent to members under Rule 5.9(1).
26. Under Rule 18.18(3) there has been provided an exemption from the requirement to seek a decision on the basis of remuneration from creditors where an administrator has made a statement under para 52(1)(b) of Sch B1 IA 86, that there is no likelihood of a distribution to unsecured creditors.

Schedule 2

27. Clarification has been provided that annual meetings continue in respect of voluntary liquidations commenced before 6 April 2010.
28. Under which circumstances in administration proceedings there is a continuing requirement to send a final progress report to the registrar of companies and to those who received notice of the appointment of the administrator have been clarified.
29. Where, in an administration, liquidation and bankruptcy cases, the reporting cycle has changed prior to commencement of the 2016 Rules, then that cycle will continue after commencement of those Rules.

Schedule 4

The service requirements of a 'notice of intention to appoint an administrator' have been amended to ensure that deemed date of service may occur on the same day as service.

Schedule 5

Clarification has been provided with regard to the start and end of a period which is stated in months.
2) The beginning and the end of a period expressed in months is to be determined as follows -
a) If the beginning of the period is specified -
i) The month in which the period ends is the specified number of months after the month in which it begins, and
ii) The date in the month on which the period ends is:
aa) the date before the date corresponding to the date in the month on which it begins, or
bb) if there is no such date in the month in which it ends, the last day of that month;
b) If the end of the period is specified -
i) The month in which the period begins is the specified number of months before the month in which it ends, and
ii) The date in the month on which the period begins is -
aa) the date after the date corresponding to the date in the month on which it ends, or
bb) if there is no such date in the month in which it begins, the last day of that month.

Explanatory note re The Insolvency (England and Wales) Rules 2016 (Consequential Amendments and Savings) Rules 2017 SI 2017/369

Amendments to the Insolvency (England and Wales) Rules 2016 (the 2016 Rules") were laid before Parliament 13 March 2017 and came into force 6 April 2017.
These amendments clarified that the 1986 Insolvency Rules continue to apply to Limited Liability Partnerships.


The Small Business, Enterprise and Employment Act 2015 (Commencement No.6 and Transitional and Savings Provisions) Regulations 2016 (Amendment) Regulations 2017 SI 2017/363

Amendments made 9 March 2017 provide that annual meetings will continue under s105 IA 86 in a members' voluntary winding up where the resolution to wind up was passed before 6 April 2010.

 

 

Ben LuxfordBen Luxford
Head of Technical
020 7566 4218
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