Transitional provisions Schedule 2 Insolvency (England and Wales) Rules 2016

The transitional provisions are contained in Schedule 2 of the Rules 2016. Generally the new 2016 Rules apply to all cases existing at the date of commencement and to all cases commencing after 6 April 2017. There are some exceptions however to be aware of which include:

Opting out: Schedule 2 para 2: Where office holders have provided a first communication to creditors pre 6 April 2017, they do not have to provide information to creditors on the right to opt out. They may choose to do this however.

Electronic delivery: Schedule 2 para 3: Where insolvency proceedings commenced pre 6 April 2017 Rule 1.54(4) Consent to electronic delivery will not apply. This means that individual creditor consent to electronic delivery of documents will still be required.

Statement of affairs: Schedule 2 para 4: The provisions of the 2016 rules in relation to changes to the content of Statement of affairs will not apply to insolvency proceedings commenced pre 6 April 2017.

Meetings: Schedule 2 para 5: Meetings convened but not held prior to 6 April 2017 will continue to be operated under the old rules and to formalities and certain matters relating to or following on from the meeting. 

The provisions of the 2016 Rules will apply to all meetings in insolvency proceedings after 6 April 2017 but will not apply to the following meetings:

-          A meeting which is required to be held as a result of a notice issued pre 6 April 2017.

-          A meeting requisitioned by a creditor or contributory before 6 April 2017.

-          A meeting an administrator is required to hold pursuant to a request made before that date under para 52 of Sch B1 to the 1986 Act.

-          Progress meetings required under section 104A IA 86 in respect of any company where the winding up resolution was passed before 6 April 2017.

-          Meetings as a result of final reports to creditors sent before that date in bankruptcy and insolvency proceedings.

Schedule 2 para 6: Detail transitional provisions re changes to final meetings and reports

Progress reports: Schedule 2 para 7: Generally, for cases commenced before 6 April 2010, the old rules will continue to apply where any progress report became due pre 6 April 2017 but which had not been issued by that date.

OR appointed trustee: Schedule 2 para 13: The OR will become first trustee in bankruptcy in cases where the bankruptcy order was made pre 6 April 2017 but a trustee has not yet been appointed.

Forms: A form from Schedule 4 IR 1986 may be used on or after 6 April 2017 if the form:

-          Is used to provide a statement of affairs which is subject to the transitional arrangements (where the relevant proceedings commenced before 6 April 2017)

-          Relates to a meeting held under the IR 1986 by virtue of the transitional provisions

(where the meeting was requisitioned or summoned before 6 April 2017)

-          Is required for a fast track voluntary arrangement already in effect on 6 April 2017

-          Is required because an office holder sought the passing of a resolution by correspondence before 6 April 2017

-          Relates to an application to the court, or petition repented, before 6 April 2017

Applications to court: The Insolvency Rules 1986 will continue to apply to;

-          Any petition for bankruptcy or winding up presented before 6 April 2017 until the court makes a winding up or bankruptcy order, dismisses the petition or the petition is withdrawn. 

-          Any application to court filed before 6 April 2017 until the court has made an order determining the application 

Claims in a foreign currency: Schedule 2 para 8: Where before 6 April 2017 the office holder has converted an amount stated in an application, claim or proof of debt at the official exchange rate under the IR 1986, that rate applies to any subsequent conversions of that currency for distribution purposes. However, if the official exchange rate has only been used before 6 April 2017 for voting purposes (and not therefore for any admission to proof for distribution purposes) the office holder can use a different rate for subsequent conversions (and thus distributions).

CVA moratoria: Schedule 2 para 9: The transitional rules preserve the operation of the 1986 Rules relating to a company voluntary arrangement (CVA) moratorium under Schedule A1 of the IA 86 where the directors submit the documents required for such a moratorium under para 6(1) of that Schedule before 6 April 2017.

Priority of expenses in a failed voluntary arrangement: Schedule 2 para 10: The priority given to unpaid CVA expenses in a subsequent compulsory liquidation is preserved where the winding up petition is presented before 6 April 2017. The priority given to unpaid IVA expenses in a bankruptcy on a debtor's petition is similarly preserved but in practice this will only apply to bankruptcies where the petition was issued before 6 April 2016.

Fast track IVAs: Schedule 2 Para 12 preserve the operation of the 1986 Rules relating to any fast track IVA still in force on 6 April 2017. Note that fast track IVAs were abolished with effect from 26 May 2015.

First trustee in bankruptcy: Schedule 2 para 13: On 6 April 2017 the Official Receiver will become the trustee in bankruptcy in all cases where a bankruptcy order has been made but no trustee yet appointed.

Miscellaneous provisions: Schedule 2 paragraphs 17 to 20: The 1986 Rules (as in force in each case at the relevant time) continue to apply to:

-          Administrations where the petition was presented before 15 September 2003

-          Set-off in insolvency proceedings commenced before 1 April 2005

-          The calculation of future debts in insolvency proceedings commenced before 1 April 2005

-          Obligations arising under family proceedings where the bankruptcy order was made on or before 31 March 2005.

Ben LuxfordBen Luxford
Head of Technical
020 7566 4218

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