The Insolvency Service has announced that new insolvency rules will come in to place from the 6th April 2017, replacing the existing insolvency rules of 1986. The new legislation would include replacing the 28 subsequent amendments to bring in a more efficient insolvency process overall and to both modernise and stabilise the legislation.

This will bring the legislation in line with modern business practices which would include the usage of present day terminology and gender neutral language. Ultimately, the legislation would therefore be presented in a clearer, concise and logical manner for all to interpret.

Plentiful advantages

There would certainly be numerous advantages for having a revised legislation as it would mean that Insolvency Practitioners will be able to use electronic communication methods as opposed to the outdated paper communication methods of times gone by when communicating with creditors.

In addition, face-to-face creditor meetings will no longer become an obligatory requirement in the decision-making process. In fact, this will only be necessary if the creditor is adamant that a face-to-face meeting takes place. Creditors will also be positioned to opt out of receiving any further communication relating to proceedings from the office holder. Again, this would apply in most cases except for certain circumstances such as when a dividend becomes payable. Where for instance the dividend is less than £1,000, there will be no requirement for the creditor to submit a claim to the office holder. For the office holder to pay the dividend, they would be able to rely on information contained in a company statement of affairs and accounting records.

The new rules will be reviewed five years after coming in to practice, with the insolvency service continuing to look at further amendments to introduce which would include the insolvent partnership order. Nonetheless, the reformed rules will be the biggest change to insolvency law witnessed over the past 30 years.

Ahmed Ali

Practice Development Executive

 

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