[ARCHIVED CONTENT] Dear insolvency practitioner: Chapter 15: Insolvency rules and regulations

Dear insolvency practitioner > Chapter 15 > Insolvency rules, regulations and orders

[Chapter 1] [Chapter 2] [Chapter 3] [Chapter 4] [Chapter 5] [Chapter 6] [Chapter 7] [Chapter 8] [Chapter 9] [Chapter 10] [Chapter 11] [Chapter 12] [Chapter 13] [Chapter 14] [Chapter 15] [Chapter 16] [Chapter 17] [Chapter 18] [Chapter 19] [Chapter 20] [Chapter 21] [Chapter 22] [Chapter 23] [Chapter 24] [Chapter 25]

1. Priority of Payment of Costs - Insolvency Rules 1986, Rules 4.218 and 6.224

There appears to have been some confusion over these rules, particularly Rule 6.224(1)(h), which deals with the payment of the petitioner's costs in a bankruptcy. Some practitioners are of the opinion that they have no power to make such payments from the estate. Their view is that Rule 6.224 sets out the priority for payment of costs, but does not authorise payment. The Service�s view is that Rule 6.224(1)(h) does provide adequate authority for the payment of the petitioner's costs as that Rule contains a statement that the expenses of the bankruptcy are payable out of the estate and lists the costs of the petitioner as one of those expenses. A distinction is drawn in paragraph (1)(h) of Rule 6.224 between the petitioner�s costs and those of other persons appearing on the petition, which are not payable without the authority of a court order.

(First published in Dear no. 6, February 1988)

2. Taxation of Costs in Old Act Cases

Rule 7.34 of The Insolvency Rules 1986 allows payment of costs without taxation. Rule 7.34(6) applies this Rule to all liquidations and bankruptcies in both old and new Act cases. However, where taxation is required in old Act bankruptcies, any bills must be taxed in accordance with the scales in Appendices II and III of the Bankruptcy Rules 1952.

(First published in Dear IP no. 6, February 1988)

3. Authorisation to Operate a Local Bank Account Under the Insolvency Regulations 1994 (as amended)

All applications for authority to operate a local bank account under the 1994 Regulations (as amended) should be submitted to IPCU.

As part of its desk-top monitoring procedures, IPCU has recently completed a review of the local bank account authorities granted to practitioners. It is evident from the majority of cases reviewed that many practitioners are not adhering to the specific terms of the sanction given in each case, and the following practices are considered to be contributing to this.

Failing to request a change of any inappropriate terms of a sanction

It is appreciated that when a practitioner seeks a sanction, the information provided is based upon estimates. However, once the terms of the sanction are set, they must be adhered to. IPCU are, though, always willing to reconsider the terms in the light of the practitioner�s experience from trading and operating the account. Consequently, it is suggested that practitioners may wish to review the terms of the sanction within the first six to eight weeks of operating the local bank account to ensure that the terms are still appropriate.

Failing to monitor the account correctly resulting in the maximum balance to be retained in the account being exceeded.
It is apparent that practitioners generally monitor the operation of the account by reference to their cash book rather than bank statements, and then only on a monthly basis. As a result, while the cash book may record the account as operating within the agreed limits, the bank statement may not. This is generally due to timing differences between the date of the issue of cheques and their presentation for payment. It must be noted, however, that the sanction to operate a local bank account is expressed in terms of the actual balance in the bank account, and not the practitioner's cash book balance. It is suggested, therefore, that practitioners may wish to take into account matters such as timing differences when requesting the sanction, and also to obtain and reconcile bank statements for the local bank account on, say, a weekly basis.

Failing to remit funds in excess of the agreed maximum balance to the ISA

Practitioners are reminded that the terms of the sanction, particularly the agreed maximum balance, are set at a level to enable sufficient funds to be available to meet trading expenses. Income generated over and above what is required to meet those expenses should be remitted to the ISA.

Again, monitoring the account on a weekly basis should ensure that any monies held in excess of the agreed maximum balance will be remitted to the ISA in good time.

Drawing remuneration from the local bank account
The Service�s view is that sanction to operate a local bank account enables the office holder to make payments into and out of that account. The sanction does not permit remuneration (which is not a payment made by the office holder) to be drawn from the local bank account. Remuneration should be drawn from the ISA in the usual way once it has been approved.

All enquiries regarding the use of a local bank account should be directed to Pat Christopher at IPCU, 5^th Floor, West Wing, Ladywood House, 45/46 Stephenson Street, Birmingham B2 4UZ, telephone number 0121 698 4104.

(First published in Dear IP no. 48, November 1999)

4. The Insolvency (Amendment) Rules 1995�.

�.(came into force on 1 April 1995)

The Amendment Rules have changed the order of priority of payment of expenses out of the assets of companies in compulsory liquidation and bankrupts� estates contained in Rules 4.218 and 6.224 of the Insolvency Rules 1986 respectively.

Previously, the deposit payable on presentation of a petition as security for the administration fee, was repayable after the expenses incurred in protecting and realising the assets, the expenses and disbursements incurred by the OR, and the administration fee, had been recovered from the realisation of assets.

The amendment Rules 4.218(1)(c) and (d), and 6.224(1)(c) and (d) changed the order of priority in which expenses are payable. The effect of the amendment is that the petition deposit will not be repayable until after all statutory fees and the OR�s remuneration have been recovered from the realisation of assets.

Practitioners should please note that the changes apply only to winding-up proceedings commenced on or after 1 April 1995 and to bankruptcy proceedings where the petition is presented on or after that date.

(First published in Dear IP no. 33, March 1995)

5. The Insolvency (Amendment) Regulations 2000 � Electronic Receipts and Payments

The above Statutory Instrument, which came into force on 31 March 2000, amends the Insolvency Regulations 1994 so as to permit the use of electronic means for payments both into and out of the Insolvency Services Account (ISA). This is a modernisation measure which takes account of developments in banking practice and overcomes the inherent risk of loss or theft of postal remittances. It will also extend and improve the range of banking services provided by Central Accounting Unit (CAU). The Service recognises that there will be a continuing requirement for cheque payments so the new electronic system will operate in parallel with the existing paper-based one as provided for in the 1994 Regulations as amended. The practical arrangements under the new provisions will be as follows:-

Any payment into the ISA can be made by the liquidator or trustee by electronic transfer, accompanied by details identifying the liquidator or trustee making the payment and the estate to be credited. The estate should be identified by the BANCS account ID if known and, failing that, by the name of the estate.
All payments out of the ISA can also be made by electronic transfer, at the request of the liquidator or trustee, using the appropriate requisition form, CAU 105, a copy of which has previously been supplied to IPs. However, the Secretary of State retains discretion to determine the mode of payment out of the ISA to allow for any technical or practical problems which could prevent or inhibit electronic payments.
In the initial period of using the electronic payments facility (BACS), payments out of the ISA will be restricted to payments to IPs for fees and expenses in all insolvency types and for distribution in voluntary liquidations. IPs should note that the fax number required in form CAU 105 will be used to send the remittance advice to the IP.
Having sorted out any operational problems during the initial period, it is intended that BACS payments will be made available for a wider range of payments including one-off payments of �50,000 or more (to any payee) and payments to "regular payees" such as agents and Government creditors. Where the payee is not the IP, the fax number and address of the payee will be required in addition to the bank account information. Form CAU 105 will be modified to cater for the additional requirements.
The initial performance target for BACS payments will be: payment into payee�s bank account on the 4^th working day after receipt by CAU of the requisition.
Further bulletins will be issued in due course but in the meantime IPs are encouraged to make their views and needs known to their representatives on the CAU User Group. Enquiries about electronic payments can be directed to Central Accounting Unit�s Customer Services team on 0121 698 4268.

(First published in Dear IP no. 50, June 2000)

6. Recoverable expenses or costs (Rule 4.218 and Rule 6.224)

In the case of Re Floor Fourteen Limited, Lewis V IRC [2001] the Court of Appeal held that costs of unsuccessful legal proceedings would not fall within the expenses listed in Rule 4.218 (1) I.R.86 and were therefore not recoverable from the assets of the company. The Court further found that any funds recovered from proceedings under sections 214 and 239 I.A.86 were not assets of the company but arose after the liquidation and were held on trust by the liquidator for distribution to creditors. As a result the costs of a successful application could similarly not be recovered as an expense of the liquidation under that rule.

On page 17.34 of Dear IP no.9 issued in November 2002 there was a brief reference to the amendment to Rule 4.218 made by the Insolvency (Amendment) (No.2) Rules 2002 so that properly incurred costs or expenses relating to the conduct of any legal proceedings, which the liquidator has the power to bring or defend, may be recovered from the assets of the company. IPs should also be aware that other amendments were made to the order of priority of payment set out in Rule 4.218 including the addition of sub-paragraph(r) which now provides:

"any other expenses properly chargeable by the liquidator in carrying out his functions in the liquidation".

Similar amendments have been made to Rule 6.224 with regard to proceedings commenced or defended by the trustee and other properly chargeable expenses.

The amendment only applies to those cases where the petition is presented, or a resolution for voluntary winding up has been passed, after 1 January 2003 ie the commencement date of the amending rules.

The provisions of Schedule 4 and 5 of the Act (powers exercisable with sanction) will be amended by provisions of the Enterprise Act 2002 coming into effect later this year.

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk

7. Enterprise Act 2002 -Amendments to Insolvency Rules.

Details of the changes arising from the new procedures for administration are provided in article 4 of Chapter 1 and those relating to the abolition of Crown preference and the introduction of the prescribed part can be found at article 23 of chapter 17 of this edition of Dear IP.

Amendments and additions to the Insolvency Rules and the Scottish Court Rules have been made as a result of the Enterprise Act 2002 provisions. The changes are made through the following Statutory Instruments:

The Insolvency (Amendment) Rules 2003 (S.I. 2003/1730)

The Insolvency (Scotland) Amendment Rules 2003 (S.I. 2003/2111)

The Insolvency Act 1986 (Prescribed Part) Order 2003 (S.I. 2003/2097)

The Enterprise Act 2002 (Consequential Amendments) (Prescribed Part)(Scotland) Order 2003 (S.I. 2003/2108)

Act of Sederunt (Rules of the Court of Session Amendment No. 5) (Insolvency Proceedings) 2003 (S.S.I. 2003/385)

Act of Sederunt (Sheriff Court Company Insolvency Rules 1986) Amendment 2003 (S.S.I. 2003/388)

Copies of the instruments are available through HMSO http://www.legislation.hmso.gov.uk/ or can be accessed via The Insolvency Service website http://www.insolvency.gov.uk/

8. Enterprise Act 2002 (Individual Insolvency Provisions) - Income Payments Orders/Agreements

Income Payments Agreements (IPAs) will provide an out of court alternative to Income Payments Orders (IPOs) and bind the bankrupt in those cases where agreement is made with the trustee on the amount to be contributed to the estate from the bankrupt�s income. This will avoid unnecessary court hearings, which involve time and expense, delay the process and use up funds that would otherwise be available for creditors. In case of default an agreement can be enforced as if it were an IPO made by the court.

Income Payments Agreements � rule changes

New rules 6.193A to 6.193C are added as a separate Chapter 16A, which follows on from the rules governing Income Payments Orders.

They specify the form of an agreement (to be in writing), the time limits for approval, variation procedure and notice requirements. Specifically, an agreement must be made before, and may extend beyond, discharge but for a period of no longer than three years in total.

No new statutory form is prescribed since, although enforceable as if made as an order of the court, the court does not become involved except in matters of dispute.

IPAs will be worded to provide for the payments to be made to the official receiver �or any other person appointed as trustee�. In general the official receiver will aim to obtain at least an agreement in principle where handing over to a trustee, so that he/she can finalise the agreement in due course.

Enquiries arising from the above should be addressed to Steve Quick, Director of Policy. Tel: 020 7291 6747.

9. Enterprise Act 2002 (Individual Insolvency Provisions) - Other Changes To Part 6

1. Summary Administration

Rules 6.48 to 6.50 in relation to summary administration, which will no longer apply to new cases following commencement of the individual insolvency provisions of Part 10 of the Enterprise Act 2002, are nevertheless saved for existing cases.

2. Summary Certificates

As no new summary certificates will be issued after commencement, sub-paragraph (c) of rule 6.97 (2) is revoked. The change to rule 6.121 (1) is made for the same reason.

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk

10. Contents of Proof of Debt Form in Bankruptcy, and Changes to the Procedures to be Adopted by the Official Receiver (OR) for Proving Debts

As a result of the legislative changes arising from the Insolvency (Amendment) Rules 2004, from 1 April 2004 the Official Receiver will only be required to send proofs of debt forms to creditors on request and will no longer be obliged to lodge proofs of debt in court on completion of the bankruptcy or winding up. The new provisions will become effective on 1April 2004 and they apply to all cases as from that date, irrespective of whether the bankruptcy or winding-up order was made before or after 1April 2004.

The information that is required to be detailed in the proof of debt forms themselves is set out in Rules 4.75(1) and Rule 6.98(1) of the Insolvency Rules 1986, both of which have been amended by the Insolvency (Amendment) Rules 2004 (Amendment Rules).

Unfortunately an error has crept into the Amendment Rules with the result that Rule 6.98(1)(b) and (d) incorrectly contain references to liquidation, rather than bankruptcy.

Whilst it is anticipated that users will read the appropriate bankruptcy references into those sub-rules, it has been decided that the error should be corrected. This will be achieved in the Insolvency (Amendment No. 2) Rules 2004 (No. 2 Rules).

The No. 2 Rules will replace the words �on which the company went into liquidation� with �of the bankruptcy order� in Rule 6.98(1)(b) and �company� with �debtor� in Rule 6.98(1)(d).

The Amendment Rules will come into force on 1 April; 2004. It is anticipated that the No. 2 Rules will come into force by the end of April 2004.

As the procedural changes to be adopted by ORs may be of interest to IPs, both in respect of advising creditor clients and to explain when proofs of debt are likely to be available in cases where they are appointed office holder in bankruptcies and compulsory liquidations, they are set out below.

From 1April 2004, in the absence of a specific request, proof of debt forms will only be sent out by ORs in the following circumstances:

� in cases in which a decision has been made to hold a meeting of creditors;

� in cases in which a dividend is to be paid (and assuming that proofs have not previously been sent out, eg for a meeting); normally the forms will be sent out when a distribution is to be made accompanied by a notice of intended dividend;

� in connection with an application for annulment in cases in which forms have not already been sent out; in such cases the proof will be accompanied by a standard letter;

� when the OR considers that the submission of formal proofs of debt would aid his or her investigation.

Creditors who are not sent a proof of debt form by the OR, but who wish to complete one, can access the form on The Service�s Internet site (http://www.insolvency.gov.uk/) or request one from the OR.

General enquiries may be directed to IP Policy Section Email: IPPolicy.Section@insolvency.gsi.gov.uk Telephone 020 7291 6772

11. Petition Costs in Bankruptcy where the Bankruptcy Order is silent on the Payment Of Costs

Form 6.25 (bankruptcy order on a creditor�s petition) does not make specific provision for reference to the payment of the petitioner�s costs and therefore in most cases the order is likely to be silent as to whether the costs should be paid from the estate. Following a recent enquiry there appears to be some general uncertainty as to whether payment can be made to the petitioning solicitors where the order is silent.

The view of The Insolvency Service is that petition costs should be paid in accordance with the priority set out in rule 6.224(1) of the Insolvency Rules 1986 (as amended) in all cases, unless the bankruptcy order specifically provides otherwise.

General enquiries may be directed to IP Policy Section Email: IPPolicy.Section@insolvency.gsi.gov.uk Telephone 020 7291 6772

12. Application of Section A of Chapter 6, Part 2 of the Insolvency Rules 1986 �Creditors� Meetings� in cases where the business of a creditors� meeting is dealt with by correspondence

Under paragraph 58 of Schedule B1 to the Insolvency Act 1986 and Rule 2.48 of the Insolvency Rules 1986, an administrator can deal with the business of a creditors� meeting by correspondence. Under Rule 2.48(9) anything done, or required to be done, at, or in connection with, or in consequence of, a creditors� meeting, also has to be done for �correspondence� cases. In order to provide guidance for administrators who may make use of these provisions we have set out, below, the Service�s view on how the relevant Rules relating to meetings apply or should be adapted to deal with �correspondence� cases.

Rule for Meeting	Application to �Correspondence� Meeting or Equivalent Action
2.34(1)	Applies; suggest that the advert should state that business of meeting is being dealt with by correspondence and use closing date for receipt of Forms 2.25B as relevant date. Also consider giving details of contact details from where a creditor can obtain Form 2.25B, if they have not received one.
2.34(2)	Does not apply.
2.34(3)	Applies.
2.34(4)	Does not apply; equivalent provision in Rule 2.48(6).
2.35	Does not apply; equivalent provision in Rule 2.48.
2.36	Does not apply.
2.37	Does not apply; in our view where the a meeting is requested by the creditors the administrator should arrange a �physical� meeting, compare Rule 2.48(7)
2.38	Applied by Rule 2.48(2) and (3), the date for receipt of the �statement as to entitlement to vote� set out in Rule 2.48(2).
2.39	Applied by Rule 2.48(3)
2.40(1)	Applies.
2.40(2)	Does not apply; see comments regarding requisitioned meetings.
2.41	Applies.
2.42	Applies.
2.43	Applies.
2.44	Does not apply; however the administrator will need to keep a record of the Form 2.25Bs that were received and details of the outcome of the �meeting�.

2.46

Applies; the administrator should complete Form 2.23B with appropriate amendments to take account of the particular circumstances of the case; Rule 12.7(2) provides administrators with the power to make any necessary changes.

The following are suggested amendments that should be made to Form 2.23B in cases where the business of the creditors� meeting was conducted by correspondence:

- The words �a meeting/an adjourned meeting of the creditors of the above company was held at� should be deleted;

- On the line prefixed �(b) Insert place of meeting" the administrator should insert the following �Business of meeting conducted by correspondence pursuant to paragraph 58 of Schedule B1 to the Insolvency Act 1986 and Rule 2.48 of the Insolvency Rules 1986.�

- On the line prefixed �(c) Insert date of meeting� the administrator should delete the word �on� and state �closing date specified in Form 2.25B� and insert the relevant date.

The other information in the form should be completed or deleted as appropriate.

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk Telephone: 0207 291 6740

13. Review of insolvency practitioner regulation

Article Withdrawn December 2007

14. Amendments to Rules, Regulations and Fees Orders 2005

The Insolvency (Amendment) Rules 2005 (SI 2005/527)

The Insolvency (Amendment) Regulations 2005 (SI 2005/512)

The Insolvency Proceedings (Fees) (Amendment) Order 2005 (SI 2005/544)

The insolvency practitioners and Insolvency Services Account (Fees) (Amendment) Order 2005 (SI 2005/523)

The above statutory instruments come into force on 1 April 2005. Details of issues that may be of interest to insolvency practitioners are outlined below. However, full details of the changes are contained in the legislation which may be accessed on the Insolvency Service website, at www.insolvency.gov.uk/whatsnew/whatsnew.htm. Alternatively, the legislation will shortly be available through HMSO at http://www.legislation.hmso.gov.uk/

1.The Insolvency (Amendment) Rules 2005 (SI 2005/527)

These Rules come into force on 1 April 2005 (the commencement date) and make a number of changes to the Insolvency Rules 1986.

The changes only apply where a company has entered administration or gone into liquidation, or where a bankruptcy order has been made, after the commencement date, unless otherwise indicated.

Mutual credit and set-off

There is no change to the provisions relating to mutual credit and set-off in bankruptcy. However, the following Rules that relate to administration and liquidation have been revised and new Rules substituted:

Rules 2.85 and 4.90

The substituted Rules are designed to provide greater detail and clarity of meaning for the user to reflect the applicable case law and bring the rule on set-off for liquidation into line with the rule in administration. The main points to note are:

�Mutual dealings� that are not to be included in the set-off account are defined; these include any debt acquired by a creditor by way of an agreement entered into after one of the dates set out in Rules 2.85(2)(e) and 4.90(2)(d). If a creditor acquires, or re-acquires, a debt after one of those dates, as a result of an agreement entered into at an earlier date, then such a debt would be considered a �mutual dealing� for the purposes of the set-off account.

Set-off in liquidation proceedings and administration proceedings are harmonised so that all amounts due to and from a company are �mutual dealings� to be included in, or excluded from, the set-off account, as applicable.

The provision of a meaning for the term �sums due� drawing on the definition of �debt or liability� in Rule 13.12(3);
For the purposes of calculating the set-off account, the Rules which relate to the quantification of debts (Rules 2.81, 2.86 to 2.88, 2.105, 4.86, 4.91 to 4.93 and 11.13) are extended to cover debts owed to a company, as well as debts owed by a company. Accordingly, debts owed to the company that are contingent or payable at a future time are to be included in the set-off account and liquidators and administrators will be able to place a value on such debts.
Rules 2.78 and 4.83 provide the means of appeal if a mutual third party disagrees with an administrator�s or liquidator�s valuation of a debt that a third party owes to a company;
Where, after the calculation of the set-off account an amount is owed to the company arising from a contingent debt or a debt payable at a future time, such an amount only has to be paid to the liquidator or administrator if and when it becomes due and payable.

Debts payable at a future time

An amendment to Rules 2.105 and 11.13 (and, consequentially, to Rule 2.88(7)) to the formula for use in calculating the discounted value of a debt which is not due for payment at the date of payment. This change responds to criticism made by the House of Lords in Re Park Air Services Limited [2000] 2 AC 172.

Relevant insolvency date

As a result of the changes made to the law on administration by the Enterprise Act 2002 (c.40) a company can move between liquidation and administration or between administration and liquidation. Both of these procedures enable creditors to prove their debts at the date of the administration or liquidation respectively. By way of clarification of the existing rules, the amendments provide that the relevant date is the date that the first insolvency procedure commenced.

Remuneration of non OR liquidator and trustee � these provisions apply in any case where, on or after 1 April 2005, a winding-up order has been made or a resolution for the winding-up of a company has been passed or, a bankruptcy order has been made.

Following amendments made in the Insolvency (Amendment) Rules 2004, post 1 April 2005, provisions relating to the calculation of the remuneration of a non official receiver liquidator or trustee, are set out in the Rules. There was no intention to change the substance of the provisions in force pre 1 April 2005 (which were set out in Regulations 33, 34 and 36 of the Insolvency Regulations 1994) � the amendments introduced in the Rules were simply intended to restate the substance of the legislation that had previously been set out in the Regulations. Amendments to Rules 4.127B, 4.148A, 4.218 and 6.224 have now been made to correct some drafting errors and omissions arising from that restatement exercise.

Replacement of sheriff with enforcement officer

Following changes introduced by section 99 of and Schedule 7 to, the Courts Act 2003, from 1 April 2004 High Sheriffs no longer carry out writs of execution emanating from the High Court and have been replaced by High Court Enforcement Officers. The changes in the Courts Act 2003 have not altered the requirement to serve notice of insolvency proceedings on the enforcement officer executing a warrant. There are numerous references to �sheriff� and �under-sheriff� in the Rules which are amended consequently upon these changes. The affected Forms are 6.9 and 6.24A.

Company registration number

In order to assist the identification of a company entering into liquidation and to bring certain Rules and Forms into line with requirements elsewhere in the Rules, amendments have been made to require the inclusion of a company�s registered number in liquidation proceedings. The following forms are consequently amended; Forms 4.6, 4.11, 4.12, 4.13, and 4.14.

Postal redirection in bankruptcy

Section 371 Insolvency Act 1986 permits the court to make an order, on the application of the official receiver or the trustee of the bankrupt�s estate, for the redirection by a postal operator of a bankrupt�s post for a period not exceeding three months. Postal redirection orders are typically sought only in cases of non-co-operation or where the applicant believes that a bankrupt has not made a full disclosure of his affairs (for example, in an attempt to conceal assets).

A new Rule, 6.235A, provides for procedure on the application for such an order and Form 6.80 is revised. The Rule provides for �without notice� application, embodies the current operational practice of the Insolvency Service regarding provision of a report setting out the reasons why the order is sought, and gives the court wide power to make the order on such conditions as it thinks fit.

Family proceedings

Rule 12.3(2)(a) is amended to provide that lump sum and costs arising as a result of an order made in family proceedings are now provable in bankruptcy proceedings whilst periodical payments continue to be non-provable.

Administration

A new sub-rule is added to Rule 2.67 to state expressly that the expenses of the administration per Rule 2.67(1) are expenses of the former administrator for the purposes of paragraph 99(3) of Schedule B1 to the Insolvency Act 1986.

Rules 2.106 and 2.107 are amended to clarify that in circumstances where an administrator had made a statement under paragraph 52(1)(b) of Schedule B1 to the Insolvency Act 1986 if it falls to the creditors to fix or increase the administrator�s remuneration, those creditors comprise the secured creditors (with the inclusion of 50 per cent of the preferential creditors where a distribution is made etc to preferential creditors).

Rule 2.108 is amended to provide that where the administrator feels that the quantum of remuneration fixed by the secured/preferential creditors under Rule 2.107(2) is insufficient, he may apply to the Court to have it increased.

Rule 4.7 is amended to clarify the circumstances in which a winding up petition can be presented following the discharge of administration.

Notice changes

Rule 4.26(3) and (4) is amended to provide that a copy of the provisional liquidation order must be sent to the registrar of companies by the provisional liquidator (whether the official receiver or otherwise). A new statutory form (Form 4.15A) is introduced for this purpose.

The duty to send a copy of the notice (of a final meeting) to the official receiver in Rule 4.125(4) is replaced by the Secretary of State. The address where notices should be sent is: Insolvency Service, PO Box 3690, Birmingham B2 4UY. The DX address is: DX 713899, Birmingham 37. Rule 6.137(4) is similarly amended for bankruptcy.

Post 1 April 2004, voluntary liquidators no longer have to bank with the ISA. Although the requirement to submit receipts and payments accounts to the registrar of companies does remain, there is no longer any need for a copy to be sent to the Insolvency Service. The duplicate copy sent to the registrar of companies is thus redundant and a waste of resource. Sub-rule 4.223-CVL(4) is therefore redundant and deleted. Consequential amendments are made to Form 4.68.

Miscellaneous

� A new sub-rule is added to Rule 4.12 (mirroring the wording in Rule 2.4(4)) to provide that the affidavit in support of a winding-up petition must include a statement as to the (non) applicability of the EC Regulation. This will then reflect the requirement of the winding up petition (Form 4.2). In order to harmonise with the administration procedure, the prescribed form of affidavit (Form 4.3) is deleted.

� Rule 6.42 is amended to provide that a debtor is only required to file one copy of the SA with his petition; and that the court is to send that copy to the official receiver if a bankruptcy order is made. The SA itself (Form 6.28) is amended to require additional information from a debtor.

The reference to RSC Order 11 in Rule 12.12(1) is replaced by reference to CPR Part 6 paragraphs 6.17 to 6.35 to make it clear that those procedural rules relating to service out of the jurisdiction are not to be applied in relation to insolvency proceedings. Rule 12.11 is also amended by the inclusion of a reference to Rule 12.12 to further enforce the point that insolvency proceedings have their own free-standing rules regarding dealing with service outside the jurisdiction

2.The Insolvency (Amendment) Regulations 2005 (SI 2005/512)

These Regulations come into force on 1 April 2005 and make changes to the Insolvency Regulations 1994.

A new regulation (regulation 3A) is inserted into the 1994 Regulations to make provision for when the Secretary of State can require information from an administrator and the circumstances in which an administrator can dispose of a company�s records.

A further new regulation (regulation 36A) is inserted into the 1994 Regulations. This provides that an insolvency practitioner can be required to provide a statement of the number of hours spent on a case by the insolvency practitioner and his staff by grade and further makes provision for the circumstances on which a statement should be made and the information to be included in that statement.

Regulation 35 is amended to clarify the circumstances in which an official receiver can draw remuneration on a time cost basis � and to link with those functions not included within the definition of the official receiver�s �general duties� in the Insolvency Proceedings (Fees) Order 2004 (as amended in the Insolvency Proceedings (Fees) (Amendment) Order 2005 � see paragraph 3 of this article)

3.The Insolvency Proceedings (Fees) (Amendment) Order 2005 (SI 2005/544)

This Order comes into force on 1 April 2005 (the commencement date) and makes changes to the Insolvency Proceedings (Fees) Order 2004. The changes apply only in relation to any case where a winding-up or a bankruptcy order is made on or after the commencement date.

Article 6(1) of the 2004 Order is amended to provide that a deposit is payable where a bankruptcy petition is presented by a temporary administrator or a liquidator within the meaning of Council Regulation (EC) No 1346/2000.

Schedule 2 is amended to clarify those functions that are not included as part of the official receiver�s �general duties� in respect of which the administration fee (Fee B1 or W1) is payable under the 2004 Order. An official receiver�s �general duties� do not include anything done by him in connection with or for the purposes of-

The appointment of agents re realising assets.
The making of a distribution to creditors (including preferential or secured creditors)
The realisation of assets on behalf of holders of fixed or floating charges
The supervision of a special manager

Where the official receiver acts in relation to any of the above he is entitled to remuneration on a time cost basis � and Regulation 35 of the Insolvency Regulations 1994 has been amended to reflect this.

4.The insolvency practitioners and Insolvency Services Account (Fees) (Amendment) Order 2005 (SI 2005/523)

This Order comes into force on 1 April 2005 and makes changes to the insolvency practitioners and Insolvency Services Account (Fees) Order 2003.

The Schedule to the 2003 Order is amended to make provision for the circumstances where an account relating to monies held in the Insolvency Services Account will no longer be regarded as being �maintained�. Where an account ceases to be maintained this terminates liability for the payment of fees under the 2003 Order.

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk Telephone: 0207 291 6740

15. The insolvency practitioners Regulations 2005 (SI 2005/524)

These regulations come into force on 1 April 2005. The following notes are intended to illuminate certain provisions of the Regulations and a provision about time records to be provided by insolvency practitioners in the Insolvency (Amendment) Regulations 2005. The notes have no statutory authority and where there is doubt as regards legislation insolvency practitioners should seek independent legal advice. Provisions in the legislation that appear self-explanatory are not further addressed in these notes.

Regulation 3 � In relation to some offices, an office-holder who changes office but continues to act on an on-going basis in respect of the same insolvent may rely upon the security he has obtained in relation to the first office (i.e. �the initial capacity�) for the second office (i.e. �the subsequent capacity�). He need not obtain new security for the second office save where there has been an increase in the value of the assets. The offices to which this applies are set out in regulation 3(3).

Regulation 4(1) � Revokes the insolvency practitioners Regulations 1990 and subsequent amendments.

Regulation 4(2) � Parts I and II of the insolvency practitioners Regulations 1990 will continue to apply to an application for authorisation from the Secretary of State, made before commencement.

Regulation 4(3) � Parts I, III, and IV of the insolvency practitioners Regulations 1990 will continue to apply where an insolvency practitioner was appointed before commencement or where an insolvency practitioner, now acting in a �subsequent capacity�, was appointed in an �initial capacity� before commencement. Only regulations 16 and 17 of the insolvency practitioners Regulations 2005 will apply in these cases.

Regulation 6(e) � The scope of matters that shall be taken into account when determining if an individual is a �fit and proper person� to act as an insolvency practitioner is extended to include whether or not that individual acts in accordance with generally accepted professional standards, practices and principles. Such professional standards, practices, and principles, may include, but are not limited to, Statements of Insolvency Practice and ethical guidelines.

Regulation 7 and Regulation 8 � These regulations are concerned with applications for authorisation by the Secretary of State and reflect two policy changes decided upon since the issue of the consultation document on the 2005 Regulations.

The first policy change relates to those who are able to apply to the Secretary of State for an authorisation. The insolvency practitioners Regulations 1990 did not allow insolvency practitioners who had been authorised to act by Recognised Professional Bodies but who did not hold a pass in the Joint Insolvency Exam to apply for �re-authorisation� by the Secretary of State; a position �at odds� with insolvency practitioners who held an authorisation from the Secretary of State but who also did not hold a pass in the Joint Insolvency Exam. It was decided that given the equality of standards and requirements between the Recognised Professional Bodies and the Secretary of State this inconsistency was not sustainable. Consequently policy has been changed so as not to prevent applications for �re-authorisation� by the Secretary of State from insolvency practitioners without a pass in the Joint Insolvency Exam who had been authorised to act by Recognised Professional Bodies.

The second policy change relates to applications from those who have either previously been authorised to act by a Recognised Professional Body or held an authorisation from the Secretary of State but who are not authorised to act or holders of an authorisation at the time of application. �Re-authorisations� under the insolvency practitioners Regulations 1990 required insolvency practitioners granted an authorisation by the Secretary of State but not holding a pass in the Joint Insolvency Exam, to be the �holder of an authorisation� at the date of application for a �re-authorisation� i.e. that there had been �no lapse or break between authorisations�. Having given further thought to this, we appreciate that there may be reasonable grounds � health grounds, career break, or simple human error � why such a �break in authorisation� might occur. It was decided that to require the applicant to be the �holder of an authorisation� at the time of application was no longer necessary given that in respect of �re-authorisations� by the Secretary of State under the 2005 regulations we have retained the practical experience requirements contained in the 1990 regulations, we have introduced requirements for at least 108 hours of Continuing Professional Development to be obtained in the three years immediately preceding the date of the application, and we have extended the matters which are to be included when assessing an applicants status as �a fit and proper person�. Failure either to meet the prescribed requirements or to be deemed �a fit and proper person� will result in an application for an authorisation being rejected; we do not anticipate a significant number of �speculative� applications as each application is to be accompanied by the application fee of, currently, �2000. We similarly recognise that �breaks in authorisation� such as those we have considered might occur where the insolvency practitioner holds a pass in the Joint Insolvency Exam and consequently the regulations are drafted to accommodate applicants in this position too.

The effect of this policy change is to allow insolvency practitioners who were authorised to act or held an authorisation but who are not so �authorised� at the date of application and who may or may not hold a pass in the Joint Insolvency Exam to apply to the Secretary of State for �re-authorisation�.

Regulation 7 � This regulation applies to applicants who have neither held an authorisation from the Secretary of State nor been authorised to act by a Recognised Professional Body. All applicants must hold a pass in the Joint Insolvency Exam or equivalent, and have a good command of the English language.

Regulation 8 � This regulation applies to applicants who have either previously held an authorisation from the Secretary of State or have been authorised to act by a Recognised Professional Body but are not so authorised at the date of application; and, applicants who at the date of application hold an authorisation from the Secretary of State or are authorised to act by a Recognised Professional Body, including applicants who do not hold a pass in the Joint Insolvency Exam (or equivalent) but have previously been authorised by the Secretary of State or a Recognised Professional Body.

Regulation 8(2)(a) � When an applicant is seeking �re-authorisation� by the Secretary of State regulation 8(2)(a) provides two sets of practical experience criteria either of which can be relied upon by the applicant. Each set of criteria is mutually exclusive. Regulation 8(2)(a) also extends the categories of practical experience that can be relied upon by a holder of an authorisation to include regulatory work experience and advisory work experience. The definitions of such experience are included in regulation 5.

Regulation 8(2)(b) � Introduces a new prescribed requirement to the regulatory regime, which applies to an applicant seeking �re-authorisation� by the Secretary of State. All applicants must have completed at least 108 hours of Continuing Professional Development (CPD) in the three years immediately preceding the date of his or her application; 54 of those 108 hours must fall into specific categories as detailed in regulation 8(3)(b)(i) � (v). In each of the three years the applicant must undertake a minimum of 12 hours CPD the balance being achieved in the remaining year(s) in the period.

Regulation 8(3) � Directs an applicant as to the nature of CPD required and provides for all CPD activity to relate to insolvency law or practice or to the management of the practice of a insolvency practitioner. Matters 8(3)(b)(i) � (v) represent what is often termed �structured learning�, 8(3)(b)(vi), �unstructured learning�.

Regulation 8(4) � The requirement to have completed CPD in order to comply with the requirements for authorisation will become effective on the third anniversary of commencement i.e. 1^st April 2008. Consequently, an applicant applying for an authorisation from the Secretary of State between commencement and the third anniversary of commencement will not have to meet the requirement of the regulation but will have to do so when applying for authorisation thereafter. It�s important to note that whilst regulation 8(2)(b) does not apply until the third anniversary of commencement, regulations 9 and 11(1)(c) will apply from 1^st April 2005.

Regulation 9 � Introduces new prescribed requirements as to the content and maintenance of records of CPD. This regulation will apply from commencement.

Regulation 11 � Introduces a new prescribed requirement to the regulatory regime for a holder of an authorisation from the Secretary of State to submit an annual return providing information to the Secretary of State, which will assist in making �risk assessments� in pursuance of the statutory monitoring function by, for example, monitoring the number of open cases and the number of hours worked being recorded �against� each case. The return will be in respect of each period of 12 months ending on 31 December and will be submitted to the Secretary of State within one month of that date. The first return to be submitted will be for the 12 months to 31 December 2005. The regulation also provides for the Secretary of State to request, at any time, information relating to any matters therein and for that request to be complied with, within one month.

Regulation 12(1)Sets out the requirements for Security and Caution for the Proper Performance of the Functions of an insolvency practitioner and directs the reader to Schedule 2 to the new Regulations.

Regulation 12(2)- This regulation clarifies the requirements where more than one office-holder has been appointed.

Regulation 13(1) � Sets out a prescribed requirement for a minimum �body of records� that an insolvency practitioner must maintain in respect of each case to which he is appointed office-holder. The minimum of information required is set out in Schedule 3 to the regulations.

Regulation 13(2) � The effect of regulation 13(2) is to establish the requirement that all records maintained pursuant to paragraph (1) of this regulation are maintained on a contemporaneous basis.

Regulation 13(5) � Provides for records to be preserved for a period of six years from either the date of release or discharge of the insolvency practitioner, or the expiry of any security or caution maintained in respect of the case, whichever is later.

Regulation 16 � Where the holder of an authorisation from the Secretary of State is, or has been, office-holder, this regulation provides for the Secretary of State, upon the giving of reasonable notice, to inspect and take copies of those records relating to the case as set out in regulation 16(2) but which may not be held directly by the holder of the authorisation.

Regulation 17 � Provides for the Secretary of State to inspect and take copies of records relating to administration and administrative receivership proceedings. The extent to which the regulation will be utilised will be limited to the Secretary of State�s supervisory and monitoring functions.

Schedule 1 � Provides a summary of statutory instruments to be revoked on commencement of the insolvency practitioners Regulations 2005

Sch 2 Part 2 para. 3(3)(a) � The terms of the bond may provide for a limit to be placed on the total amount of bond cover available to an insolvency practitioner for all cases to which he is appointed. That limit cannot be less than �25,000,000.

Sch 2 Part 2 paras. 4 and 5� The definition of �insolvent�s assets� is given at Schedule 2 Part 1 paragraph 1 to the Regulations. All of the assets � subject to paragraph 4(a) and (b) are to be bonded for from the outset, including cases where assets are received over the course of the administration (e.g. in Voluntary Arrangements and Trust Deeds) and irrespective of whether or not the assets are in his, the office-holder�s, possession; the legislation does not provide for �staged realisation� of assets. Interest paid and antecedent recoveries comprise in the insolvent�s assets.

Sch.3 para. 13(c) � Provides for the amount of capital returned to be included in the �body of records�.

Sch.3 para. 15 � Establishes the requirement that time-records must be maintained as a feature of the minimum �body of records� that an insolvency practitioner must maintain pursuant to regulation 13 in relation to each case to which he is appointed.

Insolvency Practitioners should note that The Insolvency (Amendment) Regulations 2005 which amend the Insolvency Regulations 1994 (S.I. 1994/2507) � introduces a new prescribed requirement (regulation 36A) providing for any creditor, contributory, director and bankrupt to be provided within 28 days of the receipt of the request and free of charge, a statement of time and cost expended on a case, in the terms set down in the provision. The vires for the Secretary of State�s power to make regulations are provided by rule 12.1 of the Insolvency Rules 1986 and sections 411 and 412 of the Insolvency Act 1986. Rule 12.1(1) does not include insolvency practitioners acting in the capacity of nominee and supervisor, and therefore regulation 36A does not extend to insolvency practitioners as officeholder in an IVA or CVA

We anticipate that such a statement will be founded upon the information maintained pursuant to paragraph 15 of Schedule 3 to the Insolvency Practitioners Regulations 2005.

Some consultees felt that the time-recording requirement was unnecessary given that, in their view, appropriate mechanisms � SIP9, fees charged on a percentage basis, and the fact that fees tend to be agreed in Individual Voluntary Arrangements � already exist by which fees can be calculated: this is not disputed. However, whilst we can see that time-recording information can be utilised in this fashion, that is not the reason we have introduced the requirement. Rather it will add transparency and openness to all insolvency proceedings; and creditors and others will be entitled to access to that information. It will also enable insolvency practitioners to comply with the Court Practice Direction on the Remuneration of Office-holders that came into force on 1^st October 2004.

Time/cost statements will be provided to creditors and others entitled to them on a request basis for no charge. There is no on-going obligation on an insolvency practitioner to provide time/cost statements throughout the period of the proceedings based on a single request; each request is separate and requires only the most recent time/cost statement in response. Time/cost statements produced in response to requests are produced at six-month intervals and must cover the period of the insolvency procedure from the date of the office-holder�s appointment. Any person requesting a time/cost statement within the first six-months of the date of appointment should be advised that the relevant statement will be produced at six months and the statement should then be provided at that date. Any request for a time/cost statement received within the second six months of appointment will be provided with the statement produced at the end of the first six months; any request received in the third period of six months from the date of the office-holders appointment will be provided with the statement produced at the end of the second six months, which will be a time/cost statement covering the period of twelve months from the date of the office-holders appointment. All requests for statements should be complied with within 28 days of receiving the request.

General enquiries may be directed to IP Policy Section Email: IPPolicy.Section@insolvency.gsi.gov.uk Telephone 020 7291 6772

16. Consolidation of Secondary Insolvency Legislation

Insolvency practitioners are informed that The Insolvency Service has just commenced a project to review, and consolidate the secondary insolvency legislation to produce replacement instruments that will take account of the numerous amendments that have been made over the periods that the legislation has been in force.

Within this project it is proposed to review the operation of the Insolvency Rules 1986 and to consider what scope there is for:

�        Simplification;

�        Modernisation;

�        Innovative change, and

�        Removal of any unnecessary burdens.

As well as the Insolvency Rules themselves, we will also be reviewing and consolidating the instruments listed below:

� The Insolvent Partnerships Order 1994

� The Administration of Insolvent Estates of Deceased Persons Order 1986

� The Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules 1987

� The Insolvency Regulations 1994

� The Insolvency Proceedings (Fees) Order 2004

� The Insolvency Proceedings (Monetary Limits) Order 1986

� The Insolvency Practitioners and Insolvency Services Account (Fees) Order 2003

� The Insolvent Companies (Reports on Conduct of Directors) Rules 1996

� The Companies (Disqualification Orders) Regulations 2001

We expect to undertake most of the detailed work over the next 18 months, with a view to the 10 replacement Statutory Instruments coming into force in October 2007.

Insolvency practitioners are invited to raise any issues they might have regarding their experiences of using the secondary legislation with The Service�s Policy Unit, along with any comments they may have as to how the secondary legislation, especially The Insolvency Rules 1986, could be simplified and modernised. Any such comments should be e-mailed to The Insolvency Service�s Policy Unit at policy.unit@insolvency.gsi.gov.uk or sent to Tom Phillips at the address provided at the end of this article.

We would welcome any contributions as soon as possible as the early planning work will be crucial in establishing the extent of the changes that we will be able to make.

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk Telephone: 020 7291 6740

17. Insolvency Regulations 1994 � Regulation 18 � Payment into the ISA

The Insolvency Service is considering whether to extend the scope of regulation 18 of the Insolvency Regulations 1994 to enable unclaimed or undistributed assets, unclaimed dividends or other money to be paid into the ISA in corporate procedures other than liquidations (on payment of a fee).

In order to inform the policy-making process, we are seeking insolvency practitioners� views as to whether the current inability to make payments into the ISA in

cases other than liquidations is a matter of concern to them. If so, we would be glad to receive details of practical experiences of the types of insolvency proceedings where the present provisions cause difficulty, together with, if possible, an indication of the number of cases and, in the case of unclaimed dividends, the numbers of creditors involved. We would also find it helpful to know what steps insolvency practitioners are currently taking to trace creditors who fail to bank dividend cheques.

Any enquiries regarding the above should be directed towards Katherine Parker, Area 5.7, 21 Bloomsbury Street, London WC1B 3QW, telephone number 020 7637 6651 or email katherine.parker@insolvency.gsi.gov.uk

18. Consolidation of Secondary Insolvency Legislation-Update

Dear IP Number 24 brought news, in September 2005, of the commencement of a project by The Insolvency Service which aims to review, consolidate, simplify, modernise and innovate the secondary insolvency legislation.

Representatives from The Insolvency Service have met recently with representatives of R3 and The Insolvency Technical Managers Forum, to invite their comments on matters to be addressed under the project. Further meetings have been arranged with other key user groups during December and January. The matters subject to discussion include, but are not limited to, the following:

Ideas for simplification of the structure and content of the Insolvency Rules, the Insolvent Partnerships Order, the Administration of Insolvent Estates of Deceased Persons Order, the Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules and the 6 other statutory instruments covered by the project referred to in the earlier article.
Ideas for modernisation and innovative change to the legislation, including providing for electronic access to insolvency information held by insolvency practitioners and for the facility to use electronic transmission of documents in insolvency proceedings;
Identifying Rules that are no longer relevant;
Removing duplication, for example, deleting provisions in Part 7 of the Insolvency Rules 1986 where those provisions for Court procedure and Practice are addressed in the Civil Procedure Rules;
How to remove unnecessary burdens on office-holders with the aim of reducing costs in administering insolvencies, to provide better returns for creditors.

The Insolvency Service has been pleased to receive a positive response from consultees on the project and would urge you to join in the debate and provide your comments on how future insolvency legislation should be shaped. To do this please email your views to Neil.Ogilvie@insolvency.gsi.gov.uk by 31 January 2006. We look forward to hearing from you.

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk Telephone: 020 7291 6740

19. The Insolvency (Amendment) Regulations 2005 SI 2005/512

Note of the position regarding regulation 8 that inserts regulation 36A into the Insolvency Regulations 1994

Regulation 36A provides that an insolvency practitioner can be required to provide a statement of the number of hours spent on a case by the insolvency practitioner and his staff by grade. The Insolvency Service is aware that the regulation does not apply in the following circumstances:

1. Appointments in respect of Scottish insolvency procedures.

The Insolvency Regulations 1994 apply to England and Wales only, and therefore at present there is no equivalent requirement for officeholders in respect of appointments in Scotland.

For Scottish company procedures that are not devolved i.e. CVAs and Administrations) The Insolvency Service is introducing the Insolvency (Scotland) Amendment rules 2006 to place similar requirements as regulation 36A on insolvency practitioners for 6 April 2006 (see article 21).

For devolved company procedures (i.e. Liquidations and Receiverships) the Scottish Executive are considering whether to prepare a Scottish Statutory Instrument to place similar requirements on insolvency practitioners as regulation 36A does in England and Wales.

For devolved personal procedures (i.e. Trust Deeds and Sequestrations) the Scottish Executive are considering whether to insert a provision similar to regulation 36A in either primary legislation (the Bankruptcy and Diligence Bill) or possibly in the Bankruptcy Regulations (secondary legislation).

2. Individual and Company Voluntary Arrangements

The vires for the Secretary of State�s power to make regulations are provided by rule 12.1 of the Insolvency Rules 1986 and sections 411 and 412 of the Insolvency Act 1986. Rule 12.1(1) does not include insolvency practitioners acting in the capacity of nominee and supervisor, and therefore regulation 36A does not extend to insolvency practitioners acting as officeholder in an IVA or CVA. The notes to the regulation which were issued in Dear IP issue 22, Chapter 15 in March 2005 incorrectly referred to debtors subject to an IVA being able to make a request under regulation 36A.

General enquiries may be directed to IPPolicy.Section@insolvency.gsi.gov.uk Telephone: 020 7291 6772

20. The Insolvency Practitioners and Insolvency Services Account (Fees) (Amendment) Order 2005 (SI 3524/2005)

The Insolvency Practitioners and Insolvency Services Account (Fees) (Amendment) Order 2005 provides that the fee payable by each Recognised Professional Body (RPB) for each person authorised to act as an insolvency practitioner by virtue of membership of that body be increased from �100 to �150 with effect from 30 January 2006, and to �200 for subsequent years. The fee is due from the RPBs on or before 1 April each year.

The reason for the increase is that the time recording information on which the original fee was based has not proved to be a fair reflection of the time actually spent by Insolvency Service staff on insolvency practitioner regulation, and this fee was therefore understated in our original calculations when setting the fee at �100.

The authorisation and maintenance fee paid by those insolvency practitioners authorised by the Secretary of State has also increased from �2,000 to �2,100 with effect from 1 April 2006.

General enquiries may be directed to IPPolicy.Section@insolvency.gsi.gov.uk Telephone: 020 7291 6772

21. Insolvency (Scotland) Amendment Rules 2006 & Insolvency (Scotland) Amendment Order 2006

These two statutory instruments have recently been laid before Parliament and their provisions will come into force on 6 April 2006. Both statutory instruments only apply to Scotland and follow changes that were made to equivalent insolvency provisions in England and Wales with effect from 1 April 2005 by the Insolvency (Amendment) Rules 2005 (SI 2005/527).

The Insolvency (Scotland) Amendment Rules 2006 only affects administrations, company voluntary arrangements and provisional liquidations where a petition to wind up has been presented by the Secretary of State. Rule 7.35 places the same requirements on administration and supervision of voluntary arrangements (see article 19) as Regulation 36A of the Insolvency Regulation 1994.

The Insolvency (Scotland) Amendment Order 2006, which applies only to insolvency matters that are devolved under The Scotland Act 1998, substitutes page 2 of the statement of affairs form used in liquidations and receiverships in Scotland to clarify how the �prescribed part� should be applied to unsecured creditors and floating charge holders respectively.

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk Telephone: 020 7291 674

22. Insolvent Partnerships (Amendment) Order 2006 (SI 2006/622)

This short statutory instrument has recently been laid before Parliament and its provisions will come into force on 6 April 2006. It corrects certain errors that were contained in the Insolvent Partnerships (Amendment) Order 2005 (SI 2005/1516), principally in relation to the application, or not, of the �prescribed part� to insolvent partnerships and corporate members of insolvent partnerships wound up under Articles 8 and 10 of the Insolvent Partnerships Order 1994. A draft of the amending instrument is available on The Service�s website at:

http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/legislation/uk/legislation.htm

The Insolvent Partnerships Order 1994 is one of the instruments that is in the process of being reviewed within The Service�s current

project to review and consolidate the insolvency secondary legislation. It will accordingly be re-issued in its entirety with effect from

October 2007.

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk Telephone: 020 7291 6740

23. The Insolvency Proceedings (Fees) (Amendment) Order 2006 S.I 2006/561)

This Order comes into force on 1 April 2006 and makes a number of further amendments to the Insolvency Proceedings (Fees) Order 2004 (S.I 2004/593) and other earlier Fees Orders. The Order may be viewed on the the Office of Public Sector Information website at www.opsi.gov.uk

Probably of most interest to insolvency practitioners is that the fee payable to register an individual voluntary arrangement will from 1 April be reduced to �15, article 2(4) of the Order, and fees payable to the Secretary of State for cases which commenced before 1 April 2004 (old cases) will be limited so that where receipts exceed �100,000 no further fees are payable. In respect of such old cases for sums up to �100,000 paid into the Insolvency Services Account the following table details the percentage changes to fees payable in both bankruptcy and liquidation proceedings

Type of proceedings	% Fee on sums paid into the Insolvency Services Account	Provision under which fee charged
Bankruptcy where the bankruptcy petition was presented on or before the 29th December 1986	10% of the first �50,000 7.50% of the next �50,000	Fee 13 in Table B in the Schedule to the Bankruptcy Fees Order 1984 (as amended)
Bankruptcy where the bankruptcy order was made before 1st April 2004	15% of the first �50,000 11.25% of the next �50,000	Fee 13 in Part 2 of the Schedule to the Insolvency Fees Order 1986 (as amended)
Compulsory winding up where the petition was presented on or before 29th December 1986	10% of the first �50,000 7.50% of the next �50,000	Fee 3 in the Schedule to the Department of Trade and Industry Fees Order 1985 (as amended)
Compulsory winding up where the winding-up order was made before 1st April 2004	15% of the first �50,000 11.25% of the next �50,000	Fee 10 in Part 1 of the Schedule to the Insolvency Fees Order 1986 (as amended)

Any enquiries regarding IVA fees the above should be directed towards Insolvency Practitioner Unit, IPU.Email@insolvency.gsi.gov.uk as the email address.

And any queries regarding the Secretary of State Fees should be directed to, EAD Enquiries telephone: 0121 698 4275 email: EAD.Enquiries@insolvency.gsi.gov.uk

24. The Insolvency (Amendment) Rules 2006 (SI 2006/1272)

The above Statutory Instrument came into force on 1 June 2006, and amends Rule 13.12 of The Insolvency Rules 1986. The Rule is amended to extend the definition of �debt� to include claims founded in tort where all of the elements required to bring an action against a company exist at the time the company goes into liquidation or enters administration, except that the claimant has not yet suffered any damage and does not therefore, at that time, have a cause of action against the company.

The amendment is particularly relevant to those companies that may have been involved in activities where their negligent action, or inaction, has resulted in personal injury that does not manifest immediately because of a long latency period, such as asbestos related diseases.

The legislation is available by clicking here http://www.opsi.gov.uk/si/si2006/20061272.htm

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk ; Telephone: 020 7291 6740

25. Consolidation of secondary insolvency legislation - Project Update

1. The project to review, consolidate, simplify, modernise and innovate the secondary insolvency legislation is proceeding and the consolidated secondary insolvency legislation is now planned for commencement in April 2008 (see 6 below). As well as The Insolvency Rules 1986, the project will consolidate: -

The Insolvent Partnerships Order 1994
The Insolvency Regulations 1994
The Insolvency Proceedings (Fees) Order 2004
The Insolvency Proceedings (Monetary Limits) Order 1986
The Administration of Insolvent Estates of Deceased Persons Order 1986
The Insolvency Practitioners and Insolvency Services Account (Fees) Order 2003
The Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules 1987
The Insolvent Companies (Reports on Conduct of Directors) Rules 1996
The Companies (Disqualification Orders) Regulations 2001

2. Following consultation with stakeholders, and in accordance with the powers to make subordinate legislation prescribed by the primary legislation, it is anticipated that the project will achieve an outcome of nine consolidated statutory instruments, with The Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules 1987 and The Insolvent Companies (Reports on Conduct of Directors) Rules 1996 being merged into a single set of Rules.

3. The initial consultation process has proved a success. The Insolvency Service's Policy Unit has obtained the views and suggestions of a wide range of stakeholders through extensive correspondence, internet/intranet and other articles and meetings held with stakeholders including those representing the insolvency and legal professions, and other government departments.

4. Users of the legislation have welcomed the project initiatives and the consultation has generated an enthusiastic response. Policy Unit have currently gathered in more than 400 suggestions, from over 70 stakeholders, for amendment to the insolvency secondary legislation and prescribed forms. All have been reviewed and relevant further information has been sought. Almost half of those have been identified as actionable points to be addressed in the drafting of the consolidated Insolvency Rules and other statutory instruments. Furthermore, where valuable suggestions have been raised which extend beyond the scope of the project then these have been noted for future consideration.

5. Certain stakeholders have requested the opportunity to participate further as the consolidation project progresses and in response it has now been agreed that a further short process of targeted consultation on the draft consolidated Insolvency Rules will be built into the project following submission of the draft Rules to the Insolvency Rules Committee. There are also plans for further targeted consultation in relation to the draft consolidated Insolvent Partnerships Order. To accommodate further participation in the project by stakeholders the commencement date for the consolidated secondary insolvency legislation listed above is now planned for April 2008.

6. Set out below are particulars of some of the key initiatives currently being pursued under the consolidation project: -

Removal of obsolete provisions and duplication.
Restructuring of the Insolvency Rules. We are considering how best to provide an index of definitions in response to user requests, and we also anticipate moving common provisions to Common Parts within the new Rules. The existing Parts 7 to 13 are to be restructured and modernised. The Court procedure and practice provisions will largely be retained within the Insolvency Rules to meet the needs of stakeholders and by way of modernisation the new Rules will more clearly facilitate the electronic provision of information in insolvency proceedings to allow Insolvency Practitioners and Official Receivers to communicate electronically when creditors opt in.
We propose to remove requirements for proofs and proxies to be signed and with a view to modernised insolvency practice we intend that the new Insolvency Rules will be drafted to allow Meetings of Creditors in insolvency proceedings to be held in whatever form is deemed most appropriate (i.e. electronically, physically, telephonically etc).
Consultation has demonstrated that the majority of the existing requirements to Gazette insolvency events are considered by stakeholders to be valuable. Therefore, we intend to pursue only limited revision to the Gazetting requirements but we do propose to provide for much greater discretion for office-holders to decide when it is appropriate to advertise insolvency events in local newspapers (in addition to the requirement to Gazette).
We are reviewing existing requirements to file insolvency documents in Court with a view to removing these from the Insolvency Rules where they no longer serve a valuable purpose. Currently, we propose to remove all requirements to file insolvency Advertisements and Gazette notices in Court with the exception of the Gazette notice of presentation of the winding up petition.
We propose to pursue the introduction of a fixed fee option for office-holders� remuneration to allow creditors to authorise or approve the quantum of that remuneration.
We intend to respond to user requests for fuller write out of the Insolvent Partnerships Order and the Administration of Insolvent Estates of Deceased Persons Order provisions.
Our lawyers have been asked to advise on the structure of the Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules and The Insolvent Companies (Report on Conduct of Directors) Rules and on the proposed merging of those two statutory instruments.
We wish to pursue the removal of references to �affidavits� from the insolvency legislation to ease the cost and burden on users of the legislation. It is proposed that �affidavits� would be replaced by witness statements submitted with a statement of truth.
We are seeking views currently on an increase in the level of debt required to support a creditor's bankruptcy and winding up petition, given that the current �750 debt figure has not been changed since 1986.
Suggestions have been accepted for some revision to prescribed insolvency forms and we propose to make all of the new prescribed insolvency forms available on The Insolvency Service website from April 2008. The consolidation will inevitably lead to the replacement/renumbering of prescribed insolvency forms.

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk ; Telephone: 020 7291 6740

26. The Banks (Former Authorised Institutions) (Insolvency) Order 2006 (SI 2006/3107)

The Banks (Former Authorised Institutions) (Insolvency) Order 2006 came into force on the 15 December 2006, and revokes the Banks (Administrative Proceedings) Order 1989, except for the purposes of any administration proceedings, which are already underway under the 1989 Order. This is necessary to apply the changes to administration introduced by the Enterprise Act 2002 to former authorised institutions.

The Banks (Former Authorised Institutions) (Insolvency) Order 2006 makes provision for the application of Part 2 of, and Schedule B1 to, the Insolvency Act 1986 to any company within the meaning of Section 735(1) of the Companies Act 1985 that is a former authorised institution.

Former Authorised Institutions are formerly authorised banks, as defined by Section 422 of the Insolvency Act 1986. Financial Institutions are now authorised under the Financial Services and Markets Act 2000 (FSMA 2000) The 2006 Order covers institutions which accepted deposits in accordance with authorisations under the Banking Acts 1979 or 1987, but which do not have permission to accept deposits under FSMA 2000. This is a largely transitional arrangement as over time such institutions will cease to exist and the Order could be revoked.

Under the new Order, the FSA can participate in the administration process, i.e. apply for an administration order, consent to the making of an order, attend meetings of creditors, make representations, etc. There is no change in regulatory responsibilities from the 1989 Order with regards to the FSA.

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk ; Telephone: 020 7291 6740

27. The Insolvency Practitioners and Insolvency Services Account (Fees) (Amendment) Order 2007

The authorisation and maintenance fee for practitioners authorised by the Secretary of State will rise from �2,100 pa to �2,500 with effect from 1 April 2007. Since April 2004 the authorisation and regulation of insolvency practitioners has been undertaken by The Insolvency Service on a cost recovery basis. Fee income in respect of this function has been insufficient to meet costs, and the increase in the fee is required in order to avoid cross-subsidisation of the activity from other sources of income.

The Fees Order also amends the fee payable for the transfer of funds held in the Insolvency Services Account, which are made by way of the Clearing House Automated Payments System (CHAPS), and introduces a fee of �10 in respect of them. The fee for transfers by way of the Bankers Automated Clearing (BACS) or any other electronic payments system remains at 15p.

A draft of the Fees Order which is available on our website at http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/legislation/enterpriseact/Secondary%20legislation.htm

Enquiries about the authorisation and maintenance fee should be directed to IP Policy Section tel: 020 7291 6772 email: IPPolicy.Section@insolvency.gsi.gov.uk and those about the CHAPS fee to Estate Accounting Directorate tel: 0121 698 4268 ead.enquiries@insolvency.gsi.gov.uk

28. The Insolvency Proceedings (Fees) (Amendment) Order 2007 (SI 2007/521)

As insolvency practitioners may be aware The Insolvency Proceedings (Fees) (Amendment) Order 2007 also comes into effect on 1 April 2007.

One of the changes made by that Order is the reduction of the fee payable on the registration of an individual voluntary arrangement from �15 to �10.

A draft of the Fees Order is available on our website at http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/legislation/enterpriseact/Secondary%20legislation.htm

General enquiries may be directed to IPU.Email@insolvency.gsi.gov.uk

29. The Insolvency Proceedings (Fees) (Amendment) Order 2007 (SI 2007/521)

In article 28 of this chapter (issued in the March edition of Dear IP No 31) insolvency practitioners were advised that the Insolvency Proceedings (Fees) (Amendment) Order 2007 came into effect on 1 April 2007.

A number of fees were amended by that Order and this is to confirm that the Order is available on our website here.

General enquiries may be directed to IP Policy Section Email: IPPolicy.Section@insolvency.gsi.gov.uk Telephone 020 7291 6772

30. Insolvency (Amendment) Rules 2007 (SI 2007/1974) and Insolvency (Scotland) Amendment Rules 2007 (SI 2007/2537 (S.5))

The Insolvency (Amendment) Rules 2007 (SI 2007/1974) came into force on 6 August 2007, and inserted an amended Rule 4.228 into the Insolvency Rules 1986. The Rule is amended to address the issue that arose in the case of re First Independent Factors and Finance Limited v Churchill [2006] EWCA Civ 1623, where the Court of Appeal held that a notice given under the Rule, to avoid the prohibitions on the re-use of a company name under section 216 of the Insolvency Act 1986, could not be given where an individual was already a director of the successor company that wished to acquire the business of the insolvent company and adopt the prohibited name. The judgment had significant implications for management buy-outs in insolvency situations.

In addition to addressing the above issue, the new Rule 4.228 goes further and provides for a number of other scenarios where an individual may avoid the section 216 prohibitions by giving of the requisite notice under Rule 4.228.

The Rule now allows a person to carry on the business of the insolvent company using a prohibited name other than through a limited company where the relevant notice is given. The Rule also provides that the prescribed notice may be given before the company enters insolvent liquidation (for example, where the insolvent company is in administration and it is likely, or possible, that it will subsequently go into insolvent liquidation). In cases where the insolvent company is not in insolvent liquidation and also in any case where the acquiring company has not yet adopted a prohibited name, notice can be given where the director of the insolvent company is already a director of the acquiring company.

However, notice under Rule 4.228 must always be given before a director acts in a way that would be prohibited by section 216. The Rule introduces a new prescribed form, Form 4.73, for the provision of the requisite notice to creditors.

Although the Court of Appeal decision is not binding in Scotland it was thought likely to be persuasive, given the identical nature of the provisions north and south of the border, should a similar case be brought before a Scottish court. The Insolvency (Scotland) Amendment Rules 2007, which will come into force on 1 October 2007, make corresponding amendments to Rule 4.80 Insolvency (Scotland) Rules 1986.

The legislation for England and Wales is available at http://www.opsi.gov.uk/si/si2007/20071974.htm and for Scotland, at http://www.opsi.gov.uk/si/si2007/20072537.htm.

Any enquiries regarding this article should be directed toward Stephen Leinster, Policy Unit, Area 5.7, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7291 6747; email: stephen.leinster@insolvency.gsi.gov.uk.

General enquiries may be addressed to Policy.unit@insolvency.gsi.gov.uk or telephone 020 7291 6740

31. Consultation on changes to the Insolvency Act 1986 and the Company Directors Disqualification Act 1986

A consultation document on suggested changes to the Insolvency Act 1986 and the Company Directors Disqualification Act 1986, to be made by a Legislative Reform Order, for the modernisation and streamlining of insolvency procedures has recently been issued. The closing date for replies is 10 December 2007 and The Insolvency Service will welcome any comments from insolvency practitioners on the proposals.

The paper sets out the Government�s proposals for reforming the law governing some aspects of insolvency procedure in order to modernise, streamline and make easier for users some processes in the insolvency legislation. The underlying aim is to reduce the burdens on users of insolvency law generally so as to increase the returns to creditors.

The changes being proposed in this paper are designed to achieve one or more of the following broad aims:

to modernise certain aspects of insolvency law to take account of technological developments, particularly the growth in the use of electronic communication over the last 20 years;
to recognise that some decisions are best left to the professional judgement of insolvency office-holders, who are experienced members of a regulated profession;
to remove unnecessary burdens on insolvency practitioners and others, while not removing any necessary protections for the creditors; and
to make more flexible the means of communication, and the exchange of information, between insolvency office-holders and creditors (and others who send or receive information) in insolvency cases.

The paper can be viewed on our website: http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/con_doc_register/registerindex.htm - look under �Live consultations�

Any enquiries regarding this article should be directed towards Katherine Parker telephone: 0207 637 6651; email: katherine.parker@insolvency.gsi.gov.uk

General enquiries may be addressed to Policy.unit@insolvency.gsi.gov.uk or telephone 020 7291 6740

32. The Insolvency (Scotland) Amendment Rules 2008

This instrument, which amends the Insolvency (Scotland) Rules 1986(�the I(S)R86�), comes into force on 6 April 2008. It resolves the problem relating to the priority of expenses in Scottish administrations, outlined in Article 51 of the December 2007 issue of Dear IP, namely that the current rule that applies a priority of expenses, Rule 2.39, sits in Chapter 9 of Part II of the I(S)R86, Distributions to creditors. A priority of expenses is only required where there are insufficient funds with which to pay them all. In any administration where there is to be a distribution to creditors, all expenses must already have been paid in full and a priority of expenses given in the distribution chapter is irrelevant.

After 6 April 2008 the priority will be applied in new Rule 2.39B, which will sit in its own Chapter, Chapter 8A, of the I(S)R86. This will provide a priority in cases where there are insufficient funds with which to pay expenses in full.

Any enquiries regarding the above should be directed towards Steven Chown, Policy Unit, Area 5.7, 21 Bloomsbury St, London WC1B 3QW; telephone: 020 7637 6501 email: steven.chown@insolvency.gsi.gov.uk

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk;

Telephone: 020 7291 6740

33) Commencement of Section 176ZA of the Insolvency Act 1986 and the Insolvency (Amendment) Rules 2008

Section 176ZA of the Insolvency Act 1986, which was introduced by the Companies Act 2006 following the House of Lords decision in re Leyland Daf, will come into force on 6 April 2008. The new section gives liquidators in England and Wales priority over assets subject to a floating charge for the payment of their general expenses, so far as the assets of the company are otherwise insufficient to meet them, although rules may be made to restrict its application. Generally speaking, the new section applies to companies that enter liquidation on or after 6 April 2008.

The Insolvency (Amendment) Rules 2008 (�the Rules�), which will also come into force on 6 April 2008, restrict the application of Section 176ZA only with respect to litigation expenses, defined as expenses of a liquidation which are incurred in the preparation of, or during the course of, any legal proceedings which exceed, or are likely to exceed, a cumulative value of �5,000. Such litigation expenses shall not have the priority provided by Section 176ZA over any claims to property comprised in or subject to a floating charge and shall not be paid out of such property unless and until approved or authorised by the preferential creditors, the floating charge holder(s) or the court, in accordance with the conditions set out in new Rules 4.218B to 4.218E.

The Rules amend Rule 4.218 to ensure that proceeds of any legal actions, which the liquidator has power to bring in his own name or in the name of the company, will be available to pay the expenses of the liquidation. They also provide for the recovery of expenses and costs relating not only to the conduct but also to the preparation of any legal proceedings. Included within this, whilst not expressly referred to, are any proceedings taken under Section 245 of the Insolvency Act 1986. The existing provision is extended so as to apply to proceeds arising out of any awards made under arbitration or dispute resolution procedures or of any compromise or settlement of any legal action or dispute reached prior to a judgment or award being made.

Correspondingly, also included as expenses of a liquidation are those expenses properly incurred in the preparation or conduct of arbitration or dispute resolution procedures and negotiations leading to a settlement or compromise of any legal action, arbitration, or dispute resolution procedure.

New Rules 4.218A to 4.218E are inserted into the principal Rules, the Insolvency Rules 1986, and set out the conditions with which the liquidator must comply in seeking and obtaining authorisation or approval and the conditions with which the preferential creditors and/or floating charge holders must comply in granting or refusing the liquidator�s request.

Additionally the Rules provide for the liquidator to make an application to court for the approval or authorisation of such amount of litigation expenses as the court thinks fit where the specified creditor(s), that is the creditor(s) from whom authorisation or approval would be sought, is, or is intended to be, a defendant in the legal proceedings to which the expenses relate. An application may also be made to court where the specified creditor(s) has declined to authorise the amount requested, has approved or authorised an amount less than that requested by the liquidator (which he considers to be inadequate), or made an application to the liquidator for further particulars which in the liquidators opinion is unreasonable.

Where the circumstances are such that the liquidator forms the view that the approval or authorisation is urgent, he may apply to court for approval or authorisation either without seeking it from the specified creditor(s) or, if sought, prior to the expiry of the prescribed time limit. The draft version of this legislation in its final form can be accessed via the following link:

http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/legislation/enterpriseact/Insolvency(Amendment)Rules08draft.doc

Any enquiries regarding this article should be directed towards
Alison Parine, Policy Unit, Area 5.7, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7637 6365 email: alison.parine@insolvency.gsi.gov.uk

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk;

Telephone: 0207 291 6740

33. Commencement of Section 176ZA of the Insolvency Act 1986 and the Insolvency (Amendment) Rules 2008

http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/legislation/enterpriseact/Insolvency(Amendment)Rules08draft.doc

Any enquiries regarding this article should be directed towards Alison Parine, Policy Unit, Area 5.7, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7637 6365 email: alison.parine@insolvency.gsi.gov.uk

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk;

Telephone: 0207 291 6740

34. The Insolvency Practitioners and Insolvency Services Account (Fees) (Amendment) (No. 2) Order 2008

The authorisation and maintenance fee for practitioners authorised by the Secretary of State has risen from �2,500 pa to �2,550 with effect from 6 April 2008. Since April 2004 the authorisation and regulation of insolvency practitioners has been undertaken by The Insolvency Service on a cost recovery basis. The increase in the fee is required in order to avoid cross-subsidisation of the activity from other sources of income.

The Fees Order has also introduced a fee of �25 where a payment is made into the ISA of unclaimed dividends or other money in an administration or administrative receivership. Please refer to Dear IP Chapter 5 Article 56 for further details.

A copy of the Fees Order is available at the website of the Office of Public Sector Information, at http://www.opsi.gov.uk/

Any enquiries regarding this article should be directed towards Andrew Shore, IP Policy Section, Area 5.7, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7291 6769; email: andrew.shore@insolvency.gsi.gov.uk

General enquiries may be directed to IPPolicy.Section@insolvency.gsi.gov.uk; Telephone: 020 7291 6772

35. The Insolvency Practitioners and Insolvency Services Account (Fees) (Amendment) Order 2009 (SI 2009/487)

The authorisation and maintenance fee for practitioners authorised by the Secretary of State has risen from �2,550 pa to �3,250 with effect from 6 April 2009. Since April 2004 the authorisation and regulation of insolvency practitioners has been undertaken by The Insolvency Service on a cost recovery basis. The increase in the fee is required in order to avoid cross-subsidisation of the activity from other sources of income.

In addition, the annual maintenance fee for the recognition of professional bodies by the Secretary of State under section 391 of the Insolvency Act has risen from �207 per authorised member to �300 per authorised member. This change is necessary to ensure full cost recovery, and to enable additional monitoring activity in relation to Statement of Insolvency Practice 16 and pre-packaged sales in administrations.

Other fee changes

The following fees payable in connection with the operation of the ISA have been amended as follows:

Banking Fees	Current quarterly Fee	Amended quarterly Fee
Fee No. 1 Banking Fee Winding up by the court and bankruptcy	�15	�18
Fee No. 2 Banking Fee voluntary winding up	�20	�23
Fee No. 3 Cheque issue fee	�0.80	�1.00

A flat rate fee of �25.00 is currently payable for handling payments made into the ISA of unclaimed dividends or other money in an administration or administrative receivership. The Fees Order extends the current fee of �25.00 to voluntary liquidations to ensure consistency for all voluntary users of the ISA.

A copy of the Fees Order is available at the website of the Office of Public Sector Information, at http://www.opsi.gov.uk/

Any enquiries regarding this article should be directed towards Richard Crowton, Estate Account Services, Cannon House, 18 Priory Queensway, Birmingham, B46FD email:richard.crowton@insolvency.gsi.gov.uk

General enquiries may be directed to EAD.Enquiries@insolvency.gsi.gov.uk

Telephone 0121 698 4268

36. The Insolvency Proceedings (Fees) (Amendment) Order 2009

The Insolvency Proceedings (Fees) Amendment) Order 2009 comes into effect on 6 April 2009.

The Secretary of State fee charged on cases with insolvency orders occurring during the period 1April 2004 � 31 March 2005 has been revoked.

The fees order also amends the investment fee to reflect the current cost of the activity.

Investment Activity	Current Fee	Amended Fee
Purchase Costs up to �5,000	�50	�50
Purchase Costs over �5,000	�50	�50 plus 0.3% of the amount in excess of �5,000
Proceeds up to �5,000	Nil	None
Proceeds over �5,000	Nil	�50 plus 0.3% of the amount in excess of �5,000

In addition to this the existing petition deposit fees are amended as follows:

Type	Current Fee	Amended Fee
Debtors	�345	�360
Creditors	�415	�430
Company	�690	�715

Finally, the IVA registration fee increases from �10 to �15 with effect from 6 April 2009.

A copy of the Fees Order is available at the website of the Office of Public Sector Information, at http://www.opsi.gov.uk/

General enquiries may be directed to email EAD.Enquiries@insolvency.gsi.gov.uk

Telephone 0121 698 4268

37. The Insolvency (Amendment) Rules 2009

The Insolvency (Amendment) Rules 2009 have been made by the Lord Chancellor and laid in Parliament. This instrument will not only introduce the rules for the new Debt Relief Order procedure but will also implement the first of the modernisation changes arising out of the Rules Modernisation and Consolidation project, both with effect, for England and Wales, from 6 April 2009.

The Insolvency (Scotland) Amendment Rules 2009 have also been laid in Parliament and will introduce changes to the advertising regime in Scottish administrations and Company Voluntary Arrangements (�CVAs�) only.

This article provides guidance to the insolvency profession on how the new advertising discretion might be used and applied.

Introduction of discretionary advertising provisions from 6 April 2009 in England and Wales

The Insolvency (Amendment) Rules 2009 are expected to be published shortly on the OPSI website at www.opsi.gov.uk. These Rules will revise insolvency advertising procedures in all new insolvency cases commencing on or after 6 April 2009.

The majority of insolvency advertising requirements appear within the Insolvency Rules 1986 and amendment to these provisions is not dependant upon changes to the Insolvency Act 1986. The Insolvency Act does contain two separate requirements for advertising in voluntary liquidation proceedings, within sections 95 and 98. Separate action is being taken to amend sections 95(2)( c) and 98(1)(c) in England and Wales only by means of a Legislative Reform Order. That Order is subject to an on-going Parliamentary scrutiny process but we remain hopeful that the amendments to these sections will also be implemented on 6 April 2009.

The reason for these changes is to achieve better targeted publicity in insolvency proceedings. Insolvency office-holders (and others upon whom the duty to advertise currently falls) will continue to be required to Gazette key insolvency events but will have discretion as to whether any additional publicity is warranted and, if so, the best medium for this. This initiative will provide savings in the cost of administering insolvencies which are expected to be passed on to creditors by way of better returns.

The Insolvency Service would not expect this discretion to be used routinely in �run of the mill� cases but rather in cases where clear benefits or a business need can be identified. The discretion might be exercised in cases where the office-holder assesses that a full disclosure may not have been made, for example where the office-holder cannot determine to his/her satisfaction the full extent of a company�s or debtor�s assets and liabilities.

An office-holder might consider that there is a strong public interest to be served in a particular case through placing additional publicity, for example, in trader cases which have given rise to high levels of complaint or public concern. Where there is high interest from the public in a case, practitioners might wish to work with local or national newspapers, as appropriate, to get stories into the press. This would help to raise the profile of the practitioner and the work that he/she does as well as bringing that case to the attention of the public.

As the initiative is designed to provide a more flexible, cost effective and tailored approach to insolvency publicity, the expense of placing any form of additional publicity should be weighed against the likely benefit to be achieved. The new provisions will give office-holders flexibility to decide the most efficient and effective form for additional publicity so that this can be placed to best serve the intended purpose and to reach the target audience. Advertising in addition to notice in the Gazette will no longer have to be by newspaper advertisement so other forms of media advertising, including internet, radio, print media or even television advertising, will in future be an option, if deemed most appropriate to meet the purpose of the advert (given the cost and likely effect).

Other matters

In response to requests from users of the legislation, The Insolvency (Amendment) Rules 2009 will introduce a new requirement upon petitioners to Gazette the dismissal of winding-up petitions and upon office-holders to Gazette any appointment and termination of appointment of a Provisional Liquidator. Rule 7.32 will also cease to have effect, reducing burdens on the court and insolvency office-holders.

Introduction of discretionary advertising provisions from 6 April 2009 in Scotland

The Insolvency (Scotland) Amendment Rules 2009 are expected to be published shortly on the OPSI website at www.opsi.gov.uk. These Rules will revise insolvency advertising procedures in the Insolvency (Scotland) Rules 1986 for administrations and CVAs only (these being the procedures for which legislative responsibility is wholly reserved to the UK Parliament under the Scotland Act 1998). All other Scottish insolvency procedures will be unaffected by these changes.

The reasons for these changes � and the expected use of discretion in the future - are the same for Scotland as discussed above for England & Wales.

The Legislative Reform Order mentioned in the preceding part of this article, in respect of sections 95(2)(c) and 98(1)(c) of the Insolvency Act 1986 will not apply in Scotland.

Any queries on the changes affecting England & Wales should be addressed to Neil Ogilvie by e-mail to neil.ogilvie@insolvency.gsi.gov.uk or by phone on 020 7637 6307.

Any queries on the changes affecting Scotland should be addressed to Steven Chown by email to steven.chown@insolvency.gsi.gov.uk or by phone on 020 7637 6501

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk;

Telephone: 020 7291 6740

38. Timetable for the Insolvency Rules Modernisation & Consolidation project

The first modernisation changes under the Modernisation and Consolidation project are being delivered in the form of a new advertising regime.

The Insolvency Service now wishes to proceed with delivery of the remaining modernisation changes to the Insolvency Rules 1986 before consolidating those Rules and other insolvency statutory instruments. This approach aims to ensure the most effective delivery of measures to provide added flexibility of communication within insolvency processes and other measures to reduce burdens on users of the legislation, providing further savings in the cost of administering insolvencies for the benefit of creditors.

These modernisation proposals are dependant upon the successful passage of a further Legislative Reform Order (LRO) through the Parliamentary process, to make necessary changes to the Insolvency Act 1986 that will allow the Rules to provide for matters such as e-delivery of insolvency notices and the use of websites for sending reports and other documents to creditors. As this LRO will make significant changes, we have decided to follow a lengthier �super affirmative� LRO procedure.

Accordingly, the Minister has agreed the following new programme for delivery of the next phases of the Modernisation and Consolidation project:

6 April 2010- LRO and Insolvency (Amendment) Rules 2010 to implement the full programme of modernisation measures proposed, by way of changes to the Insolvency Act and the existing Insolvency Rules;
6April 2011- Consolidation of the Insolvency Rules by publication of a completely new set of Insolvency Rules together with several smaller insolvency statutory instruments.

This delivery programme will allow us to introduce further changes to modernise insolvency procedures in April 2010. The modernising amendments to the Rules would then have a short time to bed in before the new Insolvency Rules (and other instruments) come into force in April 2011.

This project has evolved to accommodate requests from users for more than a mere consolidation of existing law. Our aim is to provide modernised insolvency legislation which remains fit for purpose in a modern business environment. We are looking to address practical issues raised by stakeholders and to produce clear, modern, sensible and effective legislation which can reduce burdens placed upon its users.

Any enquiries regarding the above should be directed towards Neil Ogilvie, Policy Unit, Area 5.7, 21 Bloomsbury Street, London WC1B 3QW; e-mail Neil.Ogilvie@insolvency.gsi.gov.uk

General enquiries may be directed to Policy.unit@insolvency.gsi.gov.uk;

Telephone: 020 7291 6740

39. The Provision of Services (Insolvency Practitioners) Regulations 2009

As you may be aware The Provision of Services (Insolvency Practitioners) Regulations 2009 (the Regulations) will come into effect on 28 December 2009; a copy of those regulations is available on the OPSI website at:

http://www.opsi.gov.uk/si/si2009/uksi_20093081_en_1

The Regulations transpose the EU Directive 2006/123/EC on services in the internal market (�The Services Directive�) with respect to the provision in Great Britain of insolvency services. The Regulations supplement the Provision of Services Regulations(SI 2009/2999 � see Article 60 in Chapter 17) which transpose the main provisions of The Services Directive for all service providers in the UK in relation to the authorisation and regulation of insolvency practitioners.

Although the changes in the Regulations mainly relate to those insolvency practitioners authorised by the Secretary of State other practitioners may be interested to know that the amendments are:

The Insolvency Act 1986 will be amended to provide that insolvency practitioners authorised directly by the Department of Enterprise, Trade and Investment in Northern Ireland are able to act as an office holder in Great Britain. Corresponding amendments will be made to Northern Ireland legislation.

Authorisation by the Secretary of State will be for a fixed period of one year subject to automatic renewal, providing that the insolvency practitioner continues to fulfil conditions e.g. remains fit & proper; etc.

The amount of insolvency experience required to support a first time application for authorisation will be reduced to 2,000 hours.

The Insolvency Practitioners and Insolvency Services Account (Fees) Order 2003 will be amended so that the authorisation fee payable on application to the Secretary of State will be reduced to �850 and if the applicant is successful a separate maintenance (monitoring) fee will be payable. This fee will �2,400 for the first authorisation period and �3,250 thereafter.

The amended Regulations will also enable all insolvency practitioners to provide a copy of their bond to their authorising body. The original, or a copy, may be sent electronically.

The amended Regulations will also make it clear that those insolvency practitioners seeking recognition under the provisions of EU Directives may comply with the bonding requirements if they have professional liability insurance or guarantee which the Secretary of State approves as equating to, or being essentially comparable with, a bond.

Any enquiries regarding this article should be directed towards Devorah Burns, Zone B, 21 Bloomsbury Street, London, WC2B 3QW. Telephone: 0207 291 6770. Email: Devorah.Burns@insolvency.gsi.gov.uk

General enquiries may be directed to IPPolicy.section@insolvency.gsi.gov.uk

Telephone: 0207 291 6772

40. Insolvency Rules Modernisation � Guidance for Insolvency Practitioners

The Insolvency Service Policy Unit has successfully delivered the second phase of modernisation of the Insolvency Rules.

Following on from the new insolvency advertising regime delivered in April 2009, the following instruments have been made and laid in Parliament, and will come into force from 6 April 2010:

The Legislative Reform (Insolvency)(Miscellaneous Provisions) Order 2010 (2010 No.18)
The Insolvency (Amendment) Rules 2010 (2010 No.686);
The Insolvency (Amendment)(No 2) Rules 2010 (2010 No.734);
The Insolvency (Scotland) Amendment Rules 2010 (2010 No. 688);

The Legislative Reform (Insolvency)(Miscellaneous Provisions) Order 2010 was required to make changes within the Insolvency Act to permit the extensive modernisation changes planned for the Insolvency Rules.

Each of these instruments can now be viewed on the OPSI and Insolvency Service websites.

The changes implemented by the project to modernise the Insolvency Rules will provide estimated annual savings of �48 million in the cost of administering insolvencies, including the advertising changes in April 2009. These savings are expected to be passed on to creditors in the form of improved returns and the new e-delivery provisions will also provide for a significant reduction in the insolvency carbon footprint. The amendment Rules, by their nature, amend the Insolvency Rules 1986.

Changes to the Insolvency Rules 1986

1.1 The Rules amendments adopt the now standard gender neutral drafting style (except we have continued to use the word �chairman�, because that word is also to be found in unamended Rules: its continued use will be reconsidered when we deliver the complete Insolvency Rules in a new restructured and reordered instrument. Wherever sensible the amended Rules also apply the Civil Procedure Rules (�CPR�) and adopt CPR language.

1.2 We have taken the opportunity presented by the significant amendment of much of what currently is in Part 12 of the Rules to create a new Part 12A. This includes much new material and some of the old which ought logically to be associated with it. Some of the old Part 12 however remains. We hope the creation of the new Part 12A will be seen as �user friendly�.

2. Stakeholder engagement and Modernisation themes

2.1 Since the start of the Modernisation project, The Insolvency Service Policy Unit has received a very high level of feedback from stakeholders on changes that they would wish to see applied in the modernised Rules. We have welcomed this engagement which has contributed greatly to the legislative changes that are being delivered. Whilst many of the changes suggested have resulted in small revisions which can improve the practical application of the Rules, there are also many overarching modernisation �themes� which have driven changes throughout the Rules. The commentary below provides a summary of the main themes where changes will be seen from 6 April 2010. Under each theme reference to particular Rules may be given as examples of the changes being made.

2.2 The themes are �

The Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2010 (paragraph 3)
Advertising Rule changes (paragraph 4)
Standard contents for �gazetting� (paragraph 5)
Standard contents for advertising otherwise than in the Gazette (paragraph 6)
Meetings and resolutions (paragraph 7)
Official receiver (paragraph 8)
Creditors� and liquidation committees (paragraph 9)
Disclaimer procedure (paragraph 10)
Court procedure and practice (paragraph 11)
Applications for private examination under sections 236, 251N and 366 (paragraph 12)
Public examination under sections 133(1) and 290(1) (paragraph 13)
Filing in court: rationalisation and removal of unnecessary filings (paragraph 14)
Affidavits (paragraph 15)
Ex parte (paragraph 16)
Leave of the court (paragraph 17)
Deponents (paragraph 18)
Parts 1 and 5 (CVAs and IVAs): miscellaneous modernisation and harmonisation (paragraph 19)
Removal of the requirement to report to court in certain voluntary arrangements (paragraph 20)
Remuneration, expenses and reporting (paragraph 21)
Provision of �receipts and payments� account on resignation of office holder (paragraph 22)
Creditor and debtor bankruptcy petitions (paragraph 23)
Block transfer orders (paragraph 24)
Verification of a statement of affairs (paragraph 25)
Claims and distributions (paragraph 26)
Limited disclosure (paragraph 27)
Amendments to Part 4 Chapter 22 (leave to act as director etc. of company with prohibited name) (paragraph 28)
Part 3 (Administrative Receivership): miscellaneous amendments (paragraph 29)
Amendments relating to the EC Regulation on Insolvency Proceedings (paragraph 30)
Electronic delivery (paragraph 31)
Service of court documents (paragraph 32)
Forms (paragraph 33)
Authentication (paragraph 34)
Annulment Changes (paragraph 35)
Insolvency Registers (paragraph 36)
Victims of Violence (paragraph 37)
Inland Revenue (paragraph 38)
Deceased office-holders (paragraph 39)
Definitions (paragraph 40)
Schedule 2 (paragraph 41)
Schedule 5 (paragraph (42)

3. Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2010

3.1 The Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2010 (the LRO) was made on 6 January 2010 and will come into force on 6 April 2010.

3.2 The LRO amends the Insolvency Act 1986 so as to reduce administrative burdens and thereby permit financial savings to be passed on to creditors.

3.3 Specifically, it (a) permits certain new procedures, (b) removes certain burdensome requirements and (c) removes inconsistencies between the Act and the Rules.

3.4 The new procedures under (a) are-

permitting remote attendance at meetings ;
permitting the use of websites to communicate information.

3.5 The burdensome requirements removed in (b) are-

removal of the requirement to hold annual meetings in creditors� and members� voluntary winding up in England and Wales;
removal of the requirement to report to court in certain voluntary arrangements;
removal of the requirement for sanction for certain acts by the liquidator or trustee in bankruptcy.

3.6 The inconsistencies removed in (c) are-

permitting things required by the Act to be in writing to be in electronic form;
removing the requirement for certain documents in the Act to be sworn by affidavit.

3.7 The items in (a) and (b)(i) and (ii) require either new rules or amendments to existing rules. Item (b)(iii) has no effect on the Rules.

3.8 The items in (c) allow the Rules to make uniform provision in certain areas without the need to make separate provision for matters where requirements under the Act are different.

4 Advertising Rule changes

4.1 The amending Rules contain a small number of amendments to the new advertising regime introduced in April 2009. These are mainly minor or technical changes but they do include some new advertising requirements. An example of a technical amendment can be found in respect of provisional liquidators in the amendments to Rule 4.31 removing the requirement to give notice of removal from office when a winding up order is made. An example of a new requirement to advertise can be found in the amendments to Rule 4.106.

5 Standard contents for �gazetting�

5.1 The amending Rules introduce �standard contents� provisions. These requirements are intended to ensure that all gazetted notices include the necessary information that readers of the gazetted notice may need in respect of the insolvency concerned. They are introduced in response to stakeholder representation. They are not expected to give rise to any increase in the cost of gazetting.

5.2 The expression �standard contents� is to be defined in Rule 13.13 and the �standard contents� provision is contained in the new Rules 12A.33 to 12A.35. It works by applying in all cases where notices are gazetted, but it does not displace additional requirements as to contents contained in the Insolvency Act 1986 or the Rules. In order to assist users of the Rules we have adopted a drafting style in the main body of the Rules that reminds the reader, where additional contents are to be included, that these are additional to the standard contents. Good examples of this can be found in the amendments to Rules 1.40, 1.42 and 3.9.

6 Standard contents for advertising otherwise than in the Gazette

6.1 The amending Rules introduce a new requirement as to standard contents for notices advertised otherwise than in the Gazette. These notices are discretionary on the part of the insolvency office-holder. The provisions are contained in new Rules 12A.38 to 12A.41. These requirements are a �cut down� version of the required minimum �standard contents� for gazetted notices reflecting the required minimum for these adverts and increasing the discretion available to an insolvency office-holder as to contents. These requirements apply in the same way as those for gazetted notices. The definition �standard contents� includes the standard contents for advertising otherwise than in the Gazette.

6.2. The new advertising provisions introduce the possibility that advertisements might be contained in media other than newspapers. It therefore becomes important to ensure that where information must be provided it must be provided in a way that is likely to lead a person needing to hear, see or read the information to be able to do so. For that reason Rule 12A.41(1) is introduced.

7 Meetings and resolutions

7.1 Inconsistencies are eliminated between various provisions relating to meetings, in particular of creditors, in different types of insolvency procedure, particularly in respect of the lodging of proofs and proxies and the adjournment of meetings; and the minimum period of notice for meetings is reduced from 21 to 14 days (other than final meetings in a liquidation or bankruptcy, where the minimum notice will be 28 days).

7.3 Resolutions may be adopted by correspondence in winding up and bankruptcy as is already the case in administration.

7.4 Provision is also made facilitating remote attendance at meetings (see new Rules 12A.22-12A.27).

7.5 The power of the court to order that notice of a meeting be given by advertisement only, already present in liquidation and bankruptcy, is being extended to administration.

8 Official receiver

8.1 It is expressly provided that the official receiver may not be appointed liquidator or trustee in bankruptcy by a meeting of creditors, contributories or company members.

9 Creditors� and liquidation committees

9.1 Paragraph 57 of Schedule B1 to the Act (administration) provides for the establishment of a creditors� committee by a meeting of creditors. In Chapter 7 of Part 2 (administration procedure � the creditors� committee) the amendments include the following. Rule 2.50 provides that any creditor of the company is eligible to be a member of the creditors� committee so long as that person�s claim has neither been wholly disallowed for voting purposes, nor wholly rejected for the purpose of distribution or dividend; and is not fully secured.

9.2 Rule 2.52 provides that after the calling of the first meeting of the committee, the administrator must call a meeting if requested by a member of the committee. This Rule has been amended to provide that such a meeting must be held within 21 days of the request being received by the administrator. The current position is that the meeting must be held within 14 days of the receipt of the request.

9.3 Also in Rule 2.52, a new paragraph (5) provides that, in a case where the administrator has determined that a meeting should be held and conducted by remote means under new Rule 12A.26(2), the notice period of the meeting which must be given by the administrator to committee members is 7 business days.

9.4 In Rule 2.57, paragraph (1)(c) has been amended to the effect that a person�s membership of the creditors� committee is automatically terminated if that person ceases to be a creditor provided that a period of 3 months has elapsed from the date that he ceased to be a creditor.

9.5 In Rule 2.59, new paragraph (4) provides that a meeting of creditors may agree a resolution to appoint a new creditor to fill a vacancy in the membership of the creditors� committee.

9.6 Rule 2.61 provides for the agreement of resolutions by the committee.

9.7 Equivalent amendments have been made to those mentioned above in relation to Chapter 7 of Part 2 to: Chapter 4 of Part 3 (administrative receivership � the creditors� committee); Chapter 12 of Part 4 (companies winding up � the liquidation committee); Chapter 13 of Part 4 (companies winding up � the liquidation committee where winding up follows immediately on administration) and Chapter 11 of part 6 (bankruptcy � the creditors� committee).

9.8 In addition, Rule 4.174 has been substituted with new Rule 4.174A which sets out the circumstances in which a creditors� committee established for the purposes of an administration continues in being as a liquidation committee.

9.9 Finally, provisions have been inserted into new Part 12A to allow creditors� and liquidation committee meetings to be attended by remote means.

10. Disclaimer procedure

10.1 Section 178 (power to disclaim onerous property) allows the liquidator of a company to disclaim any onerous property by giving a prescribed notice. The disclaimer operates so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the company in or in respect of the property.

10.2 In Chapter 15 of Part 4 (companies winding up) the following amendments have been made. In relation to filing a notice of disclaimer, a copy of the notice is no longer filed with the court. Instead, Rule 4.187 has been amended to provide that a copy of the notice must be sent to the registrar of companies and, in any case where the disclaimer is of registered land, a copy must also be sent to the Chief Land Registrar. In Rule 4.187(4), for the purposes of section 178, the date of the prescribed notice has been changed to the date the notice is authenticated by the liquidator. This means that the liquidator no longer has to wait for the notice to be endorsed by the court. Rule 4.190 has been substituted by new Rule 4.190A which replaces the duty to keep the court informed with a new requirement for the liquidator to keep certain records. Other minor amendments have been made which are largely consequential on other changes that have been made to the Rules.

10.3 Section 315 (disclaimer (general power)) is in similar terms to section 178 and allows the trustee in bankruptcy to disclaim any onerous property by giving a prescribed notice. In Chapter 14 of Part 6 (bankruptcy � disclaimer) equivalent amendments have been made to those mentioned above in relation to Chapter 15 of Part 4. The only difference being that in Part 6 the notice of disclaimer will continue to be filed with the court because there is no alternative repository in bankruptcy cases.

11 Court procedure and practice

11.1 In Part 7 (court procedure and practice), the following amendments have been made. References to county court registrars have been revised to refer instead to district judges. In relation to applications to court, the distinction in the Rules between an ordinary application and an originating application has been removed. However, the distinction between the two types of applications is being maintained for court administrative purposes in the new Application Notice (Form 7.1A). Rule 7.6 has been replaced by new Rule 7.6A which provides that most hearings should be in open court.

11.2 In relation to enforcement procedures, certain amendments have been made to deal with problems relating to the delivery of bankrupts etc. to prison and the discharge of warrants. In particular, Rule 7.19 now makes provision to allow county courts to discharge High Court warrants. Rule 7.22 now provides that in the case of arrests under section 134 (officer of company failing to attend for public examination) or section 364 (arrest of debtor or bankrupt) the arrested person can be delivered to the court or, where the court is not ready to deal with that person, to the prison named in the warrant (or another prison if that prison cannot take the arrested person). In the case of arrests under section 236 (inquiry into insolvent company�s dealings) or section 366 (the equivalent in bankruptcy), Rule 7.23 now permits a prisoner to be delivered either to the prison named in the warrant or, where that prison cannot accommodate the arrested person, such other prison which has appropriate facilities.

11.3 In relation to court records and returns, a new Rule 7.31A has been substituted for Rules 7.26 to 7.31. Rules 7.26, 7.29, 7.53 and 7.54 have been omitted as they were considered to serve no useful purpose. Rule 7.58 has been omitted as security in court is covered by the CPR.

12 Applications for private examination under sections 236, 251N and 366

12.1 Section 236 (inquiry into company�s dealings, etc,) provides the court with a power to conduct an inquiry into a company�s dealings. In particular, the court has the power, on the application by an office-holder (e.g. liquidator or official receiver), to summon to appear before it (a) any officer of the company; (b) any person known or suspected to have in his possession any property of the company or supposed to be indebted to the company; or (c) any person whom the court thinks capable of giving information concerning the promotion, formation, business, dealings, affairs or property of the company. The court has similar powers to conduct private examinations of specified persons under Section 251N (debt relief orders � inquiry into dealings and property of debtor) and 366 (inquiry into bankrupt�s dealings and property).

12.2 Part 9 (applications for private examination � sections 236, 251N and 366) has been amended as follows. In particular, Rule 9.5 has been amended to expressly provide that copies of any questions put to the respondent or proposed to be put to the respondent are not open to inspection without an order of the court by specified persons. Other minor amendments have been made which are largely consequential on other changes that have been made to the Rules.

13 Public examination under sections 133(1) and 290(1)

13.1 Section 133(1) (public examination of officers) provides that where a company is being wound up by the court, the official receiver may apply to court for the public examination of any person who (a) is or has been an officer of the company; (b) has acted as liquidator or administrator of the company or as receiver of manager; or (c) not being or having been any such person, is or has been concerned or has taken part, in the promotion, formation or management of the company.

13.2 Chapter 19 of Part 4 (companies winding up � public examination of company officers and others) is amended as follows. Rule 4.211 has been amended to provide that effective service of an order for public examination made by the court will be to a known address in accordance with any means permitted by new Part 12A. Service is no longer restricted to postal service in all cases.

13.3 In Rule 4.212(2) the requirement for the official receiver to give notice of the hearing of a public examination to every creditor and contributory of the company who is identified in the company�s statement of affairs has been removed because it is unnecessary. All such creditors and contributories will be known to the official receiver who must serve them with a notice of the hearing by virtue of that knowledge pursuant to Rule 4.212(2)(c).

13.4 Rule 4.212(4) provides that, unless the court otherwise directs, at least 5 business days must have elapsed since the examinee was served with the order for a public examination before the official receiver may exercise his discretion under this Rule to advertise notice of the order. Paragraph (4) has been amended to limit the 5 business day protection period so that it applies only to orders which relate to persons falling within section 133(1)(c) (public examination of officers). Other minor amendments have been made which are largely consequential on other changes that have been made to the Rules.

13.5 Section 290(1) (public examination of bankrupt) provides that where a bankruptcy order has been made, the official receiver may at any time before the discharge of the bankrupt apply to the court for public examination of the bankrupt.

13.6 Chapter 13 of Part 6 (bankruptcy � public examination of bankrupt) has been amended as follows. In Rule 6.172(3) an equivalent amendment has been made to that mentioned above in relation to Rule 4.212(2). Other minor amendments have been made which are largely consequential on other changes that have been made to the Rules.

14. Filing in court: rationalisation and removal of unnecessary filings

14.1 The aim of this theme is to reduce the burdens on the courts and their users by reducing the number of occasions when documents are filed in court; reducing the number of documents so filed; and, in corporate insolvency, substituting filing with the registrar of companies for filing in court where appropriate.

14.2 Most of the amendments are in Parts 4 and 6. However, there are also amendments to Parts 1, 2 and 5.

14.3 Where a filing is considered to serve no valuable purpose and is not required by the primary legislation, the requirement to file has been removed (e.g. Rules 1.26, 2.29, 2.47, 4.33, 4.42, 5.31 and 6.65).

14.4 Filings solely with the registrar of companies occur in cases where removal of the concomitant requirement to file in court has left the registrar of companies as the sole depository (e.g. Rule 4.45).

14.5 In Rule 4.116 (procedure on removal of liquidator) there is a new requirement for the documents in question to be filed with the registrar of companies as well as with the court. This is on account of the importance of the documents.

14.6 Where a petition is to be verified or a certificate of service is to be filed in court, the document served is to be described in sufficient detail for the served document to be identified (e.g. Rules 4.9A, 4.12, 6.12). The effect is to avoid attaching a copy of the document served, of which the court already has a copy.

15 Affidavits

15.1 Throughout the Rules, references to affidavits have been removed. They have been replaced with a requirement for a statement of truth. In some cases this statement will be incorporated into the document to be verified and in others the reference to an affidavit is replaced by a reference to a witness statement supported by a statement of truth. There is a new definition in Rule 13.13 (expressions used generally) explaining that �statement of truth� has the same meaning as in the CPR.

15.2 Consequential changes have been made to references to �swear�, �sworn�, �oath� and �exhibited�. In Parts 2 (administration procedure) and 4 (companies winding up) the discretionary requirement that a claim of debt must be verified by affidavit has been removed. In Part 6, the provision requiring a petition in respect of a money lending transaction to be supported by an affidavit has been removed.

15.3 The position for statutory declarations (e.g. Declaration of Solvency under section 89 of the Act) has not been changed.

16 Ex parte

16.1 Throughout the Rules, references to ex parte have been removed. They have been replaced with the phrase �without notice to any other party�.

17 Leave of the court

17.1 Throughout the Rules, references to obtaining �leave� of the court have been replaced with references to obtaining �permission� of the court.

18 Deponents

18.1 Throughout the Rules, references to deponents have been removed. Other than in Part 3 (administrative receivership), they have been replaced with the phrase �person making the statement�. In Part 3, they have been replaced with the term �nominated person� which is defined in that Part.

19 Parts 1 and 5 (CVAs and IVAs): miscellaneous modernisation and harmonisation

19.1 Parts 1 and 5 mirror each other to a large extent. Where a rule in one part has a corresponding rule in the other part which differs, they have been amended in order to effect harmony, so far as possible. Where corresponding rules have been amended, they have been amended so far as possible to achieve harmony.

19.2 Miscellaneous amendments to Parts 1 and 5 have been incorporated. Examples are set out below:

In Part 1, the proposal is to include details of other useful information (Rule 1.3(2)(r)).
In Part 5, the proposal is to include details of any proposals in the preceding 2 years and their results (Rule 5.3(2)(s)). It is not considered appropriate to make corresponding provision in Part 1.
In both Parts the, the statement of affairs is to accompany the proposal (Rules 1.5 & 5.5).
In Part 1, the �nominee� has been substituted for references to the �convener� or convenor� of a meeting (e.g. Rules 1.13 and 1.14).
Rules 1.55 and 5.66 are new. The new rules give effect to regulation 36A of the Insolvency Regulations 1994 (S.I. 1994/2507) as regards voluntary arrangements.
Majorities for creditors� meetings have been amended to �three quarters or more� (Rules 1.19, 5.23 and 5.43).
The office-holder is to notify creditors of whose address the office-holder is aware rather than of whom he is otherwise aware. (e.g. Rules 1.9 and 5.17).
Defective drafting has been remedied (Rule 5.50(1)).

20 Removal of the requirement to report to court in certain voluntary arrangements

20.1 Two of the provisions of the LRO, (b)(ii) above relate to voluntary arrangements: one provision substitutes a requirement for the nominee to report to the creditors for the requirement to report to the court in a non-interim order individual voluntary arrangement; the other substitutes a requirement to give notice to the Secretary of State of the result of the creditors� consideration of the debtor�s proposal in a fast-track voluntary arrangement for reporting it to the court.

20.2 New Rules 5.14A, 5.14B and the omission of Rules 5.15 and 5.16 give effect to the first provision.

20.3 As a consequence of the first provision, there is a distinction between individual voluntary arrangements where there has been an interim-order where the nominee continues to report to the court and non-interim order individual voluntary arrangements where there is no report to the court. There are numerous amendments giving effect to this. The form of words used to describe a non-interim order individual voluntary arrangement mirrors that in the LRO (e.g. Rules 5.34 and 5.55).

20.4 There are a number of amendments to give effect to the second provision (e.g. Rules 5.39 and 5.42).

21 Remuneration, expenses and reports

21.1 The remuneration of office-holders may be set as a fixed amount instead of, or in addition to, a percentage of the value of property dealt with or a time charge. Remuneration may consist of a combination of any two, or all three, of these bases.

21.2 Scrutiny of office-holders� remuneration and expenses is made easier by enabling creditors to obtain further information. Expenses may be challenged as excessive as well as remuneration. Remuneration already received and expenses already incurred may be challenged within eight weeks of the report recording them.

21.3 Office-holders may seek a review of their remuneration if there is a change of circumstances.

21.4 Provision is made for an administrator or other qualified insolvency practitioner to be able to recover remuneration charged and expenses incurred before the formal start of the administration.

21.5 Progress reports, already used in administration, are introduced into winding up and bankruptcy (but annually, not every six months as in administration). The report to be laid before the final meeting of creditors is brought into line with progress reports: and a draft of the final report must be sent to creditors eight weeks beforehand.

21.6 Final progress reports are no longer to be attached to the conversion notice for paragraph 83 creditors� voluntary liquidations but rather are to be submitted as soon as reasonably practicable after resignation.

22. Provision of �receipts and payments� account on resignation of office-holder

22.1 This theme is associated with the remuneration theme and the meetings theme. It affects winding up and bankruptcy.

22.2 A report with receipts and payments is to be submitted to the creditors� meeting to receive the liquidator�s or trustee�s resignation (Rules 4.108 and 6.126). Provision is made for the procedure to be followed where there is an ongoing challenge to the outgoing office-holder�s remuneration. The resignation will be effective from the acceptance of the resignation (Rules 4.108, 4.108A, 6.126 and 6.126A). However, release can only be considered and effected once any challenge to remuneration has been resolved (Rules 4.108A and 6.126A). There are consequential amendments to Rules 4.109, 121, 122, 6.127 and 135.

23 Creditor and debtor bankruptcy petitions

23.1 Two new Rules (6.9A and 6.40A) have been inserted which make significant amendments. They provide that where a business is carried on in a different district from that for the debtor�s residence, the appropriate court is the one for the district in which the business is carried on.

23.2 The alternative county court for the presentation of a petition by a debtor who carries on a business is the alternative county court under Schedule 2 to the Rules for the district in which the business is carried on or the court for the district in which the debtor resides. Where the debtor does not carry on a business, and resides in a county court district, the alternative court is the county court under Schedule 2 to the Rules.

23.3 The Rules have also been amended to permit a creditor to present a petition against a debtor who is non-resident at the time of the presentation of the petition but has carried on a business or resided in the jurisdiction in the six months preceding the presentation in the court for the district where the debtor had carried on business or resided or the High Court.

23.4 Where the debtor is non-resident and has not carried on a business or resided in the jurisdiction in the six months preceding the presentation of the petition, the creditor must present the petition in the High Court.

24 Block transfer orders

24.1 A new Chapter 1A is inserted into Part 7 between Chapter 1 (applications) and Chapter 2 (transfer of proceedings between courts). It is so placed because a block transfer order is a special type of application. Rule 7.11 is amended consequentially.

24.2 The Chapter builds on the provisions in paragraph 1.6 of the Practice Direction: Insolvency Proceedings as reflected in the 2007 draft Consolidation Rules and the subsequent decision in Donaldson -v- O�Sullivan [2008] EWCA Civ 879. It varies from the Practice Direction in the following respects: it allows the application to be made to the registrar in the first instance; an application may be made to a county court with insolvency jurisdiction where all the cases subject of the application are in the county court; separate provision is made in respect of administration to take account of the provisions of paragraphs 91 and 95 of Schedule B1 to the Act; the costs of the application in respect of an administration are to be expenses of the administration unless the court otherwise directs; not all the outgoing office-holder�s cases need be subject of the block transfer order; the outgoing office-holder�s cases may be transferred to more than one replacement office-holder; advertisement of the incoming office-holder�s appointment is to be as the court directs rather than in accordance with the provisions in the Rules in respect of each type of insolvency proceeding.

24.3 Donaldson settled the law concerning block transfers as it relates to bankruptcy and winding up by the court. The powers under which the registrar may make the order reflect the decision in Donaldson.

25 Verification of a statement of affairs

25.1 In Part 1 (company voluntary arrangements), the provisions dealing with the verification of a statement of affairs have been amended to require that such statements are verified by a statement of truth made by at least one director.

26 Claims and Distributions

26.1 The changes relating to claims and distributions are miscellaneous, with no overarching principle. Some inconsistencies between administration, administrative receivership, winding up and bankruptcy are eliminated (but not the differences in respect of the form of proof of debt, where there remains no prescribed form in administration, receivership or voluntary liquidation). Distribution of assets in kind is made more transparent.

27 Limited disclosure

27.1 Discrepancies between the existing provisions on limiting the public disclosure of information about creditors are eliminated, and the same principles on limited disclosure are applied uniformly to all types of insolvency procedure. Essentially, the court may order that information about creditors in statements of affairs and proposals for voluntary arrangements and administration may be omitted from what is filed at Companies House, sent to creditors generally or otherwise given wide publicity or circulation; and the grounds for omission are prejudicial to the insolvency proceedings or might reasonably be expected to lead to violence against any person.

28 Amendments to Part 4 Chapter 22 (leave to act as director etc. of company with prohibited name)

28.1 Rule 4.227 is amended to provide for the service of an application for leave to use a prohibited name to be served on the Secretary of State who may make representations at the hearing of the application either in person or in writing.

28.2 Rule 4.228 is amended to remedy defective drafting.

29 Part 3 (Administrative Receivership): miscellaneous amendments

29.1 Rule 3.31 has been amended to mirror Rule 2.66 in order to achieve consistency.

29.2 In Rule 3.33, paragraph (3) was omitted on the basis that the Rule relates to resignation as distinct from vacation. Since an administrative receiver �vacates� office upon the making of the administration order, the paragraph is of no effect. Rule 3.35 applies for vacation of office on completion of the administrative receivership. It therefore does not apply where the company subsequently goes into administration. Therefore there is no requirement for an administrative receiver to give notice where the company subsequently goes into administration. Therefore Rule 3.33(3) is otiose.

30 The EC Regulation

30.1. The amending Rules include two classes of amendment relating to the EC Regulation on Insolvency Proceedings 2000 (�the EC Regulation�). Those in the first class relate to an application under Article 37 of the EC Regulation to convert insolvency proceedings opened as �primary proceedings� into �secondary proceedings�. The amendments deal specifically with the requirement for there to be a witness statement accompanying the application to the court which should include the maker�s opinion as to which winding up procedure the proceedings should be converted. In the first instance (which can be found in the amendment to Rules 1.31 to 1.33) the proceedings into which primary proceedings can be converted are listed as administration proceedings �limited to winding up�, creditors� voluntary winding up and winding up by the court. In a second set (to be found in the amendments to Rules 2.130 to 2.132) proceedings into which the administration may be converted are listed out as creditors� voluntary winding up and winding up by the court. Provision is also now made to deal with the circumstance where the order limits the purposes of an administration to a �winding up through the administration�. This reflects the fact that the wide purpose of administration generally must be restricted before it can fall within the more limited definition of administration now found in Annex B of the EC Regulation.

30.2. The second class of amendments also relates to the inclusion of certain administration proceedings within the definition of �secondary proceedings� within the EC Regulation. An example of this can be found in the amendments to Rule 2.4 where �secondary proceedings� are inserted between �main proceedings� and �territorial proceedings�.

31 Electronic delivery

31.1. One of the key facets of the modernisation reforms is to facilitate the delivery of documents electronically. With this in mind the amending Rules make a number of provisions facilitating the sending of documents by electronic means. The general principle found in Rules 12A.7 and 12A.10 is that documents may be delivered by electronic means provided that the recipient has consented and provides an electronic address. The provisions do not apply to petitions or applications to court, evidence in support of such applications or petitions or orders of the court; nor do certain other provisions apply to the filing of notices or other documents with the court, the submission of documents to the registrar of companies or to the service of a statutory demand. Uniformity is facilitated by the provision of the LRO.

31.2. A new provision for the use of websites by office-holders occasioned by the LRO is now found in Rule 12A.12. However, a new provision is made in 12A.13 which allows the court, where it is satisfied the expense of sending notices under 12A.12 in specified circumstances is too onerous, to dispense with the requirement for notices to be sent on each and every occasion and instead allow the requirements to be satisfied by the sending of one notice alone to cover all circumstances. The justification for this is to reduce costs where because of the number of persons entitled to receive a notice on each occasion, the cost is disproportionate to the benefit of sending the notices every time.

31.2A Rule 12A.14 has been inserted in agreement with HM Courts Service and RCJ to allow electronic delivery of court documents in the limited circumstances where there is an electronic working scheme in place for that court which permits such delivery. It is introduced to facilitate an the RCJ electronic working pilot which, from April 2010, RCJ proposes to use to allow electronic case management of insolvency cases at the RCJ in London. If that court pilot is successful then the drafting of Rule 12A.14 would allow HM Courts Service to extend e-working to other insolvency courts in future.

31.3. New Rule 12A.15 simply repeats the requirement presently contained in the Rules that a document served on a single joint office-holder is to be treated as served on them all.

31.4 We have adopted the use of �hard copy� rather than �paper copy� in the Rules generally when referring to �paper� documents.

32 Service of court documents

32.1. CPR Part 6 is to apply, except for the serving of a winding up petition, a bankruptcy petition and any document relating to such an application or petition or the serving of an administration, winding up, or bankruptcy order, But the provisions of CPR Part 6 relating to service outside the jurisdiction apply, with such modifications as the court may direct, in every case (including bankruptcy petitions etc) so there is no bespoke Rule in the Insolvency Rules. These Rules are now contained in Chapter 3 of the new Part 12A

33 Forms

33.1. The approach adopted in the modernisation Rules is to start the move away generally from the prescription of forms in the Insolvency Rules. Instead the drafting approach adopted is to specify what information must be sent to a particular person (an information requirement) rather than to provide a form in which it is to be sent. The reason for this is that with the advent of the electronic age the use of prescribed forms � a concept heavily based on paper delivery � can get in the way of electronic delivery. It is ultimately the intention within our planned new Insolvency Rules to dispense with �prescribed forms� wherever we can. This should facilitate the use of electronic communication, in particular in the light of the provisions we have made in respect of website delivery and delivery of other Insolvency documents. This means that in these amending Rules �

no new forms have been prescribed (only replacements)
certain forms have been revoked where they no longer serve a useful purpose.

33.2 Old forms have however been retained or will be amended.

33.3 In order for the electronic provisions to work properly, there still needs to be �a fix� to deal with the submission of information which would otherwise have been submitted on a hard copy prescribed form. The solution to this is found in Rules 12A.31 and 12A.32, which in effect allows the information which must be contained in a prescribed form to be sent electronically provided that minimum requirements are met.

33.4 Since the advent of the Companies Act 2006 any prescription as to the form and manner of delivery of information to the registrar of companies now falls properly to the registrar.

33.5 It has been agreed with Companies House that from April 2010 the rules which will apply to form and delivery of information to the registrar will be governed by registrar�s rules. The Registrar Rules 2010 prescribe any necessary forms and set out all the rules relating to the manner of delivery for this information. The Insolvency Rules will still determine the information requirements themselves but prescribed forms relating to this information have been removed from the Insolvency Rules. Any substantive provision to supply information to the registrar contained in the required content of a prescribed form, but not fully reflected in the Insolvency Rule to which it relates, has been placed in generic information requirements set out in Rules 12A.42 to 12A.50.

33.6 Insofar as information which is required to be sent to the registrar is concerned, The Registrar Rules 2010 provide for the format of paper forms setting out, for example, what the forms must look like, how to complete them (e.g. in black ink) and where to send them. The registrar�s rules also cover other documents such as court orders which companies and Limited Liability Partnerships have to deliver to the registrar. In all cases the rules require the use of black ink on white paper.

33.7 On the whole, the insolvency forms which are required to be sent to the Registrar under the registrar�s rules will be largely unchanged to those which have hitherto been prescribed within the Insolvency Rules. However, there will be a small number of new forms created and other forms which are amended. It should also be noted that the Registrar will require his new forms to be used in all cases, except where the event which creates the obligation to send or file occurred before 6 April 2010 (see paragraph 6 of Schedule 4 SI 2010 No.686).

33.8 For more details on which forms are affected or copies of the Registrar forms please contact formsdesign@companieshouse.gov.uk These new forms can also be accessed via the following link on the Companies House website (but must not be used for notifications to the Registrar until 6 April 2010):

http://www.companieshouse.gov.uk/forms/insolvencyForms.shtml

34 Authentication

34.1 The Rules generally now adopt the concept of �authentication of a document� rather than requiring a �signature�, again in order to facilitate electronic delivery. This provision can be found in Rule 12A.9 (and equivalents in Rules 12A.31 and 12A.32 for forms). In effect the provision follows that provided for by the Companies Act 2006. For paper documents a signature is sufficient authentication. For non-paper documents a document is sufficiently authenticated if the identity of the sender is confirmed in a manner specified by the recipient or where there is no such manner specified, if a communication contains or is accompanied by a statement of identity of the sender and the recipient has no reason to doubt the truth of that statement.

35 Annulment Changes

35.1 Rule 5.55 has been amended so as to render more transparent the duration of the prescribed period referred to in section 261(2) of the Insolvency Act 1986 (annulment of bankruptcy in the course of a voluntary arrangement).

35.2 Section 261(2)(b) permits the official receiver to make an application for annulment of a bankruptcy order �where the bankrupt has not made an application within the prescribed period�. �Prescribed� in the 1986 Act means prescribed by rules. Whilst Rule 5.55(2) currently prohibits the official receiver from making an application before the expiry of 14 days from the date that the time period in section 262(3) for application under section 262(1) has expired, it does not itself prescribe any period within which the bankrupt might make an application, nor does it prescribe any period beyond the expiry of which the official receiver may make an application.

35.3 The duration of the period referred to in the current paragraph (2) may be deduced from the provisions of the 1986 Act referred to as consisting of the 28 days during which the decision of a creditors� meeting may be challenged beginning with the day that the report of the creditors� meeting is made to the court under section 259. To this is to be added the 14 days from the date upon which that period expires.

35.4 This amounts in total to 42 days which is reflected in these modernisation amendments.

35.5 In addition, Rule 6.211 has been amended to allow annulment where debts are secured for, to the satisfaction of the court, and to allow the court to take into account whether amounts in respect of post-commencement interest on the bankruptcy debts have been paid, which is of particular relevance where the payment is made by a third party. This latter amendment reflects case law on the subject (see Harper v Buchler [2004] BPIR, Harper v Buchler (No.2) [2005] BPIR, Wilcox v Duckworth [2005] BPIR).

36 Insolvency registers

36.1 Part 6A of the Rules has been amended to reflect desired policy on the operation and maintenance of the insolvency registers. Rule 6A.2A seeks to make uniform provision for information to be displayed in respect of voluntary arrangements of all types. Rule 6A.3 extends the period of time for which information added to the register pursuant to Rule 6A.2A must remain on the register, prior to deletion by the Secretary of State following receipt of notice of either the making of a revocation order, or full implementation or termination of the voluntary arrangement. Rule 6A.4 requires additional information to be placed on the individual insolvency register by the official receiver in circumstances where a bankruptcy order has been rescinded by the court. Under Rule 6A.5, information on annulled bankruptcies will remain on the individual insolvency register for a period of between 28 days and three months. The insolvency registers have also been made subject to the court�s discretion that information should either not be entered onto the register or should be deleted where there is a risk of harm to the subject of the information (see Victims of Violence below).

37 Victims of Violence

37.1 New Rules 5.67 and 6.235B have been added to the Rules to provide for an appropriate procedure to permit the court, on the application of the debtor, the supervisor, the official receiver (whether acting as a supervisor or otherwise) or the Secretary of State, to order that the details in respect of a debtor to be entered onto the individual insolvency register under Rule 6A are not to include details of the debtor�s current address. The court is also permitted to order that details of the debtor�s current address be removed from any part of the court file of the proceedings relating to the debtor, which is open to inspection, and be kept on a separate file not open to inspection. The provisions are to apply in any case where disclosure to other persons (whether to the public generally or to specific persons) of the current address or whereabouts of a debtor might reasonably be expected to lead to violence against the debtor or against a person who normally resides with the debtor as a member of the debtor�s family.

38 Inland Revenue

38.1 References in the Rules to �Inland Revenue� have been amended to reflect the replacement of the Inland Revenue by HM Revenue and Customs.

39 Deceased office-holders

39.1 Rules 2.124, 4.132, 4.133, 4.145 and 6.143 have been amended to reflect the fact that persons other than partners may be appointed as office-holders.

40 Definitions

40.1 The interpretation provisions contained in Part 0 and Part 13 of the Rules have been updated. Additionally, where in the Rules references are made to periods of less than 14 days, these have been amended to periods of business days in order to afford the relevant party a more appropriate period of time.

41 Schedule 2

41.1 Schedule 2 has been amended to take account of changes in the alternative courts that may be utilised.

42 Schedule 5

42.1 Schedule 5 has been amended to reflect the correct terminology.

Transitional provisions for amendments to the Rules

The amendments to the Insolvency Rules 1986 will apply to all new insolvency proceedings commencing on or after 6 April 2010 , but in cases where the proceedings commenced before 6 April 2010 some old provisions will necessarily continue to apply throughout the life of the case. This part of the commentary should be read in conjunction with the transitional provisions in Schedule 4 of The Insolvency (Amendment) Rules 2010 and with Rule 13 of the Insolvency (Amendment)(No 2) Rules 2010.

To maximise the benefits that can be drawn from the Rules modernisation changes, certain provisions have been identified within the amendment Rules, such as those for e-delivery, authentication and the replacement of requirements for the provision of affidavits, which will be made effective for all cases, regardless of whether they commence before, on or after 6 April 2010.

The transitional provisions for the Insolvency (Amendment) Rules 2010 are set out in Schedule 4 to those Rules and give effect to three principles:

amendments of a purely procedural nature which simplify the way in which cases are handled but do not affect the substance of anyone�s rights and obligations apply in all cases from 6 April 2010;
but amendments which do affect rights and obligations apply only to new cases started on or after 6 April 2010, because it would often be unfair and/or impractical to make changes of that type part way through a case;
in addition, changes which follow the amendments to the Insolvency Act 1986 made by the Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2010 have to come into force at the same time and in the same way as the provisions of that Order do.

The second of those principles is given effect by paragraph 1 of Schedule 4. That paragraph specifies the events in different types of insolvency procedure which determine whether a case is a new case to which the changes affecting rights and obligations apply.

The first and third of those principles are given effect by paragraph 2 of Schedule 4. Changes relating to new provisions in the Act, otiose provisions in the Rules, leave of the court, signature on documents, affidavits (which are replaced in insolvency cases by statements of truth and witness statements), electronic notices and court procedure all come into force on 6 April 2010. Sub-paragraphs (2) to (4) of paragraph 2 ensure that when a case has begun before 6 April 2010 and continues on or after that date, pre-6 April references to affidavits are treated from 6 April as including witness statements, and post-5 April references to witness statements are treated as including pre-6 April affidavits, so that there is a seamless change from one to the other.

Paragraphs 3 to 5 of Schedule 4 deal with a handful of special cases where paragraphs 1 and 2 do not deliver the right result.

Paragraph 6 provides that for forms to be filed at Companies House in cases commenced before 6 April 2010, the old version of a revoked, replaced or amended form should be used only when the event which causes the form to be filed itself happens before 6 April (see Schedule 4, paragraph 6(2)); if that event occurs on or after 6 April, the amended or new form should be used with such variations as circumstances require (see Schedule 4, paragraph 6(3)).

For forms which are not filed at Companies House in cases commenced before 6 April 2010, the old version of a revoked, replaced or amended form should continue to be used throughout the life of the case unless the amendment is contained in paragraph 502(3) to (6), 503, 504, 505(3) or (4), 513 to 516, 518(2) or (3), 519 to 523, 525, 526, 529, 531 to 537, 540 to 545, 547, 549, 552, 555 or 556 of Schedule 1 or the form is 6.13, 6.17, 6.18, 7.1 or 7.2 (which are replaced by Forms 6.13A, 6.17A, 6.18A and 7.1A), where the amended or replacement form should be used in all cases from 6 April.

For clarificatory purposes, a further transitional provision was introduced at Rule 13 in the Insolvency (Amendment) (No 2) Rules 2010. This makes it clear that where a company enters administration before 6 April 2010 and is converted (under paragraph 83 of Schedule B1 of the Insolvency Act 1986) into a creditors� voluntary liquidation on or after that date, the amendments to the Insolvency Rules 1986 providing for progress reports in creditors� voluntary liquidations and removing the requirement to hold annual meetings in those liquidations will apply so as to give effect to the provisions in the Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2010 for progress reports and the abolition of annual meetings.

At Annex A to this issue there is a paper providing more detailed guidance on the transitional application of the changes made to the Insolvency Act 1986 and the Insolvency Rules 1986 in cases in which , under paragraph 83 of Schedule B1 of the Act, companies move, on or after 6 April 2010, to creditors� voluntary liquidation from administration entered before 6April 2010.

Any enquiries regarding the above should be directed towards Neil Ogilvie, Zone B, 3^rd Floor, 21 Bloomsbury St, London WC1B 3QW, telephone: 020 7637 6307, email: Neil.Ogilvie@insolvency.gsi.gov.uk

Insolvency (Scotland) Amendment Rules 2010

The Insolvency (Scotland) Amendment Rules 2010 amend the company voluntary arrangement and administration (procedures reserved to the UK Parliament under the Scotland Act 1998) provisions in the Insolvency (Scotland) Rules 1986, reflecting changes being made in England & Wales for those procedures in the Insolvency (Amendment) Rules 2010.

The changes will enable (in those procedures only) office-holders to communicate electronically with creditors and other parties (with those parties� consent); to enable the holding of meetings of creditors in both procedures and of the creditors� committee in an administration, via non-physical means and to disseminate information via a website. To facilitate electronic transmission of documents, such documents need not be physically signed; rather they must be authenticated to the satisfaction of the recipient to confirm the identity of the sender.

These new �e-commerce� provisions are aligned with their English & Welsh counterparts and, like those rules, will be available for use in all cases (pre and post commencement) after the commencement of the rules on 6 April 2010. The only exception to this (a departure from what will be the case for England & Wales) is the holding of non-physical meetings of the creditors� committee, which will only apply to new administrations on or after the commencement date. This exception is required as the creditors� committee rules will be written out in full by these rules, replacing the current practice of applying rules in Part 4 via Part 3. As the written-out rules, which will mirror the English & Welsh rules on administration creditors� committees, differ from those currently applied, the ability to hold non-physical is being limited to new cases going forward, to avoid unforeseen problems.

Pre administration expenses will be subject to the same procedure for approval as will be the case south of the border. Rules on the standard content of notices placed in the Edinburgh Gazette (or advertised by other means) for CVAs and administrations will also come into force. These provisions will apply to new cases going forward only.

There are also a number of technical amendments being made by the instrument. Practitioners will note that, as stated above, rules on meetings of the creditors� committee in an administration, applied, prior to 6 April 2010 (with necessary modifications), from Part 4 (liquidation) via Part 3 (receivership), have been written out in full in Part 2. CVA meetings are similarly written out in Part 1, where they, prior to 6 April 2010, were part written out and part applied from Part 7.

A separate commentary on the Scottish rules is available on The Insolvency Service website .

Any enquiries regarding the Scottish amendments should be directed towards Steven Chown, Zone B, 3^rd Floor, 21 Bloomsbury St, London WC1B 3QW, telephone: 020 7637 6501, email: steven.chown@insolvency.gsi.gov.uk

General enquiries may be directed to policy.unit@insolvency.gsi.gov.uk Telephone: 020 7291 6772.

ANNEX A

Insolvency (Amendment) Rules 2010 � application to transitional paragraph 83 cases

1. This paper considers how the amendments to the Insolvency Rules 1986 (�the 1986 Rules�) made by the Insolvency (Amendment) Rules 2010 (�the Amendment Rules�) apply in cases in which, under paragraph 83 of Schedule B1 (�paragraph 83�) to the Insolvency Act 1986 (�the 1986 Act�), companies move, on or after 6 April 2010, to creditors� voluntary liquidation (�CVL�) from administration entered before 6 April 2010. In this paper, those cases are referred to as �transitional paragraph 83 cases� (and except for references to �transitional Rule 13� � see paragraph 6 below � references to Rules are to Rules (new, amended or unamended as the case may be) of the 1986 Rules).

2. Article 6(3) and (4) of the Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2010 (�the LRO�) inserts a new section 104A into, and amends section 105 of, the 1986 Act. The effect is to replace annual creditors� meetings in CVL with a requirement for the liquidator to send periodic progress reports to the creditors.

3. Article 12(1) and (2) of the LRO provides that those amendments do not apply where the resolution to wind up is passed before 6 April 2010. By virtue of section 247(3)(b) of the 1986 Act and paragraph 83(6)(b), that also means that those amendments do not apply where the notice under paragraph 83 of moving from administration to CVL is registered before that date. Thus they do apply where the noticed is registered on or after that date, including in transitional paragraph 83 cases.

4. The Amendment Rules contain several amendments giving effect to article 6(3) and (4) of the LRO. Paragraph 1(6) of Schedule 4 to the Amendment Rules provides that those amendments do not apply in transitional paragraph 83 cases.

5. That, however, is inconsistent with article 12(1) and (2) of the LRO, because that article applies the LRO amendments where the paragraph 83 notice is registered on or after that date irrespective of the date of entry into administration or of application therefor.

6. Accordingly, Rule 13 of the Insolvency (Amendment) (No. 2) Rules 2010 (�transitional Rule 13�) provides:

�Where a company goes into voluntary liquidation under paragraph 83 of Schedule B1 to the Act in a case in which article 12(1) and (2) of the Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2010 causes section 104A of the Act and the amendments to section 105 of the Act to apply, the amendments to the Insolvency Rules 1986 made by the Insolvency (Amendment) Rules 2010 apply to the extent necessary to give effect to section 104A and the amendments to section 105 notwithstanding that by virtue of paragraph 1(6)(a) or (b) of Schedule 4 to the Insolvency (Amendment) Rules 2010 those amendments to the Insolvency Rules 1986 would otherwise not apply.�

This means that the amendments, revocations and new Rules in the Amendment Rules providing for progress reports and removing the requirement to hold annual meetings will apply in transitional paragraph 83 cases even though other amendments, revocations and new Rules in the Amendment Rules will not apply in those cases.

7. The problem with applying transitional Rule 13 is that there is no simple division of amendments, revocations and new Rules in the Amendment Rules into those which provide for progress reports and remove the requirement to hold annual meetings and those which do other things. The Amendment Rules are drafted so as to be applied as a whole or not at all. They are not drafted in so that in transitional paragraph 83 cases, some of the amendments, revocations and new Rules will apply and some not. That means that textual analysis is required to determine how provisions for progress reports in the Amendment Rules are to apply in transitional paragraph 83 cases when those provisions also refer to other things provided for in the Amendment Rules but not in the unamended 1986 Rules, and also how provisions in the unamended 1986 Rules are to apply in transitional paragraph 83 cases when they refer to annual meetings as well as other things.

8. The following paragraphs suggest how transitional Rule 13 is to be applied in respect of particular amendments, revocations and new Rules in the Amendment Rules.

9. New Rule 4.49B sets out the basic provision for progress reports in windings up by the court. Since new section 104A and section 105 of the 1986 Act do not apply to windings up by the court, that new Rule does not in itself apply in transitional paragraph 83 cases. It is, however, relevant because of references to it in new Rules 4.49C and 4.49E, which apply to CVLs.

10. In new Rule 4.49C, which is the basic provision for progress reports in CVLs:

a. paragraphs (1) to (3), (6) and (7) will apply without difficulty in transitional paragraph 83 cases;

b. paragraph (4) provides that a progress report in a CVL is not required for any period which ends after the liquidator has sent a draft final report to creditors under new Rule 4.49D: since new Rule 4.49D does not itself apply in transitional paragraph 83 cases, there will be no such period in transitional paragraph 83 cases and therefore, in effect, paragraph (4) does not apply in transitional paragraph 83 cases;

c. paragraph (5) provides for the content of progress reports in CVLs by reference to new Rule 4.49B, which in turn refers to new Rule 4.49E and amended Rules 4.127 and 4.131:

i. although Rules 127 and 131 are amended by the Amendment Rules, the references to them in new Rule 4.49B(1)(d) and (j) are equally capable of being to the unamended Rules 127 and 131, and therefore pose no problem in transitional paragraph 83 cases;

ii. since new Rule 4.49E does not itself apply in transitional paragraph 83 cases, the reference to it in new Rule 4.49B(1)(j) is meaningless and therefore it can be treated as not being there, with the practical consequence that new Rule 4.49B(1)(j) should be read as if the words �right to request information under Rule 4.49E and their� were not there.

11. New Rules 4.49E (as mentioned above), 4.108A, 4.126(5) and (6) and 4.131(1B) and substituted 4.108(3) do not apply in transitional paragraph 83 cases (nor, obviously, do the amendments to Rule 4.125, which has no CVL application), because they do not fall within transitional Rule 13. The references therein to progress reports are therefore irrelevant in transitional paragraph 83 cases.

12. Rule 4.223 must be complied with in transitional paragraph 83 cases even though it is being revoked as duplicating progress reports, because it does not fall within transitional Rule 13, and therefore paragraph 1(6) of Schedule 4 to the Amendment Rules applies.

41. The Insolvency Proceedings (Fees) (Amendment) Order 2010 (SI 2010/732)

The Insolvency Proceedings (Fees) (Amendment) Order 2010 came into force on 6 April 2010. The Order makes amendments to the Insolvency Proceedings (Fees) Order 2004, and is available on the OPSI website at the link below:

http://www.opsi.gov.uk/si/si2010/uksi_20100732_en_1

The Order amends fees charged by The Insolvency Service in respect of its services for insolvency case administration. As part of an annual fees review, changes have been made to the structure of insolvency fees to ensure more of the fee is recovered earlier in the process and to maintain a balance in the share of the cost of the regime between debtors and creditors. Overall, the cost of case administration has not increased in real terms and therefore the total amount which will be raised from fees will not increase in real terms.

Creditors or debtors that petition for bankruptcy or winding-up are required to pay a deposit into the court towards the cost of the administration of the case. This deposit is returned if sufficient assets are realised. Changes to deposit levels mean debtors will pay �90 more for their deposit to file a petition for bankruptcy. Creditors will pay �170 more for their petition deposit to put an individual into bankruptcy and �285 more to put a company into compulsory liquidation.

Further details on changes made to petition deposits, case administration fees and restructuring of the Secretary of State (SoS) fee are available on The Insolvency Service website at the link below:

http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/FeeChanges2010.pdf

General enquiries may be directed to EAD.Enquiries@insolvency.gsi.gov.uk Telephone: 0121 698 4268.

42. The Insolvency Proceedings (Fees) (Amendment) Order 2011 - changes to bankruptcy and compulsory liquidation petition deposits

The following changes are intended to come into effect through the Insolvency Proceedings (Fees) (Amendment) Order 2011, a draft of which will become available on The Insolvency Service website shortly:

1. For all petitions presented up to and including 31 May 2011 there are no changes to current deposits.

2. For petitions presented on or after 1 June 2011:

a. Debtor�s deposit on a bankruptcy petition increases from �450 to �525.

b. Creditor�s deposit on a bankruptcy petition increases from �600 to �700.

c. Creditor�s deposit on a winding up petition increases from �1,000 to �1,165.

d. No changes to bankruptcy or company case administration fees.

e. No changes to the Secretary of State fee or fee bands.

Any enquiries regarding the changes should be directed to Stephen Parcej, The Insolvency Service, Finance Governance and Accounting Services Directorate, Zone B, 5th Floor, 21 Bloomsbury Street, London WC1B 3QW; telephone: 020 7291 6761

email: Stephen.parcej@insolvency.gsi.gov.uk

General enquiries may be directed to DSM.FGAS@insolvency.gsi.gov.uk

43. Insolvency Rules Modernisation - update

Towards the end of last year we invited views from stakeholders as to whether or not to continue our work on a full re-write of the Insolvency Rules 1986, as the final phase of recent work to modernise the Insolvency Rules. We have now considered those responses and Ministers have decided that work on a full new set of rules should continue, although those rules will not now come into force before October 2013. This will take into account some concerns expressed by practitioners about the introduction of the new rules so soon after the changes introduced in April 2010.

We plan to publish a full working draft of the new rules in the near future for the purpose of inviting feedback on the structure, content and detailed drafting. We would welcome as much feedback on that draft as insolvency practitioners and other users of the rules are able to provide.

We are also in the process of reviewing evidence that representative bodies were recently invited to submit about the administration expense regime, particularly as to the impact of Mr Justice Briggs� recent decision in Re Nortel/Lehmans concerning Financial Support Directions issued by the Pensions Regulator to companies in administration. If Ministers are persuaded that there is an urgent need for legislative change in that area, those changes would be implemented well ahead of the new rules.

Any enquiries regarding this article should be directed towards Tom Phillips Zone B, 3^rd Floor, 21 Bloomsbury St, London WC1B 3QW, telephone: 020 7637 6307, email: tom.phillips@insolvency.gsi.gov.uk

General enquiries may be directed to email: Policy.unit@insolvency.gsi.gov.uk

Telephone 0207 291 6740

[Chapter 1] [Chapter 2] [Chapter 3] [Chapter 4] [Chapter 5] [Chapter 6] [Chapter 7] [Chapter 8] [Chapter 9] [Chapter 10] [Chapter 11] [Chapter 12] [Chapter 13] [Chapter 14] [Chapter 15] [Chapter 16] [Chapter 17] [Chapter 18] [Chapter 19] [Chapter 20] [Chapter 21] [Chapter 22] [Chapter 23] [Chapter 24] [Chapter 25]

[ARCHIVED CONTENT]


	Disclaimer \| Information Charter / Privacy Statement \| Complaints Procedure \| Crown Copyright 2008