The 2016 Insolvency Amendment Rules, brought in on 1 April 2017, were some of the largest changes to the insolvency industry for a number of years. The new rules were intended to make it easier for creditors to participate in insolvency proceedings through the use of technology and the streamline of some of the processes to try and reduce costs. We have found however that this has resulted in creditors facing or suffering a potential bad debt needing to act more quickly and take a more active interest in proceedings. As always the sooner we are brought in, the better the chance of us being able to achieve a positive result. Should you or one of your clients require any assistance concerning a possible bad debt, please do not hesitate to call any of us.
Creditor Meetings and Decision Procedures
Physical creditor meetings cannot now be used unless requested by creditors that meet certain criteria and have been replaced by new ‘decision procedures’ which include deemed consent, vote by correspondence and virtual meeting.
We have found that this change has had the biggest effect on the way in which Liquidators are appointed in Creditors Voluntary Liquidations, with most opting for the deemed consent process. We find this approach offers creditors with shorter notice of the intended proceedings and have resulted in creditors needing to act much more quickly than before if they want to influence the outcome of the identity of the Liquidator.
Office Holder Report and Communications
A number of changes were made to the way in which officeholders (Liquidator’s/Administrators etc) communicate with creditors and these included:-
- Allowing creditors to opt out of communications
- Improvements use of websites
- Encouragement of email communications
The use of websites for reporting purposes has had the greatest effect, with officeholders now able to give a one off notice providing website and login details for all future reports to creditors and these reports are then posted without notice to the website. This has resulted in creditors needing to be more proactive when tracking the reporting periods and accessing creditor reports in order to stay up to date with the progression of a case.
Agreement of Claims of Less than £1,000
The new rules now allow an officeholder to agree creditor claims that are less than £1,000 without the need to verify the claims, with a view to limiting costs. An officeholder must send notice of his intention to agree the claim to the creditor and if no response is received, will pay a dividend based on this level of claim. We would advise creditors to pay close attention to the amount they are scheduled for in the company’s records and ensure that the officeholder is made aware of any discrepancy as soon as possible.