On 6 April 2017, the much-vaunted Insolvency (England & Wales) Rules 2016 come into force. This is arguably the single biggest overhaul of insolvency procedure seen in this jurisdiction in the 30 years since the Insolvency Act 1986 and the Insolvency Rules 1986 came into being.
The rules aim to modernise, consolidate, and streamline insolvency procedure, and by doing so reduce the costs of administration of insolvent estates – both personal and corporate – in order to maximise returns to creditors.
Some of the changes are purely formal in nature, and are aimed at couching the rules in more modern, user-friendly language: in the interests of gender neutrality ‘chairman’ simply becomes ‘chair’; reliance on the Interpretation Act 1978 means that words in the singular are taken to include the plural; and to ensure consistency and clarity of language ‘must’ replaces ‘shall’ and ‘deliver’ replaces ‘send’ (although, for the avoidance of doubt ‘service’ remains a separate consideration reserved for the most formal of documents). The aim here is that the new rules should be easier to use and understand, with less ambiguity and consequently less room for misinterpretation. In pursuit of the same aim, new Common Parts will be introduced covering such rules as apply to multiple insolvency procedures, reducing repetition.
The revised Rules as a whole make an effort to embrace technological advances – electronic filing and service of documents is adopted, and a party is deemed to consent to the use email as a means of valid service in any situation where email has customarily been used between sender and recipient. There is even provision for good service of notices required to be served by an office-holder (Trustee in Bankruptcy, Administrator, Liquidator, etc) by notifying the recipient that the document is to be made available for viewing and downloading on a website, and providing details of the website address and leaving it up for viewing and downloading for a prescribed period.
However, it is anticipated that the changes likely to have the greatest practical impact will be in the new Part 15, which deals with ‘Decision Making’ across all forms of insolvency, and provides for the use of electronic voting and ‘virtual’ meetings. Actual, physical meetings of creditors, which are all too often poorly-attended, despite the significant costs which can be incurred in convening and hosting them – will only need to be held in limited circumstances. The aim here is to reduce the costs of administering the estate, but these changes may also increase the level of engagement by often disinterested creditors resigned to getting little or nothing by way of distribution.
The primary insolvency legislation is, to the writer’s knowledge, broadly unchanged, but the way in which that legislation is implemented and the procedures followed in giving the legislation effect are set to undergo significant change in a matter of a couple of weeks. Whether the transition will be a smooth one remains to be seen, but hopefully the changes to the rules will pay dividends in future, both in the literal and metaphorical sense.
If you would like some advice regarding insolvency, speak to our expert solicitors at Farleys Solicitors. You can contact us on 0845 287 0939 or submit your enquiry online.