Insolvency technical update – April 2021
By David Menzies, Director of Practice
6 May 2021
Insolvency technical update – your round-up of recent developments in insolvency.
Coronavirus
For all coronavirus related updates please go to the regularly updated A-Z of all things insolvency amid the coronavirus outbreak.
The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021
The above regulations came into force on 30 April 2021.
The regulations impose conditions on substantial disposals in administration to connected persons, namely, that an administrator must not proceed with a disposal of property of a company within the first 8 weeks of that company entering administration without either an independent opinion on the disposal, or approval of creditors.
An article looking at the regulations in more detail is available on icas.com.
A webinar was hosted by R3 on 27 April 2021, which took a look at the new regulations and the role of the evaluator. The webinar is available to view on demand.
Accompanying guidance about the requirement for independent scrutiny of disposals of company assets in an administration has also now been released by the Insolvency Service.
Statements of Insolvency Practice 13 and 16
The legislative changes introduced by the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 mean that it has been necessary for changes to be made to two Statement of Insolvency Practice (SIPs). The changes relate to SIPs 13 and 16.
The changes have been made with the sole purpose of adapting the SIPs to align with the new legislative requirements in the regulations. The updated SIPs came into effect at the same time as the regulations came into force, 30 April 2021.
An article has been published which provides a summary of the changes.
Statement of Insolvency Practice 4
When new legislative provisions for the reporting obligations of insolvency office holders on the conduct of those who formerly controlled a company came into effect from 6 April 2016, it was intended that SIP 4 - disqualification of directors, would be withdrawn.
However, there remained some ongoing cases where an office holder was able to submit a paper conduct return rather than use the online reporting tool. The Insolvency Service has informed the Joint Insolvency Committee that all such cases should now be complete.
SIP 4 has therefore been withdrawn with effect from 30 April 2021.
Statements of Insolvency Practice 3.2, 7 and 9
Changes to three SIPs came into effect on 1 April 2021. The changes relate to SIPs 3.2, 7 and 9.
To assist IPs and their staff, ICAS ran an online update session on 24 February and a recording of the session is available to view on demand.
The introduction of the revised SIP 9 has resulted in the Recognised Professional Bodies (RPBs) being asked a number of questions surrounding its practical operation.
The RPBs (ICAS, ICAEW, IPA and CAI) have addressed these questions and provide their collective thoughts on the applied impact of the changes to in an FAQ document. An accompanying article with further background has also been published.
Dear IP
Dear IP 124 has been issued by the Insolvency Service. The edition includes updates to the Redundancy Payment Service IP Upload Service and details of an extension of the IVA Protocol COVID-19 Guidance.
Dear IP 125 has been issued by the Insolvency Service. The edition sets out details of an updated platform for future issues of Dear IP. The platform is live and has been backdated to include all editions from 2020 onwards (issue 92). Any articles published before 2020 will initially remain at their current location before moving to the National Archives website.
Dear IP 126 has been issued by the Insolvency Service. This edition includes information on dealing with increased holiday pay carry-over arising from the Working Time (Coronavirus) (Amendment) Regulations 2020, the new connected party disposals out of administration regulations and the IVA Protocol 2021.
Insolvency Service Redundancy Payments Service RP1 factsheet
The Insolvency Service has updated its RP1 factsheet for employees made redundant by an insolvent employer to add guidance about 12 and 52 week average pay.
Insolvency Service guidance: calculate your average weekly pay if it varied
The Insolvency Service has published guidance to help with the calculation of average rate of pay for individuals without fixed hours and fixed pay, so that they can apply for redundancy related payments from the Insolvency Service.
The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Change of Expiry Date in section 32(1)) Regulations (Northern Ireland) 2021
The above regulations came into operation on 29 April 2021.
The regulations extend by one year, until 29 April 2022, the period during which the Department or the Secretary of State can exercise their power under section 28 of the Corporate Insolvency and Governance Act 2020 to make regulations.
The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading) Regulations (Northern Ireland) 2021
The above regulations came into operation on 29 April 2021.
The regulations extend until 30 June 2021 the period during which liability for wrongful trading is suspended by the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading) Regulations (Northern Ireland) 2020.
IVA protocol 2021
A new IVA protocol 2021 has just been published by the Insolvency Service.
The IVA protocol is a voluntary agreement, which provides an agreed standard framework for dealing with straightforward consumer IVAs and applies to both IVA providers and creditors.
Individual Voluntary Arrangement (IVA) protocol guidance
The COVID-19: Individual Voluntary Arrangement (IVA) protocol guidance was revised with effect from 7 September 2020. The IVA Standing Committee has agreed that the revised guidance will now be extended until 31 July 2021.
Debt Respite Scheme (Breathing Space) guidance
The Insolvency Service has made further updates to its guidance for creditors and money advisers about the Breathing Space scheme in force from 4 May 2021.
Legal update
The Accountant in Bankruptcy against Peter A Davies: A judgment by the Sheriff at Peterhead concerning an Application by the Accountant in Bankruptcy made under section 40 of the Bankruptcy (Scotland) Act 1985.
Subscribe to the ICAS Insolvency Technical Update