Insolvency technical update – February 2021
By David Menzies, Director of Practice
3 March 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 Corporate Insolvency and Governance Act 2020 (Coronavirus) (Change of Expiry Date) Regulations 2021
The above regulations have been laid with a view to amending the Corporate Insolvency and Governance Act 2020 (CIGA 2020) to extend the date on which the power in section 20 to make temporary amendments to, or modify the effect of, corporate insolvency and governance legislation, expires, by a year to 29 April 2022.
The Regulations do not extend any of the measures relaxing requirements currently in place (most of which are due to expire on 31 March 2020). However, keeping the power in section 20 of CIGA 2020 available for a further year will provide a means for specific and temporary changes to be made to corporate insolvency and governance legislation should the urgent need arise to do so, which will allow quick reactions to any unforeseen challenges arising as a result of the pandemic’s impact on business.
The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021
Regulations have been laid which 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.
The regulations will be laid under the affirmative procedure meaning that they must be actively approved by both Houses of Parliament. If approved, the regulations are scheduled to come into force on 30 April 2021.
An article looking at the regulations in more detail is available on icas.com.
Statements of Insolvency Practice
Changes are being made to three Statements of Insolvency Practice (SIPs) with effect from 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.
Guidance on monitoring insolvency practitioners: advertisements, marketing and debt advice
The Insolvency Service has published guidance on monitoring insolvency practitioners in relation to advertisements, marketing and debt advice, focussing on cases where the debt solution is, or is likely to be, an IVA or PTD.
RP14a
A new RP14a upload template has been released by the Insolvency Service, effective from 19 February 2021.
The template has been updated to reflect the reference period for holiday pay changing from 12 weeks to 52 weeks to allow for seasonal variations in pay.
HMRC Debt Management EIS helplines
The following HMRC Debt Management EIS helplines are now open. HMRC has requested that enquiries are restricted to urgent queries as HMRC staff are still clearing a backlog of cases.
Cardiff
- Administrations - 0300 322 9250
- Compulsory Winding Up - 0300 322 9209 (examiners) and 0300 322 9210 (support team)
- Voluntarily Arrangements - 0300 322 9251
Edinburgh
- IVA – 0300 322 7838
- Trust Deeds - 0300 200 3873
- Debt Arrangement Scheme - 03000 513404
Newcastle
- Members Voluntary Liquidations 0300 322 7815
Dear IP
Dear IP 120 has been issued by the Insolvency Service. The edition is issued to draw attention to two recent rulings by the Advertising Standards Agency in relation to misleading online advertisements aimed at those in debt. IPs are reminded of their requirements under the Code of Ethics (Section 2360) as they relate to third party advertisements and IPs.
Dear IP 121 has been issued by the Insolvency Service. This details the new RP14a form and process to be used when submitting holiday pay details to the Redundancy Payments Service.
Dear IP 122 has been issued by the Insolvency Service. The edition provides notice of the draft regulations relating to pre-pack administrations and details of an exemption in the Victims’ Payment Regulations 2020 which stipulates that payments made under the regulations do not form part of a bankrupt’s estate.
Companies House voluntary and compulsory strike off processes
Companies House has advised that, following a temporary pause, it will resume its voluntary and compulsory strike off processes from 8 March 2021.
Insolvency Service: cyberattacks
The Insolvency Service has recently seen an increased number of cyberattacks against its public websites. As an added precaution, it is asking Insolvency Practitioners to assist it in remaining vigilant against such attacks by changing their passwords.
Pension Protection Fund (PPF) guidance note – Corporate Insolvency and Governance Act 2020 (CIGA 2020)
The PPF has issued guidance on engagement with it and the Pensions Regulator (TPR) required under CIGA 2020 where an eligible pension scheme employer is involved in a moratorium or restructuring plan.
A notice has also been published to inform the PPF that a sponsoring employer of an occupational pension scheme has commenced, extended or ended a moratorium.
Pension Schemes Act 2021
The Pension Schemes Act 2021 received Royal Assent on 11 February 2021. Section 114 of the Act inserts new section 80B into the Pensions Act 2004. This gives the Pensions Regulator power to issue a fine of up to £1m to person who knowingly or recklessly provides information to pension trustees that is false or misleading. This may include insolvency practitioners acting in an advisory capacity.
FCA guidance for firms on the fair treatment of vulnerable customers
The FCA has published guidance highlighting the actions firms should take to understand the needs of vulnerable customers to make sure they are treated fairly.
Guidance to the ICAS Code of Ethics
ICAS has published new non-authoritative guidance to the ICAS Code of Ethics, developed to assist members understand their responsibilities in relation to values of equality, diversity and inclusion. An accompanying article has also been published to highlight key points from the new guidance.
Helpsheet: Appointing an alternate and continuity of practice
The ICAS General Practice Manual (member login required) contains a recently revised Helpsheet providing information and guidance on matters to consider when appointing an alternate and considering continuity of practice in time of incapacity. The appointment of an alternate is compulsory for insolvency practitioners who operate as a sole practitioner but many of the principles highlighted in the Helpsheet are relevant to all insolvency practitioners.
Legal update
Re Peter Jones (China) Ltd [2021] EWHC 215 (Ch) The Court ruled that the Registrar should use its discretion to remove mis-filed documents (in this case schedules of employees and consumers accompanying the Statement of Affairs), as opposed to insisting that the IP obtains a Court Order.
Lynda Louise Dixon v Nicholas Myers, Adam Henry Stephens (as administrators of L & N D Development and Design Limited) The English High Court recently considered an application by a company director under para.74(1)(a) of Schedule B1 for an order requiring administrators to assign a cause of action to the director (via BBM Solicitors)
Subscribe to the ICAS Insolvency Technical Update