Insolvency technical update – June 2022
By Steven Wood, Practice Support Specialist (Insolvency)
5 July 2022
Insolvency technical update – your round-up of recent developments in insolvency
Advertising rules for IVAs and PTDs
The UK Committee of Advertising Practice (CAP) has launched a market-wide enforcement project about advertisements placed by lead generation companies and licensed insolvency practitioners, which ultimately advertise services for individual voluntary arrangements (IVAs) or protected trust deeds (PTDs).
CAP writes the advertising rules, which are enforced by the Advertising Standards Authority (ASA), the UK’s independent advertising regulator.
CAP has produced and published an Enforcement Notice (‘the Notice’) which will be followed with active monitoring, applying sanctions where necessary.
IPs should review the Notice and also consider their obligations in terms of the Code of Ethics. The Notice is effective immediately, however monitoring and enforcement will start from 25 July 2022.
An article looking at the Notice has been published on the ICAS website.
AiB DX service discontinued
The Accountant in Bankruptcy has announced that it is not renewing its DX mail service. From 30 June 2022, any mail to be sent by post should be directed to the AiB’s normal postal address: 1 Pennyburn Road, Kilwinning, KA13 6SA. Electronic methods of communication are preferred wherever possible.
Dear IP
Dear IP 147 has been issued by the Insolvency Service. The issue provides details of a Companies House insolvency filing service survey, HMRC’s guidance on VAT returns, CAP’s advertising enforcement notice, new guidance to support the IVA protocol and a request for insolvency professionals to become diversity and inclusion champions.
HMRC Insolvency Guidance – VAT returns (VAT100)
HMRC has issued guidance on the way it processes VAT returns following the introduction of a new style VAT100 and a fully automated process.
Insolvency Service ISCIS Online
The Insolvency Service has issued notification of a slight change to ISCIS online.
Coronavirus (Recovery and Reform) (Scotland) Bill
The Coronavirus (Recovery and Reform) (Scotland) Bill (‘the Bill’) was passed on 29 June 2022.
The Bill will make changes in 35 specific legislative areas, many of which originated in temporary Scottish and UK Covid legislation.
An article previously published by ICAS summarises the measures in the Bill that will impact restructuring and insolvency (as per the initial draft of the Bill), all of which remain in the Bill as passed. These include:
- An adjustment to the minimum debt level that individuals must owe before a creditor can make them bankrupt to £5,000.
- Service of a document allowed by electronic transmission.
- Remote meetings of creditors permitted.
In addition to these changes, an amendment was introduced to the Bill at Stage 2 which has been incorporated into the final Bill as passed.
That amendment has the effect of increasing the length of the moratorium against diligence created by sections 195 to 198 of the Bankruptcy (Scotland) Act 2016 from a period of 6 weeks to 6 months. An additional subsection is also added to provide the Scottish Ministers with a power to amend the period of the moratorium against diligence through affirmative procedure regulations.
All of the provisions noted above are set to come into force on 1 October 2022 (the day after the temporary measures introduced by Scottish Covid legislation expire).
Government Evaluation of the Corporate Insolvency and Governance Act 2020 (CIGA)
The Government made a commitment to review the three permanent measures introduced by CIGA, no longer than three years after they came into force. Those measures are:
- Company Moratorium (Part A1 Insolvency Act 1986)
- Restructuring Plan (Part 26A Companies Act 2006)
- Suspension of Ipso Facto (Termination) clauses (section 233B Insolvency Act 1986)
As part of that review the University of Wolverhampton has been commissioned to carry out research on how the permanent CIGA measures have been received in practice.
The review includes an online survey which is addressed to all insolvency practitioners and which is open until 15 July 2022. The Government’s interim report on CIGA can be found here.
Company voluntary arrangement (CVA) research report for the Insolvency Service
A research report into CVAs has been published by the Insolvency Service.
The report was commissioned due to criticism that the procedure can be unfair to landlords, where a company’s future obligations to them under property leases are restructured by a company’s proposal.
Legal update
The Accountant in Bankruptcy against (first) Graeme Allan (second) Anna Ragnarsson: A recent Sheriff Court Judgment in relation to a gratuitous alienation action brought by the trustee in a sequestration case.
Fitzroy Street Capital Inc & Anor v Manning & Ors [2022] EWHC 1495 (Ch): A High Court case concerning allegations of breach of duty against administrators resulting from a failure to adequately market and obtain the best price for two properties (via Brodies LLP).