Insolvency technical update – October 2022
Insolvency technical update – your round-up of recent developments in insolvency
Code of ethics – Internal audit
The Recognised Professional Bodies have issued a joint explanation of the meaning of the phrase ‘audit related work’ in the Code of Ethics as applied to insolvency practitioners, particularly for internal audit work in the context of evaluating a significant prior relationship.
Anti-money laundering – ICAS supervision report 2021/22
ICAS has issued its anti-money laundering (AML) supervision report for 2021/22. The report provides stakeholders and interested parties with a better understanding of the actions that ICAS undertakes as an AML supervisor, with the aim of increasing transparency and providing reassurance as to the robust nature of its activities. Additionally, it provides a breakdown of the AML monitoring outcomes and most common findings across the firms reviewed by ICAS in 2021/22. It also summarises ICAS’ regulatory action and discipline procedures, and information regarding the channels for whistleblowing and the support available from ICAS to assist with AML compliance.
Call for evidence: Review of the personal insolvency framework
The UK government previously issued a call for evidence to aid its review of the personal insolvency framework in England and Wales.
ICAS’ response to the call for evidence is now available to view.
Dear IP
Dear IP152 has been issued by the Insolvency Service. The issue provides details of changes to how the Redundancy Payment Service manages pre-appointment cases.
Redundancy payments as a company director
The Insolvency Service has again updated its guidance for company directors who are claiming redundancy-related payments.
The latest update has removed the requirement for the company to have been incorporated and trading for more than 2 years for a claim to be considered.
Guidance for amending a redundancy claim
The link to an online form to amend holiday pay accrued details, previously added to the Insolvency Service’s guidance for amending a redundancy claim, was withdrawn earlier in the month due to a technical issue. Those issues should now be resolved, and the link has been republished.
Debt Relief Orders: Guidance for debt advisers
The Insolvency Service has updated its guidance on debt relief orders for debt advisers to include clarification on how debt advisers should assess a debt relief order applicant's pension and cover previously missing information.
Help for Households campaign
A number of Insolvency Service factsheets and guidance pages have been updated to include details and a link to help signpost the government's Help for Households campaign, in response to the cost of living crisis.
The Insolvency Practitioners (Amendment) Regulations (Northern Ireland) 2022
The above Regulations were made on 4 October 2022 and come into operation on 4 November 2022.
The Regulations make changes to the licensing system and record-keeping requirements for IPs in Northern Ireland, bringing the position into line with the rest of the UK.
The Insolvency (Northern Ireland) Order 1989 (Prescribed Part) (Amendment) Order (Northern Ireland) 2022
The above Order was made on 4 October 2022 and comes into operation on 4 November 2022.
The Order increases the cap set by Article 3(2) of the Insolvency (Northern Ireland) Order 1989 (Prescribed Part) Order (Northern Ireland) 2006, on the part of a company's net assets (the "prescribed part") that must, in certain circumstances be distributed to the unsecured creditors of a company which has entered an insolvency process, from £600,000 to £800,000. This brings the position in Northern Ireland into line with the rest of the UK.
Changes to the protected minimum balance in bank arrestment
From 1 November 2022, the amount protected in a bank arrestment in Scotland increases from £566.51 to £1,000. This means that anyone in Scotland subject to a bank arrestment from 1 November, will be left with a minimum of £1,000 in their bank account.
Request to write-off debt in DAS
The AiB, in its capacity as DAS Administrator, has decided to publish pro forma letters and guidance to assist money advisers in contacting creditors to request that the repayments made in certain cases where debtors can no longer meet their payment obligations are treated as paid to date settlements, allowing DPPs to be completed.
Legal update
BTI 2014 LLC (Appellant) v Sequana SA and others (Respondents) [2022]: A recent case that provided the first opportunity for the Supreme Court to consider the duty of company directors to consider, or to act in accordance with, the interests of the company’s creditors when the company becomes insolvent, or when it approaches or is at real risk of, insolvency.
Spex Group Holdings Limited again Alexander Iain Fraser and others: A Court of Session opinion on whether the interpretation of “creditor”, in the context of an appeal against the acceptance or rejection of any claim, includes a person whose own claim has been rejected but wishes to appeal against the decision to accept or reject another party’s claim.