Insolvency technical update – September 2022
Insolvency technical update – your round-up of recent developments in insolvency
Coronavirus (Recovery and Reform) (Scotland) Act 2022
The Coronavirus (Recovery and Reform) Scotland Act (the "Act") received royal assent on 10 August 2022.
The June insolvency technical update set out the measures in the Act that will impact insolvency and restructuring from 1 October 2022.
Scottish Government Consultation: Scotland's statutory debt solutions and diligence –policy review response
The Scottish Government previously published a consultation seeking views on its proposals for reforms to the Scottish statutory debt solutions and debt recovery mechanisms (diligence).
The proposals put forward are in response to recommendations arising from stakeholder-led policy reviews that have now concluded.
ICAS’ response is now available to view.
Call for evidence: Review of the personal insolvency framework
A reminder that the Government has issued a call for evidence to aid its review of the personal insolvency framework in England and Wales.
The call for evidence is open until 24 October 2022 and ICAS will be submitting a response. Views and comments to feed into that response are welcome and should be emailed to email@example.com in the first instance.
Bounce Bank Loan (‘BBL’) – data sharing information
The Insolvency Service has started a process of informing IPs by email if they are appointed on insolvent estates which have individuals/corporate entities that applied for a BBL as part of the Government’s Covid support package in 2020/21.
The emails will have an attachment with details of the cases the Insolvency Service are aware of, with the intention of assisting office holders with their SIP 2 investigation obligations.
Changes to Director Conduct Reporting Service
The Insolvency Service issued advance notice of changes to the Director Conduct Reporting Service (DCRS) with a planned release date of 3 October 2022. The changes are:
- A new section added to the Director Conduct Report regarding abuse of financial support schemes and misuse of funds. This section will allow users to specifically report abuse of Covid support schemes, as well as other financial support.
- The Company Director Summary section is amended so that, when moving through the form or navigating to that section, the first page of the Company Director Summary section will include an overview where all directors can be viewed and amended, and new directors added. The first page will also include the option to add a corporate director with a new question set for this type of director.
Insolvency petition deposits (England and Wales)
The Insolvency Proceedings (Fees) (Amendment) Order 2022 (the Order) has been laid in Parliament and comes into force on 1 November 2022. The Order increases the deposit paid by a creditor when presenting a bankruptcy petition from £990 to £1,500. It also increases the deposit paid on presentation of a winding up petition from £1,600 to £2,600.
HMRC Insolvency Guidance – process for DLAs written off as part of corporate insolvency procedures
HMRC has issued guidance to IPs on new voluntary procedures which are available in relation to Director Loan Account write-offs.
If engaged, information received is matched against HMRC intelligence to identify any assets against which the directors loan may be recovered from (and which might not be known to the IP) and is then also used to follow up tax which should become payable under self-assessment, closing a potential tax gap.
HMRC Insolvency Guidance – tax clearance requests in Members Voluntary Liquidations
HMRC has issued guidance to IPs setting out changes to its process for providing tax clearance in MVL cases.
Clearance requests will no longer need to be sent to two separate areas of HMRC.
Dear IP150 has been issued by the Insolvency Service. The issue provides details of the latest HMRC updates, the changes to DRCS and details of the increase in creditor bankruptcy and compulsory liquidation petition deposits (covered in last month’s technical update).
Redundancy payments from the Insolvency Service
A link has also been added to the guidance for amending a redundancy claim to an online form to amend holiday pay accrued details.
Finally the guidance on whether a company director can apply for redundancy payments has been updated to amend the criteria that must be met for a claim to be considered. The requirement for a minimum 16 hours per week to have been worked has been removed from the guidance.
AiB Dear Trustee letters
The AiB has issued a ‘Dear Trustee’ letter notifying of its intention to discontinue the acceptance of cheques from Monday, 5 December 2022.
A further letter has been issued setting out minor amendments to:
- The Common Financial Tool Notes for Guidance
- The Protected Trust Deed Notes for Guidance for Trustees
- The Notes for Guidance for Trustees
Bank holiday for HM The Queen Funeral
IPs are reminded that the public holiday which was declared in respect of the day of the State Funeral for HM The Queen will impact on a variety of timescales under insolvency legislation. Bank holidays are excluded from 'business days'. While IPs should have assessed the impact on the various processes in place at the time, care should be taken to remain aware of any situations where the appropriate timescales were not applied due to the unexpected public holiday and take appropriate steps to assess the implications and remedies which may require to be actioned.
DAS revocation suspension
The AiB has announced a planned change to the DAS regulations in relation to six-month payment break variations.
The intention is to extend the eligibility criteria to include those impacted by the ongoing cost of living crisis. Current plans are for the new regulations to come into force by the end of 2022, pending parliamentary approval.
To prevent the potential revocation of Debt Payment Programmes (DPPs) before the new regulations come into force, the DAS Administrator will refuse to revoke DPPs on the grounds of failure to maintain payments, where it can be demonstrated that the cost crisis has impacted surplus income to the extent that DPP commitments cannot be maintained. Where revocation applications are received, money advisers are advised to provide an updated income and expenditure statement using the common financial tool to illustrate their clients’ circumstances, supported by a written explanation detailing how surplus income has been impacted.
Economic Crime and Corporate Transparency Bill 2022
The Government has published its Economic Crime and Corporate Transparency Bill.
The Bill follows on from the Economic Crime (Transparency and Enforcement) Act, which was passed earlier this year, and aims to deliver:
- Reforms to Companies House;
- Reforms to prevent the abuse of limited partnerships;
- Additional powers to seize and recover suspected criminal cryptoassets;
- Reforms to give businesses more confidence to share information in order to tackle money laundering and other economic crime; and
- New intelligence gathering powers for law enforcement and removal of nugatory burdens on business.
The Insolvency Service has produced a series of factsheets giving details of the different measures contained in the Bill.
Nostrum Oil & Gas Plc  EWHC 2249 (Ch) and Petropavlovsk Plc, Re  EWHC 2097 (Ch): Two cases concerned with the impact of Russian sanctions on a Scheme of Arrangement under Part 26 of the Companies Act 2006 and an administration under Schedule B1 to the Insolvency Act 1986 (via Brodies LLP).