Insolvency Technical Update - August 2018
Insolvency technical update – Your round-up of recent developments in insolvency.
Common Financial Tool (Scotland) Regulations 2018
The Scottish Government has withdrawn the Common Financial Tool (Scotland) Regulations 2018 which had been laid in draft in the Scottish Parliament and were due to come into effect on 29 October 2018. In a letter to the Presiding Officer, Jamie Hepburn MSP, Minister for Economy, Jobs and Fair Work explained that the draft regulations were being withdrawn to allow the advice sector additional time for IT system changes and staff training. It is expected that the regulations will be reintroduced at a later date. As a result, the Standard Financial Statement will not be introduced in relation to Scottish debt relief and statutory debt payment plans on 29 October 2018.
The introduction of the Debt Arrangement Scheme (Scotland) Amendment Regulations 2018 are unaffected and will commence on 29 October 2018.
Financial Market Infrastructure Administration (England and Wales) 2018
The Rules came into force on 4 August 2018 and give effect to Part 6 of the Financial Services (Banking Reform) Act 2013. This provides for a special process for the administration of operators of certain financial market infrastructure systems (known as “FMI administration”) and restricts the powers of persons other than the Bank of England in relation to the insolvency of infrastructure companies. The Rules set out the procedure for FMI administration.
Redundancy payments: Template for setting up a new case
The Insolvency Service has updated the documents and templates to set up a new case on CHAMP.
The Insolvency Service has announced that from 5 September 2018 a change will be made which will mean that Bankruptcy and Compulsory Liquidation cases will only come off ISCIS on-line once the IP release date has been entered onto their case management system.
The Summer 2018 edition of DAS Digest has been published by the Accountant in Bankruptcy. It contains the latest on DAS statistics, case reviews and decisions and new regulations amongst other things.
HMRC increases late payment interest rate
Following the recent increase in Bank of England base rate, HMRC have increased the interest rate on late payments from 3% to 3.25%. The rate of interest repayable on early payment remains at 0.5%.
Fire safety duties for insolvency practitioners
Pinsent Masons have produced an article which serves as a useful reminder to IPs on their duties under fire safety regulations. Although the article focuses on the law in England and Wales, there are broadly similar duties and legislation which apply in Scotland.
McGleish – v – Tough & Leslie The Sheriff Appeal Court has considered, for what appears to be the first time, the question of whether in the context of a sequestration an insurance life policy is moveable property or a non-vested contingent interest and hence whether a life policy remains vested in the trustee for the duration of the sequestration or whether it reverts back to the debtor on their discharge. (via Shoosmiths and Scottish Financial News)
Application of the Joint Liquidators of Doonin Plant Limited for directions The Court of Session has issued an Opinion directing that costs associated with notices issued under Environmental legislation are expenses of a liquidation and not a claim in the insolvency. It also approved an application by the liquidators to have their remuneration paid in priority to the expense. (via BBM Solicitors)
Barker v Baxendale-Walker  EWHC 1681 (Ch) The High Court has ruled that a rule which gives UK courts the power to postpone bankruptcy while a court ruling that led to the bankruptcy is appealed, only applies when that appeal is in motion and not just because a party has asked for permission to appeal. (via Pinsent Masons)
Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd  EWHC 2043 (TCC) A recent TCC decision has ruled that adjudication proceedings cannot be brought by companies in liquidation in relation to financial claims under a construction contract. The decision would appear to run contrary to current liquidator practice, both as to the use of adjudication proceedings in liquidations and as to the assignment of claims to third parties, but essentially only confirms the mandatory nature of insolvency set-off. (via CMS Cameron McKenna Nabarro Olswang LLP)
Burnden Holdings (UK) Ltd v Fielding A recent decision of the Supreme Court may allow Scottish insolvency practitioners to bring claims against company directors, even if the claims are over five years old and, on the face of it, are out of time. (via Anderson Strathern)
MF Global  EWCA Civ 1327 The Court of Appeal has held that a CVA should be precluded from becoming effective where a ‘game changer’ claim of €126.7m was submitted after the CVA was approved but before the statutory bar on new claims had lapsed. (via Ashfords)
ICAS Insolvency and Restructuring news has gone digital