Insolvency Technical Update - January 2018
Insolvency technical update – Your round-up of recent developments in insolvency
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A revised SIP 6 (E&W) - Deemed consent and decision making procedures in insolvency proceedings – became effective on 1 January 2018. The revised SIP follows the issuing of an interim SIP 6 (E&W) and consultation earlier this year. Further details are available here.
A revised SIP 11 - Handling of funds in formal insolvency appointments – became effective 1 January 2018. IPs should ensure:
- that in their practice, they have fully documented the financial controls and safeguards, including levels of insurance cover
- they have procedures to review the financial controls and safeguards at least annually
- that estate money is held in accounts which meet the account criteria set out in the SIP. Further details are available here.
Closure of ISA estate accounts
The Insolvency Service have issued information on the process of closing ISA estate accounts following the amendments to the Insolvency (E&W) Rules 2016 introduced on 8 December.
The Contract (Third Party Rights) Scotland Act 2017
The Contract (Third Party Rights) (Scotland) Act 2017 comes into effect on 26 February 2018 allowing parties to a contract to confer a right or immunity from liability on a person/entity who is not a party to the contract. Further information and the implications for IPs are available in this article
Notifying HMRC in relation to CVLs
HM Revenue & Customs (HMRC) have announced new procedures to allow them to receive notification of deemed consent and meeting notifications in relation to CVLs. From 1 January 2018 all initial pre-appointment notifications for the deemed consent or virtual meeting procedures for CVLs should be sent to a designated HMRC mailbox (email@example.com). Further information is available here.
Tax return requirements for MVLs
Given the recent HMRC attention relating to statutory interest in MVLs, it is perhaps worth reviewing guidance issued previously by HMRC on the company tax return requirements for MVLs and company strike off applications. This includes examples of HMRC’s approach in dealing with such cases.
RPO claims where the employer is not a company, LLP or an individual
The Employment Rights Act 1996 and Pension Schemes Act (Amendment) Regulations 2017 came into effect on 26 December 2017. This formally allows RPO claims to be made by employees of insolvent employers who are not companies, individuals or LLPs . The RPO were in practice accepting such claims and therefore the regulations do not have any practical implications.
Dear IP 79
The Insolvency Service issued Dear IP 79 on 22 December 2017. This edition contains information on notification of CVL appointments to HMRC, RPO changes and amended E&W Insolvency Rules.
Funding the Accountant in Bankruptcy - consultation
The Accountant in Bankruptcy have launched a consultation on proposed changes to the fees payable to the AiB from 1 June 2018. The consultation closes on 12 March 2018.
Grampian MacLennan's Distribution Services Ltd v Carnbroe Estates Ltd – The Inner House of the Court of Session has overturned an earlier decision of the Court of Session, ruling that the distressed sale of a major asset was a gratuitous alienation and providing clarification to the proper meaning of ""adequate consideration"" in the context of a defence to a gratuitous alienation claim. (via TLT LLP)
Promontoria (Henrico) Limited v The Firm of Portico Holdings (Scotland) and others - Assignation of Securities – The end of the OneSavings effect? (via Addleshaw Goddard)
Lehman Brothers International (Europe) - Statutory interest paid by a company in administration must have tax deducted, says Court of Appeal (via Pinsent Mason)
Ball (liquidator of PV Solar Solutions Ltd) and another v Hughes and another  EWHC 3228 (Ch) - Directors' breached fiduciary duties when a company is of 'dubious solvency' (via Pinsent Mason)
Simmonds v Pearce - Failure to co-operate with trustee and comply with section 333 of the Insolvency Act 1986 constitutes contempt of court. (via Taylor Wessing)
Stevensdrake Limited (trading as Stevensdrake Solicitors) -v- Hunt  EWCA Civ 1173 CA - Court of Appeal uphold that an office holder is not personally liable for legal fees unless expressly contracted to do so (via Ashfords LLP)