Insolvency technical update – January 2022
Insolvency technical update – your round-up of recent developments in insolvency
Insolvency Service consultation: The Future of Insolvency Regulation
As advised in last month’s technical update, the Government has released a consultation paper setting out new proposals to reform the regulation of the insolvency profession.
A summary of the proposals has now been published on the ICAS website.
The consultation closes on 25 March 2022 and ICAS encourages its Members and Affiliates to respond to it directly.
ICAS will be responding to the consultation and also welcomes views and comments to feed into that response, which should be emailed to email@example.com in the first instance.
National Security and Investment Act 2021
The Act came into effect on 4 January 2022 and modernises the government’s powers to investigate and intervene in mergers, acquisitions and other deals that could threaten the UK’s national security.
While the vast majority of acquisitions will be unaffected by this legislation, acquisitions of ‘qualifying entities’ that meet certain criteria, in 17 sensitive areas of the economy (called ‘notifiable acquisitions’) must be notified to government prior to completion. The detailed coverage of the 17 sensitive areas is extensive and IPs should be aware of the possibility of undertaking asset sale transactions in these areas. IPs should also be ensuring that they have amended checklists to ensure consideration is given to this at an early stage (and potentially before) in relation to an appointment.
A general article on the Act is available which contains links to Government guidance and resources such as flowcharts on whether a transaction should or may wish to be notified.
Coronavirus (Recovery and Reform) (Scotland) Bill
Legislation proposing the permanent adoption or temporary extension of some measures enacted during the coronavirus pandemic has been published by the Scottish Government.
The Coronavirus (Recovery and Reform) (Scotland) Bill (‘the Bill’) proposes changes in 30 specific legislative areas, which were modified by temporary provisions made under Scottish and UK coronavirus legislation.
An article will follow on the ICAS website summarising the proposed measures in the Bill that would impact restructuring and insolvency. Those proposed changes for bankruptcy 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 to be allowed by electronic transmission.
- Remote meetings of creditors.
HMRC Insolvency Guidance – incorrect treatment of HMRC claim
HMRC has issued guidance for IPs to counter instances where HMRC considers that IPs are incorrectly denying or reducing HMRC’s claim when considering it for voting purposes in a decision procedure, particularly where the insolvent person or others may dispute the amount due to HMRC.
Updated HMRC Insolvency Guidance - case queries mailbox
On 4 November 2021, HMRC introduced a dedicated mailbox for insolvency related cases - firstname.lastname@example.org. HMRC has subsequently requested that the following message be circulated:
“We recently launched our new mailbox email@example.com on 04/11/21. Since then, we have received a significant number of case queries and today would like to issue a gentle reminder around the criteria when contacting us.
We ask that you use this route only when contacts via the normal channels have failed to elicit a response, despite repeated attempts.
To allow us to help you, we ask that in every case, whether that may be Option 1 or 2, the contact form is completed providing full details of your query and this is attached to your email. Without a contact form, we will be unable to deal with your query. We do not require any additional attachments. Our response time continues to be 15 working days.
We will not respond to emails noted as complaints. HMRC’s published complaints procedure should be followed as usual”.
Guides for creditors on insolvency practitioner fees
Updated guides for creditors on insolvency practitioner fees in Administration, CVA and Liquidation are now available to download.
Please note that the short URL www.icas.com/creditorguides can be used by firms referencing the location of the guides in their letterpacks.
Dear IP 141 has been issued by the Insolvency Service. The edition features HMRC updates on the incorrect treatment of claims and mailbox for case queries as well as information about contacting the Insolvency Service regarding DCRS and details of the new directors’ questionnaire issued by RPS to replace the RP3 form.
Energy company insolvencies
The Insolvency Service has received information from Ofgem about areas in which they are working with IPs who are seeking Court Directions. The Insolvency Service has asked for the information to be shared as it may be of use to other IPs who are considering seeking the Court’s views on the same matters.
The administrators for a supplier that failed in 2018 are seeking directions from the court on the following issues:
- Whether a supplier of last resort (SoLR) may have a claim in the insolvency of a failed energy supply company (ESC) by virtue of the SoLR having honoured the credit balances owed by the failed ESC to its customers. This is of importance to Ofgem because ESCs can claim the costs that they incur by acting as a SoLR from an industry levy. Any sums that they can recover from the failed ESC would reduce such a levy claim, and the burden on consumers’ bills.
- Whether Ofgem, as the administrator of environmental and social schemes in the energy sector (largely, the renewables obligation scheme and the feed-in tariffs scheme) continues to have a claim in the insolvency of a failed ESC once Ofgem has “mutualised” the shortfall caused by the failed ESC’s non-payment by charging other ESCs.
Companies House forms for insolvency
Companies House has published forms relevant to the moratorium process introduced by the Corporate Insolvency and Governance Act 2020.
The Insolvency Practitioners (Recognised Professional Bodies) (Revocation of Recognition) (Revocation) Order (Northern Ireland) 2022
The above Order came into operation on 5 January 2022.
This Order has revoked the Insolvency Practitioners (Recognised Professional Bodies) (Revocation of Recognition) Order (Northern Ireland) 2021, which was due to come into operation on 6 January 2022.
Consequently, The Law Society and the Association of Chartered Certified Accountants remain recognised by the Department for the Economy for the purposes of authorising persons to act as Insolvency Practitioners.
The Money Laundering and Terrorist Financing (Amendment) Regulations 2022
The above Regulations come into force on 9 March 2022.
The Regulations amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, mainly changing the time limits for registration of trusts but also adding further exclusions to the type of trusts which are required to register.
Corporate Insolvency and Governance Act 2020 (Coronavirus) (Early Termination of Part 2 of Schedule 8) Regulations (Northern Ireland) 2022
The above regulations come into operation on 14 February 2022.
The regulations provide that Part 2 Schedule 8 to the Corporate Insolvency and Governance Act 2020 ceases to have effect on 14 February 2022. That Part made certain temporary modifications to the Insolvency (Northern Ireland) Order 1989.
ICAS Ethics Buddy Service
ICAS has introduced the Ethics Buddy Service. The service will enable Members facing an ethical problem, where deemed appropriate, to have confidential and informal discussions with an experienced Member to explore the matter and assist them in considering how they might approach it.
Riley Sports Bars (2014) Limited (in administration) against CGW Snooker LLP A Court of Session judgment that serves as a reminder that it can’t be assumed that a landlord will give consent to an assignation and that it is up to the tenant to prove that consent to assignation was unreasonably withheld.