Insolvency technical update – May 2020
By David Menzies CA, Director of Practice
2 June 2020
Insolvency technical update – your round-up of recent developments in insolvency.
Coronavirus
This update relates to matter not directly linked to the coronavirus crisis. For coronavirus updates please go to the regularly updated A-Z of all things insolvency amid the coronavirus outbreak.
Corporate Insolvency and Governance Bill
The Corporate Insolvency and Governance Bill was laid in Parliament on 20 May 2020 and is likely to come into force as the Corporate Insolvency and Governance Act 2020 later in June, with MPs due to consider all stages of the Bill on 3 June 2020.
The government previously consulted on changes to the corporate insolvency regime and announced plans to introduce new insolvency restructuring procedures in August 2018. The new legislation will, in large part, implement those plans.
The overarching objective of the legislation is to provide businesses with the flexibility and breathing space they need to continue trading and avoid insolvency during this period of economic uncertainty.
A series of articles has been produced by ICAS looking at the various insolvency measures introduced by the new legislation.
Factsheets have also now been published by the Insolvency Service. These are designed to explain the detail of the Bill in a more accessible way.
The Bill will be the subject of an Ask ICAS webinar on 25 June.
Consultation on Statements of Insolvency Practice
The Joint Insolvency Committee (JIC) is consulting on changes to a number of Statements of Insolvency Practice (SIPs) including SIP 3.1 - Individual voluntary arrangements, SIP 3.2 - Company voluntary arrangements, SIP 7 - Presentation of financial information in insolvency proceedings and SIP 9 - Payments to insolvency office holders and their associates
The JIC recognises that these are testing times. But these are only proposed changes. There is no intention to amend the SIPS without careful consideration of the responses received and any plan to introduce changes will take into account any continuing challenges faced by the insolvency profession.
Further details about the consultation can be found in an article on icas.com.
The consultation closes on 20 July 2020 and responses should be emailed to swood@icas.com.
ICAS Code of Ethics for Insolvency Practitioners
A revised and restructured Code of Ethics was introduced by ICAS on 1 January 2020. The new revised and restructured Part 5 of the 2020 ICAS Code of Ethics for Insolvency Practitioners came into effect on 1 May 2020.
An article was previously produced to accompany the publication of Part 5 and further articles looking at inducements and the IP as an employee have been produced.
Protected Trust Deeds
Following its inquiry, the Economy, Energy and Fair Work Committee has published a report on protected trust deeds citing that changes are needed to make the debt solution more effective in supporting people who are in debt.
Some of the conclusions and recommendations in the report include:
- an overarching debt review should be undertaken during the current parliamentary session.
- when entering any debt solution, the debtor's payments should contribute to reducing their debt from the outset.
- the AiB should provide agreement before a trustee can refuse to discharge a debtor from a PTD.
- the Scottish Government should consider how access to free sector money advisers could be encouraged and built into the process before a debtor signs a PTD, with a recommendation that different funding options are explored to enhance the capacity of the free money advice sector, including the use of a levy on money paid through statutory debt options.
- the minimum debt level to enter a Protected Trust Deed should be increased.
Dear IP 101
Dear IP 101 has been issued by the Insolvency Service. Aside from coronavirus-related matters, the update introduces the Corporate Insolvency and Governance Bill.
RP1 factsheet for employees
The Redundancy Payments Service RP1 factsheet for employees made redundant by an insolvent employer has been redrafted.
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