Changes to SIP 2 and SIP 4
Find out about changes to Statement of Insolvency Practice 2 and Statement of Insolvency Practice 4 as new director conduct reporting requirements come into effect.
New legislative provisions concerning the reporting obligations of insolvency office holders on the conduct of those that formerly controlled a company come into effect from 6 April 2016.
Consequently, the existing Statement of Insolvency Practice 4 - Disqualification of Directors, will not be relevant to or appropriate for cases to which the new legislative provisions apply, although it will continue to be of application to cases to which the existing legislation applies. The existing legislation will be repealed on 6 October 2016, and the current SIP 4 will, therefore, be withdrawn concurrently with effect from that date.
Broadly speaking, conduct reports in insolvency procedures which are commenced after
6 April 2016 will be submitted under the new legislation, and will be required to be submitted within 3 months of the office holder’s appointment, via the new online reporting portal. Reports and returns due in respect of procedures which were commenced prior to 6April 2016 will continue to require the submission of a D1 or D2 form in the traditional manner. (See transitional provisions for full details of the application of the new regime.)
It is anticipated that the new reporting system will reduce the burden upon office holders to supply information and introduce efficiencies in the process for doing so. As is currently the case, conduct reports will be based upon information coming to light in the ordinary course of the office holder’s work.
The extent of the office holder’s investigations is currently set out in Statement of Insolvency Practice 2 - Investigations by Office Holders in Administrations and Insolvent Liquidations. Therefore, to reflect this and to assist practitioners by reducing the number of SIPs, the Joint Insolvency Committee (JIC) has agreed to revise Statement of Insolvency Practice 2 to include a number of additional paragraphs reflecting the new conduct reporting obligations, rather than producing a separate revision of SIP 4 for this purpose.
The existing Statement of Insolvency Practice 4 will remain in effective in respect of cases under the current regime, until its automatic withdrawal on 6 October 2016.
The revised SIP 2 - investigations by office holders in administrations and insolvent liquidations and the submission of conduct reports by office holders - has been developed by a JIC working group comprising members of the profession (from firms of different sizes) and creditor representatives. It does not seek to impose additional regulatory burdens upon practitioners. Given the timing of the new provisions, the JIC, in agreement with the Recognised Professional Bodies, concluded that it was appropriate to issue the revision of SIP 2 without prior public consultation.
The new SIP 2 will come into effect on 6 April 2016, for cases commenced after that date. This SIP will apply UK wide.
View our page on SIPs where you can download individual SIPs in PDF format.
Legislation giving effect to the changes:
- The Insolvent Companies (Reports on Conduct of Directors) (England and Wales) Rules 2016
- The Insolvent Companies (Reports on Conduct of Directors) (Scotland) Rules 2016
- The Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) (Reports on Conduct of Directors) (Northern Ireland) Regulations 2016
- Small Business, Enterprise and Employment Act 2015
- Deregulation Act 2015