Consultation on Interim SIP 6(England & Wales) - Decision Making in Insolvency Proceedings
The Joint Insolvency Committee (JIC) is consulting on the operation of Interim Statement of Insolvency Practice 6 (England & Wales) published on 10 March 2017 and effective from 6 April 2017.
The Insolvency (England and Wales) Rules 2016 (the 2016 Rules) which came into effect on 6 April 2017 introduced legislative changes to the way formal decisions of creditors are obtained in insolvency proceedings in England and Wales.
As a result, SIPs 8, 10 and 12 no longer reflected expected standards of practice and in some instances conflicted with the new legislative provisions. These SIPs, were withdrawn for most England and Wales insolvency proceedings (see previous article) with Interim SIP 6(E&W) – Decision making in insolvency proceedings being introduced at that time.
Due to the time constraints of the implementation of the 2016 Rules and the need to ensure that insolvency practitioners continued to have an appropriate regulatory framework, the interim SIP 6(E&W) was issued without a public consultation.
The interim SIP 6(E&W) was developed by a working party of the Joint Insolvency Committee (JIC) comprising insolvency practitioners, representatives of HMRC and the Insolvency Service and approved by the RPBs with the proviso it would be issued for consultation prior to being issued in its final form on or around 31 December 2017.
In revising the SIP the following approach was adopted:
- The SIP adopts the principles and key compliance standards format used for all new SIPs;
- The SIP applies to office holders in all forms of insolvency proceedings, when obtaining a formal decision of the creditors via a deemed consent process or a qualifying decision procedure;
- The SIP additionally applies when assisting directors in their obtaining a decision of the creditors for the voluntary winding up of a company;
- SIP 10 and SIP 12 were largely superseded by specific provision within the new Rules. To the extent that regulatory provision was considered necessary in addition to the legislative requirements, this was incorporated into the principles and key compliance standards within SIP 6.
The former SIP 8 required significant amount of information to be provided to the meeting of creditors held under s.98 of the Insolvency Act. Given that in most instances, there will no longer be a physical meeting of the creditors for this purpose (appointment will usually be by deemed consent or virtual meeting), consideration was given to what information creditors might reasonably expect to make an informed decision and when that information ought reasonably to be provided. Elements of the information previously required by SIP 8 were retained in paragraph 12, but in a less prescriptive manner. The SIP provides that where they request it, this information should be available to creditors not later than the business day prior to the decision date.
JIC is now seeking views on the Interim SIP 6(E&W), including views on the operation of the requirements regarding the provision of information to creditors, in relation to decisions on the appointment of a liquidator to a CVL (see question 5).
JIC is interested in feedback as to whether the interim SIP prevents innovative practices in decision making or fails to prevent inappropriate practice. Question 8 is intended to capture respondents’ views on either of these topics.
The consultation issued on 1 September 2017 will run for 6 weeks, closing on 13 October 2017.
Any amendments thought necessary as a result of a review of the consultation responses will be made to the Interim SIP. This will be circulated to the authorising bodies for approval. Once approved the new SIP will be issued one month in advance of the date it comes into effect.