Enhancements made to insolvency in England and Wales

david-menzies By David Menzies, Director of Insolvency

1 October 2015

A number of measures are introduced on 1 October 2015 which will affect both corporate and personal insolvency appointments in England & Wales.

A number of measures affecting insolvency appointments in England & Wales take effect from 1 October 2015.

Fee estimates

The Insolvency (Amendment) Rules 2015 require IPs to provide creditors with an upfront estimate of their fees and expenses when charging any part of an IP remuneration on a time and rate basis. The new regime aims to increase transparency for creditors and give them an early indication of the costs of an insolvency case.

The new Rules apply only to administrations, creditor's voluntary liquidations (CVL), compulsory liquidations and bankruptcy in England & Wales.

For appointments on or after 1 October 2015 the rules introduce a requirement for the Insolvency Practitioner to provide a fees estimate where the IP wishes to take remuneration on time and rate basis. Creditors are required to approve estimate and any increase. The IP cannot draw remuneration above the amount in the fee estimate without obtaining the further approval of creditors. 

The fees estimate must be a written statement specifying:

  1. Details of the work the insolvency practitioner and his staff propose to undertake;
  2. The hourly rate or rates the insolvency practitioner and his staff propose to charge for each part of that work;
  3. The time the insolvency practitioner anticipate s each part of that work will take;
  4. whether the insolvency practitioner anticipates it will be necessary to seek approval or further approval to take remuneration above the amount set out in the fees estimate; and
  5. The reasons it will be necessary to seek such approval.

Regardless of basis of remuneration, office holders will be required to provide an indication of the likely work that will be needed and the anticipated expenses in a case. This is for creditor information only and does not require approval.

Estimates can be given up to completion of a case, or if not possible, up to a particular milestone or for a designated period.

An administrator, liquidator or trustee in bankruptcy must also make a statement in their progress reports stating whether their remuneration as set out in the fees estimate or any approval to increase that estimate or their  expenses are likely to exceed the details provided to the creditors and the reasons for this.

Further guidance on the application of fee estimates has been given by the Insolvency Service in Dear IP 68

The new Rules can be found here.

Debt relief limits (DROs) and creditor petition level increases

Two maximum limits, in place to restrict access to DRO, are increasing to make them accessible to more financially vulnerable people:-

  • The maximum level of debt will increase to £20,000 from £15,000
  • The maximum level of assets will increase to £1,000 from £300

This increase to the maximum asset level does not affect the separate limit for a vehicle which remains fixed at £1,000.

The bankruptcy creditor petition level is increased to £5,000 from £750. This is to remove the risk of bankruptcy and its costs from those individuals with small debts. 

Bank accounts – after acquired property in bankruptcy

Changes to the law governing 'after-acquired property' in bankruptcy in England & Wales will mean that  if account holders withdraw funds, banks will be protected from recovery action by trustees in bankruptcy if they had not received specific notice that the funds had been claimed as part of the bankruptcy estate.  As a result, trustees must ensure that they notify banks of a debtors bankruptcy as early as possible after the debtor has been declared bankrupt.

The banks have confirmed that they will provide basic banking facilities to bankrupt people following this change and as a result bankrupt people will have improved access to basic bank accounts.

This change mirrors provisions introduced in Scotland for sequestrations from 1 April 2015.

Other amendments

The Deeds of Arrangement Act 1914 is repealed.


  • Insolvency

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