The Insolvency (England & Wales) Rules 2016: SIP6 - Decision Making
Several changes to SIPs have been made by the RPBs to reflect changes being made from 6 April 2017 through the commencement of the Insolvency (England and Wales) Rules 2016 (the 2016 Rules).
The RPBs have issued an interim Statement of Insolvency Practice 6 (England and Wales) – Decision Making (SIP 6) and will withdraw the following Statements, in England and Wales only. The changes will take effect from 6 April 2017.
- SIP 8 (England and Wales) - Summoning and holding meetings of creditors convened pursuant to section 98 of the Insolvency Act 1986 (SIP 8)
- SIP 10 (England and Wales) – Proxy forms (SIP 10)
- SIP 12 (England and Wales)– Records of meetings in formal insolvency proceedings (SIP 12)
The equivalent SIPs in Scotland and Northern Ireland remain in force.
The 2016 Rules include changes in relation to how decisions are made. A number of the existing Statements of Insolvency Practice (SIPs 8, 10 and 12) will no longer reflect expected standards in light of the new legislation, and in some instances would have conflicted with the incoming legislative provisions.
The new SIP 6 has been developed by a working party of the Joint Insolvency Committee comprising insolvency practitioners, representatives of HMRC and the Insolvency Service, and approved by the RPBs on an interim basis.
The following approach has been used in revising the SIP:
- 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;
- 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 the first instance the new legislation prevents a physical meeting of the creditors being called 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. Consequently, elements of the information previously required by SIP 8 have been retained in paragraph 12, but in a less prescriptive manner. This information should be available to creditors not later than the business day prior to the decision date, where they request it. This is intended to be a proportionate provision, the operation of which will be specifically reviewed in the consultation which will follow the issuing of this SIP (see below).
- SIP 10 and SIP 12 have been 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 has been incorporated into the principles and key compliance standards within SIP 6.
Due to the time constraints of the 2016 Rules implementation and the need to ensure that IPs continue to have an appropriate regulatory framework in which to work concurrently with the 2016 Rules implementation date, it was necessary to issue the SIP without a public consultation. The SIP is therefore issued on an interim basis. It is intended that the SIP will be consulted upon, reviewed and amended (if necessary) before being issued in its final form on or around 31 December 2017.