Insolvency Technical Update - April 2017
Insolvency technical update – Your round-up of recent developments in insolvency
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Insolvency Rules (England and Wales) 2016
The Insolvency (England & Wales) Rules 2016 came into effect on 6 April 2017. A series of articles have been published on our website dealing with the main areas of change brought in.
From 6 April 2017 SIPs 8, 10 and 12 is withdrawn for most insolvency procedures in England and Wales. On the same date a new interim SIP, SIP 6 (England and Wales) – "Decision Making" comes into effect. Further details on the new SIP 6 is available. Information on procedures where SIPs 8,10 and 12 will continue to apply are available.
The Insolvency Service have made available a series of templates which will ensure compliance with certain notices that need to be provided under the Insolvency (England and Wales) Rules 2016. In addition, there is a downloadable archive of Forms used under the Insolvency Rules 1986 available for transitional arrangements under the Insolvency (England and Wales) Rules 2016.
Companies House Forms
Companies House have published forms to assist with filing requirements under the Insolvency (England & Wales) Rules 2016.
The Insolvency Service have issued Dear IP 76 setting out their views regarding common query themes on how the Government policy intentions are supported by the Insolvency (England & Wales) Rules 2016.
Sequestration and PTD legislation changes
The Bankruptcy and Protected Trust Deeds (Miscellaneous Amendments) (Scotland) Regulations 2017 have been laid in the Scottish Parliament and will come into effect on 1 May 2017. The Regulations amend minor errors in the Bankruptcy (Scotland) Regulations 2016. In addition, minor errors in the forms contained in the Protected Trust Deeds (Forms) (Scotland) Regulations 2016 are also corrected.
The Accountant in Bankruptcy have issued a 'Dear Trustee' letter relating to payments to associated companies. This was issued without consultation with the RPBs. It is noted that adhering to the 'Dear Trustee' requirements will in some instances not ensure compliance with the requirements of the Code of Ethics, SIP 7 and SIP 9 (Scotland). IPs are reminded that they must comply with the Code of Ethics and professional standards.
Statutory redundancy pay and minimum wages
The maximum amounts payable under statutory redundancy pay together with other employee statutory entitlements such as the national minimum wage and national living wage increased from 1 April 2017. Further details are available.
Pre Pack Pool
The Pre Pack Pool has issued a report on their first 14 months of operation. 53 applications were received (representing around 1 in 4 connected party pre packs) with around 90% saying that it was not unreasonable for the pre-pack to proceed.
ICAS and ICAEW have jointly issued guidance to identify, interpret and apply the principles relating to the determination of realised profits and losses for the purposes of making distributions under the Companies Act 2006. An understanding of the guidance will be useful to IPs seeking to challenge unlawful distributions after a company enters an insolvency process.
Finance Bill 2017
Proposals to change how carry forward losses could be utilised have been dropped from the Finance Bill 2017. The proposals would impact financially distressed company restructurings. This follows Parliament's decision to call an early general election which means that there is insufficient time to consider and scrutinise all aspects of the proposed Bill before Parliament is dissolved.
HR1 - Advance notification of proposed redundancies
An updated Form HR 1 has been issued by the Insolvency Service. The updated version removes reference to a fine limit of £5,000. Failure to provide the notification to the Secretary of State is a criminal offence (section 194, TULRCA) with liability on summary conviction to a fine not exceeding level 5 on the standard scale. Since 12 March 2015, level 5 criminal fines have been unlimited.
Accountant in Bankruptcy Stakeholder events
The AiB are running a series of stakeholder events in May 2017 to engage with stakeholders from across the debt and insolvency sector. You can book to attend one of the events.
OneSavings Bank plc v Burns & Burns  SC BAN 20 Banff Sheriff Court has found that standard securities had not been properly assigned as part of a bulk debt purchase arrangement. (NB - An appeal is understood to have been lodged).
Astor Management AG v Atalaya Mining plc The High Court in England considered how ‘reasonable endeavours’ should be assessed as part of contractual disputes. (via Mayer Brown LLP)
Dooneen Ltd v Mond The Supreme Court have granted permission to appeal the Inner House decision of the Court of Session. It is anticipated that the Supreme Court will hear the case towards the end of 2017.
Thomas & Another -v- Frogmore Real Estate Partners GP Limited & OthersThe Court considered whether the appointment of an Administrator was made for an ‘improper motive’. (via Gilson Gray)
JCAM Commercial Real Estate XV Limited v David Haulage Limited The Court of Appeal comments on the use of a Notice of Intention to Appoint makes it clear that where there is no qualifying floating charge holder then a Notice of Intention to Appoint cannot be used to create ‘breathing space’ prior to an administration appointment. (via Irwin Mitchell)