Insolvency technical update: November 2016
A round-up of recent developments in insolvency
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Bankruptcy (Scotland) Act 2016
The Bankruptcy (Scotland) Act 2016 and supporting Regulations come into effect from 30 November 2016. With minor exceptions, the new legislation will apply to all petitions and applications for sequestration made on or after 30 November 2016.
The 2016 Act also brings protected trust deeds into primary legislation and will apply to trust deeds signed on or after 30 November 2016.
Sequestration and trust deed checklists
The ICAS checklists for sequestration and trust deeds have been updated as a result of the Bankruptcy (Scotland) Act 2016. These are available free of charge and can be downloaded from icas.com (member login required).
Trust deed template
The ICAS style of trust deed has been updated to take account of the Bankruptcy (Scotland) Act 2016. The style of trust deed is available to be used under licence from ICAS. ICAS regulated IPs may obtain a licence to use the style free of charge. A licence can also be granted to any non-ICAS regulated IP on payment of a fee. Enquiries about the trust deed style should be emailed to firstname.lastname@example.org.
Bankruptcy and Debt Relief Orders (Northern Ireland)
Legislation has been laid in the Northern Ireland Assembly to bring in changes to bankruptcy and debt relief orders (DRO) in Northern Ireland. This shall bring matters in Northern Ireland into line with equivalent procedures currently in force in England & Wales. The changes require Assembly approval and are expected to come into force on 30 November 2016. Further details are available here.
SIP 13 disposal of assets to connected parties in an insolvency process
An updated SIP 13 was issued on 1 November 2016 and becomes effective on 1 December 2016. The SIP applies to connected party transactions in both corporate and personal insolvency. Further information
Professional conduct in relation to tax
ICAS and the other leading UK accountancy and tax bodies have published updated guidance on the standards expected of advisors and agents. The guidance has been endorsed by HMRC and sets out clear professional standards in relation to the facilitation and promotion of tax avoidance. MVL and restructuring assignments will often have significant tax aspects to them and therefore the guidance is likely to apply to IPs who are members of the relevant bodies.
The new guidance includes a new standard which makes clear that members “must not create, encourage or promote tax planning arrangements or structures that (i) set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation, and/or (ii) are highly artificial or highly contrived and seek to exploit shortcomings within the relevant legislation.” Such behaviours would lay a member of one of the bodies open to disciplinary action.
The Insolvency Service have published Dear IP 73. Topics covered in this issue include information on the Insurance Act 2015, closing an estate account held with the Insolvency Service Account, Enforcement of requirement by office holders to provide information under CDDA 1986, and how the new compensation regime under CDDA will affect office holders.
Insolvency (England & Wales) Rules 2016
Significant changes to the way insolvency procedures are conducted will come into effect in April 2017. Find out what action needs to be taken now to be prepared.
Small claims procedures
Changes to the way courts deal with smaller debt actions changed on 28 November 2016. Find out what is changing and its likely impact.
Dooneen Ltd & Othrs v Mond – Following an unsuccessful appeal to the Inner House of the Court of Session, an application to appeal to the Supreme Court was heard by the Court of Session on 9 November 2016. Permission to appeal to the Supreme Court was refused. It is understood that the respondent is currently considering whether to apply directly to the Supreme Court for permission to appeal.
Re Kiss Cards Ltd  EWHC (2176) – The High Court considered in this case whether excessive remuneration can be challenged as an undervalue transaction (via Taylor Wessing)
Lomas and others v HMRC  EWHC 2492 (Ch) – The High Court confirmed that statutory interest payable on insolvency is not 'yearly interest' for UK tax purposes. The administrators therefore had no obligation to account for income tax on the interest payments made. (via RPC)
Marshalling of Agricultural Charges - The High Court has recently held that an individual may claim the proceeds of the sale of assets subject to an agricultural charge by the application of the equitable remedy of marshalling. (via Squire Paton Boggs)
Lehman Bros (in admin) v ExxonMobil  EWHC 2699 (Comm) – The High Court considered the meaning of ‘close of business’ in relation to a notice delivered under an agreement. The answer may surprise you! (via Charles Russell Speechlys LLP)
Consultation on insolvency bonding
The Insolvency Service has issued a consultation on bonding arrangements for insolvency practitioners. The consultation closes on 16 December 2016.
Consultation on Scottish diligence
The Accountant in Bankruptcy has issued a consultation on diligence including diligence introduced under the Bankruptcy and Diligence etc. (Scotland) Act 2007. The consultation closes on 30 November 2016.
Common Sanctions Guidance
The Insolvency Service have published an updated version of the Common Sanctions Guidance
Professional development opportunities from ICAS
A number of courses are being run by ICAS/BPP in the next few months: