Ready, set, go! Insolvency Rules are changing

david-menzies By David Menzies, ICAS Director of Insolvency

2 November 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.

The long awaited publication of The Insolvency (England & Wales) Rules 2016 has finally taken place. With that the starting gun has been fired for IPs and their firms to commence preparing for what some have described as the biggest change in insolvency working practice in over 30 years.

The new rules will replace the Insolvency Rules 1986 and their 28 subsequent amendments.

At 448 page plus a 7 page explanatory memorandum getting to grip with the new rules is not an easy task. The Insolvency Service have at least helpfully prepared a Table of Derivations which sets out how the new rules have derived from the current Insolvency Rules 1986, however there is rarely an exact match as the structure of the 2016 Rules is different, the language has been modernised and there have been significant changes from new legislation incorporated.

What is different?

The rules have been recast to reflect modern business practice and to commence various changes brought in through the Small Business Enterprise and Employment Act 2015 and Deregulation Act 2015. Changes include:

  • Enabling electronic communications with creditors
  • Removing the automatic requirement to hold physical creditors meetings, although creditors will be able to request meetings
  • Enabling creditors to opt out of further correspondence and for small dividends to be paid by the office holder without requiring a formal claim from creditors

The new rules have taken the approach of treating many more areas as common parts rather than duplicating the provisions within the rules for each insolvency procedure. Areas included as common parts include for example, claims by and distributions to creditors, proxies and corporate representation and creditors’ and liquidation committees. The common parts are contained in Parts 14-22 of the new rules.

The new Rules have also separated the three types of liquidation into dedicated parts (Parts 5, 6 and 7 of the new Rules) to aid clarity.

In general, the transitional provisions require that the new rules will apply to all cases and not just new cases after 6 April 2017. There are some saving provisions so that for instance meetings called before commencement of the new rules will still take place under the old rules and provisions in relation to electronic communication will only apply to new cases.

Start preparing for change

The changes introduced by the new rules will have significant implications for the way IPs conduct and administer insolvency cases, both old and new. The new rules have removed all prescribed forms which are currently used and instead only prescribe the content of notices.

IPs and their firms will require to have updated checklists, diaries, template letters and new forms created over the next few months to be ready for the new rules commencing on 6 April 2017.

Over the coming weeks ICAS will provide further information and guidance on the main changes and the implications of the new rules and will support IPs through the changes through courses and presentations. We would encourage all IPs to ensure they take every opportunity to gain a detailed working knowledge of the new rules and to ensure that staff are appropriately engaged in the process also.

The Insolvency Service have indicated that later in November they will launch an online community where questions may be asked of their technical team and share your comments with other insolvency professionals.


  • Insolvency
  • Legislation

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