Annual and final reports: The Insolvency (England & Wales) Rules 2016
This article forms part of a series looking at the significant changes to insolvency procedures being brought in from 6 April 2017. In this article, David Menzies looks at the changes relating to reporting.
Under the new structure of The Insolvency (England and Wales) Rules 2016 (the 2016 Rules), many of the reporting requirements are moved into Part 18 as part of common requirements. That Part applies only to administrations, winding up and bankruptcy.
The 2016 Rules will give effect to changes made to the Insolvency Act 1986 (the 1986 Act) by the Small Business Enterprise and Employment Act 2015, one significant change of which is the abolition of annual and final meetings. These are replaced with progress reports and final reports. Any resolutions which would previously be put to those meetings will be subject to decision making procedures.
Report timing and content
The contents of the progress reports are set out in rules 18.3 – 18.5. The frequency of the progress reports remains unaltered from the previous rules – six monthly in administrations and annually in winding up and bankruptcy.
Where there is a change in office holder during the insolvency process, the reporting cycle is unaffected. The new office holder is instead only required to give notice to creditors ‘of any matters about which the [office holder] thinks creditors (or members in the case of an MVL) should be informed.’ This is open ended and discretionary on the new office holder, so I suspect is likely to result in very few such notices being issued.
Consideration of whether to issue such a notice may be influenced by matters such as information already provided to creditors under the decision-making process for the change in office holder, timing of the next progress report, whether there is a change in office holder from within the same practice or from a different practice, etc.
It is worth noting that a progress report is no longer explicitly required when seeking consent from creditors or the court to extend an administration. Instead the administrator is only required by rule 3.54(2) to send ‘the reasons why the administrator is seeking an extension’ along with the notice or application.
With final meetings removed from statute, the process of a final report and obtaining the office holders release and discharge also changes. The detail for each of the insolvency processes is contained within the relevant part of the 2016 rules (rules 5.9 and 5.10 for MVLs; rule 6.28 for CVLs; rule 7.71 for compulsory liquidations; and rule 10.87 for bankruptcies).
In summary, with the exception of administrations, a final account or report is issued (the contents of which are set out in rule 18.14) and the office holder will vacate office slightly over eight weeks afterwards. However, if a request or court application is made for further information to be provided under rule 18.9 or an office holder’s remuneration is challenged as being excessive under rule 18.34 then the office holder’s vacation of office does not take effect until those matters are finally determined.
For administrations, it is a final progress report that is issued, the contents of which are set out in rules 3.53 and 18.3. The process of exiting administration is set out in rules 3.54 to 3.61 depending on the exit route chosen.