When do the Insolvency Rules 2016 apply?
This article forms part of a series looking at the significant changes to insolvency procedures being brought in from 6 April 2017 by The Insolvency (England & Wales) Rules 2016.
In this article, David Menzies explains when the new rules will apply.
The approach taken to the introduction of the 2016 Rules is different from the norm. Historically, new rules have applied only to new cases commenced after the introduction of the new rules. Broadly, the 2016 Rules will apply to all existing cases at 6 April 2017 as well as new cases commenced after that date. However, there are some exceptions (set out in Schedule 2 to the 2016 Rules), the mains ones are:
The requirement under Rule 1.39 for an office holder to provide information to a creditor in the first communication with them on the right to opt out, does not apply where an office holder has communicated with the creditor before 6 April 2017.
Electronic delivery of documents
Deemed consent to receive documents by electronic delivery (through the creditor and insolvent having communicated electronically by way of custom prior to the insolvency proceeding) will only apply to new cases from 6 April 2017.
Statement of affairs
Provisions relating to statement of affairs in the 2016 Rules will only apply to new cases on or after 6 April 2017. Pre-6 April 2017 cases will continue to apply the 1986 Rule provisions.
Part 15 of the 2016 Rules will not apply to creditor or contributory meetings where:
- the notice was issued before 6 April 2017 but where the meeting will be held after that date; or where a creditor or contributory has before 6 April 2017 made a request for a meeting to be held; or
- where a para 52(1)(b) statement in administration has been made and a request has been made to hold an initial meeting before 6 April 2017; or
- the case is a CVL with a winding up resolution date pre-6 April 2010.
Resolutions by correspondence
Where resolutions by correspondence have been issued before 6 April 2017 then the rules relating to those resolutions under the 1986 Rules shall continue to apply to any meetings which the office holder is required to call under those rules.
Where a final progress report has been issued before 6 April 2017 in respect of a liquidation (inc. MVL) or bankruptcy but the final meeting is held after 6 April 2017 the 1986 Rules shall continue to apply to that meeting.
Any application to Court arising out of meetings, final meetings or meetings in connection with resolutions by correspondence where the 1986 Rules continue to apply will require to be made in accordance with Part 12 of the 2016 Rules.
Progress reports and statements to the registrar of companies
Where an office holder is required to prepare a progress report before 6 April 2017 but has not done so at that date the 1986 Rules (r2.47, r2.49B, r2.49C and r6.78A) will continue to apply.
Where an admin is being converted to a CVL and the notice has been sent to the registrar before 6 April 2017 but not registered by the registrar until after 6 April 2017 then the final administration progress report must be sent in accordance with r2.117A(1).
The provisions of the 2016 Rules relating to progress reports do not apply to bankruptcy or compulsory liquidation cases commenced before 6 April 2010.
R4.223 will also continue to apply to CVLs commenced before 6 April 2010 as it applied at that date. Similarly, the requirement to provide annual progress reports under s104A of the 1986 Act will continue for CVLs which were exits from administration prior to 6 April 2010.
Foreign currency conversion
Any conversion rate applied to an application, claim or proof of debt before 6 April 2017 will continue to apply for the purpose of converting a distribution after 6 April 2017. Where a conversion rate has been used only for the purposes of voting prior to 6 April 2017 then the office holder may use either the same or an alternative rate for other purposes post 6 April 2017.
The 1986 rules relating to CVA moratoria will continue to apply where the directors have submitted the documents to the nominee before 6 April 2017.
Priority of expenses of a voluntary arrangement
Where a winding up or bankruptcy petition (or bankruptcy application) is made before 6 April 2017 then the 1986 Rule applicable to the priority of an existing voluntary arrangement expenses will continue to have effect.
General powers of liquidator
Rule 4.184 remains applicable to a person dealing in good faith and for value with a liquidator in a compulsory winding up and in respect of the power of a liquidation committee or court to ratify a transaction carried out without permission.
Applications before the courts
Applications to court or petitions filed prior to 6 April 2017 but not yet dealt with shall remain under the 1986 Rules.
Forms in Schedule 4 to the 1986 Rules will continue to be used only in respect of Statement of Affairs where the case pre-dates 6 April 2017, the forms relates to a meeting of a type listed in Meetings above, the form relates to a resolution by correspondence issued before 6 April 2017, or the form relates to an application or petition to the court presented before 6 April 2017.
The 1986 Rules continue to apply to administrations where the administration order was made before 15 September 2003.
Set-off and future debts
For administrations and liquidations pre-1 April 2005, the 1986 Rules as they applied before 1 April 2005 apply. In addition, for these cases and bankruptcies where the order was made before 1 April 2005, the 1986 Rules as they applied before 1 April 2005 continue to be applied for the purposes of calculating the future value of a debt for dividend purposes.
The fee estimate provisions do not apply to pre-1 October 2015 cases and the 1986 Rules continue to apply for pre-1 October 2015 cases as they applied at that time. Paragraphs 4 and 5 of r18.20 will also not apply for pre-1 October 2015 administration cases where the administration is exited by CVL under paragraph 83 on or after 6 April 2017 and the administrator becomes the liquidator, or where the appointment of an administrator comes to an end and the court appoints the same person as liquidator under section 140(1) of the 1986 Act after 6 April 2017.
Planning for implementation
It is perhaps worth stating what may be the obvious, but in planning for the implementation of the 2016 Rules it is worthwhile making sure that any cases which pre-date 6 April 2010 and which remain open, are closed, if possible. In addition, it is probably useful to try and ensure as far as possible that meetings, resolutions, applications to court, etc. which may straddle 6 April 2017 are minimised.