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Company Law

Analysis - guidance - compliance

Guildhall Chambers , 23 SEP 2015

Draft Insolvency Rules 2015

Draft Insolvency Rules 2015
On 22 July 2015 the Insolvency Service published a draft version of the new Insolvency Rules. It is not a final draft, and in fact it is to be the subject of further work and review by the Insolvency Rules Committee. It is close to being final though. The Insolvency Service envisages that the Rules will be made in Spring 2016 and will come into force in just over a year, on 1 October 2016.

The new Rules will be styled ‘The Insolvency Rules 2016’ and will be introduced by way of a Statutory Instrument. The latest draft is lengthy and runs to 387 pages. That length will only increase since some of the 10 existing draft schedules are currently unfinished. The present draft Statutory Instrument envisages a surprisingly straightforward transitional regime whereby the old Rules cease to apply and the new Rules start to apply on the day that the Insolvency Rules 2016 come into force.

The proposed new Rules are structured as follows: introductory provisions, 22 parts and 11 schedules. Some of the parts are organised into chapters. Part 1 contains new rules dealing with the scope and interpretation of the rules, time (there is also a new Schedule 5 which will deal with the computation of time periods) and finally rules about documents in insolvencies. In particular, the rules in part 1 will also standardise the contents of some of the various gazette and other notices and court applications which are to be delivered under the Act and the Rules.

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Parts 2 to 11 then deal with the different insolvency processes which are possible under the Insolvency Act 1986 (including receivership) whereas parts 14 to 21 are common parts. As in the current Rules, the corporate insolvency processes are dealt with first (parts 2 to 7) and the personal insolvency processes are then covered in parts 8 to 11. Part 12 contains the rules in relation to court procedure and practice; it retains the current rule 7.55 on formal defects in insolvency proceedings as new rule 12.65. Part 13 deals with Official Receivers.

The common parts are clearly aimed at streamlining the common stages which occur in insolvency processes, be they corporate or personal. So for instance, part 14 will cover proving and distributions in administrations, liquidations and bankruptcies. Part 18 will contain rules in relation to remuneration of office-holders and reporting. Part 15 deals with decision making in insolvency processes. In addition to streamlining the rules, part 15 also clearly introduces changes at a substantive level. For example, it introduces streamlined rules on ‘deemed consent’ and moves away from meetings of creditors being the default position in insolvencies.

The Explanatory Note which accompanies the draft Rules promises that the aims of the Rules include ensuring that the language of the Rules is simpler and more modern (for example by using the active voice) and incorporating substantive changes designed to reduce the burden of red tape.

In short: change is coming to insolvency procedural law. Watch this space.

Stefan Ramel, Guildhall Chambers. Stefan is co-contributor on Chapters 55 and 56 of Gore-Browne on Companies.
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