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From 6 April 2017 the most radical change to insolvency legislation in 30 years will come into effect laying way for huge changes to the way insolvency cases are managed…… or not.

Whilst the changes are significant to our view they are 10 years behind the rest of the world and are now only just starting to catch up. This series of blog posts will introduce the new rules and how they will affect you and your clients when considering entering insolvency proceedings.

These posts will also take you through the “innovations”, now enforced upon Insolvency firms, which the team behind Business Rescue Expert have already been incorporating into practice for a number of years.

This introduction will take you through the biggest change to the legislation and will give a brief and links to the broken down subcategories as to how these changes will affect you. It should be noted that these changes will apply to all cases from 6 April 2017 and will not just apply to new cases.

What insolvency practitioners have been waiting for

To kick things off I can announce that the biggest change to the insolvency legislation is…………. all of the rules have a different number. That’s right; the most noticeable change for insolvency professionals when they open their new edition of the big red book is that nothing is in the same place anymore.

The law makers have cleverly described this as Consolidation of the Provisions, by taking the 3 types of liquidation and splitting them into separate sections of the Insolvency Rules. The previous 13 subsections and 6 Schedules of the Insolvency Rules 1986 have now been consolidated down to only 22 subsections and 10 Schedules in the Insolvency Rules 2016.

The upside is that each of these sections in much smaller and the additional subsections allow for consistent rules across all case types for things like distributions, decision making, creditors’ committees, officeholder remuneration and disclaimer in an attempt to reduce confusion for the man on the street between procedures.

The new rules also have been future proofed by removing all statutory forms from the legislation and leaving insolvency practices to design their own forms. This will make it infinitely easier for recipients to work out which practice they documents are from, being that they can now be covered in marketing information. It will however make it far more difficult to work out what the form actually is being there is no longer a standard format they can refer to.

The wording of the rules is now also more suitable finally identifying there are women in the workplace by changing the phrase “Chairman of the Meeting” to “Chair of the Meeting”. The use of the word “Shall” has also been dropped to use the word “Must” to ensure this is clear when referring to an obligation.

How do the insolvency changes breakdown?

Now that we’re over the technical element I’d like to give a brief introduction to the other changes in the rules which may have an effect on you and your client:

Creditors meetings

The days of the traditional creditors meeting where a group of angry creditors pile into a room to shout at the director whilst a group of Insolvency practitioners fight over the job is long gone. The new rules have embraced a new invention to the insolvency world called “The Internet” meaning that physical meetings are now a last resort. Provisions have been available since 2010 for these changes, however few insolvency practices have taken them up, meaning that the law makers have seen it as necessary to enforce the changes.

The team at Business Rescue Expert has been conducting meetings in this manner since 2011 so very little will be changing for us in this regard and you can find out more about the changes in our post titled Changes to insolvency law – The End of the Round Table.

Communications

The new rules have made a number of advancements on the 2010 rules, finally making it possible for Insolvency firms to consider a paperless office by communicating with stakeholders via electronic communication.

Again a number of these practices have long since been adopted by the team at Business Rescue Expert and more information about what is changing can be found in the article Changes to insolvency law – Saving Trees.

Changing roles

The new rules do make a number of changes to the role of the court and the official receiver. The main outcome of this is that more bankruptcies will in theory be managed by the Official Receiver however more details can be found at Changes to insolvency law – Receiver or Official Receiver

Information

The final post to wrap matters up will detail the additional information going to stakeholders along with the suppression of customer and employees data from the public record. The details of this can be found under Changes to insolvency law – Need to Know Basis

For more practical advice on insolvency, have a read through Business Rescue Expert