virtual-meeting

One of the major changes, particularly with the first meeting of creditors to place companies into liquidation, will be that physical meetings will no longer be an option, unless specifically requested by the required level of creditors. Whilst this may seem like a new advancement, the previous Insolvency Rules have allowed for virtual meetings since 2010 and the team at Robson Scott Associates have been conducting meetings in this fashion since 2011.

Our experience is that these meetings are far more efficient and the uptake within the profession has been so low that the law makers have decided to now enforce this. The new decision making and consent procedures are described as follows.

Deemed Consent

Under the first process notices can be sent to creditor laying out their proposals with a deadline by which an objection to the proposals can be lodged. If less than 10% of creditors have objected to the proposal by this deadline the proposal is deemed as passed. If the required amount of creditors do object, an alternative decision making procedure should be commenced to consider whether a simple majority of creditors accept the proposal.

This is not formally classed as a “Decision Making Procedure” therefore officeholder remuneration cannot be approved through this procedure along with some other resolutions.

Decisions by Correspondence

This is not a new option for decision making procedures and has been available since the rules changed in 2010. This route simply give creditors a date to come back to the Insolvency Practitioner as to whether they wish to approve or reject the decisions being proposed.

Unfortunately at Robson Scott Associates we have found that creditor engagement is poor in relation to this which often results in duplicated work being that creditors do not respond and a formal meeting then needs to be convened, increasing the costs on the case.

Electronic Voting

The first formal decision making procedure is electronic voting. This would require login details to be sent to creditors allowing them to go to a website and cast their vote on each of the proposals at any point from receipt of the notice to the deadline of the procedure. Creditors must also be limited on seeing the current voting progress until after the decision making deadline.

As access details are to be given on the notice documentation so Insolvency Practitioners are likely to consider additional layers of authentication along with the proof of debt which also must be submitted in order to validate each of the votes received.

Virtual Meetings

The next decision making procedure, whilst a new concept to the majority of firms is nothing new for the team at Robson Scott Associates, who have been conducting meetings this way for 6 years.

Likely due to the lack of uptake amongst Insolvency Practices, the rules from April 2017 will enforce that if a meeting is to be held it shall be done this way and physical meetings are not longer the default option. A virtual meeting can take place in a number of ways including conference call, chatrooms and video conferencing.

Through running these meetings Robson Scott Associates have found creditor participation to be greatly improved and allows for greater access without having to take time out to make travel arrangements.

Physical Meetings

The old fashioned, physical creditors meetings can now only be used when 10% of creditors in value, 10% of creditors by number or 10 or more creditors request one takes place. This will be the biggest change for the majority of Insolvency Practices who are entrenched in this being their standard practice.

These meetings were often considered costly and with creditors often now being nationwide, or even global determining a relevant locality to please everyone is very difficult under current trading circumstances. We often encountered situations where although a meeting was being held in the relevant locality, but creditors from outside the area still had difficulty in arranging to attend, hence the early transition to remote meetings.

S98 and Final Meetings

Some further changes were added to S98 Meetings and Final Meetings to round up the above changes.

Given the nature of S98 Meetings, they can now only be dealt with under the Deemed Consent procedure or as a virtual meeting (unless a physical meeting is requested by creditors). They will now also take place at 3 business days notice as it is deemed creditors need less time to arrange to attend a remote meeting. In addition, in an attempt to reduce costs the members nominated Liquidator is no longer required to attend these meetings.

Final meetings, which were almost never attended, have now been abolished. Creditors now must file an objection to the office holder receiving their release by a specific deadline otherwise the release will be deemed as granted.