Changes to insolvency law: saving trees

A lot of work in insolvency has historically involved sending pages and pages of documents through the post which, for many who receive it, will have very little meaning.

The good news is that now everybody is being encouraged to use email instead.


Use of electronic communication


The changes in the Insolvency Rules in 2010 allowed for Insolvency Practitioners to send out notices and information by email for the first time. 


Previously, this was only allowable when creditors had specifically consented to the Insolvency Practitioner that they were happy to receive communications electronically.


The consent procedure was often disregarded by creditors and therefore resulted in the standard practice of all information continuing to be sent by post.


These changes to the rules means that where a creditor corresponded with the Company or debtor by email in the normal course of business, almost all correspondence can be sent by email by the Insolvency Practitioner unless they have specifically stated that correspondence must be sent by post.


This change will hopefully encourage insolvency practises to start building databases of creditor email addresses, reduce postage and stationery costs and accordingly reduce the environmental impact by sending electronic communications rather than paper.

Use of websites


The use of websites to provide information to creditors and other stakeholders has been available since the 2010 rule changes. 


This is one of the more widely adopted changes by insolvency practices, however there are still some who insist on sending out 100 page CVA proposals in a fancy document binder which clearly costs an absolute fortune both financially and environmentally.


Like many creditors, we can’t help but grimace when something like this lands on our desk while a much more welcoming concise letter or a link to a website where we can quickly find the information we’re looking for. 


The new rules reduce the level of correspondence even further with officeholders now simply setting out a timeline as to when documents will be available to view on the website. 


It’s then down to stakeholders to access the website at the relevant time to obtain the documents.


The likely impact of this is that creditors will only receive correspondence at the start of the process, at the end and if a dividend is available.

The right to opt-out


One of the big communication changes is that creditors can elect to opt out of receiving further correspondence about a case. 


The option needs to be given to creditors with the first notice with instructions on the opt out procedure, at which point they can be removed from any further mailing lists.


This doesn’t preclude them from receiving a dividend and if a dividend becomes available and they haven’t claimed then the office holder can still write to them requesting proof of debt to be submitted.


Many creditors may take this option up to keep their desks and inboxes clear as their main interest is often “am I going to get anything back?”. The only correspondence they would then receive is if the answer to this is yes.