The Small Business Enterprise and Employment Act 2015 received Royal Assent on 26 March 2015. The Act is here, and the explanatory notes are here.
The following insolvency provisions of the Act will come into effect two months after Royal Assent, i.e. on 26 May:
Liquidation – exercise of liquidator’s powers – removal of need for sanction
This amendment gives liquidators the ability to exercise any of the powers contained in Schedule 4 without the need to obtain sanction of either the court or a creditors’ committee (or where there is none, the Secretary of State or a meeting of creditors).
Bankruptcy – exercise of trustee’s powers – removal of need for sanction
This amendment gives trustees the ability to exercise any of the powers contained in Schedule 5 and section 314(2) without the need to obtain sanction of either the court or a creditors’ committee (or where there is none, the Secretary of State).
Administration
- Section 127 – extension of administrator’s term of office
This section amends paragraph 76 of Schedule B1, and extends the maximum time period creditors may consent to an extension of an administration from six months to a specified period not exceeding one year. - Section 128 – payments to unsecured creditors and move to CVL
This section amends paragraph 65(3) of Schedule B1 to provide than an administrator may make a prescribed part distribution without the need for court permission.
Under amended paragraph 83, the move to CVL will only be possible if there is to be a distribution to unsecured creditors which is not a prescribed part distribution.
- Section 129 – sales to connected persons
This section amends paragraph 60 to make it subject to a new paragraph 60A. Under the new paragraph, the administrator’s power to sell or dispose of property will be subject to any regulations which may be made in relation to sales or disposals to connected parties in specified circumstances. (No such regulations have yet been made.)
- Section 130 – Scotland – attachment of floating charges
This section amends paragraph 115 of Schedule B1. In Scotland, a floating charge will crystallise when the court gives permission to the administrator to make a distribution to unsecured creditors (thereby avoiding the need to put the company into liquidation in order to crystallise the charge in cases where paragraph 115(2) does not apply).
Creditors not required to prove small debts: company insolvency and bankruptcy
These sections create a power to make rules which will allow an office holder in a corporate insolvency and bankruptcy proceedings to pay a dividend to a creditor without the need for the creditor to submit a claim where the debt owed to a creditor in respect of which the dividend relates, is below a prescribed amount (the intention is to set this initially at £1,000). The office holder may do so on the basis the creditor’s debt has been recorded in the insolvent’s statement of affairs submitted to the office holder or their accounting records. (No such rule has yet been made.)
IVAs
- Section 134 – time-limit for challenge
This section amends section 262(3) of the Insolvency Act 1986 so that the 28 days’ time limit in cases where there is no interim order runs from date the creditors decided whether to approve the IVA. Previously there was no time-limit in such cases.
- Section 135 – abolition of fast-track IVAs
This section amends Part 8 of the Insolvency Act by removing the provisions for fast-track IVAs.
Voluntary winding up – Progress reports
This section amends sections 92A and 104A to clarify that a progress report must be issued if the liquidator changes within the first year of the liquidation.