The Insolvency (England and Wales) Rules 2016 have been laid before Parliament and are to come into force with effect from 6 April 2017. The new Rules replace the Insolvency Rules 1986 and their 28 amendments and will apply to new appointments from that date as well as, in almost all respects, to existing cases. Note that they extend to England and Wales only. New Rules for Scotland and Northern Ireland are expected to follow in due course.
The new Rules are intended to do three things:
- The consolidation of the existing rules and their amendments into a single piece of legislation
- Allow for the modernisation and simplification of the language used
- Incorporate various changes in the law which are intended to reduce the burden of red tape, for example, those incorporated in the Deregulation Act 2015 and Small Business, Enterprise and Employment Act 2015, such as replacing creditors’ and contributories’ meetings with decision making procedures and enabling electronic communications with creditors.
Compared to the existing 1986 Rules more subjects are dealt with in common parts (Parts 14 – 22 of the new Rules) rather than being duplicated for each type of insolvency. For example, claims by and distributions to creditors, proxies and corporate representation and creditors’ and liquidation committees. The new Rules do however, very helpfully, separate the three types of liquidation into dedicated parts (Parts 5, 6 and 7 of the new Rules) to aid clarity.
R3 will aim to provide you with an initial overview of the main changes, and more detailed guidance, by way of Technical Bulletins over the coming months prior to implementation, as well as providing more specific guidance on changes such as the new decision making processes. In addition we will be running courses, providing webinars and giving presentations at Regional events on the key changes introduced.
The changes introduced by the new Rules will be far reaching and will apply to all cases administered by IPs, not just those commenced following the implementation date. They will also remove all of the presently used prescribed forms. We recommend therefore that you gain a full understanding of the changes to come in good time, and make early decisions as to the adjustments necessary to your processes to accommodate the changes being introduced. There is support available, not just from R3, however we would urge you not to simply rely on third parties telling you what is changing. There is no alternative to gaining a proper working knowledge of the changes to be made yourselves.