There were a whole host of changes to Insolvency legislation that came into effect in October 2015 across England and Wales.
One of the aims is to give creditors increased transparency about insolvency practitioners’ charges and fees, which the government believes will improve confidence in the insolvency sector.
There is a brief overview of the changes below. For more information or advice on any of the changes below, please contact a member of our insolvency and corporate recovery team.
Personal Insolvency changes
- A creditor must now be owed at least £5,000 in order to issue a bankruptcy petition against a debtor. This used to be £750
- New thresholds for debt relief orders have been introduced with individuals now able to owe up to £20,000, rather than £15,000 previously, and have assets worth up to £1,000, rather than the previous limit of £300
Litigation by Office Holders
- There is now a new power for an administrator to bring a claim for fraudulent or wrongful trading
- New power for liquidator or administrator to assign causes of action
- Proceeds of office-holder claims not to be available for floating charge holders
- In respect of the application for the making of a director’s disqualification order: the power to require information
- new provisions on directors’ disqualification (including new grounds for disqualification; factors for the Court to consider and compensation for creditors)
Regulation of Insolvency Practitioners (IPs)
- IPs’ record-keeping requirements have been simplified
- Approved fee estimates required
- New regime allowing IPs to be authorised solely to act in relation to corporate insolvency or personal insolvency
- Removal of provisions allowing individuals to be authorised to act solely as nominees or supervisors in voluntary arrangements
- New rules on recognition of IPs’ regulatory bodies and sanction of IPs
- Power to establish a single regulator of IPs
- The time it takes to strike a company off the register at Companies House will be reduced by shortening various time periods (both in relation to voluntary strike offs (which will take about two months rather than 3 – 4 months) and strike offs instigated by the Registrar (which will take 3 – 4 months rather than 5 – 6 months)).
Changes coming into effect in April 2016/October 2016
Further changes are planned for 2016.
Enterprise and Regulatory Reform Act 2013
The new provisions on the determination of bankruptcy applications by adjudicators had been expected to come into force at the same time as the Insolvency Rules 2016. However, it seems that the Insolvency Service now expect them to come into force in April 2016, six months before the anticipated date of the new insolvency rules.
Insolvency Rules 2016
These are the result of a significant re-write of the Insolvency Rules 1986 with the aim of modernising them, reducing the red tape and consolidating all the amendments. The new rules will replace the Insolvency Rules 1986, making both stylistic and substantive changes to the existing rules, in addition to re-ordering them. The government currently anticipates that they will be produced in Spring 2016 and become effective in October 2016.
For more information or advice on any of these changes, please contact a member of our insolvency and corporate recovery team.
Posted on October 28, 2015