News story
New insolvency measures
Changes are being introduced to insolvencies, the director disqualification process and the regulation of insolvency practitioners following the passage of the Deregulation Act 2015 and Small Business, Enterprise and Employment Act 2015.
Changes which came into force in May 2015
- Abolition of Fast Track Voluntary Arrangements
- Removal of the requirement to seek sanction for most office-holder actions
Changes which came into force in October 2015
Insolvency Process
- It will now be easier for people subject to bankruptcy orders to have access to basic banking facilities
Director Disqualification
- The time limit within which disqualification proceedings must be taken following an insolvency will increase from two to three years (relates to insolvencies after commencement)
- The range of ‘matters determining unfitness’ that the court can take into account when determining whether a person should be disqualified as a director will be broadened i.e. a person’s conduct in relation to more than one company
- Allowing the Secretary of State (SoS) to require any person to provide information for investigation purposes (at present only the insolvency office-holder is required to provide information) and make it easier to bring proceedings upon the basis of information provided by others, without the need to duplicate investigations
- New power to enable the SoS to seek a Compensation Order against a disqualified director where their misconduct has caused specific loss to one or more creditors. This will be a useful new tool for the SoS but not one that is anticipated to be used frequently (relates to conduct after commencement)
- New grounds for bringing disqualification proceedings against persons convicted of company-related offences overseas and persons who have instructed a disqualified director (relates to convictions after commencement – regardless of when offence took place)
- A provision to disqualify a person who gave an instruction or direction to a director who has been disqualified for carrying it out (relates to instructions that give rise to conduct after commencement that results in disqualification)
IP regulation
- The Secretary of State will cease to authorise insolvency practitioners (IP). This means in future all IPs will be authorised by a Recognised Professional Body. A transitional period of 12 months will allow existing IPs authorised by the SoS to seek alternative authorisation
- Enabling IPs to be authorised either only in relation to companies; only in relation to individuals; or both (as is currently the case)
- Introduction of regulatory objectives for the insolvency regime
- Allow the Secretary of State to apply to court to directly sanction an IP where it is in the public interest
Changes planned to come into force from April 2016
Director Disqualification
- New approach to D-reporting, allowing electronic submission of D-Returns (relates to insolvencies after commencement)
Changes planned to come into force in October 2016
Insolvency Process
- The mandatory requirement to hold physical meetings in every case will be replaced with a process of deemed consent, or a decision making process such as a virtual meeting, electronic voting, or a meeting by correspondence. Physical meetings are generally poorly attended and the time and cost of organising them is disproportionate to the benefits they bring. Removing the default requirement of physical meetings will reduce the cost of insolvency cases
- Creditors will be allowed to opt out of receiving routine correspondence and office-holder reports (except any relating to payment of a dividend). This will require changes to ICSIS so those creditors who no longer wish to receive correspondence are noted on the system
- An individual will no longer be required to submit a Statement of Affairs to the official receiver when they are subject to a bankruptcy order made on the petition of a creditor, unless it is specifically requested by us