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The Small Business, Enterprise and Employment Act has introduced a number of changes which have an impact on insolvency in the UK.

Most of the changes introduced by the Act will be brought about by a separate statutory instrument, which has yet to be passed. However, we have also seen changes to both the Insolvency Act 1986 and the Company Directors Disqualification Act 1996.

Changes In Effect From 26 May 2015

Removal of requirement to seek sanction

  • In liquidations: compulsory and voluntary – removal of liquidators
  • In bankruptcy: to seek sanction of the court/creditor’s committee – removal of trustees

This is intended to bring liquidations and bankruptcies in line with administrations.


The Act introduced several changes effecting administrators, these included:

  • An administrator may extend his term of office by up to a year (previously six months), with consent of the creditors, without the need to apply to court.
  • An administrator no longer needs to obtain the permission of the court to make a distribution of the prescribed part to unsecured creditors only.
  • A company may no longer exit administration into creditors’ voluntary liquidation where the sole purpose being relied upon is the distribution of the prescribed part.

Small debts

When a creditor is owed less than £1,000, and the office holder has clear and undisputed evidence that the sum is due, the creditor no longer needs to prove what is owed.

However, this does not prevent a creditor from proving their debt if there is a disagreement concerning the amount stated to be his claim in the Statement of Affairs.

Voluntary Arrangements

Fast track individual voluntary arrangements (IVA) have been abolished as a consequence of changes to the Act.

Any challenge to the approval of an IVA must now be brought within 28 days, beginning on the day the when creditors approve the proposal (no longer the date which the chairman of the creditors’ meeting reports to creditors on the meeting’s outcome).

In cases where a report has been required to be made to court, the 28 days will commence from the time the report was made. Where a creditor is unaware that a creditors’ meeting took place, the 28 day period starts at the point of knowledge of the meeting.


Progress reports to creditors are now required within the first year of liquidation, where there is a change of liquidator.

Contact Our Team For Expert Insolvency Advice

If you have any queries concerning the changes being introduced by the Act, or require any general insolvency advice, please do not hesitate to contact Edward Judge, Partner on 020 7400 8737 or 07860 683255 or at edward.judge@irwinmitchell.com.

For general enquiries

0370 1500 100

Key Contact

Edward Judge