Insolvency rules updated to reflect modern practice

These amendments aim to address some practical issues which have arisen since IR2016 and to better reflect evolving modern working practices. As with any legislation, over time some of the provisions prove impractical and require amendment to ensure that they are fit for purpose and more user-friendly, rather than causing unnecessary obstructions and clogging the courts with procedural matters that could be avoided.

The amendments include the following notable changes which are not drastic and numerous, but are no doubt helpful and required:

- For documents which are required to be delivered electronically, just one copy of the document is now required. For example, it was formerly the case that at least three copies were required to be filed for a Notice of Appointment of Administrators via CE Filing, otherwise this could be classed as a procedural defect (though being a defect that could be remedied). This made more sense prior to the evolution of CE Filing when solicitors had to attend the Court in person with printed appointment documents and wait for a member of the Court staff to physically stamp and issue at least three original copies in order for the same to be served upon relevant parties. Under IR 1.46 (3), it now provides: “Where these Rules require more than one copy of a document to be delivered to the court, or by the court to a party, and the document is delivered electronically, only one copy is to be delivered.” As times have moved forward and the use of electronic filing has progressed, this is a useful change which more adequately reflects the current filing process, as opposed to the hard copy filing of old.

- Rule 3.24(1)(j) and Rule 3.25(2)(k) have now been removed from the IR 2016. These concerned the requirement to specify the date and time of appointment on a Notice of Appointment of Administrators for an appointment of administrators under paragraph 22 of Schedule B1 of the Insolvency Act 1986. Specifying the date of time on a document before it was filed at Court and the appointment was made was impossible, and as such, wording was added to deal with this requirement such as “This appointment will take effect at the date and time specified below as the date and time when the notice is filed.” In recognition of this difficulty, this requirement has now been removed. This is a welcome step to reducing convoluted and unnecessary requirements that are perhaps a detraction from the main issues at hand when working through these processes with clients. Practitioners may need to amend their precedent forms to take account of the fact that this information is no longer required.

- References to the delivery of documents by fax have been removed in order to reflect modern working practices, as the use of email has far overtaken the use of fax which is bordering on obsolete.

- The threshold has been raised from £50,000 to £500,000 for bankruptcy petitions presented in the London District to be allocated to the High Court. This will shift lower value petitions to the County Court.

- The Trustee's notice at the conclusion of a bankruptcy should now be delivered to the Official Receiver and not filed at Court in respect of bankruptcies commencing on a debtor's own application.

- Save for a situation whereby the Court has fixed the basis of fees, requests for approval to exceed any fee estimate should be made to an existing creditor committee, and where there is no creditor committee, the request should be made to the relevant class of creditors which fixed the fee basis. Unless the court has fixed the basis of remuneration, then only a creditors committee or the class of creditor who approved remuneration initially will be able to increase fees above the fee estimate. This introduces the issue of what happens in the event that there is no creditors committee or a situation whereby the class of creditor who approved fees have all been paid.  Office holders have discretion to determine who is a creditor, and so they could in theory seek approval from paid creditors, however those creditors may not be willing to participate in a decision if they have no economic interest, seeing it potentially as a waste of their time.

- References to "Registrar" (used until 2018 but now obsolete for insolvency matters) have now been updated to "Judge,” which more accurately reflects the designation of Insolvency & Companies Court Judges.