The new rules came into force on 6 April 2017 to achieve the following:
- incorporate various changes in the law which are intended to reduce the burden of red tape;
- consolidate the existing rules into one single set of rules;
- modernise the rules by updating the structure and simplifying the language used.
What has changed?
Physical meetings (explanatory timeline overleaf)
- S98 meetings of creditors have been replaced by the deemed consent procedure or virtual meeting.
- A physical meeting will only be convened if:– 10% of creditors object to the decision of the appointment of the liquidator through the deemed consent procedure; or– creditors requesting a physical meeting meet the 10:10:10 criteria.
Creditors must total one of the following:
- 10% in value: claims combined must equate to at least 10% in value of the total creditors;
- 10% in number: the number of creditors must equate to at least 10% of the total number of creditors.
- 10 individuals: there must be at least ten individual creditors.
If the above criteria is not met by 23:59 hours on the decision date, the liquidator’s appointment is deemed approved.
A liquidator may convene a virtual meeting via an appropriate online platform rather than use the Deemed Consent procedure. Creditors meeting the 10:10:10 criteria may also request a physical meeting.
- Creditors can opt out of communications:
– creditors will still receive specific documents i.e. notices of intended dividends.
- Encouragement of email communications
– creditors are deemed to have agreed to email communications if they have communicated with the company by email pre-insolvency.
- Increased use of websites
– creditors should be mindful of letters and emails that advise future notices will be published on a website without any further alerts.
• Creditors with claims under £1,000 may be advised they are not required to submit a proof of debt. The amount will be deemed approved for dividend purposes.
• Where creditors receive such notices, they should inform the IP within the timeframe specified if they disagree with the amount shown.