The new Insolvency Rules – key changes for creditors

7th February 2018
Industry opinion

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?

Voting/meetings:

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  • S98 meetings of creditors have been replaced by the deemed consent procedure or virtual meeting.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.

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.

Deemed consent:
If the above criteria is not met by 23:59 hours on the decision date, the liquidator’s appointment is deemed approved.

Virtual meetings:
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.

Communications

  • 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.

Creditor claims

• 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.

 

Brendan Clarkson, Director Head of National Creditors Services, Moore Stephens

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