The Insolvency Rules 1986 are being replaced by the new Insolvency Rules 2016 that will come into effect on the 6th April 2017. The overall purpose is to reduce red tape, make communication with creditors easier (using the internet) and trying to make the whole process cheaper so as to increase the return to creditors.
The main changes that will be noticed by users of an insolvency process will be:
No longer a creditors meeting at the start or end of a Creditors Voluntary Liquidation
I think this is a mistake as it was a useful meeting for creditors to come along to and question the directors about what went wrong. In my experience the ‘naughtier’ the directors then the more creditors who would turn up to the meeting and the interesting issues would come out. I believe that these meeting gave a valuable insight into the company background.
However, if at least 10% of the creditors by value want a meeting then one will have to be called.
A company will now go into liquidation by just writing to creditors proposing a liquidation date and as long as no one objects then it will be deemed to have gone into liquidation from that date. Most decisions when needed will be made by post, email or virtual meetings without the need to actually meet.
The new rules completely do away with statutory forms. These are replaced by just making sure a document or notice contains what it needs to.
Creditors can now completely opt out of communications. Also, the Insolvency Practitioner can just communicate by email with creditors where he has an email address for them.
If a creditor claim is for less than £1,000 then the Insolvency Practitioner can just admit the claim without the creditor needing to fill in a claim form and provide evidence. This will be useful for cases with lots of very small claims. A good example is a magazine company that has a large subscriber customer list.