Time For Change

Today, a number of provisions of the Small Business, Enterprise and Employment Act 2015 and the Deregulation Act 2015 will come into effect. A number of these provisions introduce changes to insolvency legislation, and were enacted as part of the Government’s Red Tape Challenge programme.

From today, the following changes (unless otherwise stated) will apply to all existing and new cases:

Small Business, Enterprise and Employment Act 2015

  1. Powers of a liquidator

No requirement for a liquidator to obtain the sanction of the court or a creditors’ committee to exercise their powers (specified in Part 1 of Schedule 4 to the Insolvency Act 1986).

  1. Powers of a trustee in bankruptcy

No requirement for a trustee in bankruptcy to obtain the sanction of the court or a creditors’ committee to exercise their powers (specified in Part 1 of Schedule 5 to the Insolvency Act 1986).

  1. Extension of administrator’s term of office

An administrator’s terms of office may be extended for a specified period not exceeding one year by consent.

  1. Payments to unsecured creditors

An administrator may make a distribution of the prescribed part without having to get court permission.

  1. Moving from administration to creditors’ voluntary liquidation (CVL)

A company cannot move from administration to CVL where the only distribution to be made to unsecured creditors is a distribution of the prescribed part.

  1. Sales to connected persons

The Secretary of State may introduce regulations which prohibit or impose requirements or conditions in relation to the disposal, hiring out or sale of property of a company by an administrator to a connected person of the company. No such regulations have been made yet.

  1. Creditors not required to prove small debts – company or individual insolvency

The power to introduce a rule to allow an IP to make a distribution of a company’s property to a creditor who has not proved a small debt. The amount of a ‘small debt’ has been proposed to be set at £1,000. This rule has not yet been finalised.

  1. Time limit for challenging IVAs

A 28 day time limited for challenging voluntary arrangements from the date the creditors decided whether to approve the proposed voluntary arrangement has been introduced, where there is no interim order.

  1. Abolition of fast track voluntary arrangements

Various sections of the Insolvency Act 1986 have been omitted to remove the procedure to make fast-track voluntary arrangements. This has no effect for cases where a debtor has submitted the necessary documents and statements to the official receiver before today.

  1. Progress reports – voluntary winding-up

A liquidator must produce a progress report relating to the prescribed matters for each prescribed period, including on a change of liquidator with one year of the commencement of the winding up of a company.

Deregulation Act 2015

  1. Appointment of administrators

Clarification: an administrator of a company can still be appointed after a winding up petition has been presented if the person proposing to make the appointment filed a notice of intention to appoint with the court before the petition was presented.

Winding up petitions presented on public interest grounds, against Societas Europaeas and petitions presented by the Financial Conduct Authority or Prudential Regulation Authority are excluded from the operation of this provision.

  1. Treatment of liabilities relating to contracts of employment

The definition of ‘wages and salary’ through the Insolvency Act 1986 is amended to reflect the fact that ‘year in hand’ schemes have been prohibited by the Working Time Regulations 1998.

This post was edited by Matthew Flint. For more information, email blogs@gateleyuk.com.


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.