It is fair to say that insolvency or bankruptcy used to carry with it significant stigma. However in recent years insolvency proceedings have lost this stigma and have become an acceptable means of dealing with money issues and difficulties with payment of debts.
The Insolvency Rules 2016 came into force on 6th April 2017. These rules apply to all liquidation, Company Voluntary Arrangements, bankruptcies, debt relief orders and individual insolvency arrangements. An important point to note is that the new rules apply to all of these proceedings whenever such proceedings started.
The new rules on insolvency are reasonably wide ranging because they replace the Insolvency Rules 1986 (and a large number of subsequent changes to those rules). The Government states as follows on its website - 'The rules have been recast to reflect modern business practice and to make the insolvency process more efficient. Changes include:
- Enabling electronic communications with creditors.
- Removing the automatic requirement to hold creditors meetings (although creditors will be able to request meetings).
- Enabling creditors to opt out of further correspondence and for small dividends to be paid by the office holder without requiring a formal claim from creditors.
The rules will apply in England and Wales.'
One of the main aims of the changes is to increase the involvement of creditors in the insolvency process and to attempt to reduce unnecessary administrative burdens.
Some of the more important changes are as follows:
- Many of the statutory forms for use in insolvency proceedings have been abolished.
- As mentioned above, actual meetings of creditors are now discouraged and final meetings of creditors in bankruptcy proceedings are no longer a formal requirement.
- Unsurprisingly there is a significant focus on transferring the process to electronic format and creditors can use e-voting and have virtual meetings.
The changes are significant and albeit there is no fundamental change to the individual insolvency process it will be necessary to get to grips with the new electronic procedures.
Link to Government information: https://www.gov.uk/government/organisations/insolvency-service
To discuss this or any other bankruptcy related issue contact us.