One of the statutory instruments within the scope of the project is the Insolvency Proceedings (Monetary Limits) Order 1986 (SI 1986/1996), which makes provision for various monetary limits that are prescribed by the Insolvency Act 1986 (“the Act”).

 Although this instrument was amended in 2004 to increase several of the monetary limits applicable to bankruptcy proceedings, the £750 bankruptcy level (the minimum amount that must be owed for a creditor’s bankruptcy petition to be issued) prescribed by section 267(4) of the Act was not uplifted. Similarly, the level prescribed by section 123(1)(a) of the Act, stating that a creditor must be owed more than £750 before being able to present a winding-up petition against a company following an unsatisfied statutory demand for that sum, has also remained unaltered since at least 1986.

As part of the consolidation project, the Insolvency Service is considering whether these two monetary limits should be increased to reflect the increase in the retail price index over the period since 1986. If we go ahead with the change, it is likely that both amounts would be increased to £1,500 and would take effect in relation to petitions presented from October 2007. In terms of the bankruptcy level, the increase would apply only in relation to creditors’ petitions and would have no effect upon debtors wanting to present their own bankruptcy petitions (as is the case now).  

Before taking a final decision upon whether this change should be made, we are seeking views from interested parties and representative groups whose stakeholders may be affected by any change to either of these limits.  Should you have any comments on this proposal, please send them by e-mail to steven.chown@insolvency.gsi.gov.uk, or by post to Steven Chown, Policy Unit, Insolvency Service, 21 Bloomsbury St, London, WC1B 3QW, by no later than Friday 31 March 2006 in order that these may be considered.