Common Parts proposed for the new Insolvency Rules 

The project to review, consolidate, modernise and simplify the secondary insolvency legislation is proceeding with drafting work presently focussing upon the Insolvency Rules.  It is proposed that the new Insolvency Rules will include some eight or nine Common Parts containing provisions of general application, principally to Administration, Liquidation and Bankruptcy, in the following areas: 

Public Examination;

Special Manager;

EC Regulation;

Secured Creditors;

Creditors’ and Liquidation Committee;

Disclaimer;

Machinery for proving and quantification of claims and distributions;

Remuneration; and

Meetings.  

Following detailed consideration, we have concluded that the Company Voluntary Arrangement and Individual Voluntary Arrangement provisions do not lend themselves to a similar approach due to a lack of commonality, both with the other insolvency procedures and between the voluntary arrangement procedures themselves.  

Proposed structure for the new Insolvency Rules 

Subject to further review, it is proposed currently that the structure for the new Insolvency Rules will contain the following Parts set out in the order below: 

Company Voluntary Arrangements;

Individual Voluntary Arrangements;

Administration;

Administrative Receivership;

Liquidation;

Bankruptcy;

Common Parts;

Rules of general application; and

Schedules.

The Insolvency Rules Committee

The Insolvency Rules Committee, who need to approve all changes made to the Insolvency Rules, have been kept informed of our progress under the project. The Insolvency Rules Committee is appointed under section 413 of the Insolvency Act 1986 so that the Lord Chancellor may consult it before any Rules are made under section 411 (company insolvency rules) or section 412 (individual insolvency rules) of the Insolvency Act. The Committee consists of members of the legal and accountancy professions who provide a valuable contribution to the project under the chairmanship of The Honourable Mr Justice David Richards.

The Committee will review all draft Parts for the new Insolvency Rules as well as the new Disqualification Rules which are to be provided from a proposed  merging of The Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules and The Insolvent Companies (Reports on Conduct of Directors) Rules. During September 2006 we provided the first batch of draft Parts for the new Insolvency Rules to the Committee for their consideration and review. Further draft Parts will be provided as these are finalised and settled with DTI Lawyers.

Further consultation

Following the success of the initial consultation on the consolidation project, certain stakeholders have requested the opportunity to participate further as the consolidation project progresses. In response, The Insolvency Service is planning to undertake further consultation with relevant stakeholders in or around mid-2007 to take views upon the new draft Rules before they come into force. We are also planning to take views from interested parties on the draft of the new consolidated Insolvent Partnerships Order.

To allow this further period of consultation to be undertaken and to enable views expressed to be fully considered, the proposed commencement date for the new secondary insolvency legislation has been put back until April 2008.   

Any enquiries regarding the above should be directed towards Neil Ogilvie, Policy Unit, Area 5.7, 21 Bloomsbury Street, London WC1B 3QW; e-mail Neil.Ogilvie@insolvency.gsi.gov.uk.