A cut in red tape that’s estimated to save £20 Million annually
The Insolvency (England & Wales) Rules 2016 were developed in cooperation with the insolvency profession and came in to effect in April 2017. It is expected the changes are likely to save businesses an estimated £20 million annually. The modernised and consolidated rules replace the Insolvency Rules 1986 and their 28 subsequent amendments.
The rules have been updated to reflect modern business practice and the changes designed to improve the insolvency process and make it more efficient. Amendments to the law have, in the main, been slow to follow advancements in technology. Being able to take advantage of the quickest, most cost effective or most convenient methods of achieving certain tasks is important and some of the changes address the ways insolvency office-holders communicate with creditors and other parties.
- Enabling electronic communications with creditors including emails
- Removing the automatic requirement to hold physical creditors meetings, although creditors will be able to request such meetings
- Enabling creditors to opt out of further correspondence and for small debts to be paid by the office holder without requiring a formal claim from creditors
The rules apply in England and Wales. A separate project to modernise the Scottish insolvency rules is being managed by AiB in partnership with the Scottish Government.
Insolvency Service form templates: England and Wales
Statutory forms relating to insolvency procedures are withdrawn. However, there are a limited number of templates available for matters that fall under the responsibility of the Insolvency Service. Where completed properly, the use of these templates will ensure full compliance with the new rules.
Alternative templates or forms can be used but the content of these documents must comply with the Rules. A document that does not comply may not be accepted by the person for whom it is intended; the office holder (official receiver, liquidator or trustee) or the court, for example.
Applause for Cutting Red Tape
Some may be surprised that a now defunct government initiative to cut red tape set the course for these new rules. By streamlining bureaucracy and updating rules affected by technology and the process of digitisation, the changes to the Insolvency rules should offer further process efficiencies in the business recovery sector.
It is hoped this major update published by Insolvency Service will offer a rationalised and simplified process for creditors and debtors, and enable greater returns to the creditors of insolvent businesses.