New Insolvency Rules which will replace The Insolvency Rules 1986 and all its amendments.
New rules have been laid before parliament that will require insolvency practitioners in England and Wales to provide upfront summaries of the estimated costs, together with details of the intended work and likely timescale, arising from their appointment. And changes to these estimates will require the consent of creditors reports Property Week.
There is also to be an amendment to the Small Business, Enterprise and Employment Bill, which will widen the threshold needed for creditors to call a physical meeting. Ten per cent by value, ten per cent by number or 10 creditors, whichever is the smallest, will be required to call a creditors’ meeting – the current threshold is simply ten per cent by value.
This is good news for landlords, says John Cook writing for Property Week, who despite being a major stakeholder in any business rescue and turnaround, often find themselves in the dark once an insolvency practitioner is appointed.
Whilst creditor or court consent is already needed for fee rates, this is only for the hourly rates and in practice challenging these costs can be difficult and time-consuming. Landlords are often left “feeling alienated from a process” even though their properties might be being used for that process, or even being abandoned as a result of it.
Landlords are often left feeling angry when they see insolvency practitioners earning significant fees, while they receive little, if anything, from the insolvency.
John Cook writes:
“Providing upfront time and cost estimates will bring greater transparency to the insolvency process and thus help increase confidence in an insolvency practitioner’s actions and intentions.
“The insolvency regime can appear difficult to access for creditors and especially for landlords, who when faced with closing stores or purchasers in pre-pack administrations seeking discounts, may have preferred to treat the tenant failure as a fait accompli and devote energies to moving forwards. These new rules will provide landlords with a greater opportunity to engage in the process from the outset.”
John Cook is revenue manager at Capital and Regional and chair of the BPF Insolvency Committee
Following a long running consultation the Government has published a further working draft of the new Insolvency Rules which will replace The Insolvency Rules 1986 and all its amendments.
The Insolvency Service consulted on an earlier draft between September 2013 and January 2014.
Responses to the consultation resulted in well over a thousand policy and drafting points and the Government have been considering each of these and revising the drafting as appropriate. They have also been engaging with a group of stakeholders, as Parts of the rules are revised, to ensure that the provisions will work as intended. This process of revision and engagement is ongoing.
The new rules are intended to make the legislation clearer, more consistent and modern whilst also delivering amendments resulting from the Government’s Red Tape Challenge initiative.
The intention is that the new rules will come into force in April 2016.
Draft Insolvency Rules (MS Word Document, 2.09MB)
Changes to Insolvency Rules bring Transparency for Landlords – http://t.co/nETNRSdOX2
— LandlordZONE (@LandlordZONE) March 27, 2015