New Insolvency legislation was introduced on 6 April 2017 with a view to increasing creditor engagement, improve creditor communication and remove administrative burdens for all. What are the key changes to look out for?
The main headline is that Insolvency Practitioners are no longer able to choose to convene meetings of creditors, where creditors can attend in person. However, if sufficient creditors require such a meeting, they can notify the Insolvency Practitioner, who will be required to convene one.
Instead Insolvency Practitioners are provided with a number of decision making procedures which include the use of correspondence, electronic voting and virtual meetings. Virtual meetings, with creditors attending by way of telephone or video conferencing link, will often replace the old ‘Section 98 Meeting’ in creditors’ voluntary liquidations.
Insolvency Practitioners also have the option to pass most resolutions by ‘deemed consent’, creditors are given a deadline by which to object. If less than 10% of creditors object then the resolution is deemed to have been passed. Certain decisions such as the approval of office holder’s remuneration and the voluntary arrangements cannot be done using the deemed consent procedure.
Final meetings at the end of a liquidation or bankruptcy have also been confined to the history books, they are replaced by a final report. The office holder will obtain his release unless creditors make a valid objection prior to the deadline they have been notified of.
Electronic communication is encouraged with an increasing amount being done via websites. Creditors will receive reports via the office holder’s website and in due course are likely to have the ability to enter details of their claims with supporting data to the website for consideration. Where debts are less than £1,000 then proofs will no longer be required. Creditors can also opt out of receiving most correspondence should they so desire.
It will be a while yet before we know whether the intended objectives have been met, in the meantime if we can assist with regard to the changes or any other restructuring matter please do not hesitate to contact us.