Insolvency Proceedings
This theme is now closed for comment. An announcement on Red Tape Challenge plans will be made in due course.
You can read comments made during the theme spotlight (23 August 2012 – 27 September 2012) below.
These regulations are about the different types of insolvency proceedings, the financial limits which apply to them and how they are administered. They set out the information that an office-holder has to give to creditors and how the remuneration of the office-holder is set.
Tell us what you think should happen to these regulations and why, being specific where possible:
- Should we scrap them altogether?
- Could their purpose be achieved in a non-regulatory way (e.g. through a voluntary code?) How?
- Could they be reformed, simplified or merged? How?
- Can we reduce their bureaucracy through better implementation? How?
- Can we make their enforcement less burdensome? How?
- Should they be left as they are?
Information about changes already planned for insolvency proceedings can be found in the Insolvency Law information paper which you can read here.
You can view the regulations relating to Insolvency Proceedings from the scroll box below the menu on the left hand side of this page. Alternatively, you can download a spreadsheet that provides short descriptions and links to the full regulations – click here to download the regulation spreadsheet.
If you want to share your experience privately, then you can comment through our private inbox here. Visit the Insolvency landing page here.
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Insolvency Act 1976 Although mostly repealed by later legislation, this Act contains provisions relating to proofs of debt in bankruptcy cases under the Bankruptcy Act 1914, county court administration orders and the Insolvency Services Account. Read More… (opens in a new window)
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Insolvency Act 1985 Although mostly repealed by later legislation, this Act contains provisions relating insolvency amendments in other legislation. Read More… (opens in a new window)
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Insolvency Act 1986 This Act is the principal statute relating to company insolvency and the insolvency of individuals. Read More… (opens in a new window)
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Insolvency (No. 2) Act 1994 This Act amends insolvency law in relation to antecedent transactions and connected persons in order to protect purchasers of assets who acted in good faith. Read More… (opens in a new window)
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Insolvency Act 1994 This Act amends the Insolvency Act 1986 in relation to contracts of employment adopted by administrators, administrative receivers and certain other receivers. Read More… (opens in a new window)
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Enterprise Act 2002 This Act amends the Insolvency Act 1986 to streamline the appointment of administrators, remove the Crown’s preferential staus in all insolvencuies and introduce Bankruptcy Restrictions Orders to protect the public and commerce from bankrupts whose conduct has been found to be culpable. Read More… (opens in a new window)
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Insolvency Act 2000 This Act introduces a moratorium procedure for small companies entering a company voluntary arrangements, introduces a disqualification undertaking procedure and gives effect in Great Britain to disqualification orders made in Northern Ireland. Read More… (opens in a new window)
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The Insolvency Rules 1986 These Rules set out the detailed procedure for the conduct of all company and individual insolvency proceedings in England and Wales under the Insolvency Act 1986. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 1987 These Rules make detailed amendments to the Insolvency Rules 1986 in order to make the operation of them more efficient. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 1989 These Rules amend the Insolvency Rules 1986 following the coming into force of provisions in the Criminal Justice Act 1988. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 1991 These Rules change the provisions for rates of pay for shorthand writers in insolvency proceedings and provide insolvency office-holders greater discretion as to which newspapers they advertise in. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 1993 These Rules give the court discretion to agree the remuneration for shorthand writers and change the rules on provable debts to exclude some debts arising from family proceedings (e.g. maintenance payments). Read More… (opens in a new window)
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Insolvency (Amendment) Rules 1995 These Rules change the order of priority of expenses in a winding up by the court and bankruptcy. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 1999 These Rules set out the information to be kept on the public register of bankruptcy orders and individual voluntary arrangements. Read More… (opens in a new window)
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Insolvency (Amendment) (No 2) Rules 1999 These Rules amend the Insolvency Rules 1986 so that they are brought into line with the Civil Procedure Rules 1998. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2001 These Rules relate to the investment of monies by a trustee in bankruptcy and the payment of interest on monies held in the Insolvency Services Account in bankruptcy cases. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2002 These Rules amend the Insolvency Rules 1986 in the light of an EC Regulation. Read More… (opens in a new window)
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Insolvency (Amendment) (No 2) Rules 2002 These Rules are about voluntary arrangements and the recovery of costs by insolvency office-holders Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2003 These Rules make detailed amendments to the Insolvency Rules 1986 consequential to the coming into force of the insolvency provisions of the Enterprise Act 2002. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2004 These Rules make detailed amendments to the Insolvency Rules 1986 which are generally consequential on amendments made to the Insolvency Act 1986 by the Enterprise Act 2002. Read More… (opens in a new window)
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Insolvency (Amendment) (No 2) Rules 2004 These Rules correct previous secondary legislation regarding the content of a proof of debt (claim) form. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2005 These Rules makes changes to the Insolvency Rules 1986 in a number of areas including the simplicfication of those relating to mutual credit and set-off. Read More…
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Insolvency (Amendment) Rules 2006 These Rules extend the category of debts provable in a winding up or administration. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2007 These Rules clarify the law relating to the circumstances where a director of an insolvent company can be a director of another company that used a similar trading style to that of the insolvent company. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2008 These Rules enable liquidators to use the proceeds of legal proceedings to pay their liquidation expenses. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2009 These Rules replace a requirement to advertise in newspapers with a discretion to advertise in other media, and provide for rules relating to debt relief orders. Read More… (opens in a new window)
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Insolvency (Amendment) (No 2) Rules 2009 These Rules make changes consequential to the coming into effect of changes made by the Companies Act 2006. Read More… (opens in a new window)
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The Legislative Reform (Insolvency) Miscellaneous Provisions) Order 2010 This Order enables people to attend meetings using any form of technology which permits them to be heard and vote at the meeting, allows electronic means of communication to be used in insolvency procedures and replaces in England and Wales the requirement to summon annual meetings in voluntary liquidation with a requirement to provide membes and creditors with a progerss report. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2010 Thees Rules enable electronic means of communication to be used in insolvency procedures and provide clearer rights for creditors to challenge excessive office-holder fees and expenses. Read More… (opens in a new window)
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Insolvency (Amendment) (No 2) Rules 2010 These Rules correct cross-referencing errors in the Insolvency (Amendment) Rules 2010. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2011 These Rules exclude rights under an approved pension scheme as property in a debt relief order and changes where a bankruptcy petition or a debt relief order application can be made in the London insolvency district. Read More… (opens in a new window)
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Insolvency (Amendment) Rules 2012 These Rules exclude social fund debts from a Debt Relief Order and from being included as a provable debt in bankruptcy. Read More… (opens in a new window)
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Insolvency (ECSC Levy Debts) Regulations 1987 These Regulations provide that EU Coal and Steel levy debts be given preferential treatment in insolvency proceedings. Read More… (opens in a new window)
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Council Regulation (EC) No 1346/2000 on Insolvency Proceedings This European Regulation codifies the manner in which a member state determines whether it has jurisdiction to open insolvency proceedings. Read More… (opens in a new window)
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Insolvency Act 1986 (Amendment) Regulations 2002 These Regulations allow for the making rules which are required as a result of the EU Insolvency Regulation. Read More… (opens in a new window)
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Insolvency Act 1986 (Amendment) (No. 2) Regulations 2002 These Regulations make amendments to the Insolvency Act 1986 as a result of the adoption of an EU Regulation. Read More… (opens in a new window)
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Insolvency Act 1986 (Amendment) Regulations 2005 These Regulations clarify which companies formed or incorporated outside the United Kingdom can enter administration or a company voluntary arrangement. Read More… (opens in a new window)
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Cross-Border Insolvency Regulations 2006 These Regulations enact a UN model law on cross-border insolvency. Read More… (opens in a new window)
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Insolvent Partnerships Order 1994 This Order provides a code for the winding up of insolvent partnerships, and introduces two new procedures— voluntary arrangements and administrations— for insolvent partnerships. Read More… (opens in a new window)
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Insolvent Partnerships (Amendment) Order 1996 This Order amends the Insolvent Partnerships Order 1994 with regard to the winding up of an insolvent partnership as an unregistered company. Read More… (opens in a new window)
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Insolvent Partnerships (Amendment) Order 2001 This Order amends the Insolvent Partnerships Order 1994 to apply the Company Directors Disqualification Act 1986 to insolvent partnerships. Read More… (opens in a new window)
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Insolvent Partnerships (Amendment) Order 2002 This Order amends the Insolvent Partnerships Order 1994 to apply the EC Regulation on Insolvency Proceedings 2000. Read More… (opens in a new window)
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Insolvent Partnerships (Amendment) (No 2) Order 2002 This Order amends the Insolvent Partnerships Order 1994 following changes made in the Insolvency Act 2000 with regard to Voluntary Arrangements. Read More… (opens in a new window)
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Insolvent Partnerships (Amendment) Order 2005 This Order amends the Insolvent Partnerships Order 1994 to apply the insolvency provisions contained in the Enterprise Act 2002. Read More… (opens in a new window)
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Insolvent Partnerships (Amendment) Order 2006 This Order corrects errors in the Insolvent Partnerships (Amendment) Order 2005. Read More… (opens in a new window)
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Insolvency (Scotland) Amendment Rules 1987 These Rules make detailed amendments to the Insolvency (Scotland) Rules 1986 in order to make the operation of them more efficient. Read More… (opens in a new window)
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Insolvency (Scotland) Amendment Rules 2002 These Rules make changes to the Insolvency (Scotland) Rules 1986 relating to company voluntary arrangements and are consequential to the coming into force of the Insolvency Act 2000. Read More… (opens in a new window)
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Insolvency (Scotland) Regulations 2003 These Regulations amend Scottish insolvency legislation in light of an EC Regulation. Read More… (opens in a new window)
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Insolvency (Scotland) Amendment Rules 2003 These Rules make changes to the Insolvency (Scotland) Rules 1986 relating to administration and are consequential to the coming into force of the Enterprise Act 2002. Read More… (opens in a new window)
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Insolvency (Scotland) Amendment Rules 2006 These Rules make changes to the Insolvency (Scotland) Rules 1986 in relation to administration, CVA and liquidation. Read More… (opens in a new window)
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Insolvency (Scotland) Amendment Order 2006 This Order makes changes to the Insolvency (Scotland) Rules 1986 to reflect how certain assets of certain insolvent companies should be applied to unsecured creditors. Read More… (opens in a new window)
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Insolvency (Scotland) Amendment Rules 2007 These Rules clarify the law relating to the circumstances where a director of an insolvent company can be a director of another company that used a similar trading style to that of the insolvent company. Read More… (opens in a new window)
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Insolvency (Scotland) Amendment) Rules 2008 These Rules amend the Insolvency (Scotland) Rules 1986 regarding a priority of expenses of administrators. Read More… (opens in a new window)
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Insolvency (Scotland) Amendment Rules 2009 These Rules replace a requirement, in Scottish administrations and company voluntary arrangements, to advertise in newspapers with a requirement to instead use the Edinburgh Gazette and a discretion to advertise in other media if thought necessary. Read More… (opens in a new window)
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Insolvency (Scotland) Amendment (No. 2) Rules 2009 These Rules amend the Insolvency (Scotland) Rules 1986 with regard to updating of addresses for Companies House and the Accountant in Bankruptcy. Read More… (opens in a new window)
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Insolvency (Scotland) Amendment Rules 2010 These Rules make changes to the conduct of company insolvency proceedings in Scotland modernising the way notices are sent, meetings held and events advertised and allowing administrators to recover pre-administration costs. Read More… (opens in a new window)
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Enterprise Act 2002 (Insolvency) Order 2003 This Order makes minor amendments to provisions of the Enterprise Act 2002 and also makes amendments to other legislation in respect of the company administration procedure. Read More… (opens in a new window)
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Enterprise Act 2002 (Transitional Provisions) (Insolvency) Order 2003 This Order introduces further transitional provisions in relation to the abolition of the preferential status of Crown debts by the provisions of the Enterprise Act 2002. Read More… (opens in a new window)
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Enterprise Act 2002 (Insolvency) Order 2004 This Order corrects an erroneous cross-reference to an insolvency provision in the Financial Markets and Insolvency Regulations 1996, and clarifies who can challenge the actions of directors where a moratorium has been obtained for a company under a company voluntary arrangement. Read More… (opens in a new window)
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Insolvency Proceedings (Monetary Limits) Order 1986 The Order sets the monetary limits for various Sections of the Insolvency Act 1986. Read More… (opens in a new window)
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Insolvency Proceedings (Monetary Limits) (Amendment) Order 2004 This Order amends the Insolvency Proceedings (Monetary Limits) Order 1986 increasing various sums specified in the Insolvency Act 1986. Read More… (opens in a new window)
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Insolvency Proceedings (Monetary Limits) (Amendment) Order 2009 This Order prescribes monetary limits for the maximum amount of credit which a debtor subject to a debt relief order may obtain without disclosure of his status, and the monetary criteria a person has to meet in order to be eligible for a debt relief order. Read More… (opens in a new window)
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Administration of Insolvent Estates of Deceased Persons Order 1986 This Order, which applies to England and Wales, specifies the provisions of the Insolvency Act 1986 which apply to the administration in bankruptcy of the insolvent estates of deceased persons. Read More… (opens in a new window)
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Administration of Insolvent Estates of Deceased Persons (Amendment) Order 2002 This Order amends the Administration of Insolvent Estates of Deceased Persons Order 1986 in the light of Council Regulation (EC) No. 1346/2000 on insolvency proceedings which came into force on 31st May 2002. Read More… (opens in a new window)
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Insolvency (Amendment of Subordinate Legislation) Order 1986 This Order makes consequential modifications to various subordinate legislation which contain provisions about bankruptcy made before the coming into force of the Insolvency Act 1986. Read More… (opens in a new window)
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Co-operation of Insolvency Courts (Designation of Relevant Countries and Territories) Order 1986 This Order designates relevant countries and territories for the purposes of section 426 of the Insolvency Act 1986 which have the right to request assistance in matters of insolvency law from courts having jurisdiction in relation to insolvency law in any part of the United Kingdom. Read More… (opens in a new window)
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Insolvency (Land Registration Rules) Order 1986 This Order revokes an entry in The Insolvency (Amendment of Subordinate Legislation) Order 1986 relating to the Land Registration Rules 1925. Read More… (opens in a new window)
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Insolvency (Amendment of Subordinate Legislation) Order 1987 This Order clarifies the effect of the Insolvency (Amendment of Subordinate Legislation) Order 1986 in relation to bankruptcy proceedings where a petition in bankruptcy was presented, or a receiving order or adjudication in bankruptcy was made, before 29th December 1986 (the commencement date of the Insolvency Act 1986). Read More… (opens in a new window)
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Insolvency Act 1986 (Guernsey) Order 1989 This Order extends certain provisions of the Insolvency Act 1986 relating to the co-operation between courts to the Bailiwick of Guernsey. Read More… (opens in a new window)
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Co-operation of Insolvency Courts (Designation of Relevant Countries) Order 1996 This Order designates additional relevant countries which have the right to request assistance in matters of insolvency law from courts having jurisdiction in relation to insolvency law in any part of the United Kingdom. Read More… (opens in a new window)
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Co-operation of Insolvency Courts (Designation of Relevant Country) Order 1998 This Order designates Brunei Darussalam as a relevant country which has the right to request assistance in matters of insolvency law from courts having jurisdiction in relation to insolvency law in any part of the United Kingdom. Read More… (opens in a new window)
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Insolvency Act 1986 (Amendment) (No 3) Regulations 2002 These Regulations amend the eligibility criteria for a company obtaining a moratorium from its creditors in a revised Company Voluntary Arrangement procedure. Read More… (opens in a new window)
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Insolvency Act 1986 (Amendment) (Administrative Receivership and Capital Market Arrangements) Order 2003 This Order is a clarificatory amendment relating to the appointment of administrative receivers and expands the definition of “capital market arrangement” in the Insolvency Act 1986 . Read More… (opens in a new window) |
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Insolvency Act 1986 (Amendment) (Administrative Receivership and Urban Regeneration etc) Order 2003 This Order adds exceptions to an existing prohibition in the Insolvency Act 1986 against appointing an administrative receiver in respect of certain transport, utility and other companies. Read More… (opens in a new window)
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Insolvency Act 1986, Section 72A (Appointed Date) Order 2003 This Order determines that floating charges created from 15 September 2003 will not be able to appoint an administrative receiver unless they fall within one of the exceptions specified in the Insolvency Act 1986. Read More… (opens in a new window)
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Insolvency Act 1986 (Prescribed Part) Order 2003 This Order sets out the method of calculation of the prescribed part, which is the part of the insolvency estate of a company which is ring fenced from the claims of holders of debentures secured by floating charges, for the benefit of unsecured creditors. Read More… (opens in a new window)
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Banks (Former Authorised Institutions) (Insolvency) Order 2006 This revokes an earlier Order to apply the changes to administration introduced by the Enterprise Act 2002 to Former Authorised Institutions. Read More… (opens in a new window)
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Debt Relief Orders (Designation of Competent Authorities) Regulations 2009 This Regulation allows the Secretary of State to designate bodies or individuals to act as Competent Authorities for the purposes of being an intermediary between a person wishing to make an application for a debt relief order and the official receiver. Read More… (opens in a new window)
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Legislative Reform (Insolvency) (Advertising Requirements) Order 2009 This Order amends the Insolvency Act 1986 by removing the requirement on voluntary liquidators to advertise notice of the creditors’ meeting replacing it with a discretion to undertake additional advertising, and in cases where that discretion is exercised, enabling the advertisement to be effected by means other than an advertisement in a local newspaper. Read More… (opens in a new window)
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Debt Relief Orders (Designation of Competent Authorities) (Amendment) Regulations 2009 This amendment clarified a mistake in the Regulations. Read More… (opens in a new window)
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Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2010 This Order amends the Insolvency Act 1986 and the rules to allow electronic communications and remote attendance at creditors meetings, and reduces the number of meetings of creditors required to be held in insolvency proceedings. Read More… (opens in a new window)
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- abolish the need for a para 100 statement. Instead have a presumption that joint office holders can act jointly and severally unless the opposite is stated in their appoinment
- remove the need for directors to serve notice of their intention to appoint administrators on their own company
- clarify paragraph 15(2) Sched B1 IA 1986 to make it clear that when a deed of priority is entered into, the creditor whose security was first in time no longer needs to be served with 2 days notice
- make the insolvency of a company an exceptional circumstance which removes the requirement to consult with employees 90 days prior to redundancy, so avoiding employees’ rights to a protective award under TUPE
- amend the pensions legislation so that financial support directions made after administration are not an administration expense payable in priority to adminsitrators’ fees.
The principal points of insolvency procedures are to ensure that the assets are returned to creditors fairly, preserve businesses and jobs, where possible, and to review the conduct of the directors. The main things that influence the amount that is returned to creditors are the amount of assets and the costs in dealing with the procedure.
It has become more common that directors are allowed to continue trading, making losses way beyond a reasonable period of time, the consequence being that there are minimal assets available in the estate to cover costs and allow a sensible return to creditors.
Although there is an amount of legislation to try and prevent rogue directors from carrying on trading or misappropriating assets and there is the duty to report on their conduct, it is more often the case that any wrongful trading or other recovery action could be cost prohibitive and the actual take up by the Insolvency Service to pursue adverse reports on directors is low.
Consideration should be given to making it easier to impose financial penalties on directors where there is prolonged trading, without due cause and to assist with disqualification proceedings. Directors need to be more mindful of the rights of creditors rather than being allowed to continue until a creditor forces them to stop.
It has also become more common for directors to strike off companies, where there is insufficeint funds to pay for a liquidation, or to leave only sufficeint funds to cover the shut down of the company. This hampers the ability of a liquidator to recover funds and often directors can get away with their actions. Due to the large amount of requirements to place a company into liquidation and the statutory and best practice obligations, there are larger costs to cover simple shut downs. Following the successful introduction of Debt Relief Orders in place of Bankruptcies, consideration should be given to a similar system within companies that mean every insolvent company enters a procedure rather than being struck off and affords a proper review of the case. The costs would be lower and the case can still be converted to a full liquidation, should any matter be discovered or at the request of creditors. This should enhance the return to creditors.Comment Tags: costs, Directors, insolvency
Hi
I wanted to give my view on some issues regarding the current Insolvency procedures in place as part of your Red Tape Campaign.
I advise thousands of people on personal bankruptcy in England and Wales and I come across many cases from people in all walks of life. In the last 4 years the thing that crops up the most regarding procedures is firstly Debtors Petition fee’s and secondly having to go to court to be made bankrupt which only takes 15 minutes at most.
My first point regarding fees is quite simple. In the last 4 years we have seen the court fee for a Debtors Petition rise from £495 right up to its current figure of £700. In 2011 the fee rose twice meaning an increase over 47%!
The current court fee for personal bankruptcy is £700 in England and Wales and from a professional point of view way too high. I have spoken to many courts, Judges and court staff in the last 4 years who all have said that it not fair to charge such a high fee. Yes, the fee reflects the debtors responsibility to pay something back to their creditors, but a more realistic cap of £500 max would be much welcomed in the industry. This is one of the main sticking points of personal insolvency and many debtors are unhappy with the Government charging such high fees. Bankruptcy no longer has it’s myths or stigma and it is now regarded as a very suitable debt solution, provided the debtor has the correct advice.
Secondly, the whole process of going to court to be made bankrupt is a waste of time and tax payers money. In personal bankruptcy the debtor only has to go to sign a statement of truth and the statement of affairs and pay the court fee in person. 99% of the time these days the debtor does not see a judge. Bankruptcy petitions should be made directly to the Insolvency Service via an online system, that way it frees up the courts to deal with other civil matters which take up more time with court staff. The Insolvency Service is quite capable of handling applications to be made bankrupt directly and they could re-introduce the isolve online system which they got rid of three years ago.
Overall I think there could be time, money and a lot of effort saved by stream lining the current system and taking bankruptcy away from the court, but vesting powers with the Insolvency Service. Lowering fees is a must and especially if bankruptcy does come away from the County Courts in the future.
I hope you find my views and suggestions helpful and these are my own personal views. I see how the system works day in day out five days a week and I have seen change after change which so far has not benefited the system so far.
Kind RegardsComment Tags: bankruptcy, court, debtor, fees, insolvency, Law, petition
It needs scrapping and starting again from scratch. It’s far too prescriptive in detail that is pointless, with the result that insolvency proceedings prove to be far more costly and complicated than they need to be.Comment Tags: pointless red tape
New reporting requirements result in the need to generate quite bulky mail circulars. I have seen many directors sigh when binning these, in the knowledge that it just means they will not get paid. There seems to be a general drift to gereration of red tape rather than cutting.