March 1998
The Insolvency Act 1986 (the Act) provides in section 411 for rules to be made "for the purpose of giving effect to Parts I to VII of this Act" and in section 412 "for the purpose of giving effect to Parts VIII to XI of this Act" ie all corporate and bankruptcy insolvency procedures. Of the subordinate legislation made under authority of the Act, the Insolvency Rules 1986 as amended (the Rules) are the most significant and are designed to give specific administrative form to the main principles of the legislation which are set out in the Act.
There are two main ways in which the Rules give effect to Parts I to XI;
a) Referring to specific sections of the Act and expanding on their detail
For example, section 136 of the Act, subsections 4 to 6, provides that the official receiver may summon meetings of creditors and contributories of a company in liquidation, must decide whether to do so within 12 weeks and give notice of that decision explaining creditors’ power to require him to hold the meetings. Rule 4.50 adds that a venue must be fixed within 4 months of the winding-up order, notice of it be given to all creditors and contributories known to the official receiver specifying time and date by which proofs and proxies should be received, notice be given to the court, notice be given by public advertisement and the Rule also sets out how the official receiver should deal with a creditor’s request for him to hold meetings.
b) Adding detail of administration to parts or sections of the Act which are not prescriptive
For example, section 38 of the Act provides that "except in the case of an administrative receiver, every receiver or manager of a company’s property who has been appointed under powers contained in an instrument shall deliver to the registrar of companies for registration the requisite accounts of his receipts and payments". It is then rule 3.32 which requires the same to be delivered to the registrar of companies by an administrative receiver and it is schedule 5 of the rules which prescribes the penalty for default in complying with rule 3.32.
Rule 12.1 provides that the Secretary of State may, subject to the Act and the Rules, make regulations "with respect to any matter provided for in the Rules as relates to the carrying out of the functions of a liquidator, provisional liquidator, administrator, administrative receiver of a company, an interim receiver appointed under section 286, of the official receiver while acting as a receiver or manager under section 287 or of a trustee of a bankrupt’s estate...".
51.21 Application of Regulations
The resulting Insolvency Regulations 1994 (replacing the Insolvency Regulations 1986 and subsequent amendments) relate to voluntary winding up, winding up by the court and bankruptcy procedures. They govern, inter alia, payments into and out of the Insolvency Services Account, handling dividends from estates, investing funds and the records to be kept in relation to that account and provision for remuneration of the Official Receiver. They do not deal with specific detail concerning calculation of official receivers’ fees nor do they amend any of the monetary limits set out in the Act (eg minimum debt for service of a demand on a company by a creditor), both of which are set and amended by other subordinate legislation in the form of orders (see 51.23).
The Act also provides for regulations to be made for the purpose of giving effect to Part XIII of the Act. The resulting legislation is the Insolvency Practitioners Regulations 1990, as amended, consolidating and amending earlier regulations. They amplify the provisions in the Act relating to the granting or refusal of applications to the Secretary of State for authorisation to act as Insolvency Practitioner, withdrawals of such authority, requirements for security to so act and the records to be kept whilst so acting.
Sections 414 and 415 of the Act provide for orders to be made by statutory instruments governing the fixing of fees for proceedings under the Act and tasks carried out by the official receiver or Secretary of State in such proceedings. The Insolvency Fees Order 1986, as amended, is the resulting instrument and is made by the Lord Chancellor with the sanction of the Treasury.
The Secretary of State himself may prescribe monetary limits by subordinate legislation in the form of orders, in relation to specific figures set out in sections in the Act. These are listed in section 416 in relation to companies and section 418 in relation to individual insolvency procedures.
Section 420 of the Act specifies that the Lord Chancellor, with the concurrence of the Secretary of State, may provide in an order that the Act apply to insolvent partnerships with such modifications as are set out in the order. The Act itself (parent act) goes no further into the subject of insolvent partnerships. The statutory instrument produced is the Insolvent Partnerships Order 1994 replacing the Insolvent Partnerships Order 1986.
51.26 Insolvent estates of deceased persons
In the same way, the Lord Chancellor with the concurrence of the Secretary of State has extended the provisions of the Insolvency Act 1986 (with modification) to cover the administration of the estates of deceased insolvents in the Administration of Insolvent Estates of Deceased Persons Order 1986 which was made under the powers in section 421 of the Act.
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