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1.    Distress for the Council Tax

The Council Tax (Administration and Enforcement) Regulations 1992 allow local authorities to levy distress for unpaid Council Tax, and you will be aware that, by virtue of section 347(8) of the Insolvency Act 1986, the right to distrain remains even after a bankruptcy order has been made.

However, under the Council Tax (Administration and Enforcement) (Amendment) (No.2) Regulations 1993, which came into force on 1 April 1993, local authorities will not be able to levy distress on property which, under section 283(2) of the Insolvency Act, would not comprise part of a bankrupt's estate, ie -

  1. such tools, books, vehicles and other items of equipment as are necessary to the bankrupt for use personally by him in his employment, business or vocation;
  2. such clothing, bedding, furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family.

First published in Dear IP no. 27, August 1993)

2.    Council Tax

Practitioners will be aware that the council tax replaced the community charge in April 1993. Where a qualifying property (as defined by section 6 & 7 of the Local Government Finance Act 1992 and including caravans and boats) forms part of the bankruptcy estate and continues to be occupied after the date of the bankruptcy order, liability for the council tax accruing after the date of the order falls on the person(s) resident in the property. However, the Council Tax (Exempt dwellings) (Amendment) Order 1993 prescribes that no council tax is payable on "an unoccupied dwelling in relation to which a person is a qualifying person in his capacity as a trustee under the Bankruptcy Act 1914 or the Insolvency Act 1986". In those circumstances, all such unoccupied properties would be exempt from Council Tax, regardless of whether the property is owned solely by the bankrupt or jointly owned with another.

(First published in Dear IP no. 26, March 1993)

3.    Completion of Preliminary Questionnaire

Individuals and companies in financial difficulty are occasionally given a misleading impression of bankruptcy and compulsory liquidation procedures. The Official Receiver (OR), has been represented as asking trick questions and generally treating people badly. It is hoped that insolvency practitioners will be able to correct any such misconceptions by giving balanced and accurate advice.

ORs ask bankrupts and directors of companies in compulsory liquidation to provide the basic information necessary for dealing with the insolvency by completing questionnaires set out in a standard booklet. These booklets are Crown copyright, and should not be reproduced without the approval of the Service. If a person completes a questionnaire before the bankruptcy or winding-up order he or she will be required by the OR to complete another one under section 235 or 291 of the Insolvency Act 1986.

(First published in Dear IP no. 30, March 1994)

4.    Secretary of State functions carried out by IPCU

The Insolvency Practitioners Compliance Unit (IPCU), based at 2nd Floor, Ladywood House, 45/46 Stephenson Street, Birmingham B2 4UZ, is responsible for carrying out various functions on behalf of the Secretary of State (SoS). It has become apparent, from feedback from both Official Receivers (ORs) and insolvency practitioners (IPs), that there is some confusion as to whom IPs should address their applications, and what information they are required to provide. This article provides guidance on the main SoS functions carried out by the IPCU, together with details of the procedures and the information required. Other functions are carried out by the OR acting for the SoS in lieu of a Creditors' Committee or Liquidation Committee. Details of the ORs functions, and the information he will need to process the application, are detailed below. All applications regarding the following matters should be addressed to IPCU at the above address.

  1. Exemption certificates under the provisions of section 332(2)(c) of the Insolvency Act 1986

Applications for an exemption certificate should be made in writing to IPCU. Practitioners should not send their own certificates, as official certificates will be issued by IPCU as appropriate.

Before an exemption certificate under the above provision can be issued, the following conditions must be satisfied:-

  1. If the property is unregistered, the trustee must ensure that a bankruptcy notice or inhibition has been registered with the Land Charges Registry to protect the trustee's interest in the property.
  2. If the property is registered, the trustee must have registered a caution with HM Land Registry to protect the trustee's interest in the property.
  3. The trustee should confirm that he has offered the bankrupt's beneficial interest in the property to the bankrupt's spouse/partner, joint owner, other family members, and others, as the case may be, regardless of any negative equity. It should be demonstrated that the trustee has made every effort to realise this asset, and to have given the bankrupt's family every opportunity to secure the property in the family interest.
  4. The trustee must provide a current valuation of the property, and details of the current amount of any loan outstanding on the property.

    Where there is significant equity in the property, an exemption certificate will not be issued, and the trustee will be advised to obtain a charging order or to realise the asset for the benefit of the estate.

    If any of these issues have not been dealt with, or the trustee has not provided appropriate details, then IPCU will not consider any requests for an exemption certificate.
  1. Extension of time for holding annual meeting of creditors and members under the provisions of section 105 of the Insolvency Act 1986

If an office holder needs to delay holding an annual meeting, he should apply to the SoS for a time extension. The application should be submitted in writing before the expiry of the time in which a meeting would otherwise have been held. The office holder should provide a full written explanation of the reasons for the application.

The SoS can only extend the time for holding the meeting and cannot give consent to dispense with the meeting altogether.

  1. Authorisation to operate a local bank account

Generally, trustees in bankruptcy and liquidators of companies in compulsory liquidation are required to pay all funds they receive into the Insolvency Services Account. However, if it is decided to continue the debtor’s/company's business, the office holder may need to operate a local bank account.

In requesting authorisation to operate a local bank account, an office holder should provide the following details to enable prompt processing of the application:-

  1. Confirmation that the office holder is carrying on the business of the debtor/company, and that the relevant sanction has been obtained.
  2. The name and full address of the bank the office holder proposes to use.
  3. The maximum amount needed to be retained in the account.
  4. The maximum withdrawal to be made from the account at any one time.
  5. Details of the likely expenses to be settled by the account, which must be reasonable with regard to the size and nature of the business.
  1. Remuneration

IPCU deals only with remuneration in cases administered under the Bankruptcy Act 1914, and can only fix remuneration of practitioners who have been appointed by the SoS under Rule 337 of the Bankruptcy Rules 1952. Practitioners should apply in writing to have their remuneration agreed. An application should include a time/costs schedule showing the number of hours worked by each grade of staff and the hourly rate applicable.

IPs should bear in mind the words of Mr Justice Ferris in the Maxwell case that fees of practitioners should reward value, and not indemnify cost. Accordingly IPCU must consider whether or not the remuneration sought is reasonable, having regard to the services rendered to the estate by the practitioner, rather than simply satisfying itself that the fees are not excessive. Practitioners will be expected to provide details of the specific work undertaken, together with details of any realisations achieved as a result of that work.
  1. Releases

IPCU also has responsibility for processing applications for release by IPs under the following provisions:-

Rule 6.135 IR 1996 Release of resigning or removed trustee (Form 6.49)
Rule 4.121 IR 1986 Release of resigning or removed Liquidator (Form 4.41)
Rule 4.122 IR 1986 Release of resigning or removed Liquidator (CVL) (Form 4.41)
Rule 4.144 IR 1986 Release of resigning or removed Liquidator (MVL) (Form 4.41)

The relevant form must accompany each application.

(First published in Dear IP no. 40, March 1998)

5.    Settlement of Official Receiver Costs

Following the appointment of a practitioner as trustee or liquidator, the balance (debit or credit) on the estate account is transferred to the practitioner, as evidenced by the receipt of the estate cash book. As a result, control of the estate account passes from the Official Receiver (OR) to the Service’s Central Accounting Unit (CAU). The practitioner is required by the Insolvency Rules (4.107 and 6.125) to discharge any balance due to the OR at hand-over, or alternatively (and more usual in practice) to give an undertaking to discharge any such debit balance from the first assets realised. Settlement of any debit balance on the estate account can only be made by payment into the Insolvency Services Account (ISA) and not to the OR.

Where a bankruptcy order is converted to an individual voluntary arrangement after the appointment of a practitioner as trustee, a debit balance is cleared by payment to the ISA. The SoS fee will not be chargeable in those circumstances.

However, when a bankruptcy order is converted into an individual voluntary arrangement, and there has been no prior appointment of a practitioner as trustee, the OR will calculate the sum required to settle his costs. The supervisor will either pay this sum to the OR or give an undertaking to discharge it from the first monies realised, and pay the OR at a later stage. Again the SoS fee is not chargeable on the payment.

The same principles apply regarding the estate account in corporate voluntary arrangements.

Where an order is annulled or stayed following handover to a trustee or liquidator, the OR has no responsibility to calculate the amount required for payment, and practitioners should not ask the OR to make that calculation. Where additional costs become payable, for instance because of the OR’s attendance at an annulment hearing, he will notify both the practitioner and CAU of any adjusted debit balance, which may be cleared by a payment into the ISA.

(First published in Dear IP no. 22, August 1992)

6.    Examination of Lists of Creditors

There have been a number of occasions in the past where practitioners have approached Official Receivers (ORs) and claimed a right to inspect the list of creditors in bankruptcies or compulsory liquidations. In some cases they have been armed with what is purported to be a general authority from a major company or national organisation (which might or might not have been a creditor in the particular case).

ORs are not obliged to allow anyone, including a practitioner instructed generally or in a specific case, to inspect lists of creditors, and may only provide a list of creditors prior to the filing of the statement of affairs (as in Rule 12.17) on payment of the appropriate fee – currently 15p per A4 or A5 page and 30p per A3 page.

The definition of a creditor is interpreted for this purpose as including a creditor’s representative acting in that specific case, at the time the request is made.

(First published in Dear IP no. 10, April 1989)

7.    Insolvency Practitioners’ Change of Circumstances

IPCU maintains the Service’s database of insolvency practitioners (IPs), and in order to ensure that this is accurately maintained, practitioners are requested to notify IPCU in writing of any changes in their business address or telephone numbers. Similarly, practitioners are also requested to advise IPCU where there is any change in the name of their practice, and when they move between practices.

The written notifications should be addressed to Intikhab Mushtaq, IPCU, 5th Floor, Ladywood House, 45-46 Stephenson Street, Birmingham, B2 4UP, or Practitioners Compliance Unit, DX 713897, Birmingham 37.

Inaccuracies in the database may lead directly to delays in the processing of payments, and to the appointment of IPs by IPCU on behalf of the SoS.

If cases are moved to another office address, the practitioner should immediately give written notice of the move, and details of the files involved and the new office address, to both IPCU and the relevant OR.

Contact: Pat Christopher, IPCU
Tel: 0121 698 4104

(First published in Dear IP no.47, October 1999)

8.   Carrying on Business Using Goods Vehicle Operator's Licenses

The Traffic Commissioners have asked the Service to remind practitioners that anyone who uses a goods vehicle above 3.5 tonnes gross vehicle weight in the course of a trade or business has to hold an operator's license. This includes both those who carry goods for hire and reward, and those who use lorries to carry their own goods. Similar provisions apply to operators of passenger services vehicles.

Licenses are granted by Traffic Commissioners based at six Traffic Area Offices (TAO). Holders of operator's licenses have to meet certain criteria including having sufficient financial resources to maintain the vehicles and being of "appropriate financial standing". An insolvent company or a bankrupt individual is unlikely to meet these requirements but the Traffic Commissioner has discretion to allow such a business to continue to operate.

The TAO that issued the license should be informed of any such business going into receivership, liquidation or bankruptcy. If the business is continuing to operate under an administrative receiver, liquidator or trustee, that person must seek the agreement of the Traffic Commissioner. If not, the license document and associated vehicle discs should be returned to the TAO - there may be a refund of fees payable. Addresses can be obtained from the telephone directory, or by telephoning 0117 975 5000.

(First published in Dear IP no. 47, October 1999)

9.    Enforcement Concordat

Insolvency Practitioners Section, London (IP Section) and Insolvency Practitioners Compliance Unit, Birmingham (IPCU) have responsibility for undertaking the Service's enforcement functions in respect of insolvency practitioners authorised by the Secretary of State. Enforcement in this context relates not only to authorisation, statutory compliance and related matters, but also to advisory and monitoring visits.

The Cabinet Office has developed a code of practice on enforcement, which all central government and local authority departments with enforcement functions have been encouraged to adopt. On 8 July 1999 the Service formally adopted the code of practice, although it was already applying the underlying principles.

The code of practice is embodied in the Enforcement Concordat, which sets out the principles of good enforcement, which are:

  • Standards - IP Section and IPCU have drawn up clear standards setting out the level of service and performance that can be expected;
  • Openness - IP Section and IPCU will be open about the way they work and will discuss general issues, specific compliance failures or problems. They will also provide information and assistance, although they are unable to give legal advice;
  • Helpfulness - IP Section and IPCU will provide a courteous and efficient service. In addition, prevention is better than cure, and IPCU will work with practitioners to advise on and assist with compliance, particularly through monitoring visits and guidance visits on disqualification issues;
  • Complaints about service - there is an effective and timely procedure for making and dealing with complaints where it is necessary to complain about IP Section and IPCU;
  • Proportionality - if there is non-compliance by a practitioner, the regulatory action taken will depend on, and be proportionate, to the nature and seriousness of the breach; and
  • Consistency - IP Section and IPCU will carry out their duties in a fair and consistent manner.

While the Enforcement Concordat only applies to insolvency practitioners authorised by the Secretary of State, officials in IP Section and IPCU will also strive to apply the Concordat's principles to all insolvency practitioners with whom they deal.

The Service is also encouraging the Recognised Professional Bodies to apply the Concordat's principles in their dealings with the insolvency practitioners they respectively authorise.

An explanatory leaflet is available from IP Section, and can be obtained by telephoning 020 7291 6771/2.

(First published in Dear IP no. 47, October 1999)

10.    Maintaining the Central Index Database

Part of the function of the Insolvency Practitioners Compliance Unit (IPCU) is to ensure that the Service database of insolvencies, the Central Index, is accurate. The information recorded about a case on the Central Index includes the name and address of the office holder. This information is in turn used by Central Accounting Unit (CAU) when processing requests by practitioners for cheques drawn on the ISA, and the issue of statements of receipts and payments. Consequently, in order to ensure that CAU provide a service that is as effective and efficient as possible it is imperative that the name and address of the office holder appointed in respect of a particular case is accurate and up to date.

Some practitioners currently write to IPCU when they transfer the administration of a case from one office holder within their practice to another, and this helps us keep the Central Index up to date. All practitioners are encouraged to adopt this approach, and IPCU are willing to accept written notification of any changes on a case by case basis, weekly or monthly, to suit the circumstances of each particular practitioner.

Practitioners are also reminded that they should notify IPCU of any change of address for their practice, eg when an office is permanently closed or relocated, or a new office is opened. Where an office is closed or relocated, practitioners should provide details of any cases moved as a result of the closure or relocation.

Contact: Gareth Limb, Insolvency Practitioners Compliance Unit, the Insolvency Service, 5th Floor, Ladywood House, 45/46 Stephenson Street, Birmingham B2 4UZ (telephone 0121 698 4105)

(First published in Dear IP no. 48, November 1999)

11.    Redirection of a Bankrupt’s Post: Section 371 of the Insolvency Act 1986

The Service has recently issued guidance to ORs about applications for redirection of post, which is reproduced in part below.

Section 371 of the Insolvency Act 1986 permits the court to make an order, on the application of the OR or the Trustee, for the redirection of a bankrupt’s post to an address specified in the order. An application may be made without notice to the bankrupt, (see rule 7.5 of the Insolvency Rules 1986).

When seeking redirection orders, ORs have not usually provided the court with a substantial amount of information and have dealt with the matter in a summary way, largely relying on evidence of the bankrupt’s non-cooperation.

This approach was questioned by the Vice-Chancellor in a case reported as Singh v The Official Receiver [1997] BPIR 530. He said:-

"…in my view all applications to the court ought to be supported by something more substantial than merely a letter informing the courts that the order was being sought on the grounds of non-cooperation or whatever. The material ought to give chapter and verse of the non-cooperation relied on."


"I think that it is unreasonable for an application to be made in circumstances where the substantive allegation on which the application is based are not set out in some written form available to be provided to the bankrupt respondent".

Following these comments, and from observations made by courts in other cases, ORs now lodge a report, which explains in some detail why the redirection order is being sought. This gives the bankrupt an opportunity to see the case made against him/her so that he/she, can seek a review or rescission of the order if desired.

The Service has decided that an OR’s application for a redirection order should normally be made without notice to the bankrupt.

ORs have been informed that they should operate within the terms of a redirection order at all times. If, for example, post is redirected by the Post Office in error after the expiry of the order, ORs have been instructed to forward it unopened to the bankrupt. Any error by the Post Office should be drawn to its attention in writing. Items which are clearly of a personal nature should also be forwarded to the bankrupt, without delay, and without being copied. This is especially important when, for example, the bankrupt has sought legal advice, and his/her solicitor’s letter is redirected under the order. Similarly, payments of state benefits must be forwarded to the addressee without delay.

If redirection is necessary in a case where the bankrupt has co-operated, for example, where it is likely that remittances from customers might be sent to a former trading address, the bankrupt may consent to the redirection of his/her post from that address. If the redirection order is proving worthless – in the Singh case nothing was actually redirected – the arrangement may be ended.

(First Published in Dear IP no 49, March 2000)

12.    Application for Redirection of Mail by IPs

Royal Mail has confirmed that it will accept written applications from Insolvency Practitioners for the redirection of post, rather than requiring personal attendance at a post office. However, for security purposes the applications should be accompanied by:-

  1. Where appropriate a sealed copy of the relevant court order made under s.371 Insolvency Act 1986;
  2. a copy of the resolution, notice or other evidence of appointment as liquidator, receiver or trustee, which should be certified by a solicitor, and
  3. the application form, signed as confirmation of authority to redirect the mail.

A list of Redirection Centre addresses is set out below:-

Anglia Redirection Centre
Colnebank House
30 St Peters Street
London Redirection Centre
5 Almeida Street
N1 1AA
Midlands Redirection Centre
Royal Mail
2-3 Lakeside
Festival Way
North East Redirection Centre
Royal Mail House
3rd Floor
Forth Street
North West Redirection Centre
Royal Mail
2nd Floor
Castle Forgate
Scotland Redirection Centre
7 Strothers Lane
1V1 1AA
Northern Ireland Redirection Centre
Royal Mail
20 Donegal Quay
South Central Redirection Centre
Surrey Street
South East Redirection Centre
Royal Mail
2nd Floor Redstone Hill
South West Redirection Centre
Royal Mail House
21 Oxford Street

(First Published in Dear IP no.49, March 2000)

13.    Transfer of Scottish Widows Business to Lloyds TSB

In February the Court of Sessions in Scotland sanctioned the demutualisation of Scottish Widows and its sale to Lloyds TSB Group. As a result of the demutualisation, compensation will be payable at the end of June 2000 to qualifying members of Scottish Widows.

‘Qualifying members’ of Scottish Widows will receive £500 as fixed compensation (subject to minor exceptions, qualifying members are those with Scottish Widows policy at 22 June 1999 or those that had sent in a proposal for one by that date and in both cases keep up the policy.) In addition, qualifying members with ‘qualifying with profits policies’ will also be entitled to receive variable compensation based upon:

  1. the nature of the policy;
  2. when it was started; and
  3. it’s length.

(Qualifying with profits policies are those that were taken out before 1 January 1999).

Insurance policies are property (as defined by section 436 of the Insolvency Act 1986) which vest in the trustee in bankruptcy (under Section 306 of that Act). The only exception to this is that any protected rights in pensions will not pass to the trustee in bankruptcy. In addition, if an occupational pension scheme’s rule, which are applicable at the date of the bankruptcy order, contain a valid forfeiture clause that forfeits the pension benefits on the making of such an order, then the trustee in bankruptcy will be unable to claim them for the benefit of the bankrupt’s creditors. It is the view of the Insolvency Service that any compensation payable ‘arises out of or is incidental to the property’, for the purposes of section 436 and, therefore, also vests in the trustee.

Solicitors acting for Scottish Widows have informed the Insolvency Service that when making the compensation payments it may not always be possible for Scottish Widows to identify bankruptcy situations. Insolvency practitioners may, therefore, wish to enter into correspondence in all cases where a bankrupt or former bankrupt has a policy with Scottish Widows to ensure that, where appropriate, the compensation is paid to the bankruptcy estate.

Enquiries should be addressed to Shona Manson, The Insolvency Service, Technical Section, 21 Bloomsbury Street, London, WC1B 3QW (Telephone 020 72916778).

(First published in Dear IP no. 50, June 2000)

14.   Individual Insolvency Registers

The rules governing the Individual Insolvency Register are now placed in new Part 6A, including those relating to Individual Voluntary Arrangements (IVAs) (omission of rule 5.28).

Details will be maintained of Bankruptcy Orders, Individual Voluntary Arrangements, Bankruptcy Restrictions Orders, Interim Bankruptcy Restrictions Orders and Bankruptcy Restrictions Undertakings.

The registers will be maintained by the Secretary of State and made available to the public for inspection within office opening hours. The Secretary of State has an obligation to enter and remove such information as soon as reasonably practicable (new rule 6A.1)

Rectification of inaccuracies on any register to be made as soon as reasonably possible and the date of death of a bankrupt is to be recorded on the register on receipt of notice to that effect (new rule 6A.8).

Information relating to all existing and new IVAs and fast-track IVAs (see Article 17, Chapter 24 of this issue) is to be entered on receipt of the appropriate notice.

Those details are to be deleted immediately on notice of the completion, termination or revocation of the IVA (new rules 6A.2 to 6A.3).

Information is to be entered relating to all existing bankruptcies and to new bankruptcy orders on receipt of the order from the court.  Such details are to be deleted immediately on notice of the bankruptcy order having been annulled or rescinded and after three months from the date of discharge (new rules 6A.4 to 6A.5).

Information relating to Bankruptcy Restrictions Orders, Interim Bankruptcy Restrictions Orders and Bankruptcy Restrictions Undertakings to be entered when made or accepted.  Such details to be deleted immediately on expiry or ceasing to have effect (new rules 6A.6 to 6A.7).

The new rules above replace existing rules 6.223A to 6.223C, which are omitted.


General enquiries may be directed to
Telephone: 0207 291 6740  

15.  Proof of Debt forms in bankruptcy and company liquidation 

From 1 April 2004 it will no longer be necessary for a proof of debt form to be sent to all creditors in every bankruptcy case.  Rule 6.97 has been amended to provide that a creditor must be sent a proof of debt form upon request but other than that the trustee will be able to send out proof of debt forms at his/her discretion. 

Official receivers will issue proof of debt forms to creditors where a creditors’ meeting is convened for the appointment of a trustee, and insolvency practitioners should, following appointment as trustee, continue to receive the proofs from the official receiver after handover of the estate.  However, there may be cases where a trustee is appointed and where the official receiver has not issued proof of debt forms. 

The proof of debt form (form 6.37) has been simplified and is now a one‑page document. 

Rule 6.146(2) has been deleted.  It will no longer be necessary for a trustee to file proof of debt forms at court when he/she has completed the administration of the bankrupt’s estate. 

Equivalent changes have been made for compulsory liquidation (rule 4.74, form 4.25 and rule 4.138(2)).  No changes have been made to the current procedure for voluntary liquidations.  


General enquiries may be directed to
Telephone: 0207 291 6740

16.   Guidance to Official Receivers (ORs) on case administration 

Some IPs have asked if they can be informed of changes in the guidance given to ORs on the case administration of bankruptcies and compulsory liquidations as a result of the Enterprise Act. 

Guidance on case administration generally is made available to ORs and their staff in the form of a Technical Manual (Volume 1) and a Case Help Manual.  The Technical Manual is likely to be of most interest to IPs and contains full legislative references.  The Case Help Manual explains the processes to be adopted within the ORs’ offices, e.g. which statutory and internal forms and computer screens need to be completed, in order to give effect to the guidance contained in the Technical Manual. 

The manuals are published on The Insolvency Service’s website under The Service’s Freedom of Information Act 2000 publication scheme at: .  Both manuals are being updated to take account of the changes provided by the Enterprise Act 2002 and related secondary legislation and the revisions should be available from 1 April 2004. Hard copies of the Manuals are not available.


General enquiries may be directed to IP Policy Section Email:
Telephone: 020 7291 6772

17.   Information to Official Receivers following the Court of Appeal decision in Spectrum Plus Limited 

Following the decision of the Court of Appeal in the matter of National Westminster Bank plc v Spectrum Plus Limited and others  [2004] All ER (D) 390 (May) the case will be referred to the House of Lords.  Until that hearing it is difficult for the Insolvency Service to provide definitive guidance on this issue.  However, insolvency practitioners may be interested to read the advice recently prepared for Official Receivers, an extract of which is set out below.  

Sir Andrew Morritt gave judgment in the High Court in the matter of National Westminster Bank plc v Spectrum Plus Limited and others [2004] 2 WLR 783.  The Vice-Chancellor, in giving judgment, followed the position of the Privy Council in the matter of Agnew v The Commissioners of Inland Revenue (Brumark).

The Bank appealed the decision of the Vice Chancellor.  On 26 May 2004 the Court of Appeal gave a unanimous decision and allowed the appeal. 

The Court of Appeal was comprised of the Master of the Rolls, Lord Philips, Lord Justice Jonathan Parker and Lord Justice Jacob.  In allowing the appeal they upheld the decision in Siebe Gorman & Co Limited v Barclays Bank Ltd [1979] 2 Lloyds Rep 142, (Siebe Gorman). 

As a consequence the position of fixed charges over book debts remains confused.  HM Customs & Excise, the Commissioners of Inland Revenue and the Secretary of State for Trade and Industry, who are joint respondents in this matter, will seek permission to appeal to the House of Lords. 

The Court of Appeal found that the debenture held by the National Westminster Bank plc (the Bank) over the assets of Spectrum Plus Limited (Spectrum) did create a fixed charge over book debts.  The debenture followed a standard form used over the last 25 years by all major clearing banks.  The terms of the debenture, essentially, follow the clauses which had been approved as creating an effective fixed charge over present and future book debts by Mr Justice Slade in the case of Siebe Gorman. 

Official Receivers may recall that in the Spectrum case in the High Court the Vice Chancellor had drawn heavily on the decision of the Privy Council in the case of Brumark and Lord Millett's three-staged process in deciding whether a charge was a fixed charge or a floating charge.  Applying those conclusions, the Vice Chancellor determined that a restriction within the debenture, which nevertheless allows the collection and free use of the proceeds of the book debts, is inconsistent with the nature of a fixed charge.  The Vice Chancellor "very reluctantly" concluded that Siebe Gorman was wrong. 

The Court of Appeal overturned this decision and concluded that Siebe Gorman should be upheld.  A prohibition on disposing of book debts prior to collection, together with an obligation to pay the proceeds into an account, in the judgment of the Court of Appeal was sufficient to give rise to a fixed charge on book debts.  If the bank is in a position to exercise control over the book debts, then this is sufficient, whether or not the bank does exercise that control. 

The Court also considered that, notwithstanding that Siebe Gorman was upheld on legal grounds, Siebe Gorman should be upheld on public policy grounds.  Over the last 25 years banks, borrowers and guarantors have proceeded on the basis that debentures based on the Siebe Gorman decision will create a fixed charge over book debts.  The need for commercial certainty requires that Siebe Gorman be followed. 


It is anticipated that leave to appeal to the House of Lords will be granted.  Whilst it is hoped that the matter might be dealt with expeditiously, there is still some time to go before the matter is determined conclusively. 

Official Receivers should therefore continue to follow advice previously given in relation to book debts where the charge is considered to be a floating charge as the elements of control, as described in Brumark, over the collection and disposition of the debts are absent.  That advice was to agree a way forward with the debenture holder so that the collection of debts is not imperilled, and to deposit the realisations in a suspense or other appropriately named account and held until the legal position becomes clearer. 

Offers by debenture holders, for example, to divide (disputed) book debt realisations equally to enable a case to be closed pending further appeal in the Spectrum case should still be refused but if, in the unlikely event that creditors, including creditors for liquidation expenses, are willing to consent to such an arrangement in an individual case, without setting a precedent, to progress it, such an offer might be accepted.  

Note: Leave to appeal to the House of Lords has been granted since the guidance was provided to Official Receivers.  


General enquiries may be directed to IP Policy Section Email:
Telephone: 020 7291 6772

18. Guidance issued to Insolvency Service staff regarding allowable expenses when considering an income payments agreement (IPA) or income payments order (IPO) 

In response to queries raised, IPs may be interested in the following guidance issued to Official Receivers. 

In order to achieve as consistent a policy as possible when dealing with IPAs and/or IPOs, an internal notice was issued to Insolvency Service staff setting out guidance on what may be regarded as acceptable family expenditure before an IPA or IPO should be considered. This guidance has now been incorporated into Chapter 31.7 of the Insolvency Service’s Technical Manual, which is general guidance to staff on the administration of bankruptcy and compulsory liquidation cases and is available on‑line through the Freedom of Information Publications Scheme ( It should be remembered that the guidance is exactly that – ie guidance.  Individual cases and circumstances will always be considered on their own merits. 

In addition to the Technical Manual, Insolvency Service staff are guided towards the Family Expenditure survey, which is carried out each year by the Office of National Statistics. A link to the family Spending Review for 2002/03 is:  

Once a person’s real disposable income has been assessed, ie the income remaining after all expenditure necessary to finance the reasonable domestic needs of the bankrupt and his/her family, the Service guide is that between 50 and 70% of this should be sought by way of monthly payments under an IPA or, if necessary, an IPO. As a general rule, the higher the real disposable income, the higher the percentage which should be sought.  Guidance as to what amount is appropriate is contained in the table attached. Again, it should be stressed, this is a guide to staff only; all cases should be judged on their own merits and circumstances. 


General enquiries may be directed to;
telephone: 020 7291 6824

19.   Joint Insolvency Committee’s response to the Insolvency Practices Council’s recommendations 

In their 2003 Annual Report the Insolvency Practices Council (IPC) made four recommendations to the bodies involved in the insolvency profession.  The Annual Report can be viewed in full on the IPC’s website at

The Joint Insolvency Committee (JIC) has recently responded to the IPC on their recommendations, and practitioners may be interested to read a summary of both recommendations and the responses, which are given below: 

Recommendation 1 

Individual Voluntary Arrangements (IVA) 

The IVA as currently structured is too complex and, therefore too expensive for cases of personal indebtedness.  Consideration should be given by the profession in conjunction with the Insolvency Service to designing a simpler product, which would suit many more cases. 

JIC response 

The JIC fully support the comments made within your first recommendation.  This issue has been debated in many forums recently and we hope that your comments will assist the debate, which must be channelled towards the development of an alternative procedure.

We have written in these terms to the Insolvency Service and look forward to contributing to the progress of this issue in future. 

Recommendation 2 

Regulation and monitoring 

The Recognised Professional Bodies (RPBs) need to adopt a more pro-active approach to regulation and not just when a complaint is made.  This may well require an enhancement of the number and quality of monitoring staff. 

JIC response 

The JIC is extremely concerned at the comments made within your second recommendation and in the body of the report concerning regulation and monitoring.  The comments are made without reference to any substantive supporting evidence and without identifying clearly how regulation and monitoring is not working.  

Although the substance of your report identifies the Joint Insolvency Monitoring Unit (JIMU) in particular, the JIC considers that the criticisms may be taken to apply across all monitors and considers it important to express its support for the monitors, both as to their quality and what they do; they are, after all, doing no more (and no less) than is required by the licensing bodies by which they are employed!

The monitoring system satisfies the Insolvency Service’s Principles for Monitoring Insolvency Practitioners.  Regular reviews are undertaken by the Insolvency Service and no suggestions for substantive change have been made. 

The monitors meet on a regular basis to exchange views and to ensure consistency of approach. All monitors are aware of the importance of distinguishing between significant issues such as remuneration, bonding, accuracy of information and disclosure against less significant details. However, even some areas which could be regarded as minutiae must be drawn to the attention of the IP as these are invariably statutory requirements. They are likely to contribute to an overall assessment of how the IP is performing.  The significance of the issue raised will be a factor in considering whether regulatory action is necessary. 

If the IPC does in fact have evidence to support its assertions, the JIC would ask that details of the evidence are now provided to it, or to the licensing bodies individually, if this is more appropriate.  That would provide a better and clearer basis for discussion about the comments and recommendations. 

Recommendation 3 

Joint Disciplinary Body 

The RPBs could consider creating a joint disciplinary body in a similar way to that created by the Actuaries or at least a joint fact-finding and investigation unit. 

JIC response  

The Report does not indicate why the insolvency profession would be better served by the creation of a joint disciplinary body or fact-finding and investigation unit.  Without further persuasive arguments, the JIC cannot see any merit in taking this recommendation forward.  

Recommendation 4 

Aged Bankruptcy Cases 

The large number of old bankruptcy cases being passed out by the Protracted Realisations Unit of the Insolvency Service are being dealt with in many different ways by IPs.  There does not appear to be a standard approach and we recommend that the Insolvency Service issue some form of guidance. 

JIC response 

The Insolvency Service has now issued a protocol for IPs handling cases which have been passed to them from the Protracted Realisations Unit.  This will alleviate concerns that practitioners are handling these cases in a variety of different ways.  The JIC noted that the Insolvency Service required practitioners to “sign up” to the protocol and would refer any cases where practitioners did not follow the protocol to their licensing body. 


General enquiries may be directed to IP Policy Section Email:
Telephone: 020 7291 6740

20.   New chairman appointed for the Insolvency Practices Council (IPC) 

IPR Services Ltd, the company that funds the IPC, has appointed Geoffrey Fitchew to succeed Graham Kentfield, the first chairman of the IPC who retires in December 2004. 

Geoffrey Fitchew was Chairman of the Building Societies Commission and Chief Registrar of Friendly Societies until 2002.  He was formerly a senior civil servant in the Cabinet Office and H M Treasury.   

The IPC is an independent advisory body formed in 2000 that examines the professional and ethical standards of the insolvency profession.  Further information about the IPC is available from 


General enquiries may be directed to IP Policy Section Email:
Telephone: 020 7291 6740

21. Joint Insolvency Committee 

The 2004 Annual Report of the Joint Insolvency Committee (JIC) has been available on the Insolvency Service Website  since April 2005. As insolvency practitioners will be aware the JIC was formed in 1999 and two of its most important functions remains the promotion of standards amongst insolvency practitioners and the provision of guidance of a regulatory, ethical or best practice nature. 

With the aim of clarifying the status of Statements of Insolvency Practice (SIPs) during the past year the JIC has revised the introduction common to all SIPs. A revised SIP 9 on the remuneration of office holders was issued together with a new SIP 15  (Reporting and providing information to Committees).  The JIC has also been instrumental in drafting guidance papers on different aspects of insolvency which are  not covered by SIPs and, although not prescriptive, will provide practical solutions to the type of problems that insolvency practitioners encounter. The first two papers on the “Control of cases” and “Succession planning” were issued by the Authorising Bodies in early April 2005. 

As part of its efforts to promote good communication and consistency between the regulatory bodies the JIC also held a Regulatory Forum on 12 May 2005. This considered regulation from the view of not only the regulatory authorities but also other interested groups. Selected speakers representing the views of bond providers, government departments as creditors in insolvency proceedings and the Insolvency Practices Council (representing the public interest) were in attendance. Following the morning speakers, delegates were invited to submit written questions which were then used to form the basis of the discussion led by JIC members in the afternoon. The JIC panel selected four topics, Industry Intelligence, Value for money, Consistency, and Monitoring which were felt to be of most interest to the forum and the discussions on these topics were wide ranging. The JIC has agreed to consider further the issues raised as part of its working agenda

The JIC has continued its work on a revised version of the Ethical Guide which began in 2004 and this is expected to continue through 2005. The Committee also continued to develop its relationship with such bodies as R3 and the IPC and engaged in reviews of aspects of insolvency law.


General enquiries may be directed to IP Policy Section Email:
Telephone: 020 7291 6740

22. Practice Note on the Hearing of Insolvency Proceedings 

1. The following statement was issued by the Vice-Chancellor on 23 May 2005.  

2. This Practice Note supersedes all previous Practice Statements of the Bankruptcy Registrars dealing with jurisdiction and work distribution and the Guidelines issued by the Insolvency Court Users’ Committee in November 1988. 

3. As a general rule all petitions, claims and applications (except for those listed in paragraph 4 below) should be listed for initial hearing before a registrar or district judge in accordance with rule 7.6(2) Insolvency Rules 1986. 

4. The following applications should always be listed before a judge: 

Proceedings relating to insolvent companies 

  • applications for committal for contempt
  • applications for an administration order
  • applications for an injunction
  • applications for the appointment of a provisional liquidator
  • interim applications and applications for directions or case management after any proceedings have been referred or adjourned to the judge (except where liberty to apply to the registrar or district judge has been given);

Proceedings relating to insolvent individuals 

  • applications for committal for contempt
  • applications for an injunction
  • interim applications and applications for directions or case management after any proceedings have been referred or adjourned to the judge (except where liberty to apply to the registrar or district judge has been given). 

5. When deciding whether to hear proceedings themselves or refer or adjourn them to the judge, the registrar or district judge should have regard to the following factors: 

  • the complexity of the proceedings
  • whether the proceedings raise new or controversial points of law
  • the likely date and length of the hearing
  • public interest in the proceedings
  • the availability in the court which is likely to hear the proceedings of relevant specialist expertise.

6. Litigants and their advisors are reminded that paragraph 17 of the Practice Direction on Insolvency Proceedings applies to appeals and that an appeal from a registrar, district judge or County Court judge lies, in the first instance and without permission, to a single judge of the High Court. 


General enquiries may be directed to;

Telephone: 020 7291 6740

23. Relief for the Indebted –An Alternative to Bankruptcy? 

This Insolvency Service consultation concerning a proposed non-court based debt relief procedure for individuals who owe relatively little, have no means to pay their debts and are not able to access any of the currently available debt resolution procedures closed on 30th June. 

We are in the process of analysing responses and will be issuing a report on the findings of the consultation in due course. 

General enquiries may be directed to;

Telephone: 020 7291 6740

24. Update on the evaluation of the Enterprise Act 2002 and prescribed part returns

The latest Interim Evaluation report is available on the Insolvency Service website, please click the link 

We expect to issue a final report towards the end of next year.

As part of the evaluation we wish to determine whether the prescribed part has been set at an appropriate level but unfortunately the number of prescribed part returns being submitted have decreased markedly and we would like to take this opportunity to request that insolvency practitioners continue to provide returns for all cases involving a floating charge where the proceedings commence up to April 2006.

A copy of the return is available from our website, please see the link below.

Please return completed forms to, or to Prescribed Part Evaluation, Policy Unit, The Insolvency Service, Area 5.7, 21 Bloomsbury Street, London, WC1B 3QW.


General enquiries may be directed to;

Telephone: 020 7291 6740

25. Meeting with Compliance Managers

In Dear IP Issue No 22, March 2005, expressions of interest were sought for a meeting between compliance managers and monitors of the RPBs and the Secretary of State.

Two meetings were subsequently held in September 2005. The first was attended by 11 compliance managers of the larger Insolvency Practitioner firms and the second by 11 compliance managers of medium sized Insolvency Practitioner firms.

Several topics were discussed, including monitoring visits where practitioners were authorised by different authorising bodies; continuity between monitoring visits; qualitative value; compliance implications of a paperless office; the Leyland Daf decision and Money Laundering.

It is considered that the meetings were a success and will pave the way for more and better communication between those involved in compliance within the Insolvency Profession and the monitors. Consideration will be given to holding similar meetings in the future.

I would like to thank all of those who expressed an interest in these meetings, and who took part. If anyone wishes to obtain a copy of the notes of either meeting they should e-mail me.


General enquiries may be directed to

26. JIEB Examiner vacancies

JIEB has a vacancy for an examiner on the Administrations, Company Voluntary Arrangements and Receiverships papers. A job description, details of the individual responsibilities of examiners and how to apply are given in an annex attached to this chapter. The closing date is 20 January 2006.


Any enquiries arising from this article should be directed towards Mike Chapman of Insolvency Practitioner Policy Section, tel: 020 7291 6765, email

27. Responding to correspondence 

Insolvency practitioners are reminded that in late 2001 / early 2002 the authorising bodies urged their practitioners to respond to correspondence in a timely manner (a period of ten working days was suggested by some bodies), where appropriate by sending an acknowledgement if a substantive response could not be provided within that timescale.  Insolvency practitioners are also reminded that in accordance with the Ethical Guide they should conduct themselves with courtesy and consideration towards all with whom they come into contact during the course of performing their work and that failure to follow that guidance could constitute misconduct. 

Complaints about a breakdown in communications or a failure by some insolvency practitioners to communicate continue to form a significant proportion of complaints to the authorising bodies (16% to 18% in 2003 and 2004).  It is appreciated that the nature of the work of insolvency practitioners is such that they may occasionally encounter individuals whose expectations they are unable to meet, but a clear explanation of the facts at an early stage, together with details of the practitioner’s internal complaints procedure (if any) or contact details of the practitioner’s authorising body should help to resolve differences.


General enquiries may be directed to IP Policy Section Email:

Telephone: 020 7291 6772      

28. Insolvency Practitioner’s details 

Practitioners will be aware that one of the responsibilities of the Insolvency Practitioner Unit (IPU) is to ensure the accuracy of Insolvency Practitioner’s details held on The Service’s database. The information is required by Official Receivers to ensure accurate production of Secretary of State applications, by IP Banking when dealing with cheque requisitions from office holders and, where appropriate, for publication on The Insolvency Service website. 

An exercise recently carried out by IPU to update insolvency practitioner’s details canvassed all practitioners and resulted in some 900 amendments being made to the database including the removal of 123 entries.

As insolvency practitioners become increasingly transient, the onus on them to

ensure the Unit is kept up to date is even greater.   


General enquiries may be directed to   

29. Update on research projects commissioned by The Insolvency Service.

As part of our commitment to evaluate the provisions of the Enterprise Act 2002, The Insolvency Service has commissioned several research projects. On the Corporate side, these are: 

(1)   ‘Report on Insolvency Outcomes’ by Dr Sandra Frisby from the University of Nottingham. This report is based on the findings of research conducted between November 2004 and May 2006 and consisted of the construction of a database of 2063 companies, which entered into administration or administrative receivership between September 2001 and September 2004. Additionally a series of interviews with insolvency practitionerss and bankers was carried out in order to amplify and explain the trends recorded in the database. 

(2)   ‘Study of Administration Cases’ by Alan Katz and Michael Mumford, Research Fellows at the International Centre for Research in Accounting at Lancaster University. This paper considers changes in the use of administration relative to other corporate insolvency procedures and focuses on whether there may have been some substitution of administration for liquidation. The study also assesses the extent to which cases that went into administration during 2004 could be shown to meet the statutory purpose of administration. 

(3)   ‘The Impact of the Enterprise Act 2002 on Realisations and Costs in Corporate Rescue Proceedings’ by John Armour, Audrey Hsu and Adrian Walters, Research Fellows at the Centre for Business Research, Cambridge University, Department of Accounting, National Taiwan University and Nottingham Trent University respectively. In particular, this study compares the operation of the new streamlined administration procedure to that of administrative receivership. 

Full copies of their reports can be found on our website, along with other research papers and can be accessed here

The Insolvency Service has hosted seminars for the authors to present their findings, which have resulted in informative discussion amongst those present. We are sure you will find these papers of equal interest. 

The Insolvency Service is committed to developing evidence-based policy and to support this, it undertakes research and evaluation to: 

  • Ensure the delivery of outcomes that both fit within Departmental objectives and Governmental policies, and meet the requirements of ‘the market’; and
  • Utilise its unique position of having responsibility for both policy development and operational delivery for the benefit, and with the involvement, of its stakeholders.

Details of evaluation work undertaken by The Insolvency Service can also be found on our website and can be accessed here

Final evaluation reports of the Enterprise Act 2002 will be published later this year. 


General enquiries may be directed to;

Telephone: 0207 291 6740

30. UNCITRAL CLOUT Correspondent 

The means for collecting and disseminating court judgments and arbitral awards that relate to legal texts emanating from the work of the UNCITRAL (United Nations Commission on International Trade Law) Commission is known as ‘Case Law on UNCITRAL Texts’ (CLOUT).  

The collection of court judgements and arbitral awards and the preparation of abstracts thereon is done by National Correspondents designated by States who are party to an UNCITRAL Convention, or States that have enacted legislation based on an UNCITAL Model Law. 

As the UNCITRAL Model Law on Cross-Border Insolvency has been enacted within Great Britain (The Cross-Border Insolvency Regulations 2006 (SI 2006/1030) came into force on 4th April 2006), we have deemed it appropriate to appoint a National Correspondent in respect of cross border insolvency matters. 

Professor Ian F. Fletcher, Professor of International Commercial Law, University College London and a Barrister at 3-4 South Square, Gray’s Inn, London has kindly accepted our invitation to take on this role. 

The primary task of the National Correspondent is to collect judgments issued by the courts in Great Britain and to prepare abstracts and forward them to the Secretariat of the UNCITRAL Commission. The abstracts submitted are then translated and published in all six UN Languages, and available on the CLOUT website at: 

To assist Professor Fletcher, in his role as the designated reporter for Great Britain, it is important that he becomes aware of any cases where the Model Law is used (including possibly some which do not reach court, e.g. because a party from whom information is required realises that the Model Law makes it inevitable that they will have to comply in the end).  

To this end, if you or any of your colleagues were involved in a Model Law application, it would be very much appreciated if you could supply the following information to Professor Fletcher: 

1)     Full name of the case and any identifying reference numbers, such as court listing number;

2)     Neutral citation where allocated;

3)     Names of the court and of the judge;

4)     Date(s) of hearing and decision;

5)     If possible, some information about the subject matter of the application, details of the articles of the Model Law that are invoked for the purposes of the application/decision – and (where available) any transcript of the case;

6)     If the case is reported in a citable series of reports, those details should be included. 

In addition, it would be helpful if the names of the parties’ legal representatives were also provided. 

Could you please send details to Professor I.F. Fletcher, Faculty of Laws, University College London, Bentham House, Endsleigh Gardens, London WC1H 0EG. If using electronic communication, the following address should be used:

Any enquiries regarding this article should be directed towards Muhunthan Vaithianathar, Policy Unit, Area 5.7, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7637 6515, email:

General enquiries may be addressed to; Telephone: 0207 291 6740

31. Proposals for the reform of the debtor petition process 

In 2006, over 80% of bankruptcy orders made in England and Wales were from debtors petitioning for their own bankruptcy.  The increase in the number of bankruptcy orders made in the last four to five years, particularly debtors own petitions, has undoubtedly contributed to the strain on HM Court Services’ resources. 

In some parts of England and Wales debtors face a wait of up to four months from initial contact with the courts to obtaining debt relief via a bankruptcy order. Other court users also face lengthy delays as court staff deal with non-contentious debtor petitions.  If one considers that the role of the court is to resolve disputes, it can be argued that as there is no dispute in a debtor’s petition case, there is no need for the debtor to go through the court system in this first instance. 


The Insolvency Service is therefore proposing to remove the requirement that the debtor must file a petition for bankruptcy at court.  Instead, the Official Receiver could make the bankruptcy order administratively, thus freeing up the court’s time to deal with creditor’s petitions, public examinations, bankruptcy restriction orders, income payment orders, and other contentious matters and civil processes. 


Since 22 October 2007 we have been inviting all interested parties to take part in the consultation on the above proposals.  The consultation document, entitled ‘Bankruptcy:  proposals for reform of the debtor petition process’ can be accessed at The Insolvency Service website in the live consultation register, or at the following address: 

The consultation closes on 11 January 2008. 

Any enquiries regarding the consultation or requests for hard copies of the proposal document should be directed to Maria Isanzu, Policy Unit, Area 5.7, 21 Bloomsbury Street, London WC1B 3QW; telephone: 020 7291 6733 email:   

General enquiries may be directed to,

Telephone: 0207 291 6740.

32. Enterprise Act 2002 – Corporate Insolvency Provisions: Evaluation Report and discussion/forum on the future development of corporate insolvency                          

The Insolvency Service has completed an evaluation of the corporate insolvency provisions of the Enterprise Act 2002, which came into force on the 15 September 2003.  

The evaluation was undertaken to comprehensively assess whether, to what extent and how the provisions of the Enterprise Act 2002 met its policy objectives and to capture the real effects of the legislative action.  The evaluation includes both quantitative and qualitative data collected from various sources over a four-year period. 

The evidence from the evaluation indicates that the Enterprise Act 2002 is having some success in achieving its objectives. 

In summary, The Enterprise Act: 

  • Has promoted the use of administration relative to administrative receivership and made administration a more viable procedure for small and medium-sized enterprises.

  • Has encouraged the use of non-court order entry routes into administration.

  • Has shortened the average duration of administrations.

  • Has provided for alternative exit routes from administration.

  • Has reduced some of the direct costs (primarily insolvency practitioner and legal fees) of administration.

  • Has increased returns to secured and preferential creditors. 

As a result of the evaluation, there are four main recommendations for the future: 

(a)    A review of Creditors Voluntary Liquidation

(b)   Continued monitoring of the impact of the Enterprise Act and further evaluation, in particular looking at the impact of the ‘prescribed part’

(c)    Continued use of insolvency academics, other specialists and stakeholders in evaluation activities

(d)   Continued observance of the impact of case law and other legislation on the Enterprise Act and statutory amendments to be made as required 

A full copy of the evaluation report can be found on our website and can be accessed at the following address: 


The Insolvency Service also hosted a seminar on the 12 February 2008 to present the key findings of the evaluation report and to discuss widely and openly how corporate insolvency may develop in the future. To inform this discussion, a panel of experts was asked to give their personal views on the future development of corporate insolvency. 

Professor David Burdette of Nottingham Trent University gave an academic view. Jennifer Marshall, a partner in the Global Restructuring Group at Allen and Overy gave a legal practitioners view and Steven Law, a partner at Ensors gave an insolvency practitioners view. This was then followed by a question and answer session. 

Slides and notes from the seminar can also be found on our website and can be accessed at the following address: 


Any enquiries regarding the above should be directed towards Muhunthan Vaithianathar, Policy Unit, Area 5.7, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7637 6515 email:

General enquiries may be directed to

Telephone: 0207 291 6740

33. Floating charges and application of the prescribed part 

The case of Thorniley v Revenue and Customs Commissioners (Ch D (Companies Ct)) (also known as Airbase (UK) Limited, Re (Ch D (Companies Ct))) has clarified the position regarding the “prescribed part” of the company’s assets set out in section 176A of the Insolvency Act 1986, from which unsecured creditors must be paid in priority to floating charge holders. The court has confirmed that the remaining, effectively unsecured amounts due to the floating charge holder(s) do not constitute “unsecured debts” for the purpose of section 176A(2), and cannot partake of the prescribed part. Any shortfall relating to a floating charge over the company’s assets should be excluded from distributions from the prescribed part. 

In arriving at this conclusion the court considered the construction and wording of section 176A, particularly subsection 176A(2)(b). This provides that the liquidator, administrator or receiver “shall not distribute [the prescribed part] to the proprietor of a floating charge except in so far as it exceeds the amount required for the satisfaction of unsecured debts”.  

Any enquiries regarding this article should be directed towards Andrew Shore, IP Policy Section, Area 5.7, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7291 6769; email: 

General enquiries may be directed to; Telephone: 020 7291 6772

34. Enterprise Act 2002 – Individual Insolvency Provisions: Evaluation Report

The Insolvency Service has completed an evaluation of the individual insolvency provisions of the Enterprise Act 2002, the majority of which came into force on 1 April 2004.   

The evaluation was undertaken to comprehensively assess whether, to what extent and how the provisions of the Enterprise Act 2002 met its policy objectives and to capture the real effects of the legislative action. The evaluation includes both quantitative and qualitative data collected from various sources over a four-year period. 

The evidence from the evaluation indicates that the individual insolvency provisions of the Act have achieved their intermediate policy objectives in most areas – of the 18 intermediate policy objectives, 15 have been fully or partially achieved. Where intermediate policy objectives have been only partially achieved, this is mainly due to third-party actions over which The Insolvency Service has no control.

As regards the ultimate objectives of the individual insolvency provisions of the Act:

  • The alleviation of the social consequences of bankruptcy has been partially achieved - bankrupts are freed from bankruptcy restrictions quicker and they are subject to fewer restrictions. However, a bankrupt’s access to the financial market has not improved due to lack of change in lenders’ policies, and the stigma attached to bankruptcy remains the same; and
  • As regards the encouragement of business start-ups, the insolvency provisions of the Enterprise Act 2002 only play a small part in affecting this headline outcome. The insolvency provisions of the Act have not yet affected the ‘fear of failure’ and a bankrupt’s ability to recommence trading is still hindered by a bankrupt’s restricted access to the financial market and business’s attitudes to bankrupts.

 The main recommendations as a result of the evaluation are that The Insolvency Service:

  • Undertakes a detailed cost-benefit analysis of early discharge, as soon as possible, to assess whether the resources required to administer the early discharge process and the burdens placed on businesses, the courts and the Official Receiver are justified by the limited benefits afforded by early discharge, with a view to repealing the provisions;
  • Subject to the results of the above, undertakes a review of the early discharge process to ascertain whether delays in the process can be eliminated;
  • Increases its publicity of the Bankruptcy Restrictions Order (BRO) regime and reporting on cases where BROs are obtained, in order to enhance the knowledge and impact of the BRO regime;
  • Undertakes a detailed cost-benefit analysis of whether, taking into account any amendment to supervisor fees, the resources required to deal with more complex cases and for a centralised Fast Track Voluntary Arrangement (FTVA) administration centre are justified by any benefits afforded by FTVAs over those offered by non-FTVA post-bankruptcy IVAs; and
  • Considers the possibility of an automatic annulment of a bankruptcy order following approval of a post-bankruptcy IVA (after expiry of 28 days to allow for any objections).

A full copy of the evaluation report can be found on our website and can be accessed by the following link: 


Any enquiries regarding the above should be directed towards Caroline Burton, Policy Unit, Area 5.7, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7637 6517 email: 

General enquiries may be directed to email

Telephone 020 7291 6740

35. Change to JIEB syllabus and examination process 

The syllabus for the 2008 Joint Insolvency Examination has been brought into line with current examination practice by restating the syllabus from the format of a list of topics into a series of objectives or learning outcomes which a successful candidate should be able to achieve. The intention has been to prepare a syllabus that is generic to the three papers (Personal Insolvency; Liquidations; and Administrations, Company Voluntary Arrangements and Receiverships) and to two jurisdictions (England and Wales, and Scotland). This avoids much of the duplication and very detailed lists of procedures that were a feature of the syllabus format of prior years. 

The learning outcome syllabus is also intended to set out clearly the distinctions between non-formal practice of an analysis and advice nature and formal practice of appointments as office holder. 

However, this reformatting of the syllabus is not intended to introduce any substantive change from the 2007 syllabus in the subjects that may be examinable (other than routine updating for legislation in force at 30 April 2008). 

The subjects of the three papers remain Liquidations; Administrations, Company Voluntary Arrangements and Receiverships; and Personal Insolvency. Candidates who have not yet passed any of the papers may now elect to sit only one paper, should they wish. Those who have passed at least one of the three papers must pass the remaining paper(s) in a single session. 

An additional 30 minutes has been allowed in each exam for candidates to read and check their work. The standard examination time is therefore now three hours and thirty minutes (3:30). 

Examinations will take place in November each year (rather than December, as was previously the case), and will typically fall on the first Monday, Tuesday and Wednesday of the month. This year the examinations fall on 3, 4 and 5 November. 

A copy of the 2008 syllabus and Notes for Candidates can be found at: 


Any enquiries regarding the syllabus change (only) should be directed towards Elizabeth Blount, Secretary to the Joint Insolvency Examination Board, C/o The Institute of Chartered Accountants in England & Wales, Learning & Professional Development,  Metropolitan House, 321 Avebury Boulevard, Milton Keynes, MK9 2FZ; telephone: +44 (0) 1908 248 309; email: Enquiries regarding examination entry and registration should be addressed to the appropriate Recognised Professional Body, and NOT to the above contact. 

General enquiries may be directed to; Telephone: 020 7291 6772

36. Launch of Investigations and Enforcement Services (IES) 

A new business has been created within the Insolvency Service which comes into being on 1 January 2009.  Investigations and Enforcement Services (IES) brings together the current businesses of Investigations, Enforcement and Companies Investigation Branch to form a national investigation and enforcement structure which will be headed by Robert Burns, currently Inspector of Companies. 

The IES vision going forward encapsulates the delivery of an efficient and flexible investigation and enforcement capability by professional, trained and motivated teams – targeting outcomes that reflect the public interest, promoting fair markets and engaging with our stakeholders in order to maximise our impact.   

The creation of IES represents the implementation of one of a number of recommendations made by Grant Thornton, who were contracted to conduct a review of the Insolvency Service’s investigation and enforcement activity. 

Grant Thornton’s report, which was published on 4 July 2008, was positive about the quality of investigation and enforcement operations across the Insolvency Service, referring to “an experienced and committed workforce, that effectively discharge their remit.”  One of the principal recommendations was that the Service should organise investigation and enforcement activities so that they could be conducted in the most unified, effective and efficient way possible.  The creation of IES will achieve this. 

Priorities for the new business include: 

  • the establishment of an investigation career stream, linked to a professional qualification, that will enhance opportunities for movement and advancement both within the investigation specialism and across the wider Insolvency Service and will enhance the flexibility of IES staff to focus on particular areas of concern as required;

  • maximising the quality and efficiency of investigation and enforcement processes by identifying and promoting best practice and taking a corporate approach to the pursuit of excellence; and

  • engaging with stakeholders with the aim of maximising the impact of investigation and enforcement activities. 

“This is an exciting time for the Service”, according to Stephen Speed, Inspector General and Agency Chief Executive, who states “the establishment of IES marks a major step forward.  The new business, which will work seamlessly with Official Receivers Services, makes the most of the Service’s skills and talents for investigation and enforcement work in delivering for our customers. Our vision going forward is of a vibrant, outward looking and ambitious organisation that engages with and is responsive to the concerns of our stakeholders.” 

Any enquiries regarding the above should be directed towards Gay Burns or Clare Quirk, Investigations and Enforcement Services; telephone: 020 7596 6130/0151 625 2153 email: or,

37. JIEB Examiner and moderator vacancies 

The Joint Insolvency Examination Board (JIEB) exams consist of a set of practical and technical examinations which all licensed insolvency practitioners are required to pass.  Examiners and moderators responsible for setting, marking and moderating the examinations are drawn from the insolvency profession. 

The fees paid to examiners and moderators provide a useful additional income but are not sufficient to cover the time spent on a normal professional charge basis.  However, appointment to an examining team has important additional benefits for the individual and firm. 

JIEB is constantly in need of new team members and if you or anyone in your firm wish to consider applying for such a role, you are encouraged to contact JIEB for further information as soon as possible. 

Any enquiries regarding this article and for further information about the roles should be directed towards Pauline Cozens, JIEB, 321 Avebury Boulevard, Milton Keynes MK9 2FZ.  Telephone: 01908 248 204,  email:

38. Publication of Annual Review of Insolvency Practitioner Regulation and Report on the operation of SIP 16

The Insolvency Service has published the first annual review of insolvency practitioner regulation, which is now available on our website.  The review sets out the essential features of the regulatory regime that governs insolvency practitioners; what the public and businesses can expect from it, and what The Insolvency Service and the other regulators are doing to improve it.

In addition, a report on the first six months operation of SIP 16, which is concerned with the disclosure of information in pre-pack administrations, has also been published.  This sets out the key findings of our monitoring of information provided by insolvency practitioners pursuant to SIP 16 and indentifies those areas where compliance with the SIP may be improved.  It is anticipated that a further report will be published in early 2010.

The Annual Review of Insolvency Practitioner Regulation is available here:

The Report on the first six months operation of SIP 16 is available here:

Enquiries regarding this article should be directed towards IP Policy Section, Area 3.6, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7291 6772; email:

39. Securing chip and PIN devices in insolvency proceedings

The UK Cards Association (the trade association representing all the major credit, debit and charge card issuers) plays a leading role in preventing card fraud and is keen to work closely with insolvency practitioners. Having been previously responsible for the introduction of chip and PIN, The UK Cards Association is keen to help ensure that chip and PIN devices are securely managed during each stage of the insolvency process. SOCA (Serious Organised Crime Agency) is also supporting The UK Cards Association in this endeavour.

Since its introduction back in 2003, chip and PIN has had a major impact on tackling card fraud in the UK. However as fraudsters have found it increasingly difficult to commit particular types of fraud, they have started to explore other avenues for obtaining cardholder data, one of which is through chip and PIN devices that are used in retail shops and stores for accepting card payments.

In recent years the banking and retail industries have seen a number of cases where criminal gangs have targeted chip and PIN devices. These gangs tamper with the internal circuitry of the chip and PIN device and then seek to reintroduce them into retail sites. This allows the fraudster to capture card (magnetic stripe) and PIN data which is subsequently used to create magnetic stripe clones of genuine cards for fraudulent use overseas in countries that have not yet deployed chip and PIN. This activity is clearly of considerable concern to us all.

It is known that fraudsters will go to considerable lengths to obtain chip and PIN devices. Examples that have been seen range from committing theft at retail sites to the purchasing of these devices from internet merchants such as eBay. Due to the recent economic difficulties, a large number of household retail names have entered insolvency proceedings.  The potential availability of large numbers of redundant devices when such retailers go out of business is of considerable concern to the banking industry. Therefore it is important that these devices are dealt with in a safe and secure way when a business is closed.

There is a particular risk that these devices might be stolen by unscrupulous retail or landlord nominated staff at the early stages of an insolvency process. Therefore extra care is needed in handling these devices from the very early stages of a process. There is also a potential reputational risk to insolvency practitioners if these devices are not handled safely and securely and end up in the hands of the wrong people.

The UK Cards Association has provided some information on the Card Watch website for insolvency practitioners under the retail section FAQ’s. In order to access the website and the information, please follow the link below:

Any enquiries regarding this article should be directed towards:

40. Launch of a guide for debtors’ advisors – “In Debt? Dealing with Creditors”

The Insolvency Service has launched a new guide to debtors and debt advisors, entitled ‘In Debt?  Dealing with your creditors.’  The guide contains an overview of the main debt solutions, not just those administered by The Insolvency Service, and addresses what we believe to be a gap in the literature currently available to debtors from all sources. 

The guide includes the following:

  • A summary of the key features of the main statutory and non-statutory debt solutions;

  • An overview on how each one works;

  • The pros and cons of each solution;

  • Where to obtain further help and information.

The guide has been produced in conjunction with the IVA Standing Committee, which includes representatives from many sectors of the insolvency world, including R3, IPA, ICAEW and IPC, as well as debt advice organisations, creditor bodies and insolvency practitioners. The Insolvency Service has also consulted with other organisations, including Government, regulatory and charitable organisations, and we are grateful to them all for their valuable input.

The Guide is available electronically to all advice agencies, and insolvency practitioners. It is also on The Insolvency Service website from where it can be accessed and downloaded.  The Guide is badged with The Insolvency Service logo and signposts Government funded advisers for debt advice.

The Guide is also available in word format. To request a copy of the word version, together with our standard terms and conditions for its use, please contact .

Hard copies of the Guide are available on request, and it is available online at:

Any enquiries regarding the above should be directed towards Karol Sanderson, Policy Unit, 3rd Floor, 21 Bloomsbury Street, London WC1B 3QW; e-mail:

General enquiries may be directed to; Telephone: 020 7291 6740

41. Project for Modernisation of the Insolvency Rules - Update

Following the introduction of the new modernised insolvency advertising regime on 6 April 2009, The Insolvency Service is proceeding with the preparation and delivery of the remaining modernisation changes identified for the Insolvency Rules which are planned to come into force on 6 April 2010. Thereafter, all amendments to the Insolvency Rules will be taken into a new set of Rules which are planned to come into force on 6 April 2011.

The further modernisation proposals planned for April 2010 are subject to the successful passage of a Legislative Reform Order (LRO) that is currently going through the Parliamentary process. This will make necessary changes to the Insolvency Act to allow the Rules to provide for matters such as e-delivery of insolvency notices and the use of websites for sending reports and other documents to creditors.

We have recently sent a draft of the modernisation changes proposed for April 2010 to the Insolvency Rules Committee, who are required to be consulted on amendments to the Rules before they are laid before Parliament. The expectation is that they will have completed that consideration and signed off the amendments by the end of November 2009 to enable the Rules to be made early in the New Year, a few months  before they are planned to come into force on 6 April 2010.

Policy officials are keen to help the insolvency profession and other stakeholders prepare for what will be a substantial raft of changes coming into force in April 2010. With this in mind, The Insolvency Service is preparing a version of the current Insolvency Rules as if they had been amended by the proposed amendments planned for April 2010. This is expected to be published on The Insolvency Service’s website by early September 2009 and  will contain tracked changes highlighting the amendments. To the extent that it has been possible, this document will reflect those suggestions that stakeholders have made to our earlier consultations. Given the timeframe for delivery of the Rules amendments, the version that will be published should not be seen as a further consultation but as an aid to planning for the modernisation changes.

To provide further assistance to stakeholders, The Insolvency Service is planning to hold a stakeholder conference at 21 Bloomsbury Street, London during the afternoon of Wednesday 14 October 2009 to discuss and explain the nature of the principle modernisation changes proposed for April 2010. Invitations will be sent out over the next month and numbers will be restricted. However, should any practitioners or interested persons wish to be added to the invitation list please feel free to contact us at the address below.

Any enquiries regarding the above should be directed towards Neil Ogilvie, Policy Unit, Zone B, 3rd Floor, 21 Bloomsbury Street, London WC1B 3QW; e-mail

42. Consultation on Debt Management Schemes

On 18 September the Consultation Paper “Debt Management Schemes - delivering effective and balanced solutions for debtors and creditors” was issued. This is a joint consultation between the Ministry of Justice, the Department for Business Innovation & Skills (BIS) and The Insolvency Service.  The consultation is aimed at all those with an interest in providing options to help the over-indebted, debtors with multiple debts in England and Wales and their creditors.

In considering whether action is required, the Consultation Paper is guided by the following objectives:

  • helping people who could, but are struggling to, repay their debts;
  • ensuring that fees charged by debt management scheme operators are reasonable and consistent;
  • ending the practice of some creditors adding interest to debts included in a repayment plan;
  • preserving the best features of the current debt management industry;
  • ensuring that needs of debtors, creditors and operators are correctly balanced; and
  • ensuring that debtors are aware of the range of options available to them and are advised on the most appropriate and sustainable solution(s) for their circumstances.

The options considered in the Consultation Paper are:

  1. continuing with measures underway to raise awareness about current schemes and enforce existing rules with operators;
  1. improving current schemes by the introduction of best practice codes or other non-statutory regulation; or
  1. commencing the powers in Chapter 4 of Part 5 of the Tribunals Courts and Enforcement Act 2007 to introduce statutory debt repayment plans.

The consultation and accompanying initial Impact Assessment pose a number of questions, the responses to which will assist in determining future policy in this area.

The consultation period ends on 18 December 2009 and the full Consultation Paper, initial Impact Assessment and details of how to respond can be accessed on.

Any enquiries regarding this article should be directed towards Andy Woodhead, telephone: 0207 291 6738. Email:

General enquiries may be directed to; Telephone: 020 7291 6740

43. Statistics on insolvent individuals by geographical location

For the first time in July 2009, the Insolvency Service published on its website the number of bankruptcy orders and individual voluntary arrangements by region and local authority. The information is available on an annual basis covering the period 2000 to 2008 and will continue to be updated annually.

The publication of this information is only made possible by the continued high quality of address information provided by bankrupts and insolvency practitioners in their returns to the Insolvency Service.

The figures can be seen via the link here:  

Any enquiries regarding this article should be directed towards Gary Mills, Policy Unit, Zone B, 3rd Floor, 21 Bloomsbury Street, London WC1B 3QW. Email:

General enquiries may be directed to email   

 44. Publication of Insolvency Guidance Paper – ‘Dealing with complaints’ 

The above Insolvency Guidance Paper (“IGP”) has recently been published and offers guidance to insolvency practitioners as to matters which they may consider when dealing with complaints. 

The IGP is available on The Insolvency Service website at the link below: 


General enquiries may be directed towards IP Policy Section, 3rd Floor Zone B, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7291 6772; email:

45. Administrative bankruptcy orders and removal of early discharge

Responses to The Insolvency Service’s 2007 consultation on reforming the debtor bankruptcy petition process revealed clear support for the idea of bankruptcy orders being made administratively. On 13 November 2009 we launched a further consultation setting out detailed proposals for a new route into bankruptcy, based on debtors making an application directly to an official, either electronically or through the post.

Stephen Speed, Chief Executive of The Insolvency Service, said:

"The recent digital expansion of government services has provided an excellent opportunity for The Insolvency Service to look at how we can best deliver value to our service users. A new administrative process would create a more modern, efficient and appropriate entry route into bankruptcy while allowing the courts to focus their resources on matters that rightly require judicial intervention, such as resolving disputes."

Already over 94% of those petitioning for their own bankruptcy seek advice prior to accessing bankruptcy. We want to build on this and propose using prompts and pop up messages in the on-line application process to encourage debtors to seek advice as early as possible.

We also want to ensure that bankruptcy remains a serious regime. Bankruptcy is more than just an appearance at court, and we are not proposing any changes to the process after the order is made. We will provide the information to make sure that applicants are fully aware of the consequences of bankruptcy before they proceed.

The consultation also considers the removal of the early discharge provision, which enables some bankrupts to be discharged from bankruptcy in less than one year. With the cost of administering early discharge proving greater than the benefits to the debtor, to creditors or to The Insolvency Service, the removal of this discretionary provision would in our view be beneficial.

The consultation document is available to view on our website at Tell us what you think at by 8th February 2010.

Any enquiries regarding this article should be directed towards
Maria Isanzu, 21 Bloomsbury Street, London WC1B 3QW. Telephone: 020 7291 6733 email:

General enquiries may be directed to

Telephone: 020 7637 1110

46. Searches of the Consumer Direct database – agreement with OFT

The Office of Fair Trading (‘OFT’) has implemented a gateway for requesting searches of the Consumer Direct database in all insolvency cases.  Previously, insolvency practitioners have been able to make requests for searches directly, but OFT became aware that some of the requests they received were not from authorised insolvency practitioners. OFT have therefore decided to involve The Insolvency Service as the gateway to ensure that only valid requests are made. 

An insolvency practitioner is able to request a search of the Consumer Direct database when they are acting as trustee or liquidator and making enquiries into the affairs of an insolvent business.  The database holds details of any complaints made against or enquiries into trading businesses. The OFT will now supply specific information about a particular complaint.

To obtain information insolvency practitioners acting as either liquidator or trustee will have to complete a form entitled ‘Request Form for Consumer Direct Information Only’. The Form and the Guidance Notes for use are available on The Insolvency Service website at the following link:


The Form contains a box entitled ‘Enactment(s) under which functions or duties are being pursued’. This should be completed by the insolvency practitioner detailing the relevant section of either Companies Act 2006 or the Insolvency Act 1986 that enables them to make enquiries. There is provision on the Form for stating the name of the company for which information is requested and whether the complainant’s details are required.

The Form should be completed electronically and be sent to the Official Receiver Operations ‘Appointed Contact’. The form will then be forwarded to the OFT who manage the Consumer Direct database. Details of the appointed contact are provided below.

When the OFT undertakes to provide the information, it will endeavour to do so within 20 days of receiving the request.

Any enquiries regarding this article should be directed towards
Stephen Parkinson, Service Delivery Manager, OR Business Support, Cannon House, 18 Priory Queensway, Birmingham B4 6FD. Telephone: 0121 698 4313 email:

General enquiries may be directed to

47.  Publication of consultation on pre-pack sales in administration 

The Insolvency Service has published a consultation document and called for evidence on improving the transparency of, and confidence in, pre-pack sales in administration. The publication of the consultation follows widespread concerns that have been expressed about the pre-pack process and seeks views on a number of possible options for change. 

The consultation document is available to view on our website at the following link: 


Responses to the consultation should be sent to  by 24 June 2010.  

General enquiries may also be directed to  Telephone: 020 7291 6772

48. Insolvency Statistics: New Personal Insolvency Statistics & User Engagement Consultation 

Official Statistics showing personal insolvency rates by region and updated individual voluntary arrangement (IVA) completion and failure rates, including those for 2009, have been published. 

Regional figures for bankruptcies, IVAs and Debt Relief Orders (since 6 April 2009) for 2000 to 2009 are available on the statistics section of The Insolvency Service website, which can be found at the link below: 

These figures include the rates per 10,000 of the adult population, as well as a break down for each procedure to local authority level. 

Updated statistics showing the proportions of IVAs registered in each year since 1987 that have completed, failed or are ongoing have also been published on The Insolvency Service website. These statistics update those first published in December 2009 and show the status of IVAs as of May 2010. 

The Insolvency Service Statistics team has launched a user engagement consultation, to run from 26 July to 18 October 2010. We are interested in hearing your views about how you use our statistics and how you think we could improve them. Further information regarding this consultation can also be found on the statistics section of The Insolvency Service website. 

Any enquiries regarding these official statistics should be directed towards
Rebekah Paul,3rd Floor – Zone B, The Insolvency Service, 21 Bloomsbury St, London WC1B 3QW.  Telephone: 020 7637 6314, email: 

General enquiries may be directed to:  Telephone 0845 602 9848.

49. Publication of OFT report ‘The Market for Insolvency Practitioners in Corporate Insolvencies’ 

The Office of Fair Trading (OFT) published the above report on 24 June 2010 which is available on their website at the link below: 

The report will now be considered by The Insolvency Service and others in order to inform the Government’s response.  Previous practice has been to publish a response to OFT reports containing recommendations to Government within 90 days.  In considering the report BIS and The Insolvency Service will work closely with other relevant Government departments, the Recognised Professional Bodies and other parties with an interest in insolvency. If any recommendations are subsequently taken forward there is also likely to be a further period of consultation.   

General enquiries may be directed to   Telephone: 020 7291 6772

50. Debtor petition reform and Official Receiver automatically becoming trustee: Publication of consultation responses 

Debtor Petition Reform and Early Discharge 

The summary of responses to the consultation on debtor petition reform and early discharge is now available to view on our website.  In a written statement to Parliament made in October 2010, Minister Edward Davey said: 

“It is clear from the responses that interested parties see benefits in removing the court from the process in circumstances where it is unnecessary for a court to take a decision. The Insolvency Service will be exploring with Ministry of Justice and HM Courts Services how best to realise those benefits to produce a bankruptcy system that is suitably accessible and affordable, as well as providing an efficient service for all those who need to use it. I expect that this work will result in enhanced and detailed proposals being published in due course. 

There was also support for repeal of early discharge. This requires primary legislation, and will therefore be brought forward when Parliamentary time allows.” 

The consultation, which ran between November 2009 and February 2010, gave specific consideration to the concept of a bankruptcy order on a debtor’s petition being made administratively by an official appointed by the Secretary of State, rather than being made by the court. The consultation paper welcomed views on the detail of what this new bankruptcy application process might look like, and we are grateful to all those who took the time to respond to the proposals.   

The official receiver becoming trustee on the making of the bankruptcy order and the removal of the requirement to file a ‘no meeting’ notice in some company compulsory winding up cases 

In March 2010 we also invited views on our proposals for the official receiver to become trustee of the bankrupt’s estate on the making of the bankruptcy order, and to remove the requirement to file a ‘no meeting’ notice in certain company compulsory winding up cases.  

The responses to that consultation, which closed on 31st May, together with a revised impact assessment, have now been published and are available to view on our website at the link below:  


We are again very grateful to all those who responded to the consultation. The views expressed have helped formulate the final policy intentions, which are to: 

1.   Allow for the official receiver to become the first trustee on the making of the bankruptcy order, thus removing the need for the current notice of ‘no meeting’ to be sent to creditors and to be filed at court; and


2.   In all compulsory liquidation cases, remove the requirement for the official receiver to issue a notice of ‘no meeting’ to creditors or file such notice at the court.


As with the proposals for the removal of early discharge, those for the official receiver to become trustee on the making of the bankruptcy order and to remove the requirement to file ‘no meeting’ notices in all compulsory and bankruptcy cases will be taken forward when Parliamentary time permits.  

Any enquiries regarding this article should be directed towards Maria Isanzu, 21 Bloomsbury Street, London WC1B 3SS. Telephone:  020 7291 6733 email:  

General enquiries may be directed to   

Telephone 020 7637 1110.

51. Changes to the London Bankruptcy Jurisdiction  

With effect from 6 April 2011 the Insolvency Rules 1986 were amended by The Insolvency (Amendment) Rules 2011 ( SI 2011/785) to require lower value bankruptcy cases allocated to the London insolvency district to be presented to and heard by the Central London County Court rather than the High Court of Justice. The London Insolvency District (Central London County Court) Order 2011 (SI 2011/761) has given jurisdiction to the Central London County Court for personal insolvency proceedings.  

Generally speaking, the proceedings which will be dealt with by the Central London County Court are creditor petition bankruptcies (including those presented by Government Departments) where the petition debt is less than £50,000 and debtor petition cases where the unsecured liabilities set out in the statement of affairs attached to the petition are less than £100,000.  

There are cases where, notwithstanding these monetary limits, the proceedings will continue to be presented in the High Court:- 

  • where the bankruptcy petition is being presented against a member of a partnership being wound up by the High Court in London; 

  • where the debtor is not resident in England and Wales and has not carried on business or resided in England and Wales in the 6 months before the presentation of the petition; and 

  • where the petitioner is unable to determine the debtor’s place of residence and place of business. 

From a practical viewpoint any change in process, especially in the short-term, will be negligible because bankruptcy petitions will continue to be administered by officials in the Thomas More Building at the Royal Courts of Justice. Later in the year it is proposed that bankruptcy petitions issued in the High Court will be dealt with in a new High Court building (the Rolls Building) which is due to open in October 2011.     

The changes to the Insolvency Rules  apply where a bankruptcy petition is presented on or after 6 April 2011, except where the petition is pursuant to a statutory demand to which Rule 6.4(2A) applies in which case they apply where the statutory demand is dated on or after 6 April 2011. The High Court will also have discretion to transfer proceedings allocated to it prior to 6 April 2011 to the Central London County Court. 

The rule changes also provide for the allocation of applications to the court in debt relief proceedings under Section 251M and 251N of the Insolvency Act 1986 and apply where the first application is made on or after 6 April 2011.   

As well as the principal legislative changes some minor changes will be made to statutory forms 6.1, 6.2, 6.3, 6.7-6.10 and 6.27 (forms for statutory demands, creditor petitions and debtor petitions). Amended versions of these forms will be made available on the Insolvency Service website.  

A link to The Insolvency (Amendment) Rules 2011 has been included on the Insolvency Service website at:  

Any enquiries regarding this article should be directed towards Tom Phillips, Zone B, 3rd Floor, 21 Bloomsbury St, London WC1B 3QW telephone: 0207 637 6421 email: 

General enquiries may be directed to email:

Telephone 0207 291 6740

52. Statements of Insolvency Practice (SIPs) – review and updating  

At the meeting of the Joint Insolvency Committee held on 20 June 2011, the Recognised Professional Bodies, the Insolvency Service and the Insolvency Service Northern Ireland agreed that, as an interim measure pending issue of revised SIPs, certain provisions of SIP 3 and SIP 9 should be relaxed to allow for changes in practice.  SIP9 is currently under review and SIP3 has been identified for review shortly.

The details are:


Paragraph 3.8 requires that a copy of the R3 booklet “Is a voluntary arrangement right for me?” to be sent to debtors.  However, it is now common practice (and expected by OFT) for debt management companies to provide the Insolvency Service booklet “In debt – dealing with your creditors”.  As a result, there could be circumstances where a debtor receives both booklets.

It has been agreed that it would be appropriate for either booklet to be used by insolvency practitioners.


In certain circumstances, where an office-holder is replaced or where an office-holder takes a sequential appointment (for example, if a CVL follows administration), further approval is not required for the basis of remuneration.  The way in which Category 2 disbursements are approved is, of course, separate and, in the circumstances described, under the current SIP further approval would be needed for these disbursements.

It has been agreed that if an office-holder has obtained approval for the basis on which a charge for Category 2 disbursements is made, that basis may continue to be used where further approval of the basis of remuneration is not required.

The position of insolvency practitioners

With immediate effect, the Secretary of State and the Recognised Professional Bodies will interpret SIPs 3 and 9 for monitoring purposes as if they had been amended to take account of the above matters.  

General enquiries may be directed to  Telephone: 020 7291 6772

53. Consultation: Reform of the process to apply for bankruptcy and compulsory winding up 

Government announced a public consultation on 7 November 2011 about proposals to reform the way people access bankruptcy and compulsory winding-up – both in respect of petitions presented by debtors (the subject of previous consultations in 2007 and 2010*) and those presented by creditors and third parties. The proposals about winding-up relate specifically to petitions on grounds of inability to pay debts and that the company has passed a special resolution for compulsory winding-up.

* The previous consultations can be accessed by clicking the following links:



The vast majority of creditor petitions are not contested at a court hearing, so the aim is to provide a streamlined administrative route where there is no dispute between the parties. Court focus would then be on the more complex cases that rightly require detailed consideration.

A new pre-application process would require creditor applicants to demonstrate that they have taken all reasonable steps towards reaching a mutually satisfactory solution to the debt problem, before instigating proceedings. Debtors would be encouraged to seek early, free, independent advice. This reflects Government’s desire that people are empowered to make the right decisions for themselves about their finances. The earlier a debtor seeks advice, the more likely it is that they will be able to make a constructive proposal to their creditors.

Where a creditor wishes to proceed with an application, this would be made to a new office of the Adjudicator, based within The Insolvency Service. This office would also receive debtor applications for bankruptcy. Debtors would have an option to pay both the application fee and Official Receiver’s deposit by instalments, although full payment would have to be made before their application could be considered by the Adjudicator.

More streamlined access would lead to greater efficiencies; quicker access, where appropriate; a facility to apply on-line; and lower application fees.  The level of safeguards is an important part of the proposals – so that there are better outcomes for debtors whilst creditors’ rights are respected.

The consultation document can be found on our website at: Responses should be sent to: by 31 January 2012.

Any enquiries regarding this article should be directed towards Maria Isanzu telephone: 0207 291 6733 email:

General enquiries may be directed to email
Telephone : 0207 637 1110

54. The closure of the Insolvency Practices Council (IPC)  

This article notifies insolvency practitioners that the IPC has been disbanded with immediate effect. The closure of the IPC follows recommendations contained within the Office of Fair Trading’s report of June 2010 into the market for corporate insolvency and the subsequent Government response to the consultation on reforms to the regulation of insolvency practitioners. 

The IPC was set up in 2000 as an independent external body with a remit to investigate and examine the ethical and professional standards of the insolvency profession and to make recommendations to the bodies that regulate the profession for any changes in regulation it considers are needed in the public interest. It made a number of recommendations over the years which have been adopted; two of particular note were the provision of better information and advice for debtors in respect of IVAs and other debt solutions and changes to the treatment of the matrimonial home in bankruptcy. 

Copies of the IPC’s most recent annual report and March 2012 newsletter to insolvency regulators and practitioners can be accessed via the webpage on the IPC contained on The Service’s part of the BIS website, the link to which is

Any enquiries regarding this article should be directed towards  Steve Lamb
of IP Policy Section, telephone: 020 7637 6698, email:  

General enquiries may be directed to email:;  Telephone: 020 7291 6772

55. Launch of Public Consultations on proposed closures of Insolvency Service offices in Bournemouth Medway and Stockton  

On 27 March 2012 The Insolvency Service issued public consultations on the proposed closures of our offices in Bournemouth, Medway and Stockton.  

The purpose of the consultation is to gather further information and comments from the public and stakeholders about the impact of the three proposed office closures. The views expressed and information received from the consultation will become part of the evidence that The Insolvency Service will use to decide whether or not to close an office.  

The Insolvency Service is largely fee-funded from insolvency case deposits and asset realisations. Bankruptcy cases reached record levels in 2009 but have since fallen very substantially.  That fall means that The Service must reduce its costs and become more operationally flexible in the future. 

Following consultations with staff, Trade Unions, and key stakeholders during the summer of 2011, The Service announced a planned re-organisation and a reduction in the size of its office network (the Delivery Strategy).  The re-organisation will lead, over time, to a new, more centralised approach to delivering most services which will reduce costs and provide greater flexibility to adapt in future to increases and decreases in workload.  

The proposed closure of the three Insolvency Service offices mentioned above is one of the early stages of implementing The Service’s longer term plans.  All staff in the three proposed offices will be offered posts in their nearest alternative Insolvency Service office.  The Service does, however, acknowledge that not all of its staff in these offices will be able or willing to take up the posts offered for either personal or practical reasons.  

The number of customers affected by these proposals is predominantly limited to those bankrupts or company officers whom The Insolvency Service require to have a face to face interview.  (These will in general be people where The Service has some concerns about, for instance, limited information, their conduct or the security of assets.)  The number of such people who would be affected is relatively small and in the majority of cases they are likely to be required to attend for interview on only one occasion. Further analysis and details of estimated volumes of face to face interviews for each location are set out in the public consultation documents.

As is current practice, The Insolvency Service remains committed to ensuring that reasonable adjustments are made for customers who have accessibility issues or special requirements. Please see the Equality Impact Assessment for further details in regards to this.  

The public consultation started on 27 March 2012 and will close on 22 June 2011. The public and stakeholders can send their feedback to  

The public consultation documents can be found here 

The Insolvency Service welcomes your views. 

Any enquiries regarding this article should be directed towards  Tony Ryan, head of Strategy and Research, The Insolvency Service, 21 Bloomsbury Street, London WC1B 3SS  telephone: 020 7291 6750, email:

56. Investigation Hotline Publication 

The leaflet formerly know as “The Enforcement Hotline” has been updated and expanded to reflect the changing remit of The Insolvency Service’s hotline team. The publication details current complaint routes and has been renamed “What is the investigations hotline?” 

Practitioners may find the publication useful either when reporting matters unconnected to their statutory duties, or to provide information to the public about complaint routes in circumstances where the complaint is not connected to their role as office holder. 

In particular the hotline now aims to capture; 

  • complaints about live companies; (previously submitted via a separate route to what was Companies Investigation Branch)
  • complaints about the re-use of prohibited company names; and
  • information about the conduct of:
    • directors;
    • disqualified directors ;
    • undischarged bankrupts;
    • individuals subject to debt relief orders; and individuals subject to restrictions.

Where an Official Receiver or insolvency practitioner is in office then the hotline encourages the complainant to contact the office holder, but will receive (& forward) complaints addressed to it when necessary. 

The publication provides a guide to the various methods of complaint and a complete list of various contact points depending on the nature of the complaint.  

The publication is now available online only and further information about the hotline is available on our website (this information is currently being upgraded to reflect the publication and to make the site more user friendly). You can obtain copies of this new publication from, and refer any enquiries to, The Insolvency Service’s website: The Insolvency Service | BIS 

Any queries or comments regarding this notice should be sent to

57. Rejection notices post submission of a section 120 notice to the Pension Protection Fund 

The Pension Protection Fund (PPF) intend to stop sending formal rejection notices to insolvency practitioners following the submission of a section 120 notice if the scheme is not an eligible defined benefit scheme, as it is not a statutory requirement under the Pensions Act 2004.  However, as long as practitioners provide their email address when submitting their section 120 notice, the PPF will send an email informing practitioners if the notice refers to an ineligible scheme.  The PPF will allow practitioners to supply an email address by revising both the section 120 notice and the website which allows the submission of forms electronically.  Until these changes are made, the current procedures will remain in place. It is estimated that the new system should be operational by 1 September 2012. 

Any enquiries regarding this article should be directed towards Joseph Sullivan of IP Regulation Section, telephone: 020 7637 6495,

General enquiries may be directed to email: , Telephone 020 7291 6772

58. Insolvency legislation to be reviewed in the Red Tape Challenge  

The Red Tape Challenge (RTC) is an ambitious, pan-Whitehall programme to reduce and improve the stock of regulation on the statute book, drawing on comments made by business, civil society organisations and the public.  The programme is led by the Cabinet Office and BIS (The Insolvency Service’s parent department), and aims to root out unnecessary, overcomplicated regulation that strangles business and economic growth. 

Regulations are grouped in themes and each theme is featured on the Cabinet Office’s RTC website for a period of five weeks, during which people are able to say whether the regulations should be scrapped, simplified or achieved in a non regulatory or less bureaucratic way.  Being a major plank of the Government’s deregulatory agenda it is likely to attract widespread media attention during at least part of the live period. 

The insolvency theme will be launched later this summer.  During the five weeks following the launch stakeholders and the public will be able to comment on 111 insolvency ‘regulations’.  These regulations are the primary and secondary legislation that sets out the how insolvency procedures work, the obligations of insolvency office-holders and the disqualification regime.  The regulations include the Insolvency Act 1986, the Insolvency Rules 1986, and the various amendments made since their enactment – however, Fees Orders are out of scope.  A full list of the insolvency regulations that will be included in this exercise will be published on the Cabinet Office website at Much of the amending legislation already falls within the existing project to consolidate and modernise the Insolvency Rules.  To ensure that comments made as part of the RTC are taken into account in the Insolvency Rules project, it is now unlikely that a formal consultation on the draft Rules will be issued before 2013. 

The Insolvency Service has invited Philip King, CE of the Institute of Credit Management, to act as the Sector Champion for insolvency – representing the interests of those who can be expected to benefit from regulation, and acting as a link between the sector and Government. 

Once the theme window closes, The Insolvency Service will produce a set of proposals on regulatory reform, which are then reviewed by a Ministerial ‘Star Chamber’ with the presumption that all burdensome regulations will go unless Departments can justify why they are needed – well-defined and necessary regulation will be kept.  Progress on each theme is available on the Cabinet Office website and in addition we will announce future progress both in Dear IP and on the Insolvency Service website. 

Insolvency Practitioners will clearly have their own views on and hands on experience of the various pieces of insolvency legislation and so we would be pleased to receive your comments.  Comments can be made publicly on the Cabinet Office website or privately by emailing

More information about the RTC is available at:

Any enquiries regarding this article should be directed towards Mike Chapman, The Insolvency Service, Policy Unit, 4th Floor, 4 Abbey Orchard Street, London, SW1P 2HT; telephone: 020 7291 6765, email; 

General enquiries may be directed to, Telephone 020 7637 1110

59. The Enterprise and Regulatory Reform Bill 

Repeal of Early Discharge 

The Enterprise and Regulatory Reform Bill is currently going through Parliament.  It contains a clause which seeks to repeal section 279(2) of the Insolvency Act 1986, commonly known as early discharge. The effect of the repeal is that all bankrupts would be automatically discharged after 12 months providing they are not subject to any restrictions or their discharge has not been suspended.  

The objective is to reduce the financial and administrative burdens on business and government and make the bankruptcy process in England and Wales as efficient, consistent and transparent as possible and would result in a total net benefit to business of £0.6 million per year. 

Progress on the bill can be followed by accessing the link below:  

Any enquiries regarding this article should be directed towards Muhunthan Vaithianathar, telephone: 020 7637 6515.

60. Update on the Red Tape Challenge ‘Insolvency Theme’ 

The insolvency theme was in the ‘spotlight’ on the Red Tape Challenge (RTC) website from 23 August to 27 September 2012. Along with publishing 115 regulations on the website, The Insolvency Service issued an information paper, alerted our major stakeholders to the theme, and published articles in newsletters and magazines targeted at insolvency practitioners and repeat creditors from the business community. We also alerted individuals, directors and creditors who received communications from our London Official Receiver office in September to the theme spotlight in order to get ideas from people going through the process. Our sector champion, Philip King, CE ICM, held a workshop with stakeholders at which ideas were discussed that had a broad measure of support from a wide range of stakeholders.

Although the theme generated only a small number of online posts and emails via the RTC website,  R3, some of the RPBs and legal groups sent in more substantive comments by email during October. 

         The main areas put forward by stakeholders for change were:

·        greater electronic communication with creditors;

·        reduce the volume of hard copy information provided to creditors;

·        remove banking restrictions for some types of insolvency procedures;

·        reduce the burden on office-holders to maintain records of time spent on a case;

·        give office-holders discretion not to pay dividends where it was uneconomic to do so, with agreement of creditor;

·        remove the default of holding physical meetings in insolvency processes;

·        enable creditors to extend period of administration by 12 months and provide for continuity of supply of  IT and other essential goods / services in administration;

·        allow administrators to disclaim and

·        reduce the number of the different types of disqualification returns, and simplify the process for reporting to the Secretary of State.

·        introduction of specialised personal/corporate authorisation for insolvency practitioners and

·        removal of requirement for insolvency practitioners to obtain ‘sanction’ to commence certain actions.

In total we received or generated about 150 ideas, about two thirds of which we think are worth exploring further.

The Insolvency Service will now produce deregulatory proposals which will be considered by Ministers in early 2013.

More information about the RTC is available at:

Any enquiries regarding this article should be directed towards Mike Chapman, The Insolvency Service, Policy Unit, 4th Floor, 4 Abbey Orchard Street, London, SW1P 2HT; telephone: 020 7291 6765; email:

General enquiries may be directed to; Telephone 020 7637 1110

61. Reform to the Debtor Bankruptcy Process

The Government has announced reforms to the debtor petition process and has introduced amendments to the Enterprise & Regulatory Reform Bill presently before Parliament to make the required changes to the Insolvency Act 1986.  The reforms will replace the existing court-based entry route into bankruptcy with a modern, administrative process with electronic applications instead being made to an Adjudicator based within The Insolvency Service. The Adjudicator will decide whether or not to make a bankruptcy order by reference to prescribed criteria.

Removing debtor bankruptcy petitions from the courts, which are largely uncontested,  will free up court resources to deal with matters which do require judicial input. The court will still have  a role in hearing appeals and other applications that may be made to it during the bankruptcy process and will also continue to hear  bankruptcy petitions presented by creditors. There will be no change to the implications of bankruptcy for the debtor.

These changes are not expected to be implemented before 2015. Progress of the Bill can be followed on the BIS website at the link below:

Any enquiries regarding this article should be directed towards Tom Phillips at 4th Floor, 4 Abbey Orchard Street, London SW1P 2HT
telephone:  020 7637 6421,  email:

62. Insolvency termination clauses

The Government has tabled amendments to the Enterprise and Regulatory Reform Bill currently before Parliament to address concerns expressed around suppliers exercising termination clauses on insolvency or demanding 'ransom' payments as a condition of further supply.

The amendments to the Bill include a power which, when exercised, would allow IT supplies to be added to the list of supplies which are currently protected under sections 233 and 372 of the Insolvency Act 1986, as well as those supplies of gas, electricity, water and communications services that are not presently. That would mean that providers of such supplies would be unable to make supply after the onset of insolvency conditional on the payment of outstanding charges in respect of the supply given to the business before the insolvency. Such providers may make the supply conditional upon a personal guarantee being given by the office-holder for payment of any charges for that supply.

Further powers being taken in the Bill allow provisions to be made that mean certain terms in contracts for essential IT and utility supplies cease to have effect. These contractual terms are those that allow a supplier to terminate or change the terms of the supply as a result of a company entering administration or a voluntary arrangement taking effect, or where a voluntary arrangement in respect of an individual who is or has been carrying on a business is approved. This power will also require certain safeguards to be provided to ensure that suppliers who are obliged to continue supplying the insolvent business are adequately protected.

The Government will consult with interested parties later this year before exercising these new powers. The detailed amendments that have been tabled, numbered 84B to 84E, can be accessed via the link below: 

Any enquiries regarding this article should be directed towards Tom Phillips, 4th Floor, Abbey Orchard Street, London SW1P 2HT.

Telephone: 020 7637 6421 email:

63. The Insolvency Service is now on twitter

The Service’s Press Office has set up a twitter account and we are eager to engage with insolvency practitioners through the social media channel.

Twitter has more than half a billion users worldwide. Organisations from all sides of the insolvency industry use the site, such as R3, Moonbeever, the Financial Ombudsman and many more.

We tweet as @insolvencygovuk and are encouraging those on twitter to follow us for updates and tweet us about industry issues.

We know that many of our stakeholders are users of social media and we hope the channel will provide fresh and useful information about The Service as well as helping us engage with insolvency practitioners in a new way.

The Service will tweet policy announcements, statistics and research as well as big wins in enforcement activity. These tweets will generally include a link to more detailed information on our website.

We will also tweet alerts when public consultations are launched or are just about to close.

We do not intend to respond to every tweet relating to our activity but we plan to engage with as many as possible. Even if we do not reply directly, we will still ensure that any feedback we get from you reaches the appropriate people within the Agency.

So, please join the conversation.

Any enquiries regarding this article should be directed toward Media Relations Manager Kathryn Montague:

To read The Insolvency Service’s twitter policy please go to:

64. Insolvency Red Tape Challenge

Information about the launch of the insolvency Red Tape Challenge (RTC) was provided in the July 2012 edition of Dear IP.  The programme is led by the Cabinet Office and BIS, and aims to root out unnecessary, overcomplicated regulation.

Philip King of the Institute of Credit Managers was the sector champion for this work and led a number of meetings with interested parties to identify possible measures.  As a result, a package of deregulatory proposals was developed on which Ministers will shortly be inviting comments.  These include:

  • Increasing the flexibility as to how creditors engage in the decision making process, and removing the requirement for insolvency practitioners to hold meetings with creditors where they are not necessary.
  • Enabling insolvency practitioners to make greater use of electronic communications, for example making it easier to place notices on websites instead of sending individual letters to creditors.
  • Allowing creditors to opt out of receiving further communications where they no longer have an interest in the insolvency.
  • Streamlining the process by which insolvency practitioners report misconduct by directors of insolvent companies to the Secretary of State, enabling investigations to be commenced earlier.
  • Removing the requirement on insolvency practitioners to record time spent on cases, where their fees have not been fixed on a time cost basis, and to maintain a separate record of certain case events.
  • Removing the requirement for trustees in bankruptcy and liquidators in court winding-ups to apply to creditor committees before undertaking certain functions, to achieve consistency with powers in administrations.

More information about the proposals can be found on The Insolvency Service’s website at: Most of the proposals will require amendments to both primary and secondary legislation and a consultation on them will be published soon.

Any enquiries regarding this article should be directed towards Mike Chapman, The Insolvency Service, Policy Unit, 4th Floor, 4 Abbey Orchard Street, London, SW1P 2HT; telephone: 020 7291 6765 email;

General enquiries may be directed to, Telephone 020 7637 1110.


65.  Insolvency measures announced in the Deregulation Bill 

The Deregulation Bill, published by the Cabinet Office on 1 July, includes a number of new insolvency measures.  These include proposals to:

  1. Enable the Secretary of State to cease the direct authorisation of insolvency practitioners, which will result in about 60 practitioners transferring from the Government to independent regulators;
  2. Allow insolvency practitioners to qualify in personal or corporate insolvency, or both as is the case now;
  3. Simplify the procedure whereby the Secretary of State or official receiver obtains information on director misconduct ; enabling information to be obtained direct from any person without requiring authority from the insolvency office-holder;
  4. Enable a company or director to appoint an administrator, despite the presentation of a winding up petition, if the petition was presented during an interim moratorium;
  5. Remove a requirement to give notice of intention to appoint an administrator to persons who are not themselves entitled to appoint an administrative receiver or administrator in certain circumstances;
  6. Facilitate the release of the administrator where the unsecured creditors have no interest in the administration, other than by virtue of the “prescribed part”;
  7. Change the after-acquired property provisions so that it is easier for bankrupts to operate bank accounts (important for social inclusion).
  8. Amend procedures around the appointment of interim receivers, increasing creditor choice.

The draft Bill is published at:

Any enquiries regarding this article should be directed towards Clare Quirk, The Insolvency Service, Policy Directorate, 4th Floor, 4 Abbey Orchard Street, London, SW1P 2HT  telephone: 0151 625 2513 email:

General enquiries may be directed by email to:

66. Electronic communications with Insolvency Practitioners

One of the key facets of the modernisation reforms to the Insolvency Rules which came into force in April 2010 was to facilitate the delivery of documents electronically. This has obvious cost benefits and will also ensure speedier communications. With this in mind, The Service has been considering the appropriate way this could be developed in respect of communications with insolvency practitioners.

The initial focus of The Service has been on identifying high volume correspondence sent to practitioners which would more readily be suitable for sending by electronic means. There are, for instances, various letters sent out by our Investigation and Enforcement Services to practitioners on a regular basis. These include reminder letters that are issued prior to the six-monthly expiry period for the submission of conduct returns on directors.  A further example is where letters are sent following the receipt of D1 conduct returns to inform practitioners that the cases concerned are not being targeted.

Work is currently ongoing to ensure appropriate systems are in place to facilitate this communication. The Service does not therefore have a date when this is likely to be introduced and updates will be provided in future editions of Dear IP. It should be emphasised that the general principle set out in Rules 12A.7 and 12A.10 will apply whereby electronic communications will only be sent where the recipient has consented and has provided an electronic address.

It would assist if those practitioners interested in receiving communications in this format could supply their names together with the email address they would like to use to:

Any enquiries regarding this article should be directed towards Steve Lamb  of IP Regulation Section, telephone:  020 7637 6698,

General enquiries may be directed to email; Telephone 020 7291 6772

67. The Deregulation Bill

The draft Deregulation Bill contains a number of measures of interest to insolvency practitioners and has recently been subject to pre-legislative scrutiny.  The report of the Parliamentary Joint Committee has just been published and can be found at:

The Bill contains measures aimed at withdrawing the Secretary of State from the role of directly authorising insolvency practitioners, and introducing the concept of specialised authorisation for those practitioners wishing to focus purely on either personal or corporate insolvency. The aim of the latter measure is to reduce unnecessary regulation and cost which can be barriers to entering the profession. For example, those wishing to specialise and practice only in personal insolvency would no longer have to pass papers on corporate insolvency before getting their qualification.  Once qualified, they would of course only be able to practice in their chosen specialism.

Further updates will be provided on the progress of the Bill, but in the meantime if you would like to comment on any of the measures please contact:

General enquiries regarding this article may be directed to email:; Telephone: 020 7291 6772

68. Future Communications with Insolvency Practitioners

The Service is currently reviewing the way in which it communicates directly with insolvency practitioners via Dear IP.  The Service is keen to maintain regular dialogue with the profession and going forward all articles that would previously have formed part of a quarterly Dear IP issue will be published centrally on the new Government website.

Articles will be separated between those which contain technical updates or guidance requirements from those which serve as an update of a more general nature.  The Service will communicate with practitioners on a monthly basis via the Dear IP mailbox to inform them of all the new articles issued during the previous month.  We are of the view that having more contact with the profession on a monthly basis will increase confidence in the process.  There will be additional communications to alert practitioners to headline announcements or key changes.

Historical issues of Dear IP will be moved to the new website as part of this process, and The Service will be undertaking a review of older articles and removing those no longer applicable.

We would like to receive feedback from insolvency practitioners on these changes together with any other suggestions for improvement.  Practitioners can send their comments directly to  We would like to receive all feedback by 31 May 2014.

This review is part of a general overview of stakeholder engagement by The Service and may take several months to implement fully.  Therefore the next proposed issue in June will be in the same format as it is currently and further updates will be provided then.

Any enquiries regarding this article should be directed towards Joseph Sullivan 4 Abbey Orchard Street London SW1P 2HT, telephone:  0207 637 6495,  email:

General enquiries may be directed to email

69. Changes to the consumer credit regime from 1 April 2014

The consumer credit regime regulatory landscape is changing from 1 April when the Financial Conduct Authority (FCA) takes over the responsibility for this area from the Office of Fair Trading (OFT). This will result in a number of significant changes for insolvency practitioners.

The Government recently amended the legislative framework applicable to the credit activities carried out by insolvency practitioners (the link to the applicable statutory instrument 2014/366 is Insolvency practitioners have now been excluded (rather than being subject to exemption) from regulation by the Financial Conduct Authority in two specific circumstances:-

·         Where an individual  is ‘acting as an insolvency practitioner’ for the purposes of Section 388 of the Insolvency Act 1986, the exclusion covers the non-credit activities for which insolvency practitioners were previously exempt, in addition to when providing debt counselling, debt adjusting, debt administration, debt collecting and credit information services;

·         Where an individual is ‘acting in reasonable contemplation’ of an appointment as an insolvency practitioner.  Under such circumstances the exclusion only covers the carrying on of debt counselling, debt adjusting and credit information services.

An individual will not be acting in reasonable contemplation of an appointment as an insolvency practitioner whenever providing initial debt advice – only where there is a reasonable anticipation of such an appointment. It will therefore be incumbent upon an insolvency practitioner to use his or her professional judgement when considering the particular circumstances of each case to determine whether the exclusion will apply.

By way of example, if in the course of providing initial advice an insolvency practitioner advises why it is considered a Debt Arrangement Scheme or debt management plan may not be the most appropriate option then this would not necessarily be outside of the Government’s exclusion if this advice is given in reasonable contemplation of an appointment as an insolvency practitioner.

Also, where after considering the debtor’s circumstances it transpires that an insolvency appointment is not appropriate this would not necessarily render the provision of the initial advice outside the scope of the exclusion.  This is provided that the initial advice was given in reasonable contemplation of a formal insolvency appointment and that the practitioner did not continue to advise the debtor on entering into a particular debt solution, outside of the scope of the exclusion (e.g. a debt management plan), once it became apparent that such an appointment would not be

made. In such circumstances, it is acceptable for an insolvency practitioner to signpost debtors to appropriate alternative sources of advice, such as the Money Advice Service.

Debt Arrangement Schemes and debt management plans

Carrying on specific debt counselling, debt adjusting, debt collection or credit information services in relation to the provision of Debt Arrangement Schemes (a Scottish debt solution) or debt management plans is not acting as an insolvency practitioner for the purposes of Section 388 of the Insolvency Act 1986 – and consequently not within the scope of the Government’s exclusion for insolvency practitioners.

An insolvency practitioner carrying on such activity in relation to a debt management plan or Debt Arrangement Scheme is also considered unlikely to meet the criteria to be able to benefit from an exemption under Part 20 FSMA (the Designated Professional Bodies Regime).  This is because the manner of the provision of the insolvency practitioner’s service in the course of carrying on these activities is unlikely to be incidental to the provision of his or her professional services as an insolvency practitioner.

The carrying on of, for example, debt counselling or debt adjusting in the course of advising on/administering debt management plans or Debt Arrangement Schemes, is unlikely to constitute carrying on only regulated activities which arise out of, or are complementary to, the provision by an insolvency practitioner of the professional services as an insolvency practitioner to that client. The provision of professional services by an insolvency practitioner will necessarily involve the carrying on of debt counselling/debt adjusting – and for the purposes of Part 20 FSMA, ‘professional services’ are services which do not constitute the carrying on of a regulated activity.

Interim permission

For those insolvency practitioners that  may provide regulated debt advice that does not fall within the scope of the Government’s exclusion, they should consider whether they need to register  with the FCA for “interim permission”.

Any enquiries regarding this article should be directed towards Steve Lamb of IP Regulation Section, telephone:  020 7637 6698, email:

General enquiries may be directed to email Telephone 020 7291 6772.

70. The Insolvency Service Website

On 15 May 2014 our website content transitioned to GOV.UK, the central location for government information and services. Our new corporate page can be found at Our old site has now been redirected and switched off.

The GOV.UK website has been designed with users in mind by the Government Digital Service (GDS), so you may notice that much of our content has been rewritten as well as other significant changes.

The easiest way to navigate GOV.UK is to use the site search. Any content which cannot be found on may be located on the web archive of our old site

Content on the new website is driven by what evidence shows our specific user needs to be, or when publication is required via statute. Non-statutory guidance provided elsewhere by other organisations is no longer held on our site.

The site and its content will continue to develop over time and we welcome your feedback on what additional information you would like to see, or and any gaps left by the transition. Please contact us at or use the feedback option at the bottom of each page.

Further information about the new site and transition

You will notice that the way GOV.UK delivers content is very different than before, for example we no longer have tabs for our business areas on our corporate page, and you can no longer browse around our content as you did before.

The reason for this is that GOV.UK is designed as a central, consistent point of contact between the public and government, and research has shown that people mostly come to government sites with very specific user needs.

The principle aim of the site, therefore, is to fulfil those needs as quickly, simply and clearly as possible with information and guidance broken in to three main types:



Mainstream content pages (written and owned by the Government Digital Service (GDS)) are devoted to meeting the everyday needs of the general public, for example to answer questions like “I want to apply for a passport” or more relevant to us “I want to find out about bankruptcy” or “Complain about a limited company”.

In the case of this ‘everyday’ information, research has shown that users are not likely to know where to look for it, and would generally start with a search engine like Google, so in the case of GOV.UK the relevant content is not directly linked to a government department but broken down into broad headings like ‘money and tax’.

This is also why the search function on the GOV.UK homepage is ‘front and centre’.


This is the ‘about us, who we are and what we do’ information and the basis of our corporate homepage. Here you will find:

  • Our press and news stories

  • Limited information about what we do, including our objectives

  • Our documents, including publications, statistics and consultations

  • Our corporate management

  • Contacts and corporate information, including our complaints procedure, media enquiries, corporate reports and transparency data.


This content, written by us to strict GDS guidelines, is aimed at our specialist audience, for example insolvency professionals, advisors and engaged members of the public who want more detail than what is provided via ‘mainstream’.

What has changed and where are things now

The work of the transition to GOV.UK revolved around GDS identifying what our key user needs were by meeting with departments and analysing visitor information (i.e. number of ‘hits’ on individual pages on our old website) and then developing content to meet those needs.

This has resulted in some content being archived to the National Archives, and the content that remained being rewritten, or reviewed and edited to meet the GDS Style Guide. This work is ongoing.

At the top of our corporate homepage you will see a group of links for our main services and information. These provide links to our key mainstream and specialist content. We will monitor these to ensure that they remain useful to our various user groups.

What next

We will regularly take stock of the site as it is now and look for development opportunities. We would encourage insolvency practitioners to feedback any issues or common trends coming through that could be served with additional or revised content. We will be arranging for standard letters, guidance publications and other materials to be updated to reflect our new details and any additional information now required consequential to its non-transition from our old site (web address, forms/publication locations etc.) however, all the relevant content on our old site will be redirected so the above will remain functional.

General enquiries regarding this article may be directed to: 

71. The provision of consumer credit advice and related regulated activities

This article has been produced with a view to clarifying  the position regarding authorisation for insolvency practitioners – and the applicability or otherwise of the Government exclusion for insolvency practitioners and/or the FCA exemption under Part 20 of FSMA for professional firms that are supervised by a Designated Professional Body (DPB) that meet the relevant criteria.

The position as set out in the Dear IP 61 letter issued 31/03/14 is that persons undertaking regulated activities including (but not limited to) debt counselling or debt adjusting require authorisation by the Financial Conduct Authority (FCA), unless they benefit from a relevant exclusion or exemption or are an appointed representative of an authorised firm.

Where an individual is ‘acting as an insolvency practitioner’ for the purposes of Section 388 of the Insolvency Act 1986, the exclusion covers debt counselling, debt adjusting, debt administration, debt collecting and credit information services as well as the non-credit activities for which insolvency practitioners were previously exempt.

The Government exclusion also covers the situation where an individual is ‘acting in reasonable contemplation’ of an appointment as an insolvency practitioner.  However, under such circumstances the scope of the Government exclusion only covers the carrying on of debt counselling, debt adjusting and credit information services.  An individual will not be acting in reasonable contemplation of an appointment as an insolvency practitioner whenever providing initial debt advice – only where there is a reasonable anticipation of such an appointment. It will therefore be incumbent upon an insolvency practitioner to use his or her professional judgement when considering the particular circumstances of each case to determine whether the exclusion will apply.

An insolvency practitioner (or anyone else in a firm in which the insolvency practitioner operates) will not be able to rely on the Government exclusion if it is providing non-statutory debt solutions that do not constitute insolvency proceedings for the purposes of section 388 of the Insolvency Act 1986 - for example, debt management plans or debt arrangement schemes (for debtors habitually resident in Scotland). Insolvency practitioners providing such debt solutions are likely to require to be directly authorised by the FCA.

Part 20 of the Financial Services and Markets Act 2000 (FSMA), deals with the provision of financial services by professional firms under the supervision of  designated professional bodies (DPBs) of which they are members. A number of DPBs supervise the compliance of their members with rules approved by the FCA for the purpose of permitting some of their members/firms to carry on FCA regulated activities where they meet the relevant criteria for an exemption from FCA authorisation under Part 20 of FSMA. One of the key criteria for the exemption is that the regulated activity must be carried on by the firm ‘incidental’ to the provision of its professional services.  i.e. the provision of the professional service cannot itself incorporate the carrying on of the regulated activity. So, for example, an accountancy practice may be able to give debt advice under a DPB exemption without the firm needing FCA authorisation, provided that the debt counselling is only incidental to the provision of accountancy services (and the other relevant criteria for an exemption under Part 20 of FSMA are met).

To be eligible for an exemption under Part 20 FSMA, an insolvency practitioner must be a member of a designated professional body or controlled or managed by one or more such members[i]. However, because ‘professional services’  in Part 20 are services which do not constitute the carrying on of a regulated activity, the provision of debt counselling and/or debt adjusting services by an insolvency practitioner, that are outside the scope of the Government exclusion, would be carried on in the course of providing the IPs professional services (rather than incidental to them). Therefore those services are unlikely to meet the criteria to benefit from an exemption under Part 20 FSMA.

Any enquiries regarding the above should be directed towards Joseph Sullivan, IP Regulation Section, telephone: 0207 637 6495 email:


[i] "members”, in relation to a profession, means persons who are entitled to practise the profession in question and, in practising it, are subject to the rules of the body designated in relation to that profession, whether or not they are members of that body.

72. The Insolvency Service Website

As you may be aware, the Insolvency Service transitioned its website information to GOV.UK in July of this year.

Now that the site content has had time to settle in, we are looking at content for our specialist users and we would be interested in your views on how we can support the work you do.

If we, for example, were to create an area specifically for insolvency practitioners and their customers, what would you like it contain, or is there any insolvency related subject matter that you feel is not currently covered on GOV.UK that would assist you.

Please send your thoughts to

Further to this, we have an email group specifically for insolvency professionals that is used to provide relevant alerts and updates including web content changes and would welcome you and your colleagues to subscribe.

You can subscribe to the Insolvency Professionals group, and other email groups  maintained by the Insolvency Service at:

Any enquiries regarding the above should be directed towards email:

73. New Official Statistics Publication on Enforcement Outcomes

The Insolvency Service is developing a new quarterly Official Statistics release, Insolvency Service Enforcement Outcomes. Information on the number of director disqualifications, public interest winding up orders and bankruptcy and debt relief order restrictions will be reported.

The first edition will be published 20 May 2015 and will include information up to January to March 2015.

For more information, or if you would like to be notified when the new statistics are published, contact

General enquiries regarding this article may be directed to email 

74. Insolvency Guidance Paper – Retention of Title

In November, the authorising bodies issued a new insolvency guidance paper (IGP) on retention of title. IGPs are developed and approved by the Joint Insolvency Committee (JIC), and adopted by each of the insolvency authorising bodies. In this instance, the IGP was developed with the assistance of the Association of British Insurers which is represented on the JIC as one of the committee’s lay members.

Practitioners can view the new IGP here:

IGPs are issued to insolvency practitioners to provide guidance on matters that may require consideration in the conduct of insolvency work or in an insolvency practitioner’s practice. Unlike SIPs, which set out required practice, IGPs are purely guidance and practitioners may develop different approaches to the areas covered by the IGPs.   

Any enquiries regarding this article should be directed towards

75. Making the most of Intellectual Property

This article has been provided by Rosa Wilkinson, Director of Innovation and Strategic Communications at the Intellectual Property Office.

Few readers of Dear IP would, I am sure, disagree with the notion that intellectual property matters.  That is undoubtedly the case when we’re talking about an Insolvency Practitioner.  The best can make a huge difference to the end of life of a firm and the experience of creditors and those who had business relationships with it. 

In recent years developed economies have seen intellectual property move from the margins to the mainstream of business thinking. Even the likes of Dragons Den now pick up on the increased recognition that the potential for business success often depends on effective management of intellectual property assets - few bidders succeed in securing investment unless they can convince the Dragons that their good ideas, inventions and trade marks have been protected and won’t be challenged.  And these intangible assets are where we’re spending our money: in 2011, UK businesses invested significantly more in ideas and knowledge than in tangible assets like bricks and machinery, £126 billion compared to £88 billion. The trends show that intangible investment continues to rise whilst tangible investment has, at best, flat lined.

These levels of investment are not widely understood or appreciated. As insolvency practitioners will well know, too often businesses don’t keep a formal record of their intellectual property assets.  Many businesses are not always aware of the value of their intellectual property, and the advice they receive tends to ignore it when assessing their balance sheet. In all too many cases, intellectual property assets are not fully exploited within a business whether to generate additional income or to secure finance for the next phase of growth.  This latter point was something that the Intellectual Property Office (IPO) realised when that innovative companies, rich in intellectual property but poor in tangible assets, increasingly reported their difficulty accessing lending to help them grow.

In response to this the IPO developed and recently launched a new intellectual property finance toolkit that helps businesses, their advisers and the lending community talk the same language. It will help businesses identify and value their intellectual property assets when applying for finance and develop more effective management and commercialisation strategies for their intellectual property. It will also help make companies more aware of the range of finance options open to them.

This is good news for innovative firms, for business lending and for the economy more generally. 

How does this affect Insolvency Practitioners? The disciplines involved in identifying and exploiting intellectual property assets are similar to those that insolvency practitioners use to assess the value of failing firms. A deeper understanding of the value of intellectual property assets through the business growth cycle is a great opportunity to help firms that might be in trouble. It can help identify assets that may be ignored or undervalued that might potentially generate income when seeking debt finance. Similarly it can help realise the full value of a company when it goes into administration.

The simple steps and practical tools the kit offers will help improve the understanding and management of intellectual property assets. And that is good for all concerned.

76. The Care Act 2014 - Local Authorities’ etc. ‘Provider Failure’ Duties

This article which has been provided by the Department of Health, draws attention to duties on local authorities and on Health and Social Care trusts (“authorities”) under the Care Act 2014 in the event that a care provider’s business financially fails. In particular, it requests an insolvency practitioner to make local authorities aware of relevant insolvency events in relation to a financially failed provider in order to minimise the risk of disruption to services by enabling local authorities to be better prepared to step in if required.

From April 2015, the Care Act will place temporary duties on local authorities in England and Wales and on Health and Social Care trusts in Northern Ireland (“authorities”) to meet the care and support needs, of adults receiving services in their area where their care provider (in relation to England this is a provider registered with the Care Quality Commission in respect of the carrying on of a regulated activity) can no longer carry on because of ‘business failure’. Regulations made under the Care Act, the Care and Support (Business Failure) Regulations 2015 (“the 2015 Regulations”), specify the meaning of business failure for these purposes.

A business failure ‘event’ will typically involve the appointment of an insolvency practitioner to administer the affairs of a financially failed care business and if followed by the inability of the service provider to continue (i.e. both elements - failure and inability - are needed), the temporary duty on authorities to step in and meet care and support needs will be triggered in respect of each individual receiving services from the failed provider (in England this is regardless of whether a local authority was previously responsible for arranging their care or the care was arranged privately; in Wales, Scotland and Northern Ireland, the duty is limited to situations where the provider was meeting needs under arrangements made by or funded by an authority in another UK country).

The temporary duty is not triggered if the service continues but the business is insolvent; we recognise that it is fairly common for an insolvency practitioner to continue to trade a failed business whilst looking to sell it as a ‘going concern’ or provide an opportunity for the existing management or another operator to deliver a turnaround plan. Unless the care provider becomes unable to carry on, it will remain the provider’s responsibility to provide services and authorities would not be required to intervene because the service will be continuing.

The temporary duty is more likely to be triggered if an insolvency practitioner deems that the business is no longer financially viable and chooses to wind it down and close the service, leading to inability of the business to continue, with the result that care and support, or support, needs go unmet.

A local authority may not be aware that a care provider in its area has failed financially as it may not have contracts with that provider in place.

To enable local authorities to discharge their temporary duties under the Care Act, insolvency practitioners appointed in relation to a registered care provider’s business are requested to notify the Director of Adult Social Services (or their equivalents in Wales and Scotland) of the local authority in whose area the service is located of their appointment and/or business failure event and advise on their intention as regards whether to continue to trade or wind down the business as soon as possible following their appointment.

For reference, under the 2015 Regulations, available online at the following events constitute ‘business failure’ (in relation to providers who are not individuals):

  • the appointment of an administrator (within the meaning given by paragraph 1(1) of Schedule B1 to the Insolvency Act 1986 (“the 1986 Act”) or paragraph 2(1) of Schedule B1 to the Insolvency (Northern Ireland) Order 1989 (“the 1989 Order”) takes effect;

  • a receiver is appointed;

  • an administrative receiver is appointed as defined in section 251 of the 1986 Act or article 5 of the 1989 Order;

  • a resolution for a voluntary winding up is passed other than in a members' voluntary winding up;

  • a winding up order is made;

  • an order by virtue of article 11 of the Insolvent Partnerships Order 1994 is made;

  • an order by virtue of article 11 of the Insolvent Partnerships Order (Northern Ireland) 1995 is made;

  • the charity trustees of the provider become unable to pay their debts as they fall due (within the meaning of the 2015 Regulations) 

  • every member of a partnership is adjudged bankrupt; or

  • a voluntary arrangement proposed for the purposes of Part 1 of the 1986 Act or Part 2 of the 1989 Order has been approved under that part of the Act or Order.

Any enquiries regarding this article should be directed towards Stephen Airey, Department of Health, Area 313b, Richmond House, 79 Whitehall, SW1A 2NS  telephone: 0207 210 5710, email:

77. Insolvency Service guidance to Official Receivers and DRO intermediaries on undrawn pension entitlements

In the light of the decision in Horton v Henry [2014] EWHC 4209 (Ch), guidance has been issued to Official Receivers and Debt Relief Order (DRO) intermediaries on how to deal with undrawn pension entitlements in bankruptcies and when considering DRO applications. The guidance has been issued pending further consideration of the decision by the Court of Appeal. In broad terms, Official Receivers are being advised that they should follow the later decision in Henry v Horton which provides greater protection for pensions not in payment.  The full terms of the guidance can be found at:

Any enquiries regarding the above should be directed towards Simon Whiting, External Affairs (Policy), 4 Abbey Orchard Street, London SW1P 2HT;  telephone: 0207 637 6246;  email:

78. Deregulation Bill and Small Business, Enterprise and Employment Bill get Royal Assent

On 26 March 2015 the Deregulation Bill and the Small Business, Enterprise and Employment Bill both received Royal Assent and are thereby now Acts of Parliament. Measures in the two Acts do not come into force immediately but will be commenced in a phased way over the course of the next year or more.

The first measures will come into force in May 2015. These will include:

  • Removal of the requirement for liquidators and trustees to seek sanction; and

  • Creation of a power to make regulations to prohibit or place conditions on sales of businesses in administration to connected parties[1] .

The next changes will not come into force before October 2015. These are likely to include:

  • Allowing persons to be partially authorised to act as an insolvency practitioner; 

  • Withdrawal of the Secretary of State from direct authorisation of insolvency practitioners; and

  • Provisions to strengthen the insolvency practitioner regulatory regime, including the introduction of statutory objectives and new sanctioning powers for the oversight regulator.

The following measures will not be commenced before April 2016:

  • New process of D reporting by insolvency practitioners and other disqualification changes (and the new power to seek a compensation order):;

  • Enabling administrators to bring wrongful and fraudulent trading claims and to allow liquidators and administrators to assign these and certain other claims;

  • Creditor engagement changes to replace the requirement to hold physical meetings in all cases and to allow creditors to opt out of receiving communications from office-holders; and

  • Provision that the Official Receiver will be appointed as trustee on the making of a bankruptcy order, unless the court orders otherwise.

We also take this opportunity to thank those who have helped shape the policy in relation to these measures through consultation processes and passage of the two Bills through Parliament. Further implementation updates will be provided as the timetable is confirmed over the coming months.

The new legislation is accessible via the following links:

Deregulation Act 2015

Small Business, Enterprise and Employment Act 2015

Any enquiries regarding this article should be directed towards Tom Phillips at The Insolvency Service, 4 Abbey Orchard Street, London SW1P 2HT telephone:  020 7637 6421 email:


[1] This power (which lapses five years after commencement) would only be used  if the voluntary measures arising from the Graham Review into pre-pack administration  proved unsuccessful

79. Small Business, Enterprise and Employment Act 2015 and Deregulation Act 2015 - New insolvency measures coming into force in May 2015 

The following measures contained in the Small Business, Enterprise and Employment Act (SBEEA) 2015 and the Deregulation Act (DA) 2015 will come into effect on 26 May 2015.  With the exception of changes to Fast Track Voluntary Arrangements, there are no transitional measures associated with these changes, which will therefor apply to existing and new cases.

Removal of requirement for liquidators and trustees to seek sanction

Liquidators and trustees will be able to exercise any of the powers contained in section 314(2), Schedule 4 and Schedule 5 of the Insolvency Act 1986 without the need to obtain sanction (s. 120 and s. 121 SBEEA 2015).


An administrator’s term in office can now be extended with the consent of creditors for a specified period, up to one year (s. 127 SBEEA 2015)

Clarification that the court’s permission is not required where the only payment to be made to unsecured creditors by the administrator is the prescribed part (s. 128 SBEEA 2015). 

A new statutory trigger has been created to allow Scottish floating charges to crystallise in administration where funds are available to allow a distribution to be made to unsecured creditors (s. 130 SBEEA 2015).

Clarification that a winding up petition presented during an interim moratorium preceding an administration does not prevent the appointment of the proposed administrator (Schedule 6, para 5 DA 2015).

Small Debts

There are now powers to make rules to allow an office-holder to pay a dividend without the need for a creditor to submit a claim where the debt falls below a certain amount. The current intention is that these powers will not be exercised until the new Insolvency Rules come into force as part of the Rules modernisation project (s. 131 and s. 132 SBEEA 2015).

Voluntary Arrangements

The time limit for interested parties, such as creditors, to challenge the outcome of the creditors’ decision as to whether to accept an IVA proposal where there has been no interim order made, is set as 28 days from the date on which the report of the decision is filed with the court (s. 134 SBEEA 2015).

Fast-track voluntary arrangements (FTVAs) will be abolished while the small number of existing FTVAs will continue (s.135 SBEEA 2015).

Voluntary Liquidation

In a voluntary liquidation, a progress report must be issued if the liquidator changes within the first year of the liquidation (s. 136 SBEEA 2015).

We will continue to provide further updates on the other measures in the Small Business, Enterprise and Employment Act 2015 and the Deregulation Act 2015 once commencement dates are finalised.

In the meantime, if you would like further detail about the above measures or any of the other measures in the two Acts, you can visit the following pages:

Deregulation Act 2015

Small Business, Enterprise and Employment Act 2015

Any enquiries regarding this article should be directed towards the policy unit on telephone: 020 7291 6740 or email:

80. Consumer prepayments on retailer insolvency: a consultation

In a consultation paper published this month, the Law Commission asks whether prepaying consumers should be better protected in the event of company insolvency.

A study by Consumer Focus in 2009 found that approximately 24.5 million prepayment transactions are made each year in the UK by around 20 million consumers. These range from the purchase of low value gift vouchers to the making of significant deposits for items like bathroom and kitchen suites. In addition, with the prevalence of internet sales, prepayments are on the rise in the UK.

However, recent high-profile retailer insolvencies have highlighted the position of consumers making these kinds of payments. The collapse of the Farepak Christmas savings club in 2006 left many consumers out of pocket. More recently, unused gift vouchers worth £4.7 million remained in circulation when Comet collapsed and furniture retailer MFI held over £25 million in customer deposits when it went into administration.

In 1982, the Cork Report on insolvency law rejected greater protection for consumers, noting that consumers often lose small and affordable amounts whereas the effect on suppliers can be catastrophic. But following the Farepak collapse, the Treasury Select Committee described the existing safety net as “inadequate and incomplete”. The OFT carried out a review, and ministers asked the Department for Business, Innovation and Skills to consider providing more protection for consumers. BIS commissioned the Law Commission to examine the existing protections given to prepayments and consider whether such protections should be strengthened.

The issues are complex and go to the heart of the insolvency regime.

Assessing the scale of the problem

An analysis of twenty major high-street retailer insolvencies undertaken by the Commission shows that the losses to customers are often low. Gift vouchers tend to be issued in relatively small amounts and, in many of the cases reviewed by the Law Commission, administrators honoured vouchers during a period of trading in administration. The analysis suggests that the consumers who stand to lose most are those who have paid significant deposits for large items such as furniture or kitchens, particularly if they have paid by cash or cheque.

Possible means of protection

The Law Commission’s consultation paper looks at a variety of possible options for protection, including:

  • Limited changes to insolvency law, in the form of a limited preference for consumers making relatively large prepayments by cash or cheque in the run up to the insolvency

  • Increased use of trust accounts

  • Insurance/bonding products

  • Increased transparency around chargeback for those who pay by credit or debit card

  • A new form of security to be registered at Companies House

  • New rules relating to the transfer of ownership in goods

The consultation asks whether sufficient protections could be achieved through improved voluntary mechanisms or whether regulation would be required.

The Law Commission is keen to hear as many views as possible, and responses are invited by 17 September 2015.

A copy of the consultation paper is available on the Law Commission’s website at:

Any enquiries regarding this article should be directed towards the policy unit on telephone: 020 7291 6740 or email:

81. New Insolvency Measures – October 2015


Deregulation Act 2015

The following measures contained in the Deregulation Act 2015 will come into effect on 01 October 2015.

Authorisation of Insolvency Practitioners

A new regime will allow for the partial authorisation of insolvency practitioners. In future, insolvency practitioners will be able to be authorised in relation solely to companies, solely to individuals or to both (fully authorised - as is currently the case).

The Secretary of State will no longer directly authorise insolvency practitioners, and so in future, all insolvency practitioners will be authorised by Recognised Professional Bodies. A transitional period of one year will allow insolvency practitioners currently authorised by the Secretary of State time to seek authorisation from one of those bodies.

Provisions introduced by the Insolvency Act 2000 intended to allow non-insolvency practitioners to act in relation to voluntary arrangements only, which were never used and are no longer considered necessary, will be removed.

Appointment and release of administrators

An amendment to Schedule B1 of the Insolvency Act 1986 amends the current requirement for a company or its directors intending to appoint an administrator to give notice of the intention to appoint to anyone entitled to appoint an administrative receiver of the company, to any holder of a qualifying floating charge entitled to appoint an administrator, and to other prescribed persons.

Once commenced, no notice will be required in respect of the prescribed persons where there is no one entitled to appoint an administrative receiver or to any holder of a qualifying floating charge. This will prevent unnecessary delays in the appointment process.

A further amendment to Schedule B1 clarifies that the approval of unsecured creditors is not required before an administrator can obtain his or her release in cases where a paragraph 52(1)(b) statement has been made.

Bank accounts for bankrupts

Changes to the law governing ‘after-acquired property’ in bankruptcy will mean that  bankrupt people will have improved access to basic bank accounts. If account holders withdraw funds, banks will be protected from recovery action by trustees in bankruptcy if they had not received specific notice that the funds had been claimed as part of the bankruptcy estate.  The banks have confirmed that they will provide basic banking facilities to bankrupt people following this change.

Other changes

A number of other minor changes will be commenced in October, including: the repeal of the Deeds of Arrangement Act 1914; the repeal of section 151 of the Insolvency Act 1986 (payment into bank of money due to a company); a change to section 7(4) of the Company Directors Disqualification Act 1986 which will allow the Secretary of State (or Official Receiver) to require information from third parties for the purpose of investigation in non compulsory insolvency cases (see section on Disqualification below); and the insertion of a new subsection into section 174 of the Insolvency Act 1986 which provides that the liquidator, when a winding-up order is rescinded, has his or her release with effect from the time the court may determine.

Small Business, Enterprise and Employment Act 2015

The following measures contained in the Small Business, Enterprise and Employment Act (SBEEA) 2015 will come into effect on 01 October 2015. 

Strengthened regulatory regime

Following two independent reviews and consultations, measures were brought forward in The Small Business, Enterprise and Employment Act 2015 to reform the regulatory regime for Insolvency Practitioners (IPs). The aim of the measures is to strengthen the regulatory framework for IPs, thus providing greater confidence in the insolvency profession.  Sections 137-142 of The Small Business, Enterprise and Employment Act 2015 achieves this by amending Part 13 of the Insolvency Act 1986 to:

  • introduce regulatory objectives for the insolvency regime
  • introduce a range of sanctions so that proportionate action can be taken where the Secretary of State is satisfied that an Recognised Professional Body (RPB) is not adequately fulfilling its role as a regulator,
  • allow the Secretary of State to apply to court to directly sanction an IP where it is in the public interest,  and
  • clarify the purpose for which the Secretary of State can charge fees to RPBs for the maintenance of their recognition.

Section 143 enables the Secretary of State to apply to court to secure compliance with a requirement that the Secretary of State has placed on an RPB.

Sections 144-146 give the Secretary of State a power to establish a single regulator of IPs should the changes to the regime not have the desired effect of increasing confidence. This is a reserve power which will lapse after 7 years if not used.

The regulatory objectives and sanctions apply for acts or omissions by RPBs in discharging their regulatory functions, or failure to comply with a new requirement, from 1st October 2015.

The power to apply to court to directly sanction an IP in the public interest applies to conduct on or after 1st October 2015, notwithstanding the date of appointment as office holder.


The measures

Sections 104-116 provide for a package of measures to further strengthen the director disqualification regime. Taking forwards proposals outlined in the ‘Transparency and Trust’ consultation that took place in 2013/14, they place a strong emphasis on accountability with provisions that:

  • give the Secretary of State and the courts the power to disqualify a person convicted of a company related offence abroad;

  • allow for the disqualification of a person who influences or instructs  unfit directors;

  • clearly set out the matters that the Secretary of State or the court must take into account when considering whether a person should be disqualified. The matters will include breaches of laws or regulations, the loss or harm their conduct has caused and its frequency;

  • extend from 2 years to 3 years the period in which the Secretary of State can apply to court for a disqualification order against the director of an insolvent company;

  • remove the restrictions on what material he can rely on when seeking a disqualification in other cases. This will allow the Secretary of State to use information from other regulators in his proceedings;

  • create compensation orders and undertakings meaning that a disqualified director can be required to pay the amount of money creditors lost through his misconduct. Compensation can be sought for conduct that occurs on or after 1 October 2015.

One final disqualification measure under the SBEEA 15 which will not be coming into force on October 2015 is the streamlined reporting of director misconduct in insolvent companies.  This measure will be implemented from April 2016 with the first of the new online conduct reports expected to be submitted in June 2016.


Although all of the above disqualification measures will come into force on 1 October, not all of them will have immediate effect, with some biting upon new insolvencies after that date and other upon conduct.

Measure - SBEEA 15

Will Affect


S104  -  Disqualification following overseas convictions

Convictions after commencement – regardless of when the offence took place


S105 - Persons instructing a disqualified director

Instructions that give rise to conduct after commencement that results in  DQ

Although this provision extends to disqualification other than under s6 CDDA, this means that we can anticipate  some delay before the first of such cases reach the application stage.


S106  - Broadening Schedule 1 CDDA

Conduct after commencement

The new schedule has wider application and will apply  to determinations by the courts under sections 2 to 4, 5A 8 or 10 of the CDDA and to the SoS in exercising discretion to accept an undertaking under sections 5A, 7 or 8


S107 - Streamlined reporting of director misconduct in insolvent companies


Insolvencies after commencement

NB – Commencement from April 2016

There will be transitional arrangements in place until September 2016 to allow for the final D1s and D2s.

Engagement with IPs already under way.

S108  -  Time Limits  for instituting proceedings increased to 3 years


Insolvencies after commencement


S109 - removing reference to “investigative material” in S8 CDDA


Conduct after commencement


S110  - Compensation Regime


Conduct after commencement

As the compensation regime will apply to insolvent cases only, we anticipate a significant delay before the first applications are made and it is unlikely that this will be before October 2016 at the earliest.

We will be engaging with IPs as we develop the detail of how the regime will operate.

De-Regulation Act 2015

Compulsory powers in non compulsory DQ investigations


Insolvencies after commencement

We will be engaging further with IPs with respect to this measure

Assignment of Actions

As well as the introduction of compensation orders, there are further measures aimed at promoting accountability and improving returns to creditors in corporate insolvencies. Sections 117-119 extend to insolvent administrations the power for an office-holder to bring fraudulent or wrongful trading actions; previously such powers were available only in insolvent liquidations. Office-holders will also be able to assign such actions, as well as rights of action for transactions at an undervalue/gratuitous alienations, preferences/unfair preferences and extortionate credit transactions.

If you would like further detail about the above measures or any of the other measures in the two Acts, you can visit the following pages:

Deregulation Act 2015

Small Business, Enterprise and Employment Act 2015


Insolvency (Amendment) Rules 2015

These Rules require IPs to provide creditors with an upfront estimate of their fees and expenses when charging on a time and rate basis. They aim to increase transparency for creditors and give them an early indication of the costs of an insolvency case.

The new Rules apply to administrations, creditor’s voluntary liquidations (CVL), compulsory liquidations and bankruptcy.

Key features:

  • Introduces a requirement to provide a ‘fees estimate‘ where IP wishes to take remuneration on time and rate basis. Creditors required to approve estimate and any increase. Acts as a cap on fees.
  • Regardless of basis of remuneration, requires office holders to provide an indication of the likely work that will be needed and the anticipated expenses in a case. This is for information only – does not require creditor approval.
  • Can be given up to completion of a case, or if not possible, up to a particular milestone or for a designated period.

The new Rules can be found at

Debt relief limits (DROs) and creditor petition level increases

Two maximum limits, in place to restrict access to DRO, are increasing to make them accessible to more financially vulnerable people:-

  • The maximum level of debt will increase to £20,000 from £15,000
  • The maximum level of assets will increase to £1,000 from £300

This increase to the maximum asset level does not affect the separate limit for a vehicle which remains fixed at £1,000.

The change to debt relief orders can be viewed at:

The bankruptcy creditor petition level is increased to £5,000 from £750. This is to remove the risk of bankruptcy and its costs from those individuals with small debts.

The creditor petition order can be viewed at:

Essential Supplies

The Insolvency (Protection of Essential Supplies) Order 2015, made in March 2015, will come into effect on 1 October.  The Order will ensure that insolvency practitioners are better able to secure the continuation of supplies that are essential to the continuation of a business.

The Order allows the Secretary of State to amend sections 233 and 372 of the Insolvency Act 1986 to:

1.      Extend the list of suppliers prevented from asking for more money as a condition of continuing supply to IT suppliers;

2.      Extend the list of suppliers prevented from asking for more money as a condition of continuing supply to include ‘on sellers’ and intermediary providers;

3.      Insert new provisions preventing suppliers from relying on their insolvency-related contractual terms to charge higher prices or terminate  the contract just because a business enters into Administration or a voluntary arrangement

As the Order overrides contractual rights, a number of safeguards will also come into effect to allow suppliers to:

1.    Request a personal guarantee from the insolvency office-holder as a condition of continuing supply;

2.    Terminate supply where payment for post-insolvency supply remains outstanding 28 days after payment is due;

3.    Terminate supply with the permission of the court.

The Order can be viewed at:

General queries regarding the above can be directed to

82. The introduction of gig – 1 October 2015

On 1 October 2015 The Insolvency (Amendment) Rules 2015 (“the Amendment Rules”) will come into force. The Amendment Rules will require office-holders to provide all creditors with an estimate of their fees where they are seeking remuneration on a time and rate basis (“fees estimate”). The estimate will require creditor approval both for the amount and the basis to which remuneration is sought. In addition, in all cases, the office-holder will need to provide an indication of the likely work that will be needed in a case and the anticipated expenses. An estimation of the likely expenses will be for information only and will not require creditor approval.

An article on the Amendment Rules was included in the March 2015 (issue 65) edition of Dear IP. The purpose of this article is to address some of the queries that have been raised since the Amendment Rules were published.

Providing a fee estimate in a Creditors Voluntary Liquidation (CVL)

The legislation states at r4.127(2A) that where the ‘liquidator’ proposes to take all or part of their remuneration on the basis of time and rate, the ‘liquidator’ must prior to the basis being fixed, give to all creditors of the company the fee estimate and details of the expenses. The use of the word ‘liquidator’ is not intended to preclude an insolvency practitioner from providing this information ahead of a s98 meeting at which s/he is subsequently appointed.  What is important is that creditors are given sufficient time to make an informed decision about the reasonableness of the information provided. It would not be appropriate for the estimate to be provided for the first time at the meeting, and creditors expected to vote on it at the same time. If it is not possible to provide the information ahead of a meeting then a resolution should be subsequently sought by correspondence.

Fee estimate where liquidation follows an administration

In administration, where it is anticipated at the outset that the case will move into a CVL, the estimate may cover the work of the subsequent CVL, or if this is not practical, just the fees and expenses of the administration. This will be a choice for the administrator at the time of providing the fees estimate and will need to be made clear to creditors what work is covered. If the estimate is for the administration only but the company converts to a CVL earlier than expected, and before the level of the fee estimate is reached, the fee estimate may be carried forward to the subsequent CVL if the details of the work to be done for the fees estimated are the same i.e. the work will now be done in the CVL rather in the administration.  For example if an administrator had proposed to seek the court's approval to pay a (non-prescribed part) distribution to unsecured creditors in an administration and had estimated fees totalling £40,000 to conclude the administration (including the distribution and exit by way of a dissolution), but in fact the creditors modified the proposals so that the administration must move to CVL (and they approved the administrator's fees on a time cost basis).  If the administrator's time costs totalled £30,000 by the time he was appointed Liquidator, he would be able to incur and draw fees of £10,000 before he reverted to creditors as long as the work he was doing in the liquidation was the same that he anticipated to be done in the administration.

Exceeding the fees estimate

The office-holder must not exceed the total amount set out in the fees estimate without approval (r2.109AB, R4.131AB and 6.142AB). However as work cannot stop on a case, there may be instances where an office-holder exceeds the fees estimate before approval is sought/obtained. The Amendment Rules do not preclude fees being incurred during this period but do prevent them from being drawn down/taken unless or until approved.

Milestone estimates

It will not always be possible to accurately estimate the work that will need to be done at the beginning of a case.  If this is the case it may be better to provide an estimate up to a particular milestone or for a designated period and seek further approval at a later point. It is important that in doing so creditors are clear about what they are agreeing to and that the insolvency practitioner will need to revert to them for further approval at that milestone or later point. This is provided for in the legislation in r13.13(18A)(d) and (e) and in rules 2.109AB, 4.131AB and 6.142AB (e ) and (f).

Transitional provisions – s137 appointments

There are no transitional provisions that apply where a liquidator is appointed in a compulsory liquidation by the Secretary of State under s137. The effect of this is that the new provisions will apply to existing, pre-October appointments, where the basis of remuneration is fixed or changed after 1 October 2015; as well as to new appointments post 1October 2015. For cases where the basis is set before 1October 2015 the new rules will not apply and there will be no requirement to provide creditors with an estimate.

Use of ranges or alternatives

While acknowledging that it may be difficult to estimate fees or the work required for some scenarios, the estimate must be clear and absolute – it is not permissible for an estimate to be a range of fees, nor for alternative estimates to be given at one time. Any estimate must be fixed until and unless creditors are asked to approve any revised fees estimate. If an estimate is necessarily uncertain then creditors should be informed, and therefore have some expectation of a revised estimate. .

The only occasion where a range would be permissible would be when estimating expenses and repeating a range quoted by a third party, for instance for legal costs in litigation.

Any enquiries regarding the above should be directed towards Alison Ireland, Insolvency Service Policy Directorate, telephone: 0207 637 6365 email:


The Law Commission has published a consultation paper that looks at how to reform the law of bills of sale. Some of its proposals may have an impact on how insolvency practitioners seek to discover the goods that are available for distribution in the event of bankruptcy.

A bill of sale is a document by which a person transfers ownership of goods to another. This can cover a wide variety of transactions: people can sell their goods, exchange them, give them as gifts, or mortgage them to get a loan. If the former owner delivers the goods to the new owner, a bill of sale is not necessary. The new owner obtains ownership by virtue of possession. A bill of sale is used in situations where the former owner nevertheless keeps possession of the goods. Bills of sale can only be granted by individuals and unincorporated businesses. They must be granted over specific goods already owned by the former owner.

A former owner who remains in possession of goods subject to a bill of sale may give the impression of “false wealth”. If the former owner becomes bankrupt, it is essential that insolvency practitioners have a means of discovering the goods which are available for distribution.

Unfortunately, the current law regulating bills of sale does not provide a user-friendly means of discovering the existence of bills of sale. In some cases, continued regulation of bills of sale may be unnecessary.

The current law

Bills of sale are regulated by two Victorian pieces of legislation: the Bills of Sale Act 1878 and the Bills of Sale Act (1878) Amendment Act 1882. The legislation distinguishes between “security bills” and “absolute bills”. “Security bills” are bills of sale that are used to borrow money: the borrower transfers ownership of their goods to the lender as security for a loan. “Absolute bills” are bills of sale that are used for purposes other than to borrow money.

Both security bills and absolute bills must be registered at the High Court in order to be valid against a trustee in bankruptcy. The High Court register is paper-based and cannot be searched online. Instead, interested third parties must ask High Court staff to search against the former owner’s name and postcode in person or by post at a fee of £45.

Uses of bills of sale

The Law Commission conducted two surveys of the High Court registry of bills of sale. It estimates that 90% of the bills of sale registered in 2014 were security bills over vehicles (so-called “logbook loans”). It further estimates that around 0.5% of the bills of sale registered in 2014 were security bills granted over goods other than vehicles.

There was no evidence that any absolute bills were registered in 2014.

Proposals for reform

In its consultation paper, the Law Commission makes proposals to reform the registration of bills of sale that could affect how insolvency practitioners search for them in three ways:

  • logbook loans would no longer be registered at the High Court. Instead, they would be registered with asset finance registries such as HPI, Experian and CDL. Insolvency practitioners would need to search these registries (using the vehicle’s registration number and vehicle identification number) to discover the existence of security bills granted over vehicles;
  • security bills over goods other than vehicles would still be registered at the High Court, but it would be possible to search for them by sending email requests to High Court staff. Searches would be conducted against the borrower’s name and postcode; and
  • registration of absolute bills would be abolished. Instead, insolvency practitioners would need to rely on the clawback provisions of the Insolvency Act 1986 to remedy fraudulent transfers of goods.

Responding to the consultation

The Law Commission welcomes responses from insolvency practitioners on how its proposals may affect them. In particular, it seeks information on the impact of the proposal to abolish registration of absolute bills.

Further information, including the full consultation paper, is available at The Law Commission seeks responses by 9 December 2015.

Fan Yang, lawyer, and Robert Ward, research assistant, Law Commission

84. Insolvency Service and Financial Conduct Authority 

On 7 December, representatives of the FCA and the Insolvency Service met to discuss matters of mutual interest – in particular ways in which to ensure that the FCA regulatory regime for debt management and the regulatory regime for insolvency remain joined up. There was particular focus on better information sharing between regulatory bodies in both regimes with a view to ensuring that adverse information in relation to IPs (and those that employ them where relevant) in one regulatory regime can be shared with- and acted upon- by the regulator(s) in the other regime if/where relevant. The RPBs are also engaged on these matters. Further discussions will be taking place in the New Year.

General enquiries may be directed to email Telephone: 020 7291 6771

85. ‘Flag it Up’ Campaign launch

On 30 November Government, together with the legal and accountancy industries, launched a joint campaign to raise awareness of the warning signs of money laundering.

The campaign, ‘Flag it Up’, has been developed with the Accountancy Affinity Group (AAG), Law Society and Solicitors Regulation Authority (SRA) to help accountants and solicitors spot the red flags which could indicate criminal activity.

Flag it Up will run through to March 2016, providing best practice guidance on how to protect business’s reputation and ensure they are not caught up in criminality.

The size and complexity of the UK financial and professional services sectors mean they are more exposed to criminality than those in many other countries, and it is essential that Government and industry work together to tackle this threat.

Through recent amendments to strengthen the Proceeds of Crime Act, Government is making it harder than ever for people to move, hide and use the proceeds of crime. The Act gives law enforcement agencies the powers to recover criminal assets and freeze suspicious funds. The Serious Crime Act 2015 made it a criminal offence to participate in the activities of an organised crime group.

The campaign website and the relevant links to money laundering guidance issued by the RPBs can be found at

General enquiries regarding this article may be directed to

86. Changes to the CFA and ATE recoverability

From 6 April the no win no fee reforms introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 will apply to insolvency proceedings. These reforms came into effect in April 2013 but were delayed in respect of insolvency proceedings to give insolvency practitioners and other interested parties time to prepare for, and adapt to, the changes.

The Order, made on 10 March, means that from 6 April successful litigants in insolvency cases will no longer be able to recover After The Event insurance premiums and the uplift applied to Conditional Fee Arrangements from the losing side.

The Order can be viewed at:

Any enquiries regarding this article should be directed towards email:

87. Working with the National Employment Savings Trust (NEST)

Over the next few years The Pensions Regulator expects 1.8 million small employers will be impacted by auto enrolment, the government’s workplace pension initiative. Given many businesses don’t survive beyond five years of trading, pension providers and insolvency practitioners might be working together more often in the coming years. As one the largest pension providers in the UK, you are likely to come across NEST more regularly in the future.

The law on workplace pension provision changed in 2012. Government introduced reforms which mean that employers have to enrol eligible workers into a qualifying workplace pension scheme.

NEST was set up as part of the auto enrolment reforms. NEST was designed to be an online scheme to ensure we can deliver at scale, keep our costs low and make scheme administration as straightforward as possible for members and employers.

“Our public service obligation means we’re open to any employer who wants to use us for auto enrolment and we’re also open to any self-employed person who wishes to set up a pension. As well as always being open to employers, we are also free for them to use”.

NEST have provided the following top tips to insolvency practitioners:

1.      Activating your delegate account within 28 days

Once an insolvency practitioner has provided all of the information we need to verify you’re working on behalf of an employer, we email you a link to activate your online delegate account. This link expires after 28 days. Currently, some of the links aren’t being activated in this time frame, meaning that access to an employers’ account isn’t possible. Keep a close eye out for the email we send and make sure you activate your link in time.

2.      Informing us of insolvency

Often the very first time we hear that an employer has become insolvent is when an insolvency practitioner tells us. It’s important to tell us the right information. As an online scheme the information we hold about an employer, including their name, is entered by them directly onto our system. We only have the information that they give us. If the business has complex organisational structures, for example including umbrella companies, it’s useful to know this when you speak to us. It may be that we need you to make some adjustments to the system before we can mark an employer insolvent. These changes will depend on the specifics of the case, so the more information you have about the structure, the better.

3.      The use of contribution corrections versus the use of direct debit indemnity claims

If you find that an employer made a contribution in error and they paid by direct debit, please don’t use the option of a direct debit indemnity claim under the direct debit guarantee.

Pulling money from the scheme via the use of the direct debit guarantee takes money from NEST but does not reverse the contributions that have been made to a member’s pot. This might then result in a tax charge from HMRC being levied. Instead, to avoid this, you have two options depending on the situation:

a.      If the date of insolvency was prior to the period the contribution was made, you’ll need to log onto your NEST account to do a ‘contribution correction’. This involves reversing the expectations for each member and will automatically trigger a refund to the bank account 

b.      If the date of insolvency was during/after the period the contribution was made and contributions to members were due but void because of insolvency, you’ll need to inform us. We’ll need evidence to show that this is what’s happened and we’ll do an adjustment on the account that will refund the money.

4.      Cheques without a schedule

Whenever you are sending money to us via cheque, please make sure that you also complete the contribution schedule online too. As an online scheme, without the contribution schedule we’ll not know how to allocate the money and so we’ll return it to you. This means that the contributions go unpaid and the employer has not met their legal duties.

What can you do if you have any issues?

If you experience any issues with a case you’re dealing with there are several channels to help. Your first port of call should be the ‘How To’ guides on the website. These helpful guides contain a lot of the information you’ll need to know. If you want to talk to someone, there is a web chat option where an agent can guide you through any issues. If you still need help, there is also a contact centre.

With the number of small employers due to stage over the next few years, NEST are always looking for ways to become more efficient and work more effectively with insolvency practitioners. If practitioners would like to provide any feedback, please contact Georgina Maskell (

General enquiries may be directed to email 

88. Insolvency Service Consultation: A Review of the Corporate Insolvency Framework

As practitioners may be aware, the Government is currently consulting on proposals to improve the corporate insolvency framework. The UK’s corporate insolvency regime is highly regarded internationally (ranked as one of the top 15 in the world by the World Bank), but we want to ensure that it continues to deliver the best possible outcomes for business.

The consultation therefore seeks views on whether the insolvency regime needs updating in light of international principles developed by the World Bank and the United Nations Commission on International Trade Law (UNCITRAL), as well as in the wake of recent large corporate failures.

We are inviting comments on four broad areas for reform, including:

  • introducing a moratorium for distressed businesses to benefit from protection against legal action while considering their options for rescue; 

  • widening the definition of essential supplies, with appropriate safeguards for suppliers, to assist distressed businesses;  

  • developing a new restructuring plan to increase the options available to rescue businesses; and

  • increasing the availability of rescue finance.

We are keen to hear from as wide a range of stakeholders as possible, so please do take the opportunity to comment on the proposals. The consultation and response form can be accessed online at:

The consultation was launched on 25 May 2016 and will run to 6 July 2016. Following the close of the consultation we will analyse responses and compile a government response, which will be published on GOV.UK in due course.

Any enquiries regarding this article should be directed towards Steven Chown, Strategy & Change - Policy, 4th Floor, 4 Abbey Orchard Street, London, SW1H 2PT telephone: 020 7637 6501 email:

89. Financial Sanctions and Insolvency Practitioners

The Insolvency Service is aware of some individuals who may be subject to financial sanctions who are seeking to use both solvent and insolvent liquidations to circumvent financial sanctions. This article provides some information about financial sanctions and details of a free subscription service to identify designated persons, entities or bodies to which insolvency practitioners are encouraged to subscribe.


Certain formal insolvency procedures could be used to circumvent or breach financial sanctions. Breaching financial sanctions is a criminal offence. This notice sets out the responsibilities of insolvency practitioners and directions to further sources of information and guidance.

Financial sanctions are in force against a number of regimes, individuals and companies. In practice this means that you cannot do business with such designated individuals or companies, companies owned or controlled by designated entities, or undertake any relevant transaction that may be indirectly benefitting a designated entity, unless there is a relevant exemption in the sanctions regime or, you have a licence from the Office of Financial Sanctions Implementation (OFSI). For further information on financial sanctions, see the OFSI guidance;

How do sanctions affect Insolvency Practitioners?

In order to comply with financial sanctions, insolvency practitioners must ensure the following:

  • insolvency services are not provided to, or for the benefit of, a designated person (a company or individual subject to financial sanctions) or an entity owned and/or controlled by a designated person;
  • transactions which are subject to financial sanctions (for example, transfers of funds in some circumstances) are not carried out;
  • assets which should be frozen must not be realised or made available to a designated person;
  • formal insolvency processes are not used as a route to circumvent sanctions;

unless there is a relevant exemption in the legislation of the sanctions regime or you have an OFSI licence that permits you to do so.

Insolvency practitioners should familiarise themselves with financial sanctions and understand how they apply to their business. When conducting usual anti-money laundering checks, practitioners should refer to the OFSI list of financial sanctions targets: (section 3 gives more information on this list and how to use it).

Practitioners may also find Section 9 of the OFSI Guidance useful: Compliance for Businesses:

It is a criminal offence to breach the prohibitions in financial sanctions regimes. If you find that you have already carried out an economic transaction that was prohibited by sanctions (for example by dealing with a designated person’s funds without an OFSI licence) you should contact OFSI to regularise the position. (


Under certain circumstances a licence may be issued to allow transactions to take place. These circumstances are limited to the licensing grounds as set out in the legislation of the sanctions regime and practitioners should be aware that not all transactions or insolvency services can be licensed. For more information on licences including the process of applying for a licence and the circumstances in which they can be provided please refer to the OFSI guidance.

Licences cannot be issued retrospectively so it is important to apply for a licence before any work takes place.

Please note that OFSI will only consider licence applications where you have identified a valid and appropriate licencing ground that permits a licence to be issued as set out in the relevant EU legislation.

Further Information 

OFSI operates a free subscription service which allows subscribers to receive
updates whenever there are changes to financial sanctions effective in the UK. Practitioners can find out how to subscribe at:


Any enquiries regarding this article should be directed towards M Treasury’s Office of Financial Sanctions Implementation; email:  telephone 020 7270 5454.

90. Dealing with animals – availability of guidance from Animal and Plant Health Agency

This article is being issued to remind insolvency practitioners that there are legislative requirements concerning the welfare of animals and that an office holder, as a keeper of those animals, will be responsible for ensuring that those requirements are not compromised. In the case of farmed species (cattle, sheep, pigs, poultry and, in some cases, horses and camelids) there are a range of disease control requirements that may be in place concerning the way in which they are kept, their movement, transport and method of sale. Where an office holder is dealing with farmed livestock they should contact the Animal and Plant Health Agency (APHA) (03000 200 301), choosing the ‘other enquiries’ option, in the first instance, for advice.

If animals are of a species that may be endangered, consideration should be given to contacting the CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) Unit at the APHA. To establish if an animal is an endangered species a check may be made on the CITES database.

Most animals that are considered wild, dangerous or exotic require a licence. This will be issued by the relevant local authority. If there are concerns regarding the legitimacy of a wild/dangerous animal or advice is required on any possible actions, the local authority should be able to assist. 

Any enquiries regarding this article may be sent to 

91. Legal Profession Privilege re Shlosberg [2016]

A recent Court of Appeal case re Shlosberg [2016] EWCA Civ 1138 has clarified the way in which Legal Professional Privilege material can be used by a trustee in bankruptcy.

This case concerns, amongst other things, whether and to what extent a trustee in bankruptcy is entitled to use documents which were subject to legal professional privilege in favour of the bankrupt, prior to his bankruptcy. This case held that while the trustee can take possession of privileged documents under section 311(1) of the Insolvency Act 1986, the right to assert (and therefore waive) privilege in a document does not pass to the trustee, that right is personal to the bankrupt. While the trustee can inspect the documents and use the privileged information to realise the bankrupt’s estate, the trustee cannot use it outside his/her statutory functions.

It had previously been thought that the trustee would be able to waive privilege in the same circumstances in which, prior to his bankruptcy, a bankrupt would have been able to do so, provided that the documents in question concerned property within the bankruptcy estate or otherwise related to his estate or financial affairs

Following the judgement, guidance has been issued to Official Receivers, extracts of which are set out below.

Extract from OR guidance:

A bankrupt is required to deliver up all records, including privileged material, to the trustee. The trustee can deploy privileged material against the bankrupt but may not otherwise use privileged material in a manner that would amount to a waiver of privilege. Where the trustee is deploying privileged material in court, they ought to apply for an order under CPR 31(22) that the material not be disclosed further.  

The trustee, in an exceptional case, may ask the bankrupt to voluntarily waive privilege so that the documents can be disclosed onwards. This would be on a voluntary basis only and we would expect a properly advised bankrupt to refuse to give such a waiver.

Any enquiries regarding this article may be sent to   

92. Early notification of potential high profile insolvencies

The office of the Chief Executive of the Insolvency Service would appreciate early notification of any potential high profile insolvencies. In particular, we would like to know about any cases that could result in significant redundancies, could have impact at local and national level, and/or would attract significant media and ministerial interest. Early notification will allow us to prepare and put in place protocols to deal with such insolvencies, handle high volume of redundancies, or prepare for briefing of ministers and/or officials. All notifications will be treated in the strictest confidence.

Please send all notifications to

Such a notification would be separate from the obligation to notify the Secretary of State about redundancies using the HR1 process –

Any enquiries regarding this article may be sent to

93. Retailer insolvency and Refunds / Chargeback – guidance to be given to consumers who have made prepayments or have paid for goods or services


This article provides guidance for insolvency office holders on the information to be given to consumers about claiming refunds from card issuers where a retailer has become insolvent before delivering goods or services. It includes standard wording which should be put on the insolvent retailer’s website.


In July 2016 the Law Commission published a report on Consumer Prepayments on Retailer Insolvency. The full report, including an executive summary, is available at: Consumer Prepayments on Retailer Insolvency.

In the event of retailer insolvency, consumers often stand to lose prepayments made in advance of receiving goods or services unless there are sector based protections in place for them (e.g. for travel).

Law Commission recommendations

The Law Commission made a number of general recommendations designed to improve the chances of consumers regaining prepayments they have made. The Government is considering these further and intends to publish a full response in summer 2017.

One area of the Law Commission’s recommendations relates to consumers who have paid for a product by credit or debit card. A consumer who has paid by credit or debit card for undelivered goods or services has the ability to recover money through the card issuer as card payments are protected by statutory and voluntary schemes. 

Payments by credit card (including charge cards issued under a Consumer Credit Act regulated agreement) are protected by a statutory scheme: section 75 of the Consumer Credit Act 1974 gives consumers a legal claim against the card issuer where the goods or services cost more than £100 and less than £30,000 and are not delivered.

For both credit and debit cards (including pre-paid cards), the card schemes (which set the rules governing payment transactions between the card issuer and the merchant acquirer) provide a system of “chargeback”. Chargebacks are voluntary schemes, where the rules are set by the card schemes, which allow the card issuer to ask the merchant acquirer to reverse a payment made by card and is not subject to minimum or maximum monetary limits. Claims for a chargeback must be made within time limits and these vary across card schemes.

The Law Commission found that the statutory and chargeback voluntary schemes operated by the card schemes, collectively referred to as chargeback in this article (but referenced as refund in the consumer communications – see Annex A and B), need to be better understood. The Commission made a number of recommendations to the Insolvency Service, UK Cards Association (UKCA - the body representing the card payments industry’s issuers and acquirers), insolvency practitioners and card issuers to achieve this. 

The Government welcomed the Law Commission’s recommendations on chargeback and this guidance implements those recommendations for the insolvency practitioner industry. UKCA have implemented recommendations regarding refund / chargeback guidance for consumers and a Code of Best Practice for card issuers on the provision of information to consumers on chargebacks.

Guidance for insolvency practitioners

The Insolvency Service has worked with R3, the Insolvency Lawyers Association, ICAEW, UKCA, card schemes (Mastercard and Visa), the Law Commission and consumer groups to develop the guidance in this article on the information which should be made available to consumers when seeking a chargeback where there has been a retail insolvency. The main element of the guidance is that a standard notice should be published by the office-holder on the insolvent retailer’s website.

Research by UKCA shows that, in 2016, 77% of national retail sales were made by card. Therefore, it is likely that in all retail insolvencies which feature consumer deposits / prepayments or payments, some would have been paid by card. Publication of the standard notice would therefore be expected in the majority of retail insolvencies (subject to the comments below). 

Reclaiming money through a chargeback will often provide consumers (including those who have made a prepayment) with the best chance of getting their money back following a retailer’s insolvency. Following this guidance there is likely to be an increased awareness of the payment card industry’s card chargeback facility amongst consumer creditors enabling them to recover their money where a card had been used to make the payment.

Notice to be published on retailer’s website

·         It is common practice for insolvency office-holders in large retail insolvencies to ensure the retailer’s website is maintained for a period in administration or following liquidation. Where this occurs the office-holder should publish on the retailer’s website the standard notice for consumers at Annex A or B, in relation to payments made by credit and debit cards for goods or services which have not yet been received

·         As time limits for chargeback vary across card schemes, the standard notice should be published in circumstances where it is possible that goods or services may be delivered, but where it is not yet certain that they will be.

·         Annex A should be used where there is a possibility that pre-paid goods and services will be supplied by the due date. Annex B should be used where pre-paid goods and services will not be supplied by the due date (and should replace Annex A when there is certainty that goods and services will not be supplied)

·         The standard notice should also be published on social media sites maintained by the retailer, if the office-holder considers that is the best means of drawing it to consumers’ attention.

·         In relevant cases where the retailer did not maintain a website, office-holders should draw the contents of the standard notice to consumer creditors by other means (e.g. for small retailers, by a notice in the shop window or correspondence with consumer creditors).

·         It may be appropriate for the standard notice to be hosted on an insolvency related site in place of, or in addition to, the retailer’s website, e.g. in circumstances where the retailer’s site is used to direct traffic to that site where information about the insolvency procedure is hosted.

·         The standard notice should be displayed prominently on the website, taking into account other information (e.g. for employees) which may also need to be displayed with appropriate prominence.

·         It may be appropriate to publish other information alongside the standard notice, e.g. where it is known that some goods or services will be provided where fully or partly prepaid for, or not to publish the notice at all where all prepaid contracts will be honoured.

Other evidence of insolvency

·      The standard notice should be sufficient evidence of insolvency for a card issuer to deal with chargeback claims, but where this is not the case the office-holder should provide consumer creditors with other evidence or information (e.g. confirmation that goods and services will not be delivered) as card issuers may reasonably require. 

·         In the case of a travel failure, and where there is a bond or insurance scheme in place such as provided by ATOL or ABTA, the consumer creditor is advised to speak to their card issuer regarding what specific form of evidence it requires for a failure of this type.

The office-holder should use their professional judgement when following this guidance, the overriding objective being to make those consumers who have made payments for goods and services which are not expected to be delivered aware of their ability to apply for a chargeback from their card issuer.

According to the Law Commission, some insolvency practitioners are concerned that telling consumers about chargeback could be seen as preferring one set of creditors at the expense of others.  The Insolvency Service does not believe that is the case.

Any enquiries regarding this article may be sent to

Annex A

XXXXXX (in administration / liquidation)

Notice to customers regarding credit and debit cards

At present it is uncertain that goods and services ordered before [the company] entered [administration / liquidation] will be supplied.  If you have made a deposit for or paid for goods or services by credit or debit card (including charge and pre-paid cards)  and the goods or services are not going to be received by the due date, you may be able to get your money back by claiming a refund from your card issuer. 

Please contact your card issuer as soon as you can if this may apply to you (there is no need to wait until the due date before contacting your card issuer).  Further information including on time limits that apply is available from the UK Cards Association Credit and debit cards: A consumer guide.


Annex B

XXXXXX (in administration / liquidation)

Notice to customers regarding credit and debit cards

If you have made a deposit for or paid for goods or services by credit or debit card and the goods or services are not going to be received by the due date, you may be able to get your money back by claiming a refund from your card issuer.  Please contact your card issuer as soon as you can if this may apply to you.  Further information including on time limits that apply is available from the UK Cards Association Credit and debit cards: A consumer guide



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