We\u2019ve all heard overviews of the new Rules by now, but time is short \u2013 less than 5 months to go \u2013 and so it\u2019s about time that we started delving into the nitty gritty.<\/p>\n
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Starting at the start<\/strong><\/p>\n It would be wrong to assume that, with the exception of the SBEE changes that everyone has already talked about, the new Rules are simply the old rules in a different order. I thought that starting with the introductory Rules and definitions would be straightforward and frankly dull, but the new Rules are peppered with unexpected intricacies that make such assumptions dangerous.<\/p>\n <\/p>\n New Rules, new approach to transitional provisions<\/strong><\/p>\n No doubt you have heard that the new Rules are a departure from the tradition of leaving old cases to run out under the old rules. This has some advantages: no longer will we need to think twice about the date of an appointment before deciding how to approach a statutory matter, nor will we need to maintain old checklists, diaries and templates to cope with a variety of aged cases. Eliminating this complication should mean that we could run all cases, present and future, on one system\u2026 but is that true\u2026?<\/p>\n <\/p>\n If you don\u2019t want the confusion, clear away pre-2010 CVLs (and MVLs)<\/strong><\/p>\n The transitional provisions (Schedule 2 of the new Rules) refer specifically to cases commencing (i.e. orders in the case of bankruptcies (\u201cBKYs\u201d) and compulsory liquidations (\u201cWUCs\u201d)) before 6 April 2010:<\/p>\n In pretty-much all other respects, the new Rules apply to these old cases.<\/p>\n What is \u201ca progress meeting\u201d?! Search all you like in the current Act and Rules, you won\u2019t find one. And what is the relevance of S104A to meetings? S104A was the method used to replace the old S105 annual meetings by progress reports.<\/p>\n I think <\/em>that the Insolvency Service planned for annual meetings to continue on old CVLs, as well as the old six-monthly R&Ps, which had been required under the old R4.223\u2026 but I accept that this takes a bit of a stretch of the imagination. Perhaps we will receive some clarity before April.<\/p>\n (UPDATE 23\/03\/17: the recently-issued Amendment Rules have changed the references to “progress meeting” and S104A so that it now refers to “meetings required by sections 93 and 105 of the Act”.\u00a0 Therefore, it seems to me that annual meetings on pre-04\/2010 MVLs and CVLs\u00a0should continue to be convened after 04\/2017.)<\/p>\n <\/p>\n Perhaps also avoid calling a meeting to be held after 6 April 2017<\/strong><\/p>\n Schedule 2 also includes transitional and savings provisions to enable meetings called before the Rules\u2019 commencement date to be held after that date and for all the usual items resolved upon in meetings, e.g. fixing the basis of fees, to be decided. In a similar way, the old rules will apply also where an invitation to vote on a resolution by correspondence was issued prior to 6 April 2017 but where the deadline for voting falls afterward.<\/p>\n The Schedule includes potential catch-all references, e.g. \u201cgovernance of the meeting\u201d, stating that \u201cthe 1986 Rules relating to the following continue to apply\u201d. Presumably, this will also cover matters such as adjournments.<\/p>\n It is not clear to me whether these transitional provisions will also work where a draft final report has been issued but where, say, R4.126(1D) kicks in after 6 April 2017. That is, what should happen where you have not complied with R4.49D, e.g. because something unexpected has occurred in the 8-week period? Should you follow old R4.126(1D) and issue a revised draft final report and fresh notice of a final meeting under the old rules? It looks like it to me, but I would prefer to avoid straddling the April date with any meeting convened under the old rules.<\/p>\n <\/p>\n Other transitionals<\/strong><\/p>\n Schedule 2 contains many other transitional and savings provisions, including:<\/p>\n <\/p>\n (UPDATE 23\/03\/2017: the recently-issued Amendment Rules have resolved the issues explored in these next two sections.)<\/strong><\/p>\n How long is one month? <\/strong><\/p>\n The mind-bending Schedule 5, \u201cCalculation of Time Periods\u201d, also appears in Part 1 of the Rules.<\/p>\n It starts sensibly enough: \u201cdays\u201d are calculated according to the CPR (there is no definition of \u201cweeks\u201d in the Rules).<\/p>\n There are two ways of calculating \u201cmonths\u201d, depending on whether the date specified is the start date (e.g. the time period within which a progress report should be issued or the progress report review period) or the end date. As I\u2019m struggling to think of any specified end dates, let\u2019s look at a scenario where the start date is specified:<\/p>\n If I\u2019m reading this correctly, then one month from 10 April is 10 May \u2013 one month and one day.<\/p>\n <\/p>\n Reporting transactions on a period-end date<\/strong><\/p>\n Let\u2019s say that you received some money on 10 April 2017 on a CVL that began on 10 April 2016. How would this be reported in your progress reports?<\/p>\n This cannot be right, can it?! It would skew all your R&Ps, as the c\/f and b\/f figures would not tally. In the same way, your time cost breakdowns would be confusing if you incurred any time costs on the threshold day.<\/p>\n What I\u2019m struggling with is why <\/em>the Insolvency Service has seen fit to redefine the length of a month: what was wrong with the way us mortals measure time?<\/p>\n (UPDATE 17\/01\/2017: the Insolvency Service responded to my query on their blog: “We have taken legal advice on this matter and will be looking at whether and how we can clarify the definition of a period expressed in months in Schedule 5 so that there is no day which occurs in two different reporting cycles.”\u00a0 Phew!)<\/p>\n (UPDATE 23\/03\/2017: the recently-released Amendment Rules have fixed this – no more time-shifting: a month is a month long again.)<\/p>\n <\/p>\n So what is the deadline for sending out progress reports?<\/strong><\/p>\n Let\u2019s take an ADM with a period end date of 10 April 2017. You have \u201cone month after the end of the period\u201d in which to deliver a progress report. Setting aside whether \u201cafter\u201d starts the day <\/em>after \u2013 which would add another day to your timescale \u2013 let\u2019s assume that this period ends on 10 May 2017.<\/p>\n Ah, but there\u2019s a catch. The report must be \u201cdelivered\u201d, not \u201csent\u201d, by this date. The new Rules define \u201cdelivery\u201d as follows:<\/p>\n Therefore, you need to factor the delivery times into your statutory timescale. If you left it until 9 May 2017 to put the progress reports in the post, you would be too late. When the new Rules refer to \u201cdeliver\u201d, in fact they are referring to the time that the document is deemed to be received <\/em>by the recipient.<\/p>\n <\/p>\n So will every <\/em>statutory deadline need to factor in the time to deliver the document?<\/strong><\/p>\n Unfortunately, it is not that simple. For example, the new Rule on issuing progress reports in CVLs <\/em>\u2013 R18.7 \u2013 sets the 2-month deadline with reference to the sending<\/em> of the report, not its delivery. \u201cSend\u201d is not defined in the new Rules.\u00a0 (UPDATE 23\/03\/17: the Amendment Rules have changed this “send” to “deliver”, so that all filing deadlines are now consistent.)<\/p>\n However, notwithstanding this inconsistency (I thought that making the rules consistent was one of the main objectives behind the new Rules!), you could do worse than factor time periods to deliver documents into your processes. At least that way you should always meet the deadlines (and you would avoid any debate over semantics -v- the perceived \u201cspirit\u201d of the Rules with your regulator).<\/p>\n <\/p>\n Opting out<\/strong><\/p>\n In her November Technical Update https:\/\/goo.gl\/XBTAFV<\/a>, Jo Harris summarised the new Rules under which creditors can send to office holders a notice asking to be excluded from most future standard circulars. This provision \u2013 along with the wider website use described below \u2013 are two significant changes introduced by the Small Business, Enterprise & Employment Act 2015 that appear in Part 1 of the Rules.<\/p>\n I won\u2019t go into detail on these points, but I will just add to Jo\u2019s observations:<\/p>\n Personally, I don\u2019t expect many creditors to opt out \u2013 after all, if they are not engaged enough to be interested in future updates, then are they likely to be sufficiently engaged to sign and return an opting-out notice? However, this new section will add yet another page (no really \u2013 the prescribed contents do go on a bit) of information to first circulars, which we will need to take care to get right.<\/p>\n <\/p>\n Wider website use<\/strong><\/p>\n Finally<\/em>, this is something in the new Rules that put a smile on my face! Again as Jo explained in her Update, under the new Rules office holders will be able to issue to creditors just one notice explaining that future communications will only be uploaded to a website, rather than issue such a notice every time a communication is uploaded as is currently the case.<\/p>\n I have heard some unrest about this provision. Many feel that it will simply help to distant creditors even further from the process. I agree, it will. However, I do not feel that this is sufficient reason to avoid taking advantage of this provision. The Insolvency Service seems to have been charged with the aims of increasing engagement and reducing costs \u2013 two aims that are clearly in opposition to one another, as demonstrated also by the new Rules\u2019 abolition of office holder-convened physical meetings \u2013 but I wonder how much engagement really<\/em> is achieved by progress reports that are necessarily unwieldy in order to comply with the plethora of SIPs and statutory requirements. On the other hand, I think that the new provision allowing for website use alone most certainly will reduce costs.<\/p>\n <\/p>\n Part 1: just the beginning<\/strong><\/p>\n As I hope I\u2019ve demonstrated, there are plenty of revisions in Part 1 of the new Rules that will require some thoughtful planning\u2026 and that generate more than the odd furrowed brow. I am looking forward to posing a few questions on the Insolvency Service\u2019s forum, which we expect to be launched in the next few weeks.<\/p>\n If you would like to listen to my webinar that explores this Part in more depth and that will be available in the next few days, please drop a line to info@thecompliancealliance.co.uk.<\/p>\n The second webinar in this series, which will review the new Rules on Reporting and Remuneration, will be presented by Jo Harris in a few weeks\u2019 time.<\/p>\n","protected":false},"excerpt":{"rendered":" We\u2019ve all heard overviews of the new Rules by now, but time is short \u2013 less than 5 months to go \u2013 and so it\u2019s about time that we started delving into the nitty gritty. Starting at the start … Continue reading \n
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