As we approach the second anniversary of the 2016 Rules – and as Scotland gears up to take a similar plunge – I thought I\u2019d list my pet hates.\u00a0 I don\u2019t mean this to be just a whinge (no, honestly!), but rather I hope that some readers may find some nuggets in here of rules they\u2019ve overlooked.\u00a0 Who knows whether I\u2019ll reach 50\u2026 or perhaps 150!<\/p>\n
In no particular order, here is my first batch: what I hate about statutory notices\u2026<\/p>\n
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The Standard Contents Rules are a real faff.\u00a0 I appreciate that one or two readers may find it useful to see the company number, court reference, or debtor\u2019s address (which address: the one where they lived at the start of the proceedings or their current one..?), but is it really worth the time spent on getting these details on every notice?\u00a0 It may be relatively straightforward if you\u2019re on IPS\/Visionblue, but I pity IPs who aren\u2019t.<\/p>\n
And what about stating: \u201cthe section\u2026 the paragraph\u2026 or the rule under which the notice is given\u201d (R1.29(d))?\u00a0 Does anyone really want to see this?<\/p>\n
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Under the 1986 Rules, we were quite happy to include in letters information such as how to access statutory docs online, confirmation of our appointment, and dividend declarations.\u00a0 Now we need to issue statutory notices\u2026 of course, including all the standard contents.<\/p>\n
One important notice that I find sometimes overlooked is the need to issue a notice proposing a decision by correspondence vote.\u00a0 In the old days, we simply issued a voting form.\u00a0 Now it needs to be accompanied by a R15.8 notice\u2026 and if it is not, could it be challenged as a fatally flawed process..?<\/p>\n
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Why did<\/em> the InsS see the need to introduce a new requirement that the Nominee\u2019s consent to act (which is now a \u201cnotice\u201d) must be sent to all creditors in a proposed IVA (R8.19(4)(d)), especially when there is no equivalent rule for CVAs?<\/p>\n <\/p>\n I have two rules in this category:<\/p>\n <\/p>\n What is the point of including in a pre-liquidation S100 notice that creditors who have opted out may vote or that creditors with small debts need to deliver a proof in order to vote?\u00a0 Such creditors can only have opted out or be counted as small debts after the insolvency process has begun.\u00a0 Common sense would dictate that we could eliminate such statements\u2026 but then the notice would not be compliant with the Rules!<\/p>\n It\u2019s not all the IR16\u2019s fault, though.\u00a0 After all, how many of us were in breach of the IR86, which had similarly required that a Notice of No (Further) Dividend include a statement that \u201cclaims against the assets [must] be established by a date set out in the notice\u201d (now at R14.36(2))?<\/p>\n <\/p>\n I find R1.5(3)(b) odd: if someone signs a document on behalf of a body corporate and that person is the sole member of the company, the document must state that fact.\u00a0 So for example, proofs of debt need to include a statement that the person is signing as the sole member of the company (if they are such).\u00a0 That is such <\/em>a vital piece of information to us, isn\u2019t it?<\/p>\n <\/p>\n There is still <\/em>no way of giving notice to Companies House either that an IP has ceased to act as Supervisor or that an IP has taken a new position as Supervisor of an ongoing CVA!<\/p>\n <\/p>\n I still cannot fathom the logic in the Rules requiring a Gazette notice for virtual and physical meetings of creditors, but not for the other decision processes.\u00a0 If the objective is to give notice to unknown creditors, then surely the determining factor should not be the medium that is used to propose a decision.<\/p>\n Another bewildering outcome of the Rules is that you need to give notice to bankrupts of meetings (R15.14(2)), but again no notice to the bankrupt is required if you are seeking decisions by another route.<\/p>\n <\/p>\n R1.45 explains that electronic delivery can be achieved where the recipient has given actual or deemed consent.\u00a0 Deemed consent occurs where the recipient \u201cand the subject of the insolvency proceedings had customarily communicated with each other by electronic means before the proceedings commenced\u201d.\u00a0 So\u2026 how did a company customarily communicate with its director before insolvency?\u00a0 If an office holder wants to rely on email delivery for statutory documents such as notice for submitting a SoA in an Administration, it seems to me likely that they need to get actual consent.<\/p>\n And I suspect it is only a matter of time before a creditor relies on the requirement that the \u201celectronic address [be provided] for the delivery of the<\/em><\/strong> document\u201d (R1.45(2)(c)) to support a claim that e-delivery under deemed consent to an address used by the insolvent before the insolvency proceedings does not constitute delivery, as such an email address was only meant for receipt of the company\u2019s sales invoices etc.<\/p>\n <\/p>\n As acknowledged by the Insolvency Service in Dear IP 76, the Rules are silent on when delivery occurs using overseas post.\u00a0 Dear IP 76 is helpful in flagging up the Interpretation Act\u2019s direction, which leads us to calculate timelines by looking up when delivery would occur \u201cin the ordinary course of post\u201d.\u00a0 But is it really robust guidance for the InsS to write effectively: do your best to extend timelines \u201cif at all possible\u201d? \u00a0Granted, some of the Rules\u2019 timelines can become impossible (even for delivery within the UK), especially when meetings are adjourned, leaving us to contemplate the consequences of such breaches: are they simply technical breaches with no real consequences or do they threaten the validity of the proceedings?<\/p>\n <\/p>\n Please don\u2019t get me wrong, I love <\/em>R1.50 delivery.\u00a0 At a sweep of the hand, it eliminates enormous amounts of time and money posting documents that no one reads\u2026 although I think it is anti micro-business as some IPs don\u2019t have the capacity to upload docs to a website.\u00a0 However, it is clearly open to abuse: what is to stop an IP uploading a decision process on their website\u2026 say on approval of fees\u2026 and then, in light of the inevitable silence from creditors, giving a nudge to one or two (selected) creditors to lodge votes?<\/p>\n <\/p>\n Re NJM Clothing Limited, The Towcester Racecourse Company Limited, Spaces London Bridge Limited \u2013 need I say more..?<\/p>\n <\/p>\n It makes no sense to me to invite creditors to decide on forming a committee every time you propose a decision and it makes even less sense to exclude compulsory liquidations from this requirement.\u00a0 And it makes still less sense to invite creditors to consider forming a committee when you\u2019re seeking a decision to extend an Administration, which is a decision that is never in the gift of a creditors\u2019 committee.<\/p>\n <\/p>\n Is it any wonder that the InsS\/OR keep telling everyone how much cheaper they are than IPs?\u00a0 ORs have to comply with few notice (or reporting) requirements.\u00a0 And the response-deadline of the only material notice that ORs do issue \u2013 on the nomination of IPs to be appointed as liquidator or trustee (R7.52 and R10.67) \u2013 is measured from the date of the notice (and is only 5 business days!), not from the date of delivery <\/em>of the notice, which is the complication that all IPs live with.<\/p>\n <\/p>\n Oh I wish!\u00a0 Yes, indeed we do have R1.9(1)(a), which states that a document may depart from the required contents where the departure is immaterial\u2026 and interestingly this works even where such a departure is intentional!\u00a0 This rule could be handy when, say, trying to deal pragmatically with creditors\u2019 proofs of debt.\u00a0 Otherwise, I wonder how many PoDs would fail to hit the prescribed contents (see, for example, gripe no. 6).\u00a0 But I don\u2019t know how it would go down if you quoted this rule to an RPB monitor who considered your notices to be flawed!<\/p>\n So too, from my compliance consultant\u2019s perspective, I have to remember that IPs instruct me to tell them about statutory breaches, so regrettably where I see them \u2013 even the immaterial departures \u2013 I have to list them.\u00a0 But believe me, it pains me as much as it pains you!<\/p>\n","protected":false},"excerpt":{"rendered":" As we approach the second anniversary of the 2016 Rules – and as Scotland gears up to take a similar plunge – I thought I\u2019d list my pet hates.\u00a0 I don\u2019t mean this to be just a whinge (no, honestly!), … Continue reading \n
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