SIP7 is the baby bear of the three revised SIPs that came into force on 1 April 2021.\u00a0 However, despite the RPBs\u2019 intention being primarily to bring SIP7 into line with the revised SIP9, the new SIP7 includes some wrinkles that are worth exploring.<\/p>\n\n\n\n
The revised SIP7 (E&W) can be found at: https:\/\/insolvency-practitioners.org.uk\/regulation-and-guidance\/england-wales\/<\/a><\/p>\n\n\n\n <\/p>\n\n\n\n Does it apply to MVLs?<\/strong><\/p>\n\n\n\n Although SIP9 is headed up \u201cPayments to Insolvency Office Holders\u2026\u201d, the revised SIP9 states explicitly that it does not apply to MVLs (\u201cunless those paying the fees require such disclosures\u201d). In comparison, SIP7 is entitled \u201cPresentation of Financial Information in Insolvency Proceedings\u201d, but there is no explicit reference to MVLs. Does this mean that MVLs are included<\/em>, as they are a proceeding under the Insolvency Act 1986, or are MVLs excluded, <\/em>as they are not proceedings in relation to an insolvent entity?<\/p>\n\n\n\n If I had to jump one side of the fence, I\u2019d say that SIP7 leans towards excluding MVLs: paras 12 and 15 refer to \u201cthe insolvent estate\u201dand \u201ccase\u201d has been replaced throughout with \u201cinsolvency appointment\u201d.<\/p>\n\n\n\n <\/p>\n\n\n\n Does it matter if MVLs are included or excluded?<\/strong><\/p>\n\n\n\n Ok, I admit that in general I don\u2019t think it matters, at least not to the current generation of IPs. We\u2019re all accustomed to producing MVL reports with generally the same format as reports on insolvency cases. However, when new entrants start drafting reports from a clean slate, practices may begin to diverge.<\/p>\n\n\n\n It would have been useful if the scope of SIP7 had been made clear in at least a couple of areas. Para 19 of SIP7 conveys a similar requirement as para 15 of SIP9, that creditors and other interested parties should be informed of their rights (although oddly SIP7 states that \u201cadequate steps should be taken to bring\u201d those rights to their attention \u2013 I\u2019m not sure I know what constitutes adequate <\/em>steps). If MVLs are included, is more required than simply complying with R18.4(1)(f) when issuing progress reports? <\/p>\n\n\n\n Another area that could make a difference in MVLs is para 15e, which requires \u201cany amounts paid to the office holder or their associates or firm other than out of the estate\u201d to be disclosed.\u00a0 It is fairly commonplace for MVL liquidators \u2013 and indeed their firm\u2019s accounts and tax departments or sister companies \u2013 to be paid fees other than out of the estate.\u00a0 Are the RPBs content for this detail to be excluded from MVL reports?<\/p>\n\n\n\n <\/p>\n\n\n\n Consistency in \u201cAssociates\u201d?<\/strong><\/p>\n\n\n\n SIP7 repeats the revised SIP9\u2019s definition of associate as including \u201cwhere a reasonable and informed third party might consider there would be an association\u201d.<\/p>\n\n\n\n However, \u201cassociates\u201d appears in SIP7 in only one other spot: in para 15e mentioned above, which now requires disclosure of payments paid other than out of the estate, not only to the office holder, but also to \u201ctheir associates or firm\u201d. Does this mean that we\u2019re not required to disclose payments to associates or to the firm from <\/em>the estate? No, it seems to me that this is required by the rest of para 15, which includes the disclosure of \u201call other amounts required to be approved in the same manner as remueration\u201d, so if we\u2019ve handled SIP9 correctly and recognised that associates\u2019 costs need approval, then we will disclose them separately under SIP7.<\/p>\n\n\n\n What kind of payments could be captured by these disclosure requirements? Although we are awaiting the RPBs\u2019 additional guidance on SIP9, which hopefully will clarify what an \u201cassociate\u201d is, it occurred to me that it could include the following:<\/p>\n\n\n\n <\/p>\n\n\n\n Reconciliations required<\/strong><\/p>\n\n\n\n Para 11 is new:<\/p>\n\n\n\n \u201cAccounts should be reconciled to the balances at bank, the case records and to any amounts due to the office holder\u201d<\/p>\n\n\n\n I suspect that most practices make the producing of a statutory report the ideal time to reconcile the bank account and to record for the file the IP\u2019s (or manager\u2019s) formal review of this. Of course, practices regularly reconcile accounts at other times too. Generally therefore, this SIP7 requirement does not appear onerous, but it does mean that, if an R&P is revised because a report has been delayed \u2013 especially Admin Proposals, fee proposal packs or final accounts\/reports, where the report dates usually move when they\u2019re revisited \u2013 another reconciliation will need to be produced.<\/p>\n\n\n\n Ok, so that\u2019s covered reconciling accounts to the bank, but what about reconciling them to \u201cthe case records and to any amounts due to the office holder\u201d? Does this mean that the accounts need to be reconciled to the case records\u2019 lead schedules, e.g. of debtors, rental payments, even where those schedules have pretty-much fallen out of use? What about where you\u2019ve raised a final bill but only had it part-paid from the estate (because you\u2019re waiting for a VAT refund), should you now be noting a reconciliation of the R&P with your firm\u2019s debtor records? Or is it enough simply to sense check the R&P to make sure that it doesn\u2019t include any peculiar narratives, such as \u201cpreparation of SofA\u201d when it should be pre-administration costs?<\/p>\n\n\n\n Given that \u201caccounts\u201d in a SIP7 sense might include \u201creporting on remuneration and\/or expenses, whether incurred, accrued or paid\u201d (para 16), should you be checking that everyone has posted their timesheets for the period under review before producing a time cost breakdown? And again, if your Admin Proposals, fee proposal packs or final accounts\/reports were delayed and a fresh time cost breakdown is attached, does this mean you need to reconsider this reconciliation?<\/p>\n\n\n\n Another scenario is where a decision procedure needs to be repeated: I have seen some IPs issue a new Notice of Decision Procedure with a new decision date and simply refer to the original fee proposal pack as providing all the necessary information. This doesn\u2019t really work, does it, where 2 weeks or more have passed?<\/p>\n\n\n\n <\/p>\n\n\n\n Comparing EtoRs<\/strong><\/p>\n\n\n\n Spot the difference:<\/p>\n\n\n\n Steven Wood in the ICAS webinar on the SIPs stated that the change means that it is \u201cno longer acceptable to simply have the R&P using headings previously used in a SoA or EOS thereby leaving creditors with the information to do the comparison but requiring several documents to do so\u201d. I can understand why the RPBs might want this outcome, but personally I don\u2019t see that SIP7 achieves it. True, the word \u201calternatively\u201d has been removed so that now in every case \u201can analysis should be provided to enable comparison with the \u2018estimated to realise\u2019 figures in any previously issued document\u201d, but this does not mean that all R&Ps must provide <\/em>the EtoR figures. It just means that the R&P must provide sufficient information to enable a comparison <\/em>to be made with any such figures in any previously issued document, <\/em>which can be achieved by analysing receipts according to the previously-issued SoA\/EOS headings. This meaning is reinforced by para 8 of the SIP, which states: \u201cUnless there is a statutory provision to the contrary, this does not require repetition of information previously provided\u201d. <\/p>\n\n\n\n Having said that, it\u2019s not a big deal, as most IPs provide the EtoR figures in report R&Ps\u2026 but I do think that an RPB might have a hard time enforcing the practice based on the wording of the SIP.<\/p>\n\n\n\n <\/p>\n\n\n\n Other changes<\/strong><\/p>\n\n\n\n To be honest, I don\u2019t think the remaining changes need much attention:<\/p>\n\n\n\n <\/p>\n\n\n\n What\u2019s Next?<\/strong><\/p>\n\n\n\n One of our clients sent Jo and me a plea that we reduce as far as possible the number of updates to our document packs. Oh, if only we could! <\/p>\n\n\n\n We understand that a revised SIP3.1 is near to release, we expect a revised SIP16 to be issued around the end of this months to coincide with the new Connected Person Disposal Regulations, and I have heard rumours of some changes to SIP13 also because of the new Regs.<\/p>\n","protected":false},"excerpt":{"rendered":" SIP7 is the baby bear of the three revised SIPs that came into force on 1 April 2021.\u00a0 However, despite the RPBs\u2019 intention being primarily to bring SIP7 into line with the revised SIP9, the new SIP7 includes some wrinkles … Continue reading