NEW: Insolvency practice direction (Parts 1 & 2)

NEW: Insolvency practice direction (Parts 1 & 2)

A new insolvency practice direction came into force on Tuesday 29 July 2014; it was circulated today on Monday 4 August. The practice direction replaces the previous practice direction which came into force on 23 February 2012. It also states that it replaces all previous Practice Directions, Practice Statements and Practice Notes relating to insolvency proceedings with the exception of CPR PD 49B  order under section 127 Insolvency Act 1986 which deals with contributories’  winding up petitions.

What are the amendments?

Much of the practice direction remains the same but there are a number of amendments. Parts 1&2 are outlined below, with 3-6 following later in the week.

Part one: general provisions

  • the definitions of 'Registrar' and 'Court' have been updated to include county court hearing centres. The definition for the 'Royal Courts of Justice' has also been updated to provide the Rolls Building address
  • the coming into force date has been amended to be 29 July 2014 (para 2.1) and includes the fact that the practice direction does not affect the Practice Direction relating to contributories’; winding up petitions (CPR PD 49B - Order under section 127 Insolvency Act 1986)
  • applications for an injunction before a judge have been updated to clarify that this relates to the Court's inherent jurisdiction or s 37 SCA 1981 or s 38 of CCA 1984. This does not apply to any 'order' made. This applies to insolvent companies (para 3.2(3)) and insolvent individuals (para 3.3(2))
  • the court documents for insolvency proceedings under Parts I to VII have been amended to reflect the new County Court
  • when dealing with service of documents, practitioners attention is now drawn to rule 12A.16(2) in the Insolvency Rules
  • apart from documents treated as a claim forms, under rule 12A.16(3)(b), any other document which is deemed to be served on the date set out in CPR 6.26 is now stated to include 'any document which is treated as a claim form pursuant to rule 12A.16(3)(a) but which is not a document of a type specified in rule 12A.16(2))'.
  • the practice direction makes it clear that the provisions in CPR 6 do not apply when serving any of the following documents in the jurisdiction:
    • a winding-up petition
    • a bankruptcy petition
    • any document relating to such a petition, or
    • any administration, winding-up or bankruptcy order
  • applications, being treated as a claim form under rule 12A.16(3), will no longer require permission of the court to serve if:
    • when the application is by an office holder appointed in insolvency proceedings in respect of an individual. Previously this provision only applied if a company but it now applies to both an individual and a company (para 6.5(1))
    • a Member State Liquidator is to be defined as set out in art 2 of the EC Regulation on Insolvency Proceedings (para 6.5(2))

Part two: company insolvency

The provisions for the contents of a winding up petition have been amended. All the provisions are now required unless 'by reason of the nature of the company or its place of incorporation the information cannot be stated'. If that is the case then there is a requirement to provide as 'much similar information' as possible. The actual contents required are set out in para 11.2 and the amendments are:

  • the registered number(s) of the company
  • the legislation under which the company was incorporated; this provision previously stipulated the Companies Act or Acts
  • when dealing with an overseas company, the address of any establishment registered under the Companies Act or Acts
  • the practice direction now differentiates between a company incorporated under the Companies Act 2006 and companies incorporated under any of the Companies Act prior to that Act
  • companies incorporated under the Companies Act 2006 (para 11.2(6)(b)) - there is now a requirement to make one of the following statements:
    • confirmation that its objects are unrestricted pursuant to section 31(1) of the Companies Act 2006, or
    • confirmation that its objects are restricted by its Articles of Association and brief details of such restrictions
  • companies incorporated under other Companies Acts (paras 11.2(5) and 11(6)(a)) - there is now an alternative requirement to the need for 'a statement of the nominal capital of the company, the manner in which its shares are divided up and the amount of the capital paid up or credited as paid up'. That alternative is 'In the case of any other companies, a statement of the known issued share capital of the company, the manner in which its shares are divided up and the amount of the capital paid up or credited as paid up'
  • when dealing with a company being struck off the register the Solicitor to the Duchy of Cornwall has been added alongside the Duchy of Lancaster in relation to evidence of service required (para 11.4)
  • if it is discovered that a company was struck off the register prior to a winding up order being made, the matter must be restored to the list to enable the restoration of the company. New provisions have been added which state that 'and, save where the petition has been presented by a Minister of the Crown or a government department, evidence of service on the Treasury Solicitor or the Solicitor for the Affairs of the Duchy of Lancaster or the Solicitor to the Duchy of Cornwall (as appropriate) should be filed exhibiting the bona vacantia waiver letter' (para 11.6.3)
  • Validation order provisions have been amended at para 11.8.5. When providing details of bank accounts you will now need to also provide the amount of the credit or debit balance on such account at the time of making the application
  • Amendments to applications has been updated to include reference to county court hearing centers.

Parts 3-6 here.

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About the author:

Janna is a dispute resolution lawyer. She deals primarily with cross border issues and is active in the work being undertaken in relation to the implications of Brexit for Dispute Resolution lawyers. Janna also heads up a LexisNexis costs team bringing together expertise from across the company to deal with the costs issues facing the profession.