NEW: Insolvency practice direction (Part 3-6)

NEW: Insolvency practice direction (Part 3-6)

A new insolvency practice direction came into force on Tuesday 29 July 2014; it was circulated 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 3-6 are outlined below (find parts 1 & 2 here)

Part three: personal insolvency

  • Deemed date of service for statutory demands has been deleted. As this was the first provision, in this Part, it means that all the paragraph numbers have changed.
  • Hague Convention country information has been changed. The address for determining whether a country is a convention country have been updated.
  • The statutory demand precedent has been updated to reflect the new County Court and there is now reference to the month on which the demand for payment of made. Clarification is also provided for calculating the 18 day period for applying to set the demand aside; it is from 'the date of the first appearance of this advertisement'.
  • Personal service
    • where a creditor fails to effect personal service and a letter is written to the debtor, that letter previously had to be sent by first class prepaid post. The amendments provide an alternative, which is to leave or deliver the letter to the debtor's address. However, this must be done in such a way that the letter is reasonably likely to come to the debtor’s attention
    • the timings for the date of service for a statutory demand when providing personal service have changed. You will need to state whether the service was effected before 16.00 on Monday to Friday (previously 17.00). At a weekend you will now need to state whether the service was effected before or after 12.00 on a Saturday. Service can no longer be effected on a Sunday
  • searching before presenting a petition. A search must be undertaken for pending petitioners against the debtor. That search is now only required to be undertaken on the Official Search with the Chief Land Registrar in the register of pending actions. This will only catch pending petitions and not, as previously, any petition presented in the previous 18 months (para 14.3.1)
  • petition certificate. This is required at the end of the petition and has been changed (para 14.3.1)
  • deposit provisions have changed to reflect the county court hearing centre (para 14.4.1)
  • validation amendments are the same as the changes applied in corporate insolvency ie that when providing details of bank accounts you will also now need to provide the amount of the credit or debit balance on such account at the time of making the application (para 14.8.4(11))
  • amendments to applications has been updated to include reference to county court hearing centres (15.1(2)(a))
  • orders without attendance previously contained provisions which only related to the High Court making orders for Individual Voluntary Arrangements. This has been updated so that it simply provides for the court (para 16.1)
  • applications for consent orders can now be lodged before any hearing date; the previous provision referred to any 'fixed' hearing date (para 16.6)
  • persons at risk from violence are subject to specific rules. The changes mean that when such an application is made the person will be a respondent to the application even where consent is not available (para 18)

Part four: Financial markets and insolvency (settlement finality) regulations 1999 & 2013; required information

This is a completely new section and provides the following:

In any case in which the court is asked to make an order to which regulation 22(1) of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (SI 1999/2979) applies, the party applying for the order must include in the petition or application a statement to that effect, identifying the system operator of the relevant designated system, the relevant designating authority,  and the email or other addresses to which the court will be required to send notice pursuant to regulation 22(1) if an order is made.

At the date of this Practice Direction, the Regulations apply where, in respect of ‘a participant in a designated system’ (as those terms are defined in the Regulations), order is made for administration, winding-up, bankruptcy, sequestration, bank insolvency, bank administration, building society insolvency, building society special administration or investment bank special administration. Applicants must before making the application check for any amendments to the Regulations.'

Part five: appeals

Now commences at para 20.

Minor amendments to reflect the new County Court.

  • The provisions now differentiate between (1) appeals where permission to appeal was given on or before 30 September 2012 or where the appeal notice was filed on or before 30 September 2012 and permission to appeal has not yet been given and (2) all other appeals.
  • When dealing with category 1 of appeals, the relevant provisions are found in para 20.9.1 and comprise the old provisions.
  • When dealing with category 2 of appeals, the new provisions start at para 20.9.3. They provide as follows:

'20.9.3 In relation to all other appeals, CPR Part 52 and Practice Directions 52A, 52B and 52C and its Forms shall, as appropriate, apply to appeals in insolvency proceedings, save as provided in paragraph 19.9.4 below.

20.9.4 Paragraphs 4.3 to 4.5 of Practice Direction 52A and Section 2 and Tables A and B of Practice Direction 52B shall not apply.

20.10 For the avoidance of any doubt, references in this Part to the County Court include, in respect of decisions made before 22 April 2014, a county court.'

Part six: applications relation to the remuneration of appointees

This was previously part five. The only other change is that it commences at para 21, rather than the previous para 20, so leading to the change in paragraph numbers throughout the Part.

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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.