Could deregulation benefit insolvency practice?

Could deregulation benefit insolvency practice?

The draft Deregulation Bill proposes a number of changes to insolvency practice, including the option to partially qualify in specialist area. Christopher Brockman at Guildhall Chambers believes many of the proposals could ease the work of insolvency practitioners.

Original news

Policy Paper: Draft Deregulation Bill

The government’s Deregulation Bill, published on 1 July 2013, amends or repeals 182 different pieces of legislation affecting businesses, individuals and public bodies. Schedule 5 repeals certain obsolete sections of the Insolvency Act 1986.

What changes to corporate insolvency are proposed in the draft Bill?

The changes that most affect administrations are:

1. Winding up petition preceding administration

The new para 25A of the draft Bill clarifies that the prohibition on appointing an administrator when a winding-up petition has been presented and not yet disposed of applies only to a petition presented before an interim moratorium comes into effect.

2. Notice to prescribed persons

Paragraph 6 removes a requirement in IA 1986, Sch B1, para 26(2) to give notice of intention to appoint an administrator to persons who are not themselves entitled to appoint an administrative receiver or administrator.

At present a company or its directors intending to appoint an administrator must give notice of the intention to appoint to:

  1. anyone entitled to appoint an administrative receiver of the company
  2. any holder of a qualifying floating charge entitled to appoint an administrator, and
  3. other prescribed persons

The prescribed persons are set out in the Insolvency Rules 1986, SI 1986/1925, r 2.20 and include:

  1. the company (if the company is not intending to make the appointment)
  2. a landlord exercising distraint over the property of a company, and
  3. a supervisor of a company voluntary arrangement

Unlike those entitled to appoint a receiver or administrator, the prescribed persons cannot block the appointment of an administrator. This brings an end to the conflict between the decision in Hill v Stokes

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