Insolvency Service publishes its Summer 2015 newsletter

Insolvency Service publishes its Summer 2015 newsletter

The Insolvency Service published its Summer 2015 newsletter on 13 August 2015, in which it explains the work it undertakes to strengthen the insolvency regime and improve its services, and provides updates on relevant developments. We take a look below at some of those developments.

Streamlined reporting of director conduct

From 2016 the Insolvency Service will be streamlining the reporting of director conduct by office-holders in insolvent company cases. The current D1 and D2 statutory forms will be replaced by a single online form submitted by office-holders to the Secretary of State within three months of a company’s insolvency date. Office-holders will no longer have to confirm if a director appears to them to be unfit.

Debt solutions to be moved online

From April 2016 applications for bankruptcy will be moving from the courts to an online portal run by the Insolvency Service. Cases will be decided by a newly created office of adjudicator. Only applications involving an appeal or a post-order application will be referred to the court.

The new process aims to provide easier access to bankruptcy and be less stressful for applicants, who will no longer have to attend court.

Top-bracket director disqualifications

Recent cases are outlined which led to highest tariff bans for disqualified directors, including:

  • a director of a mobile phone and computer component wholesaler was disqualified for 13 years for engaging in a scheme linked to VAT fraud and making wrongful VAT reclaims, resulting in a claim in the liquidation proceedings by HMRC of over £91m
  • a land banking scam operated by a director through three companies in which individuals were misled into parting with at least £1.7m for small plots of land of little value
  • an ex-director of a football club was disqualified for the maximum 15 years for failing to avoid conflict of interest in the running of the club
  • two disqualified directors were sentenced to a combined 13 months jail, and disqualified for a further 12 years each, for being in control of a company while banned from doing so
  • two directors of a failed training services provider were disqualified for 12 years after the company was found to have falsified student information to get nearly £200,000 of public funds
  • a director of two construction companies was banned for 13 years for misappropriating £830,534 of company monies
  • an accountant was banned for 11 years for failing to keep proper accounting records or deal with the tax affairs of both his companies

Changes likely for insolvency regulation

The Solicitors Regulatory Authority, the Law Society of Scotland and the Insolvency Service have all announced plans to move away from insolvency practitioner authorisation in the near future. This will reduce the number of regulators an insolvency practitioner can choose to be authorised by from eight to five recognised professional bodies.

The remaining regulators will remain subject to oversight by the Insolvency Service, which has the role of ensuring they continue to operate effectively. The Insolvency Service will shortly publish guidance on how it intends to monitor the regulatory objectives and apply sanctions.

European insolvency framework

In February 2015 the Insolvency Service sought views from industry experts and other interested parties on how the UK insolvency regime works, to contribute to a review being conducted by the European Commission.

Responses to the call for evidence show that the UK framework encourages out-of-court procedures, with minimum court involvement, and focuses on business recovery. Responses have been published on the Insolvency Service website.

Updated Insolvency Rules

A final draft of the forthcoming Insolvency Rules 2016 has been delivered to the Insolvency Rules Committee. The draft rules update the existing framework as part of a modernisation project and to take forward policy changes.

It is anticipated that the Rules will be made in Spring 2016, with provisions relating to the new adjudicator’s office coming into force on 6 April 2016 and the remainder on 1 October 2016.

New web content for insolvency practitioners

The Insolvency Service website has been created a page to provide a single entry point for insolvency practitioners. The page brings together all the tools, forms, guides and other types of information that are relevant for insolvency practitioners.

Insolvency Service annual plan

The Insolvency Service has published its annual plan, which sets out its targets and priorities for the year 2015/16.

First published on LexisPSL Restructuring and Insolvency. Not a subscriber? Find out more about how LexisPSL can help you and click here for a free trial of LexisPSL Restructuring and Insolvency.

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.