New bankruptcy applications regime to come into force

New bankruptcy applications regime to come into force

The Enterprise and Regulatory Reform Act 2013 (ERRA 2013) received Royal Assent on 25 April 2013 and ERRA 2013, s 71 introduced a new bankruptcy applications regime to replace debtors' bankruptcy petitions. On 22 February 2016, three statutory instruments were published providing for the coming into force of the new regime on 6 April 2016.

What are the main changes to be brought in by the new bankruptcy applications regime?

The new bankruptcy applications regime is borne out of government consultations published since 2007 that, broadly, invited views on debtor bankruptcy petitions being dealt with administratively rather than by the court, and how such administrative process should operate.

ERRA 2013, s 71 inserts a new section 398A and (under ERRA 2013, Sch 18) sections 263H–263O into the Insolvency Act 1986 (IA 1986). ERRA 2013, Sch 19 also contains minor and consequential amendments.

The main changes are:

  • individuals can still apply for bankruptcy orders to be made against them, however, rather than presenting a debtor's bankruptcy petition, individuals will instead make a bankruptcy application
  • bankruptcy applications must be made through an online portal, unless there are technical issues with the portal
  • the court will not (save in certain circumstances) be involved in determining bankruptcy applications—instead applications must be made to, and determined by, an adjudicator
  • creditors' bankruptcy petitions will continue to be dealt with by the court and are unaffected by these changes

According to the Insolvency Service's latest insolvency statistics, there were 4,374 creditors' bankruptcy petitions and 11,423 debtors' bankruptcy petitions presented in 2015. On the face of it, therefore, the introduction of the new bankruptcy applications regime will remove a significant amount of the court's workload.

What secondary legislation has been passed?

On 22 February 2016, a number of statutory instruments were published in relation to the new bankruptcy applications regime:

  • the Enterprise and Regulatory Reform Act 2013 (Commencement No 9 and Saving Provisions) Order 2016, SI 2016/191—this provides that ERRA 2013, s 71 comes into force on 6 April 2016. By virtue of ERRA 2013, s 71(2) and (3), this also means that ERRA 2013, Schs 18–19 come into force on the same date
  • the Insolvency (Amendment) Rules 2016, SI 2016/187—this makes various amendments to the Insolvency Rules 1986, SI 1986/1925 (IR 1986) with effect from 6 April 2016. It also replaces IR 1986, Ch 3 which presently deals with debtors' bankruptcy petitions (existing IR 1986, rr 6.37–6.47). It is this new st

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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.