Revised Practice Direction on Insolvency Proceedings comes into force

A revised version of the Practice Direction on Insolvency Proceedings (PDIP) came into force on 4 July 2018, replacing the version that had come into force on 25 April 2018. The latest version corrects a number of issues that existed in the April 2018 version.

Why did the Practice Direction on Insolvency Proceedings need to be revised?

According to the press release published by the Courts and Tribunals Judiciary on 5 July 2018, the amended PDIP updates the April 2018 version by clarifying the position on a few areas of complexity, including the interaction with the Business and Property Courts Practice Direction around the allocation of specialist insolvency work in the South-East in particular, as well as building flexibility for specialist insolvency work to be able to be transferred out to local hearing centres if the specialist judge deems there are the resources and expertise there to deal with it. The updated PDIP still includes the original updates, including reference to the Insolvency (England and Wales) Rules 2016, SI 2016/1024, taking account of recently decided cases and changes in the CPR (in particular with regards to the Practice Direction—Business and Property Courts), specifying new arrangements for the distribution of insolvency business across the different levels of the judiciary, and clarifying the routes of appeal in insolvency cases.

For further reading on the changes brought in by the April 2018 version of the PDIP, see blog post: New Insolvency Proceedings Practice Direction.

What changes have been made to the PDIP?

As mentioned above, the revised PDIP came into force on 4 July 2018. Although it is substantially the same as the version that came into force on 25 April 2018, the following changes (other than to incorrect cross-references and numbering and other minor amendments) should be noted:

  • a new paragraph has been inserted (PDIP, para 2.2) that introduces a transitional provision absent from the April version of the PDIP. PDIP, para 3 (dealing with distribution of business) does not apply to petitions or applications where hearings have been listed at a County Court hearing centre and that hearing centre would have had jurisdiction to hear such petition or application on 24 April 2018 (ie the day before the April version of the PDIP came into force). However, a transfer of those proceedings in accordance with PDIP, para 3.6 can still occur where the court considers or the parties agree that a transfer would be appropriate
  • the definition of ‘Local Business’—ie the work that can be conducted in a County Court hearing centre—has been expanded. In addition to applications to set aside statutory demands, unopposed creditors’ winding-up petitions and unopposed bankruptcy petitions (which already comprised Local Business), the following work now also comprises Local Business:
    • applications for income payments orders
    • applications for and the conduct of public and private examinations
    • warrants for arrest in connection with the conduct of public or private examinations
    • possession claims in bankruptcy against the bankrupt
    • possession claims in bankruptcy falling under the Trusts and Land and Appointment of Trustees Act 1996 (notwithstanding the application of section 335A of the Insolvency Act 1986 (IA 1986))
    • claims for the granting and enforcement of charging orders under IA 1986, s 313
    • unopposed applications by the official receiver to suspend discharge (or for an interim suspension from discharge if the application transpires to be opposed)
    • applications for debt relief orders
  • Where work is not Local Business, it is either to be conducted:
    • in a County Court hearing centre having insolvency jurisdiction and located at a Business and Property Court
    • in the Central London County Court is the petition or application was issued in a County Court hearing centre located in the South-Eastern circuit
    • in a specialist centre specified in a list from time-to-time by the Chancellor of the High Court and located in the same circuit as the hearing centre in which the application or petition was issued. These specialist centres have been identified as having the requisite experience in dealing with insolvency proceedings, but are not located in a Business and Property Court. The specialist centres initially identified are: Brighton, Croydon, Medway, Preston and Romford. The application or petition must be listed before a judge specialising in Business and Property Courts work as defined in Practice Guide—Business and Property Courts, para 4.4 (a specialist judge)
  • new paragraphs have been inserted (PDIP, paras 3.8–3.10) that set out what is to happen when insolvency proceedings are transferred under PDIP, para 3.6. Briefly, a specialist judge in the receiving court shall review the proceedings on paper and determine on their own initiative what should happen to them by reference to the factors listed in PDIP, para 3.8. The options as to what happens to the proceedings are listed in PDIP, para 3.9, and include the proceedings being transferred back to the sending court
  • PDIP, para 18.2 is amended to clarify that the Court of Appeal deals with any decision of a High Court Judge or an Insolvency and Companies Court Judge (where the latter’s decision is itself an appeal)

Further Reading

If you are a LexisPSL subscriber, click the link below for further information:

Practice Direction on Insolvency Proceedings (subscriber access only)

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