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What are the substantive proposals for change set out in the Insolvency Service’s consultation into the modernisation of the Insolvency Rules?
The Insolvency Rules 1986 (SI 1986/1925) (the Rules) have been described by the House of Lords as an ‘impenetrable thicket’ owing to extensive amendments, additions and deletions of text. The government is therefore proposing to consolidate and replace the Rules, modernising them and reordering their structure on clearer and more logical lines. A consultation on the proposals has been launched by the Insolvency Service (IS), and closes on 24 January 2014.
Since 1986, the Rules have been heavily amended by numerous amending statutory instruments to reflect changes in primary legislation, case law and policy. Rather than simply consolidating the existing Rules and their many amendments, the IS intends ‘to modernise and recast the Rules; taking the opportunity to reorder the whole structure on more logical and clear lines’.
The draft Rules also contain some proposed technical changes on which comments are invited. Some of these arise directly from the government’s Red Tape Challenge initiative (the insolvency proposals in relation to which were announced in July 2013). The document specifically states that not all of the proposed Red Tape Challenge measures have been fully worked through in the draft rules, and that therefore that draft should be regarded as work in progress. The IS acknowledges the draft contains some inconsistencies across the different insolvency procedures and it is continuing to address them.
The draft Rules also contain some other proposed technical changes, many of which were suggested by stakeholders before the launch of the Red Tape Challenge.
The consultation document points out that in the existing Rules, those rules applicable to the different types of liquidation (ie members’ voluntary, creditors’ voluntary and winding up by the court) are amalgamated and, in the main, those which apply in the particular type of liquidation are designated in the heading to the rule. The IS states that feedback from stakeholders has been that this arrangement is confusing.
The IS anticipates that, by contrast, the new Rules will be easier to use because:
The consultation document states the IS has aimed to make the Rules easier to understand with plainer language, more modern terms, improved consistency in terms of language and order of provisions across insolvency procedures and clear delivery provisions.
The consultation document states the new rules have been drafted on the presumption that processes will in due course be carried out electronically wherever possible. Thus the required contents of particular documents are clearly set out in the body of the rules rather than being prescribed by a statutory form, to make it easier to enable documents to be delivered by electronic means—ie ‘preparing the system for moving to electronic delivery of information when the forms would become redundant’.
The following Red Tape Challenge measures are included in the draft Rules:
The other Red Tape Challenge measures that the IS considers will have a significant impact on the new Rules are as follows:
The other technical changes that are included in the draft Rules are as follows:
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