Creditor communication and decision procedures

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The Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024 provide a scheme for decision-making in all insolvency procedures from 6 April 2017. The detailed provisions for decision-making are set at IR 2016, SI 2016/1024, Pt 15.

The deemed consent procedure

The deemed consent procedure is a procedure whereby a decision is made by creditors by not objecting to a suggested course of action.

This procedure may be used (instead of a qualifying decision procedure) where a company’s creditors or an individual’s creditors need to make a decision about any matter, unless:

  1. •

    a decision is required to be made by a qualifying decision procedure by virtue of the Insolvency Act 1986 (IA 1986) (for example the removal of a liquidator in a creditors’ voluntary liquidation (CVL)), or

  2. •

    by a court order

The deemed consent procedure cannot be used to make a decision on remuneration of any person.

Under the deemed consent procedure, the relevant creditors (other than opted-out creditors) or (as the case may be) the relevant contributories are given notice of:

  1. •

    the matter about which

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The Insolvency Service has reported that Junaid Dar, a Birmingham fitness company director has received a 20-month prison sentence and suspended for 18 months, after fraudulently obtaining £45,500 in bounce back loans (BBL) during 2020. Dar made three separate loan applications when businesses were only entitled to one, subsequently using portions of the funds for personal expenses at retailers, restaurants and leisure attractions. The sentence includes 20 days of rehabilitation activity, 180 hours of unpaid work, and £2,400 in costs. Dar was previously disqualified as a company director for 11 years from April 2022.

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Restructuring & Insolvency analysis: On appeal, His Honour Judge Paul Matthews (sitting as a Judge of the High Court) held that it was not a procedural irregularity for the judge at first instance to go on and hear the bankruptcy petition, after he had dismissed an application to set aside an earlier order. The question of procedural irregularity is one of substance not of form. The judicial act of deciding what to hear, and when, is not hamstrung by the administrative act by the court staff of publishing a list of matters to be heard on a particular occasion. The court also reviewed the law on when a guarantee creates a debt in a liquidated sum, which was another of the six grounds of appeal. When acting for the creditor, consider whether the next hearing can be used to hear the petition. When acting for the debtor, raise any objections to hearing the petition at the time. Written by Robert Machell, barrister at Enterprise Chambers.

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