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What do the new 2017 Insolvency Rules mean for Creditors?


The new rules come into play on the 6th April 2017 which will guide the future of insolvency practice. The update represents the biggest change to insolvency law in 30 years.

 

While the changes listed in the 446 page document are numerous, the key points are as follows:

 

Increased use of digital communications

 

The methods we use to communicate have been transformed over the past 30 years, the new rules reflected this with a number of key changes. This means increased communication through email throughout the insolvency process. A creditor who has engaged in an email exchange with the insolvent company prior to commencement of insolvency proceedings, will be deemed as having consented to receiving documents by email. Although this consent can be revoked at any point.

 

Along with the increased use of emails, there will be encourage the use of digital platforms which will allow certain documents to be downloaded by creditors

 

Abolishment of Compulsory creditors meetings (S.98 meeting)

 

From April, a physical meeting of creditors will not be summoned and the appointment of a liquidator will be done by ‘deemed consent’ unless this is explicitly requested by at least:

 

  • 10% by value of creditors or
  • 10% in total number of creditors or
  • 10 individual creditors

 

Ability for creditors to ‘opt out’ of receiving certain notices

 

The new rules will allow creditors to opt out of receiving on-going correspondence; this is primarily geared towards situations where there is little hope of the creditors receiving any monies from the liquidation process. This however, excludes notices of dividend payments, which will continue to be sent regardless of whether the opt-out option has been triggered.

 

Changes for small creditors

 

Creditors with smaller claims no longer need to submit proof of their debt to the insolvency practitioner. Rather the financial records and accounts of the insolvent company will be used to check claims from creditors which are under £1,000.

 

No More final meetings for the creditors

 

Along with the end of S.98 meetings, the new  rules have also ended the final meeting which is currently used to conclude the insolvency proceedings and release the Insolvency practitioner from office. From April, this process along with any creditors objections, will be done through email. This will help to speed up the process while also reducing the financial cost.

 

Modernisation of wording

 

The language used to present the legislation has also been changed, through the utilisation of more contemporary wording it is hoped the new rules will be more user-friendly. There will be less ambiguity and repetition which is hoped to help limit the chance of misinterpretation.


Added: 16 Feb 2017 12:43


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About Us


We are an independent firm of specialist Licensed Insolvency Practitioners located in Bromsgrove, Worcestershire.

At The Timothy James Partnership, we work very closely with local businesses and professionals, providing guidance on formal insolvency procedures and advice on restructuring businesses.

We recognise that at times, companies find themselves in difficult financial circumstances and our aim is to provide practical solutions in these situations.