The new insolvency rules seem to make a few changes to the Insolvency Rules 1986 but I wonder if they really provide value or even will afford creditors the alleged c.£48million in costs savings. I rather think not.

For those practitioners for example who specialise in court work (compulsory liquidations and bankruptcies), costs will rise with having to do annual progress reports which previously were not a requirement.

For example further, Rule 12A.12 is a rule which essentially is unlikely I think to be taken up by many smaller firms in its current construction. This is a pity as a practical construction of such a rule would be hugely beneficial to creditors and save costs.

For those of us who predominantly do court work and wanted to utilise the website to fulfil the new annual reporting requirement that these new rules have introduced for compulsory and bankruptcy cases, the administrative burden introduced has certainly not been eased. This additional administration will increase costs and the same will result in lower, not higher returns for creditors. The need to send out annual notices for every progress report published on a website is a curious idea, given a progress report is unlikely to be many more pages in length to its notice, so why would anyone use the website? 

Whilst it is understood that creditors require protection from disenfranchisement, if it were permitted to issue a single  notice to creditors with a contact name, email address and telephone number it would be unlikley that any creditor with an interest in an insolvency matter, even one without access to electronic communications, would become disenfranchised.  

The new rule in relation to use of email to communicate reports is also somewhat unusual, such that I believe that it will not be widely used perhaps as intended. The requirement for upfront consent directly from creditors before a practitioner can issue reports to them via email, results in this rule I believe being superfluous. With the volume of creditors on cases, it is I believe impractical to get individual formal consent from each creditor before issuing statutory creditor reports by email.

These new rules are something of a dissappointment, having held out some hope that they would modernise the insolvency regime and provide better returns for creditors. I wonder…

This entry was posted on Friday, March 26th, 2010 at 6:28 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.