Legalize / United Kingdom / Northern Ireland / Ni-Statutory-Rule

The Insolvency Practitioners Regulations (Northern Ireland) 2006

Type Ni-Statutory-Rule

Publication 2006-02-09

State In force

Jurisdiction Northern Ireland

Department Government Printer for Northern Ireland

Source legislation.gov.uk

Reform history JSON API PDF

Made: 9th February 2006

Coming into operation: 27th March 2006

The Department of Enterprise, Trade and Investment[^f00001] in exercise of the powers conferred on it by Articles 349(3), 351(3), 352(2) and (3) and 363 of the Insolvency (Northern Ireland) Order 1989[^f00002] and of every other power enabling it in that behalf, hereby makes the following Regulations:

PART 1 — Introductory

Citation and commencement

1

These Regulations may be cited as the Insolvency Practitioners Regulations (Northern Ireland) 2006 and shall come into operation on 27 March 2006.

Interpretation: general

2

(1) In these Regulations—

“commencement date” means the date on which these Regulations come into operation;

“the Department” means the Department of Enterprise, Trade and Investment;

“initial capacity” shall be construed in accordance with regulation 3;

“Insolvency Practitioner” means a person who is authorised to act as an insolvency practitioner under Article 349A of the Order.

“insolvent” means a person in respect of whom an insolvency practitioner is acting;

“the Order” means the Insolvency (Northern Ireland) Order 1989;

“subsequent capacity” shall be construed in accordance with regulation 3.

(2) In these Regulations a reference to the date of release or discharge of an insolvency practitioner includes—

(za) where the insolvency practitioner acts as the monitor in relation to a moratorium under Part 1A of the Order, whichever is the earlier of the date on which—

(i) the moratorium comes to an end, or

(ii) the insolvency practitioner otherwise ceases to act as the monitor in relation to the moratorium;

(a) where the insolvency practitioner acts as nominee in relation to proposals for a voluntary arrangement under Part II or Chapter II of Part VIII of the Order, whichever is the earlier of the dates on which—

(i) the proposals are rejected by creditors;

(ii) he is replaced as nominee by another insolvency practitioner; or

(iii) the arrangement takes effect without his becoming supervisor in relation to it; and

(b) where an insolvency practitioner acts as supervisor of a voluntary arrangement, whichever is the earlier of the dates on which—

(i) the arrangement is completed or terminated; or

(ii) the insolvency practitioner otherwise ceases to act as supervisor in relation to the arrangement.

Interpretation – meaning of initial and subsequent capacity

3

(1) In these Regulations an insolvency practitioner holds office in relation to an insolvent in a “subsequent capacity” where he holds office in relation to that insolvent in one of the capacities referred to in paragraph (3) and immediately prior to his holding office in that capacity, he held office in relation to that insolvent in another of the capacities referred to in that paragraph.

(2) The first office held by the insolvency practitioner in the circumstances referred to in paragraph (1) is referred to in these Regulations as the “initial capacity”.

(3) The capacities referred to in paragraph (1) are:

(a) nominee in relation to proposals for a voluntary arrangement under Part II of the Order;

(b) supervisor of a voluntary arrangement under Part II of the Order;

(d) provisional liquidator;

(e) liquidator;

(f) nominee in relation to proposals for a voluntary arrangement under Chapter II of Part VIII of the Order;

(g) supervisor of a voluntary arrangement under Chapter II of Part VIII of the Order; and

(h) trustee.

Revocations and transitional and saving provisions

4

(1) Subject to paragraphs (2), (3) and (4), the Regulations listed in Schedule 1 shall be revoked.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Parts I, III and IV of the Insolvency Practitioners Regulations (Northern Ireland) 1991 shall continue to apply in relation to any case in respect of which an insolvency practitioner is appointed—

(a) before the commencement date; or

(b) in a subsequent capacity and he was appointed in an initial capacity in that case before the commencement date.

(4) Only regulation 17 shall apply in relation to the cases mentioned in paragraph (3).

PART 2 — Authorisation of Insolvency Practitioners by Competent Authorities and Related Matters

Interpretation of Part

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Matters for determining whether an applicant for an authorisation is a fit and proper person

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirements as to education and training – applicants who have never previously been authorised to act as insolvency practitioners

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirements relating to education and training etc.—applicants previously authorised to act as insolvency practitioners

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Records of continuing professional development activities

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Maximum period of authorisation

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Returns by insolvency practitioners authorised by the Department

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 3 — The Requirements for Security for the Proper Performance of the Functions of an Insolvency Practitioner etc.

12

(1) Schedule 2 shall have effect in respect of the requirements prescribed for the purposes of Article 349(3)(b) of the Order in relation to security for the proper performance of the functions of an insolvency practitioner and for related matters.

(2) Where two or more persons are appointed jointly to act as insolvency practitioners in relation to any person, the provisions of this regulation shall apply to each of them individually.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 4 — Records to be maintained by Insolvency Practitioners – Inspection of Records

Records to be maintained by insolvency practitioners

13

(1) In respect of each case in which an insolvency practitioner acts, the insolvency practitioner shall maintain records containing information sufficient to show and explain—

(a) the administration of that case by the insolvency practitioner and the insolvency practitioner’s staff; and

(b) any decisions made by the insolvency practitioner which materially affect that case.

(2) Where at any time the records referred to in Schedule (3) as is applicable to the case. do not contain all the information referred to in Schedule 3 as is applicable to the case, the insolvency practitioner shall forthwith make such changes to the records as are necessary to ensure that the records contain all such information.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Any records created in relation to a case pursuant to this regulation shall be preserved by the insolvency practitioner until whichever is the later of—

(a) the sixth anniversary of the date of the grant to the insolvency practitioner of his release or discharge in that case; or

(b) the sixth anniversary of the date on which any security maintained in that case expires or otherwise ceases to have effect.

Notification of whereabouts of records

14

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inspection of records

15

(1) Any records maintained by an insolvency practitioner pursuant to this Part shall on the giving of reasonable notice be made available by him for inspection by—

(a) any professional body recognised under Article 350 of the Order of which he is a member and the rules of membership of which entitle him to act as an insolvency practitioner;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) Any person who is entitled to inspect any record pursuant to paragraph (1) shall also be entitled to take a copy of those records.

Inspection of practice records

16

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inspection of records in administration and administrative receiverships

17

On the giving of reasonable notice to the insolvency practitioner, the Department shall be entitled to inspect and take copies of any records in the possession or control of that insolvency practitioner which—

(a) were required to be created by or under any provision of the Order (or any provision made under the Order); and

(b) relate to an administration or an administrative receivership.

SCHEDULE 1 — Regulations revoked

The Insolvency Practitioners Regulations (Northern Ireland) 1991[^f00004]

The Insolvency Practitioners (Amendment) Regulations (Northern Ireland) 1993[^f00005]

The Insolvency Practitioners (Amendment No. 2) Regulations (Northern Ireland) 1993[^f00006]

The Insolvency Practitioners (Amendment) Regulations (Northern Ireland) 2003[^f00007]

SCHEDULE 2 — Requirements for Security and Related Matters

PART 1 — Interpretation

Interpretation

1

In this Schedule—

“cover schedule” means the schedule referred to in paragraph 3(2)(c);

“the insolvent” means the individual or company in relation to which an insolvency practitioner is acting;

“general penalty sum” shall be construed in accordance with paragraph 3(2)(b);

“insolvent’s assets” means all assets comprised in the insolvent’s estate together with any monies provided by a third party for the payment of the insolvent’s debts or the costs and expenses of administering the insolvent’s estate;

“professional liability insurance” means insurance taken out by the insolvency practitioner in respect of potential liabilities to the insolvent and third parties arising out of acting as an insolvency practitioner.

“relevant losses” means the losses referred to in paragraph 3(1)(b);

“specific penalty sum” shall be construed in accordance with paragraph 3(2)(a).

“SPS indemnity period” has the meaning given in paragraph 3(3)(c).

PART 2 — Requirements relating to security

Requirements in respect of security

2

The requirements in respect of security for the proper performance of the duties of insolvency practitioners prescribed for the purposes of Article 349(3)(b) of the Order shall be as set out in this Part.

Requirement for Bonding – Terms of the Bond

3

(1) The bond shall—

(a) be in writing or in electronic form;

(b) contain provision whereby a surety undertakes to be jointly and severally liable for losses in relation to the insolvent caused by—

(i) the fraud or dishonesty of the insolvency practitioner whether acting alone or in collusion with one or more persons; or

(ii) the fraud or dishonesty of any person committed with the connivance of the insolvency practitioner; and

(2) The term of the bond shall provide—

(a) that claims in respect of relevant losses will be paid up to an aggregate maximum sum for each case where the insolvency practitioner acts (“the specific penalty sum”), together with interest on relevant losses calculated at a rate above the Sterling Overnight Index Average;

(b) that claims in respect of relevant losses, together with interest, will be paid out of a further sum of £750,000 (“the general penalty sum”) if—

(i) a specific penalty sum is not in force in relation to a case, or

(ii) any amounts payable under a specific penalty sum are insufficient to meet all claims arising out of a case;

(c) for a schedule containing the name of the insolvent and the value of the insolvent’s assets to be submitted to the surety within such period as may be specified in the bond;

(d) that where at any time before the insolvency practitioner obtains his release or discharge in respect of his acting in relation to an insolvent, he forms the opinion that the value of that insolvent’s assets is greater than the current specific penalty sum, a revised specific penalty sum shall be applicable on the submission within such time as may be specified in the bond of a cover schedule containing a revised value of the insolvent’s assets;

(e) for the payment of relevant losses, whether they arise during the period in which the insolvency practitioner holds office in the capacity in which he was initially appointed or a subsequent period where he holds office in a subsequent capacity.

(f) for the payment of the following costs and expenses reasonably incurred or charged by the successor insolvency practitioner—

(i) the costs and expenses of investigating the suspected fraud or dishonesty;

(ii) the costs and expenses of making a claim under the bond, including costs incurred in providing documents or evidence or responding to requests for further information;

(iii) the costs and expenses of obtaining expert advice (including legal advice) in relation to a claim or potential claim under the bond;

(iv) the costs and expenses of administering the insolvent estate, which duplicate costs incurred or charged by an insolvency practitioner before the successor insolvency practitioner’s appointment to act in the relevant case.

(3) The terms of the bond may provide—

(a) that total claims in respect of the acts of the insolvency practitioner under all bonds relating to him are to be limited to a maximum aggregate sum (which shall not be less than £25,000,000); ...

(b) for a time limit within which claims must be made , provided the time limit satisfies the requirements of paragraph 8ZA (minimum run-off period); and

(c) for a limit on the surety’s liability under the specific penalty sum by reference to a specified period of time (“the SPS indemnity period”) during which the relevant losses may arise following the insolvency practitioner’s appointment to act in a case, subject to paragraphs 8ZC (minimum SPS indemnity period) and 8ZD (notification of expiry).

4

Subject to paragraphs 5, 6 and 7, the amount of the specific penalty in respect of a case in which the insolvency practitioner acts, shall equal at least the value of the insolvent’s assets as estimated by the insolvency practitioner as at the date of his appointment but ignoring the value of any assets—

(a) charged to a third party to the extent of any amount which would be payable to that third party; or

(b) held on trust by the insolvent to the extent that any beneficial interest in those assets does not belong to the insolvent.

5

In a case where an insolvency practitioner acts as a nominee or supervisor of a voluntary arrangement under Part II or Chapter II of Part VIII of the Order, the amount of the specific penalty shall be equal to at least the value of those assets subject to the terms of the arrangement (whether or not those assets are in his possession) including, where under the terms of the arrangement the debtor or a third party is to make payments, the aggregate of any payments to be made.

6

Where the value of the insolvent’s assets is less than £5,000, the specific penalty sum shall be £5,000.

7

Where the value of the insolvent’s assets is more than £5,000,000 the specific penalty sum shall be £5,000,000.

8

In estimating the value of an insolvent’s assets, unless he has reason to doubt their accuracy, the insolvency practitioner may rely upon any statement of affairs produced in relation to that insolvent pursuant to any provision of the Order.

PART 3 — Records relating to bonding and connected matters

Record of specific penalty sums to be maintained by insolvency practitioner

9

(1) An insolvency practitioner shall maintain a record of all specific penalty sums that are applicable in relation to any case where he is acting and such record shall contain the name of each person to whom the specific penalty sum relates and the amount of each penalty sum that is in force.

(2) Any record maintained by an insolvency practitioner pursuant to this paragraph shall, on the giving of reasonable notice, be made available for inspection by—

(a) any professional body recognised under Article 350 of the Order of which he is or was a member and the rules of membership of which entitle or entitled him to act as an insolvency practitioner;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Retention of bond by recognised professional body or competent authority

10

(1) The bond referred to in paragraph 3 or a copy shall be sent by the insolvency practitioner to—

(a) any professional body recognised under Article 350 of the Order of which he is a member and the rules of membership of which entitle him to act as an insolvency practitioner; or

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The bond referred to in paragraph 3 or a copy of it may be sent electronically.

Inspection and retention requirements relating to cover schedule

11

(1) This regulation applies to an insolvency practitioner appointed in insolvency proceedings under the Order to act—

(a) in relation to a company which the High Court has jurisdiction to wind up; or

(b) in respect of an individual.

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.