The Insolvency (England and Wales) Rules 2016

Made: 18th October 2016

Laid before Parliament: 25th October 2016

Coming into force: 6th April 2017

The Lord Chancellor has consulted the committee existing for the purposes of section 413 of the Insolvency Act 1986 (“the Act”).

The Lord Chancellor makes the following Rules in exercise of the powers conferred by sections 411 and 412 of the Act, with the concurrence of the Chancellor of the High Court (by authority of the Lord Chief Justice under sections 411(7) and 412(6) of the Act) in relation to those rules which affect court procedure, and with the concurrence of the Secretary of State.

INTRODUCTORY RULES

Citation and commencement

1

These Rules may be cited as the Insolvency (England and Wales) Rules 2016 and come into force on 6th April 2017.

Revocations

2

The Rules listed in Schedule 1 are revoked.

Extent and application

3

• (1) These Rules extend to England and Wales only.

• (2) These Rules as they relate to company voluntary arrangements under Part 1 of the Act, administration under Part 2 of the Act and winding up under Parts 4 and 5 of the Act apply in relation to companies which the courts in England and Wales have jurisdiction to wind up.

• (3) These Rules do not apply to receivers appointed under section 51 (Scottish receivership).

Transitional and savings provisions

4

The transitional and savings provisions set out in Schedule 2 have effect.

Power of the Secretary of State to regulate certain matters

5

• (1) Under paragraph 27 of Schedule 8 and paragraph 30 of Schedule 9 to the Act, the Secretary of State may, subject to the Act and the Rules made under it, make regulations with respect to any matter provided for in the Rules relating to the carrying out of the functions of—

• (a) a liquidator, provisional liquidator, administrator or administrative receiver of a company;

• (b) an interim receiver appointed under section 286 ; and

• (c) a trustee of a bankrupt's estate.

• (2) The regulations that may be made may include, without prejudice to the generality of paragraph (1), provision with respect to the following matters arising in companies winding up and individual bankruptcy—

• (a) the preparation and keeping by liquidators, trustees, provisional liquidators, interim receivers and the official receiver, of books, accounts and other records, and their production to such persons as may be authorised or required to inspect them;

• (b) the auditing of liquidators' and trustees' accounts;

• (c) the manner in which liquidators and trustees are to act in relation to the insolvent company's or bankrupt's books, papers and other records, and the manner of their disposal by the responsible office-holder or others;

• (d) the supply of copies of documents relating to the insolvency and the affairs of the insolvent company or individual (on payment, in such cases as may be specified by the regulations, of the specified fee)—

• (i) by the liquidator in company insolvency to creditors and members of the company, contributories in its winding up and the liquidation committee; and

• (ii) by the trustee in bankruptcy to creditors and the creditors' committee;

• (e) the manner in which insolvent estates are to be distributed by liquidators and trustees, including provision with respect to unclaimed funds and dividends;

• (f) the manner in which moneys coming into the hands of a liquidator or trustee in the course of the administration of the proceedings are to be handled and invested, and the payment of interest on sums which have been paid into the Insolvency Services Account under regulations made by virtue of this sub-paragraph;

• (g) the amount (or the manner of determining the amount) to be paid to the official receiver as remuneration when acting as provisional liquidator, liquidator, interim receiver or trustee.

• (3) Regulations made under this rule may—

• (a) confer a discretion on the court;

• (b) make non-compliance with any of the regulations a criminal offence;

• (c) make different provision for different cases, including different provision for different areas; and

• (d) contain such incidental, supplemental and transitional provisions as may appear to the Secretary of State necessary or expedient.

Punishment of offences

6

Schedule 3 sets out the punishments for certain contraventions of these Rules.

Review

7

• (1) The Secretary of State must from time to time—

• (a) carry out a review of these Rules;

• (b) set out the conclusions of the review in a report; and

• (c) publish the report.

• (2) The report must in particular—

• (a) set out the objectives intended to be achieved by the regulatory system established by these Rules;

• (b) assess the extent to which those objectives are achieved; and

• (c) assess whether those objectives remain appropriate and, if so, the extent to which they could be achieved with a system that imposes less regulation.

• (3) The first report under this rule must be published before the end of the period of five years beginning with the day on which these Rules come into force.

• (4) Reports under this rule are afterwards to be published at intervals not exceeding five years.

PART 1 — SCOPE, INTERPRETATION, TIME AND RULES ABOUT DOCUMENTS

CHAPTER 1 — Scope of these Rules

Scope

1

• (1) These Rules are made to give effect to Part A1 to 11 of the Insolvency Act 1986 and to the EU Regulation.

• (2) Consequently references to insolvency proceedings and requirements relating to such proceedings are, unless the context requires otherwise, limited to proceedings in respect of Part A1 to 11 of the Act and the EU Regulation (whether or not court proceedings).

CHAPTER 2 — Interpretation

[Note: the terms which are defined in rule 1.2 include some terms defined by the Act for limited purposes which are applied generally by these Rules. Such terms have the meaning given by the Act for those limited purposes.]

Defined terms

1

• (1) In these Rules, unless otherwise stated, a reference to a Part or a Schedule is to a Part of, or Schedule to, these Rules.

• (2) In these Rules—

• “the Act” means the Insolvency Act 1986, and—a reference to a numbered section without mention of another Act is to that section of the Act; anda reference to Schedule ZA1, ZA2, B1, 4ZA, 4ZB or 4A is to that Schedule to the Act;

• “appointed person” means a person as described in paragraph (3) who is appointed by an office-holder (other than the official receiver);

• “Article 1.2 undertaking” means one of the following within the meaning of Article 1.2 of Regulation (EU) 2015/848 of the European Parliament and of the Council” (“the EU Regulations”)—an insurance undertaking;a credit institution;an investment undertaking which provides services involving the holding of funds or securities for third parties;a collective investment undertaking;

• [Note: “associate” is defined by section 435];

• “attendance” and “attend” a person attends, or is in attendance at, a meeting who is present or attends remotely in accordance with section 246A or rule 15.6, or who participates in a virtual meeting, whether that person attends the meeting or virtual meeting in person, by proxy, or by corporate representative (in accordance with section 434B or section 323 of the Companies Act, as applicable);

• “authenticate” means to authenticate in accordance with rule 1.5;

• “authorised deposit-taker” means a person with permission under Part 4A of the Financial Services and Markets Act 2000 to accept deposits; this definition must be read with—section 22 of that Act and any relevant order under that section; andSchedule 2 to that Act;

• [Note: “bankrupt's estate” is defined in section 283];

• “bankruptcy application” means the bankruptcy application submitted by the debtor to the adjudicator requesting the making of a bankruptcy order against the debtor;

• “bankruptcy file” means the file opened by the adjudicator in accordance with rule 10.47;

• “bankruptcy restrictions register” means the register referred to in rule 11.13(2) of matters relating to bankruptcy restrictions orders, interim bankruptcy restrictions orders and bankruptcy restrictions undertakings;

• “business day” means, for the purposes of these Rules as they relate to Parts 7A to 10 of the Act (insolvency of individuals; bankruptcy), any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday in England and Wales [Note: for the purposes of these Rules as they relate to Part A1 to 7 of the Act (company insolvency; company winding up) section 251 defines “business day” as including additionally a day which is a bank holiday in Scotland];

• “centre of main interests” has the same meaning as in the EU Regulation;

• “certificate of service” means a certificate of service which complies with the requirements in Schedule 4;

• “COMI proceedings” means insolvency proceedings in England and Wales to which the EU Regulation applies where the centre of the debtor's main interests is in the United Kingdom;

• “Companies Act” means the Companies Act 2006 ;

• [Note: the term “connected” used of a person in relation to a company is defined in section 249 of the Act];

• “consumer” means an individual acting for purposes that are wholly or mainly outside that individual's trade, business, craft or profession;

• [Note: “contributory” is defined by section 79];

• “convener” means an office-holder or other person who seeks a decision in accordance with Part 15 of these Rules;

• [Note: “the court” is defined by section 251 for the purposes of these Rules as they relate to Part A1 to 7 of the Act (company insolvency; company winding up) and by section 385(1) for the purposes of these Rules as they relate to Parts 7A to 10 of the Act (insolvency of individuals; bankruptcy);

• “CPR” means the Civil Procedure Rules 1998 ;

• “credit reference agency” means a person authorised or permitted by the Financial Conduct Authority to carry on the regulated activity of providing credit references;

• “CVA” means a voluntary arrangement in relation to a company under Part 1 of the Act;

• “debt” is defined in rule 14.1(3) for the purposes of administration and winding up and “small debt” is also defined in rule 14.1(3) for administration, winding up and bankruptcy [Note: debt is defined in section 385(1) for the purposes of these Rules as they relate to Parts 7A to 10 of the Act (insolvency of individuals; bankruptcy)];

• “debt relief restrictions register” means the register referred to in rule 11.13(2) of matters relating to debt relief restrictions orders and debt relief restrictions undertakings;

• “decision date” and “decision procedure” are to be interpreted in accordance with rule 15.2 and Part 15;

• “decision procedure” means a decision procedure prescribed by rule 15.3;

• [Note: “deemed consent procedure” is defined in section 246ZF for corporate insolvency and 379ZB for individual insolvency; rule 15.7 makes further provision about deemed consent];

• “deliver” and “delivery” are to be interpreted in accordance with Chapter 9 of Part 1;

• “deliver to the creditors” and similar expressions in these Rules and the Act are to be interpreted in accordance with rule 1.37;

• [Note: “distress” is defined in section 436 as including the procedure in Schedule 12 to the Tribunals, Courts and Enforcement Act 2007 (c.15), and references to levying distress, seizing goods and related expressions are to be construed accordingly];

• “document” includes a written notice or statement or anything else in writing capable of being delivered to a recipient;

• [Note: EU Regulation is defined for the purposes of these Rules by section 436 of the Act as Regulation (EU) 2015/848 of the European Parliament and of the Council];

• “enforcement agent” means a person authorised by section 63(2) of the Tribunals, Courts and Enforcement Act 2007 to act as an enforcement agent;

• “enforcement officer” means an individual who is authorised to act as an enforcement officer under the Courts Act 2003 ;

• “establishment” has the same meaning as in Article 2(10) of the EU Regulation;

• “establishment proceedings” means insolvency proceedings in England and Wales to which the EU Regulation applies where the debtor has an establishment in the United Kingdom;

• “fees estimate” means a written estimate that specifies—details of the work the insolvency practitioner (“the IP”) and the IP's staff propose to undertake;the hourly rate or rates the IP and the IP's staff propose to charge for each part of that work;the time the IP anticipates each part of that work will take;whether the IP anticipates it will be necessary to seek approval or further approval under Chapter 4 of Part 18; andthe reasons it will be necessary to seek such approval under these Rules;

• “file with the court” and similar expressions in these Rules means deliver to the court for filing and such references are to be read as including “submit” and “submission” to the court in the Act (except in sections 236 and 366);

• “the Gazette”, which has the meaning given in section 251 for the purposes of these Rules as they relate to Part A1 to 7 of the Act (company insolvency; company winding up), has that meaning for the purposes of these Rules as they relate to Parts 7A to 10 of the Act;

• “Gazette notice” means a notice which is, has been or is to be gazetted;

• “to gazette” means to advertise once in the Gazette;

• “general regulations” means regulations made by the Secretary of State under introductory rule 5;

• “hearing centre” means a hearing centre of the County Court;

• [Note: “hire-purchase agreement” is defined by section 436(1) as having the same meaning as in the Consumer Credit Act 1974 for the ... (administration) for the purposes of that Schedule];

• “identification details” and similar references to information identifying persons, proceedings, etc. are to be interpreted in accordance with rule 1.6;

• “individual insolvency register” means the register referred to in rule 11.13(1) of matters relating to bankruptcies, debt relief orders and IVAs;

• “individual register” has the meaning given by rule 217(1) of the Land Registration Rules 2003 ;

• “insolvent estate” means—in relation to a company insolvency, the company's assets;in relation to a bankruptcy, a petition or an application for bankruptcy, the bankrupt's estate (as defined in section 283);or otherwise the debtor's property;

• “IP number” means the number assigned to an office-holder as an insolvency practitioner by the Secretary of State;

• “IVA” means a voluntary arrangement in relation to an individual under Part 8 of the Act;

• “judge” includes an Insolvency and Companies Court Judge unless the context otherwise requires;

• “London Insolvency District” has the meaning given by section 374 of the Act and the London Insolvency District (County Court at Central London) Order 2014 ;

• ...

• “meeting” in relation to a person's creditors or contributories means either a “physical meeting” or a “virtual meeting” as defined in rule 15.2, unless the contrary intention is given;

• ...

• “nominated person” means a person who has been required under section 47 or 131 to make out and submit a statement as to the affairs of a company in administrative receivership or being wound up by the court;

• [Note: “nominee” is defined in section 1(2) in relation to company voluntary arrangements and section 253(2) in relation to individual voluntary arrangements];

• ...

• “office-holder” means a person who under the Act or these Rules holds an office in relation to insolvency proceedings and includes a nominee;

• “permission” of the court is to be read as including “leave of the court” in the Act and in the Company Directors' Disqualification Act 1986 ;

• “petitioner” or “petitioning creditor” includes a person who has been substituted as such or has been given carriage of the petition;

• “physical meeting” means a meeting as described in section 246ZE(9) or 379ZA(9) ;

• “Practice Direction” means a direction as to the practice and procedure of a court within the scope of the CPR;

• “prescribed order of priority” means the order of priority of payments of expenses set out in—Chapter 10 of Part 3 for administration proceedings;Chapter 6 of Part 6 for creditors' voluntary winding up proceedings;Chapter 14 of Part 7 for winding up by the court proceedings; andChapter 18 of Part 10 for bankruptcy proceedings;

• “prescribed part” has the same meaning as in section 176A(2)(a) and the Insolvency Act 1986 (Prescribed Part) Order 2003 ;

• “progress report” means a report which complies with Chapter 2 of Part 18;

• [Note: “property” is defined by section 436(1) of the Act];