‘Modernised and consolidated’ insolvency rules will come into force on 6 April 2017 and will affect creditors’ rights in most insolvency procedures but will maximise their returns.
According to the Insolvency Service, the changes are designed to ensure that insolvency processes are as efficient and streamlined as possible, both to maximise returns to creditors and to maintain safeguards to avoid abuse or injustice.
However, one change, which creditors may be unaware of, is that after this date, meetings in person can only be held where requested by creditors representing 10 per cent in value or number or by 10 individual creditors.
This is a departure from the current practice where creditors are asked to attend meetings or can send others on their behalf. From 6 April, creditors will be sent a “deemed consent” notice and, unless a minimum of 10 per cent in value of creditors object, the decision is treated as having been approved.
This means, for example, that if creditors wish to have a say in the appointment of liquidators, the 10 per cent rule must apply. However, they should also note that some key decisions cannot be made using the deemed consent procedure, such as how much the Insolvency Practitioner is paid.
Meanwhile, as part of the modernisation of the rules, creditors can be notified by email, as long as they agree to this form of communication or are deemed to have agreed by virtue of having communicated in this way in the past with the debtor.
In addition, if a creditor does not want to receive any communication on the insolvency, if they are unlikely to see any return, for example, they can elect to “opt out” of all communications. A creditor who opts out will still receive key communications, such as notice of distributions and other prescribed notices, however. They can also still vote and can opt back in at any time.