Draft Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2009 - Regulatory Reform Committee Contents


1  What the draft Order proposes

Introduction

1. Insolvency proceedings in England and Wales are governed mainly by the provisions of the Insolvency Act 1986 (the Act). Further detail is provided by the Insolvency Rules 1986 (the Rules), which have been frequently revised and updated. The Rules are made by the Lord Chancellor with the consent of the Secretary of State for Business, Innovation and Skills, after consultation with the Insolvency Rules Committee whose members include members of the judiciary, legal practitioners and other professionals with insolvency expertise.[2] The draft Order is part of a project that began in July 2005 to consolidate and modernise insolvency law by amending certain aspects of the Act and the Rules.

2. Insolvency law in Scotland is largely a matter for the devolved institutions. However, two of the proposals (A and B below) will have some limited application to corporate insolvency in Scotland. The ED explains that the relevant offices of the Scottish Executive are content with the draft Order and that the Scottish Executive is considering whether more extensive implementation in Scotland would be possible by means of Scottish legislation.[3]

The proposals

3. There are seven proposals in the LRO:[4]

a)  Proposal A: To permit remote attendance at meetings (including by telephone or videoconferencing) unless there is objection from 10% of creditors by value or of members by voting right

b)  Proposal B: To permit use of websites as a means of communication at the discretion of insolvency practitioners in order to reduce the burden of providing printed information, but subject to a right for creditors to request printed copies free of charge

c)  Proposal C (Reference to things "in writing" and "post"): To replace provisions in the Act and in the Rules to permit the use of e-mail

d)  Proposal D: To remove requirements for documents to be verified by affidavit in England and Wales and replace them with a less burdensome requirement for a statement of truth

e)  Proposal E: Removal of the requirement for certain annual meetings rarely attended by creditors or members and replacement (by means of separate rules) with a written progress report

f)  Proposal F: Removal of the requirement for certain routine reports to be filed at court in Individual Voluntary Arrangements

g)  Proposal G: Removal of the requirement that liquidators and trustees in bankruptcy obtain sanction (i.e. approval) for compromises made in realising assets.

Parliamentary procedure

4. Under the LRRA, the super-affirmative procedure provides for an extended parliamentary scrutiny period of 60 days, together with the opportunity for the Committee to suggest changes to a draft LRO.[5] The ED states that, although the draft LRO is not believed to be controversial or of wide public or political importance, the super-affirmative procedure was recommended in the present case because of: the complex and technical nature of insolvency law and its practice by a small number of specialists; the technical nature of the proposals within that field of law; the prevailing economic conditions; the wide public interest in insolvency matters; and the fact that property and rights would be affected by the draft Order.


2   For Scotland, rules are made by the Secretary of State - see ED paragraph 81 Back

3   ED paragraph 89 Back

4   The A to G letter designations employed here for convenience are not used in the ED but correspond to the Annexes in the ED Back

5   See LRRA section 18 Back


 
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Prepared 9 July 2009