Insolvency technical update: May 2024
By Steven Wood, Practice Support Specialist (Insolvency)
12 June 2024
Read our latest insolvency technical update – your round-up of the recent developments in insolvency.
Debt relief order (DRO) changes
From 28 June 2024, the value of a single motor vehicle that can be disregarded from the total value of assets an individual seeking a DRO is permitted to own will be increased from £2,000 to £4,000. The total debt allowable for a DRO will also be increased from £30,000 to £50,000.
The changes will be brought into force by the the Insolvency (England and Wales) (Amendment) Rules 2024 and the Insolvency Proceedings (Monetary Limits) (Amendment) Order 2024.
Changes to Companies House fees
Companies House fees increased with effect from 1 May 2024. A table setting out the new fees has been published.
HMRC guidance – advisory fuel rates
HMRC has updated the advisory fuel rates for company car users. The new rates are applicable from 1 June 2024.
Review of Scotland’s statutory debt solutions – Stage 3 Consultation
A consultation has been published to seek stakeholder views on Scotland's statutory debt solutions.
Responses should be sent to the stage 3 lead, Yvonne MacDermid OBE, at yvonnemacdermid@yahoo.co.uk by no later than 18 July 2024.
Mental Health Moratorium Regulations
The Bankruptcy and Diligence (Scotland) Bill is now at stage 3 of the Parliamentary process. The Bill’s main provision is an enabling power which will permit Scottish Ministers to introduce a mental health moratorium through regulations. This is to allow for the creation of a bespoke moratorium protection for those struggling with problem debt and serious mental health issues.
A copy of the draft Mental Health Moratorium Regulations has been shared with the Economy and Fair Work Committee. This will allow Parliament an opportunity to consider the potential process of the moratorium prior to the final vote on the Bill. A further draft of the regulations will be subject to full public consultation before the summer.
The draft regulations introduce some significant changes to previous proposals in areas where the Committee showed special interest. Most notably the regulations widen the eligibility criteria beyond those undergoing compulsory treatment to those voluntarily undergoing equivalent treatment either as a hospital inpatient or in the community under the case of an intensive home treatment team (or equivalent).
The Protected Trust Deeds (Miscellaneous Amendment) (Scotland) Regulations 2024
The above regulations have been laid in draft and, if approved, will come into force on 1 July 2024.
The regulations broadly import into legislation many of the measures introduced by the Accountant in Bankruptcy’s (AiB’s) PTD Protocol. They propose amendments to Part 14 of the Bankruptcy (Scotland) Act 2016 on voluntary trust deeds for creditors to:
- Require that, where a dividend is payable, it will be paid to creditors at month 12 and quarterly thereafter.
- Require a trustee to seek the agreement of the AiB when refusing to discharge a debtor from a PTD.
- Allow for the removal of the protected status of a PTD where there has been a material error made in the process for the trust deed gaining protected status.
- Remove any time limitation for a trustee refusing to apply for a debtor’s discharge.
- Allow early discharge of the debtor in extenuating circumstances.
- Allow AiB to act as trustee of last resort where a trustee can no longer act in that capacity and a replacement trustee cannot be found.
- Increase the supervision fee of a trustee under a PTD from £100 to £120.
- Place beyond doubt that anyone or a legal entity applying for the protection of a trust deed will have to have been habitually resident in Scotland or an established place of business in the year prior to the granting of the trust deed. Alternatively, a body or entity applying will have to be constituted or formed under Scots law and at any time have carried out business within Scotland.
ICAS does not believe that many of the provisions within the regulations are appropriate for inclusion in legislation. We consequently oppose the regulations in their current form. We have provided detailed feedback on the regulations to the AiB on two occasions. We have also written to the Economy and Fair Work Committee of the Scottish Government to set out our concerns.
Insolvency Service Annual Review of Insolvency Practitioner Regulation 2023
The Insolvency Service has published their annual review of IP regulation for 2023 which sets out the work they have undertaken as well as statistics on insolvency regulation, complaints and sanctions by RPBs against IPs. Firms may find it helpful to review the report, to understand the types of complaints being made generally and where firms and individual IPs are finding standards are not being upheld resulting in disciplinary action, in order they can consider whether they may take further steps to avoid similar issues.
Legal update
Gordon Maclure, insolvency practitioner as trustee on the sequestrated estate of GG against GG: A Sheriff Appeal Court opinion considering two key questions in connection with the sale of heritable property by a trustee in bankruptcy. (via BBM solicitors)
