Insolvency technical update: July 2024
By David Menzies, Director of Practice
1 August 2024
Read our latest insolvency technical update – your round-up of the recent developments in insolvency.
Insolvency and Restructuring Conference 2024, sponsored by Sweeney Kincaid
Registration is now open for this years insolvency profession focused conference which will be held online during the mornings of 17 and 18 September 2024. With a practical focus and free of charge, the conference is ideal for anyone involved with the insolvency and restructuring profession at whatever level.
Full details of the agenda and links to register.
Insolvency Guidance Papers
Together with the other recognised professional bodies (RPBs), we have issued a revised Insolvency Guidance Paper 2 – succession planning and have withdrawn two IGPs with effect from 1 August 2024. The withdrawn IGPs are IGP 3 – Bankruptcy: The Family Home and IGP 6 - Retention of Title. Further information, including the revised IGP 2, is available in our announcement of the changes.
Dear IP 164 and 165
The Insolvency Service have published Dear IP 164 and Dear IP 165.
Dear IP 164 provides a reminder and guidance on expectations about reconciling estate bank accounts, authorisation to operate a local bank account in lieu of an ISA, and a change in approach by the IS in relation to case closure requests.
Dear IP 165 sets out the impact of the R v Palmer judgement on the office holder’s duties under TULRCA (HR1) and highlights new requirements in relation to insolvency in England under the Leasehold and Freehold Reform Act 2024 which commenced on 24 July 2024.
Dear Trustee
The Accountant in Bankruptcy has issued a Dear Trustee notification reminding that they no longer accept cheques for the payment of invoices or the consignation of funds and of the correct process for such payments.
The Insolvency (Monetary Limits) (Amendment) Order (Northern Ireland) 2024
The Order amends the prescribed amounts for the debtor’s overall indebtedness, monthly surplus income and total value of property for the purposes of paragraphs 6 to 8 of Schedule 2ZA to the Insolvency (Northern Ireland) Order 1989 and came into effect on 8 July 2024. From this date in relation to DRO eligibility in Northern Ireland the maximum debt increased from £20,000 to £50,000, the maximum permitted monthly surplus income raised from £50 to £75 and the maximum single asset value increased from £1,000 to £2,000.
Cyber security
We are aware that a number of accountancy firms in Scotland have been targeted by cyber attacks in recent weeks. It is important to ensure that you and your staff are extra vigilant as most cyber attacks which are successful involve human error. Some useful resources on cyber security include:
ICAS Cyber Hub
Cyber and Fraud Centre - Scotland
National Cyber Security Centre
ICAS practising certificates
Updated guidance on when a practising certificate (PC) is required by ICAS members has been published and comes into effect on 1 September 2024.
Changes to ICAS Professional Indemnity Insurance (PII) requirements
Changes to the ICAS PII Regulations come into effect on 1 September and may impact on the policy renewals of regulated members and firms on or after this date. Further details can be found in this article.
Changes to notification of VAT Registration and bank account details to HMRC
From 5 August 2024, HMRC will require changes to VAT Registration details via Form VAT 484 to be done electronically. Changes that could be reported using the form include business contact details, bank details and VAT return dates. More information on the change is available in this article.
The Protected Trust Deeds (Miscellaneous Amendment) (Scotland) Regulations 2024
The above regulations came into force on 1 July 2024.
They amend Part 14 of the Bankruptcy (Scotland) Act 2016, the Protected Trust Deeds (Forms) (Scotland) Regulations 2016 and the Bankruptcy Fees (Scotland) Regulations 2018 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.
Further commentary on the Regulations is available in this article.
Accountant in Bankruptcy Notes for Guidance
The Accountant in Bankruptcy has updated the Notes for Guidance in relation to protected trust deeds to reflect changes brought in under The Protected Trust Deeds (Miscellaneous Amendment) (Scotland) Regulations 2024.
Bankruptcy and Diligence (Scotland) Act 2024
The Scottish Parliament has passed the Bankruptcy and Diligence (Scotland) Bill and received Royal Assent on 15 July 2024.
The Act introduces enabling provisions for a mental health moratorium which will be set out in separate Regulations. It also makes minor and technical amendments to the Bankruptcy (Scotland) Act 2016 including when statutory interest is payable in relation to a recall of sequestration and allowing the AiB to be appointed as replacement trustee where a debtor has failed to co-operate and where otherwise the trustee would have had to remain in office.
The Act also introduces changes to protected trust deeds, requiring a trust deed information document to be provided to the debtor (in addition to the debt advice and information pack) and requiring the debtor to be provided with a ‘cooling off period’ to consider the advice and information provided before signing the trust deed.
No substantive provisions within the Act have been commenced and no timetable has been published on when the various provisions within the Act will be commenced.
Insolvency Service case management system update
The Insolvency Service have published new templates and guidance in advance of the move to their new case management system (INSSight) being launched in October 2024.
As part of this change, new templates will require to be used when interacting with the Insolvency Service in relation to:
- Unclaimed Receipts (and the creditor listings relating to those receipts)
- Cheque and BACs payment requisitions
- IVA registrations
- Bulk transfer of bankruptcy, compulsory liquidation and non-compulsory liquidation cases
Legal update
Liquidators of DMWSHNZ Ltd v the Bank of Scotland PLC The First Division of the Inner House of the Court of Session issued its opinion in the above appeal in which a sum of over £26 million was sought by the liquidators on the grounds that the Bank had been shadow directors of the company, and they had breached their fiduciary duties, or alternatively they had been unjustifiably enriched. (via BBM Solicitors)
