Insolvency Technical Update - November 2018

HM Revenue & Customs have issued a statement which corrects a previous statement made in relation to the payment of statutory interest in Scottish MVLs. HMRC now accept that the Insolvency (Scotland) Rules 1986 do not make provision for a statutory rate of interest in MVLs and as a result interest payable in accordance with s.189 Insolvency Act 1986 is payable at the normal rate of interest that would have been paid had the winding up not occurred.

The above Rules have been laid in Parliament and will come into effect on 6 April 2019.

The ICAS website contains a gateway page to all the latest information on the changes to corporate insolvency rules in Scotland including explanations of what is changing.

The new Scottish corporate insolvency rules mentioned above will bring significant changes to the way corporate insolvency procedures are conducted in Scotland. ICAS, in association with BPP, have a number of courses running throughout January 2019 to help practitioners and their staff get prepared for the changes which will come into effect in April 2019. You can book your places now.

On 9^th November, the Minister for Economy, Jobs and Fair Work withdrew the draft Regulations laid in the Scottish Parliament. This follows significant reservations about the regulations having been raised by the Economy, Energy and Fair Work committee after hearing evidence from ICAS and others. The Regulations will now no longer come in as planned in April 2019 unless they are re-laid and accepted by the Scottish Parliament in the intervening period.

The Insolvency Service have published Dear IP 82. The latest edition contains articles on costs of block transfer applications, changes to cheque clearing processes, guidance on the submission of information to Companies House, clarification on Director Conduct Reporting Service submissions, an update on directors’ employment claim from RPS, the statement of affairs post GDPR, an update on the Code of Ethics consultation, updated guidance and complaint process for re-use of prohibited names, and the Bankruptcy Adjudicator and pending petitions.

A special edition (Dear IP 83) has also been published by the Insolvency Service. This deals with The Insolvency (Amendment) (EU Exit) Regulations 2018 which have been laid in draft and deal with the situation where the UK leaves the EU without an agreement (a no-deal Brexit).

HM Revenue and Customs have requested that correspondence in relation to recall of sequestration should be sent to:

HMRC

Enforcement & Insolvency

Elgin House

20 Haymarket Yards

Edinburgh

EH12 5WT

The Scottish Parliament has passed the Prescription (Scotland) Bill.

The Budget contained announcements relating to a breathing space and statutory debt repayment plan to be introduced in England and Wales. The policy consultation document proposes that insolvency practitioners will only be able to participate if they are also FCA authorised.

Responses to the consultation on the detailed policy proposals may be submitted up to 29 January 2019.

The Accountant in Bankruptcy has also issued a consultation paper entitled ‘Building a better DAS’.

The consultation focuses on four areas:

*           proposed changes to DAS payments distribution;

*           a new fee structure;

*           reducing bureaucracy; and

*           improved flexibility.

Responses to the consultation may be submitted up to 24 January 2019.

Orton and others v Towcester Racecourse Company Ltd (in administration) [2018] EWHC 2902 (Ch) The Insolvency (England and Wales) Rules 2016 require the notice of appointment of an administrator in an out of court appointment to state the date and time of appointment. Given that the appointment is usually effective at the point of filing it has been unclear how the IP should fulfil the requirements. A recent High Court decision resolves the issue, confirming that a notice making reference to a future filing is acceptable. (via Lewis Silkin)

Garcia v Marex Financial Ltd [2018] EWCA Civ 1468The Court of Appeal has for the first time applied the rule against reflective loss to claims by creditors. The rule had in the past only been used to prevent claims by shareholders against directors, where the losses claimed by the shareholders reflected those suffered by the company. (via Addleshaw Goddard)