Insolvency technical update – November 2019
By David Menzies, Director of Practice
9 December 2019
Insolvency technical update – your round-up of recent developments in insolvency.
ICAS insolvency licence renewal
ICAS issued all authorised insolvency practitioners (IPs) a renewal notice on 25 November to enable their licences to be renewed for 2020. The renewal application should be completed as soon as possible and no later than 6 December 2019 to allow sufficient time for the licence to be issued to be effective from 1 January 2020.
Any IP whose licence is not renewed in sufficient time for their current licence expiry on 31 December 2019 will no longer be authorised as an IP and would be committing an offence under s389 Insolvency Act 1989 in respect of any appointments held at that date.
Debt Arrangement Scheme (Scotland) Amendment Regulations 2019
The above Regulations came into effect on 4 November 2019. A summary of the changes made by the Regulations is available within an article from July 2019 by Steven Wood and also a subsequent article containing further clarifications.
Insolvency (Scotland) (Company Voluntary Arrangement and Administration) Rules 2018 Insolvency (Scotland) (Receivership and Winding Up) Rules 2018
The Insolvency Service has published a table summarising queries it has received since the commencement of the 2018 rules on 6 April 2019. The table also details the responses provided by the Insolvency Service and/or the AiB.
Common Financial Statement
The AiB has confirmed that Scottish statutory debt solutions will continue to use the Common Financial Statement past April 2020.
Updated spending guidelines will be made available to licence holders in early 2020.
The Scottish Government is currently undertaking a consultation on users’ experience of the Common Financial Tool as part of the wider BADAS consultation noted below, which will inform developments beyond April 2020.
Code of Ethics
ICAS is adopting a new revised and restructured Code of Ethics with effect from 1 January 2020, which replaces the previous version (applicable from 1 November 2017 to 31 December 2019).
Part 5 of the code, which is applicable to IPs, will be published in due course. The specific provisions for IPs when performing insolvency or similar engagements within Part D of the existing Code (applicable from 1 January 2014) therefore continue to be applicable until further notice. The revised and restructured ICAS Code of Ethics is otherwise applicable to IPs with effect from 1 January 2020.
Nomination of the AiB as payments distributor
The AiB has issued information and guidance for firms interested in nominating the AiB as payments distributor for their DAS cases following the coming into force of the Debt Arrangement Scheme (Scotland) Amendment Regulations 2019 on 4 November 2019.
Insolvency service levy
The Insolvency Practitioners and Insolvency Services Account (Fees) (Amendment) Order 2019 comes into force on 31 December 2019. This will have the effect of increasing the insolvency service levy from £360 to £470 in 2020.
Energy supply company insolvency
Ofgem has issued an open letter to IPs appointed to failed energy supply companies. The letter reflects Ofgem's experience of dealing with IPs appointed to failed energy suppliers and sets out Ofgem's expectations of IPs operating in this context.
BADAS consultation
In April 2015, the Scottish Government introduced the most significant and wide-ranging reforms to bankruptcy law in Scotland for 30 years through the Bankruptcy and Debt Advice (Scotland) Act 2014 (BADAS).
The Scottish Government is now seeking views on the effectiveness and operational impact of the reforms introduced by BADAS.
The recently published consultation seeks views on some key areas:
- statutory moratorium on diligence
- common financial tool
- debtor contribution orders
- minimal asset process
- financial education
- treatment of child maintenance debt
- statutory rate of interest
Responses are requested by 11 February 2020. ICAS will be responding to the consultation and will be canvassing members’ views in support of that response.
Protected Trust Deed inquiry
The Scottish Parliament’s Economy, Energy and Fair Work Committee has launched a call for views as part of its inquiry into Protected Trust Deeds. This follows on from concerns raised during the Committee’s recent scrutiny of the Debt Arrangement Scheme (Scotland) Regulations 2019.
The deadline for responses is Monday 6 January 2020.
Legal update
Philip Stephen Wallace (as liquidator of Carna Meats (UK) Limited) and George Wallace [2019] EWHC 2503 (Ch)
The High Court in England has revisited the question of whether section 236 of the Insolvency Act 1986 has extraterritorial effect and considered the differing views expressed in previous cases (via Lexology).
Donnelly v RBS
The Inner House of the Court of Session has issued its long-awaited judgment in the case of Donnelly v RBS, reaffirming that the bank cannot exercise set-off when the debtor has already been discharged from their trust deed. The judgment is considered further in a recent article on icas.com.
Re Noble Vintners Limited
Insolvency and Companies Court Judge Prentis has made the first compensation order under section 15A and 15B of the Company Directors Disqualification Act 1986 (via Shepherd + Wedderburn).
Re Thomas Auld & Sons (In liquidation) [2019] CSOH 83
An appeal by a liquidator resulted in restoration of £43,000 of remuneration which had been recommended for deduction by the Court Reporter.
Toone and others as Liquidators of Implement Consulting Ltd (in liquidation) [2019] EWHC 2855 (Ch) and Vining Sparks (Vining Sparks UK Limited (In Liquidation) [2019] EWHC 2885 (Ch))
An examination of two High Court cases where liquidators tried to recover monies from directors who had engaged the companies in aggressive Employee Benefit Trust (EBT) schemes.
ICAS Insolvency and Restructuring news has gone digital: Learn more
