Insolvency professionals will no doubt welcome changes detailed below. In particular, clarification that a director’s administration appointment is not invalid by virtue of the filing of a winding up petition during the interim moratorium period.
In the past this has often led to uncertainty and increased costs as a result of the requirement to apply to court for the retrospective appointment of the Administrators. Costs will also be saved now that Administrator’s no longer have to apply to Court for permission to make a prescribed part distribution to unsecured creditors.
Parliament has been busy giving Royal Assent to a number of Orders, Rules and Acts of Parliament that amend, clarify or introduce new insolvency rules and legislation that insolvency professionals should be aware of.
The Deregulation Act 2015 received Royal Assent on 26 March 2015. The following insolvency provisions will come into effect on 26 May 2015:
- Company/director administration appointments will now be possible where a winding up petition has been filed during the interim moratorium period.
- The repeal of preferential treatment of “year in hand” holiday entitlements.
Further provisions of the Deregulation Act 2015 that impact upon the profession are to be implemented on or after October 2015 and we will send a further update nearer the time setting out those changes.
The Small Business, Enterprise & Employment Act 2015 received Royal Assent on 26 March 2015. The following insolvency provisions will come into effect on 26 May 2015:
- The extension of the maximum period that creditors may extend the term of office of an Administrator by way of consent from 6 months to a specified period not exceeding 1 year (paragraph 76 of Schedule B1 IA86).
- Removal of the requirement under paragraph 65 of Schedule B1 IA86 to obtain Court permission for an Administrator to make a prescribed part distribution to unsecured creditors. Moving from administration to creditors’ voluntary liquidation under the provisions of paragraph 83 Schedule B1 IA86 will remain permissible only if there is to be a distribution to unsecured creditors which is not a distribution under the prescribed part.
- Liquidators and Trustee’s in Bankruptcy will have the ability to exercise any of the powers set out in Schedule 4 and 5 IA86 respectively without the need to obtain the sanction of the Court, creditors committee or Secretary of State. Such powers include, the power to instigate and defend certain legal proceedings, the power to pay any class of creditors in full and the power to mortgage property in a bankrupt’s estate to raise money to pay debts.
If you have any questions about this blog, please contact the Corporate Recovery and Insolvency Team.
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