Insolvency news and alerts

IPA Insolvency Practitioner newsletter, November 2021

Notice on energy company insolvencies

IPs who have or may be appointed to energy company insolvencies should be mindful that appointments under the Special Administration Regime are possible.

Concerns were raised about the treatment of customers in previous energy company insolvencies. We would like to remind members that the regulatory framework supports both the fair treatment of customers and the fulfilment of duties under the Insolvency Act. The Act sets out IPs’ primary duties, and the Code of Ethics sets out how these should be achieved, with the Code stating that conduct should not discredit the profession, and IPs should show courtesy and consideration to all parties. This extends to work that is delegated or sub-contracted, so adequate oversight in this area is vital.

IPs should consider any previous arrangements an insolvent energy supplier had with vulnerable customers and flexible repayment plans, and give close consideration to communications (e.g. providing accurate contact details to customers and anticipating high volumes of calls, ensuring measures are in place to deal with them). IPs should be mindful of communication strategies and should not impose undue pressure on clients, and they should consider carefully the prospect of scam activity which targets former energy clients.

Ofgem would also like to reiterate the following:

The incoming supplier (a Supplier of Last Resort in appointments made so far) must be provided with the data required for consumer transfer to be as quick and smooth as possible.
Ofgem will be paying close attention to fees charged in terms of being fair and reasonable.
IPs should support the Citizens Advice Extra Help Unit by quickly providing correct staff contact details in order to help resolve off-supply cases in the Supplier of Last Resort process.
Finally, IPs are reminded of Ofgem’s open letters from 2019 and 2020 in relation to customer treatment and back-billing. The letters are below.

Open letter to energy suppliers and insolvency practitioners who undertake charge recovery action | Ofgem (2020)

Open letter to insolvency practitioners appointed to failed Energy Supply companies | Ofgem (2019)

New Accountant in Bankruptcy Notes for Guidance for Trustees

The Accountant in Bankruptcy (AiB) has released updated Notes for Guidance for Trustees. The changes are reformatting and an additional explanation on AiB methods for processing information and documents. Access the document here.

A repeated reminder from the Insolvency Service on filing a report of an approval of an IVA with the Secretary of State

In March 2021, a reminder was included in the newsletter about the importance of filing a report of an approval of an IVA with the Secretary of State. Despite the reminder, the Insolvency Service continue to advise that there are repeated errors and late filings by IPs. The errors are occurring across a broad spectrum of firms, irrespective of the number of IVAs they are dealing with.

IPs need to be able to demonstrate they have effective controls and procedures to check that notifications and payments have been correctly sent on all IVA cases.

Rule 8.26 (2) of The Insolvency (England and Wales) Rules 2016 requires that:

The report must be delivered as soon as reasonably practicable, and in any event within 14 days after the report that the creditors have approved the IVA has been filed with the court under rule 8.24(3) or the notice that the creditors have approved the IVA has been sent to the creditors under rule 8.24(5) as the case may be.

The IVA register is an important public record and IPs should note that if they are in continued breach of this rule, this is likely to lead to the matter being referred to the Regulation and Conduct Committee, and in accordance with the Common Sanctions Guidance this may result in a reprimand, a fine or both.

Updated Debt Relief Order guidance for debt advisors

The link below gives access to the updated version of Debt Relief Orders: Guidance for debt advisors. It is a useful tool for members when reviewing IVAs that now meet the criteria for a DRO following the recent consultation. Whilst a debtor may appear eligible based on DI, debt, and asset level, there are other things to take into consideration that the debtor should be made aware of.

Debt Relief Orders: Guidance for debt advisers – GOV.UK (www.gov.uk)

Debt solutions and the impact on executries

Eileen Maclean, IPA Standards, Ethics and Regulatory Liaison Commitee member, and Anne Hastie, Law Society of Scotland Administrative Justice Commitee member, have co-authored an article for the Law Society of Scotland, reporting on work taking place on Protected Trust Deeds and sequestration, and making a request to those acting as executors. Read the article here.