New measures to support Insolvency Practitioners
The IPA and ICAEW have been in conversation with the Insolvency Service and are looking at introducing various measures to ease the burden and support Insolvency Practitioners during the current situation we are faced with.
While some measures are still being explored, the ones below have already been agreed and introduced by both RPBs. These are mainly high-level measures or where there have already been queries raised by IPs. We are in contact with the Insolvency Service and R3 to agree positions in relation to other areas and we will continue to update you as we reach agreement on these.
- IPs are expected to have taken reasonable steps to comply with their regulatory obligations. However, if they fall short, due to social distancing, technological or other constraints caused by the Covid-19 pandemic, but have followed ethical principles and have justifiable, sound and well documented reasons for making those decisions, disciplinary action is unlikely to be taken.
- Likewise changes to operations and all resulting effects of the current crisis could amount to a “reasonable excuse” defence for any statutory breaches.
- Where procedural meetings are required, virtual meetings will suffice in order to avoid breaching social distancing requirements. A reasonable approach will be required to handling any creditor requests for physical meetings.
- It is acknowledged that IPs may defer, on a short-term basis, non-priority work on existing cases (for instance investigatory work) and focus on new/urgent areas. IPs must take all reasonable steps to progress case administration in the longer term and ensure stakeholder financial interests are not prejudiced.
- When selling assets affected by markets, IPs would not be breaching the Professional Competence and Due Care ethical principle by allowing reasonable time for markets to recover.
- Where a Notice of Intended Dividend has already been issued, we acknowledge that the payment of the dividend can be postponed and may be unable to be paid within two months.
- GDPR compliance may be more challenging when working remotely and/or mistakes may happen. For regulatory purposes, any findings against IPs by the Information Commissioner’s Office will be considered in the context of the crisis.
- The Insolvency Service has announced that payment requisitions are being accepted by email. Click here for full information. It has also announced that IVA registration fees can be paid electronically, e.g. via BACS. Click here for full details.
2. Corporate Insolvency
- For statutory declarations of solvency in MVLs, from a regulatory perspective we are content for the swearing of such documents over video conferencing, and clarity is expected from the Law Society to provide comfort to solicitors in this respect. We are aware of solicitors who are able to facilitate remote swearing of documents and can provide further details on request. We understand that the Insolvency Service Policy Unit is also reviewing the legislative requirements in this regard.
- In order to provide flexibility for IPs to focus on new/urgent matters and to allow time for market recovery, we are relaxing the expectation in existing MVLs that creditors will be paid in full within 12 months provided that the IP continues to consider the company will be solvent in the medium term when markets have recovered.
- When considering MVLs moving to a CVL (s.95), IPs may take longer than the deadline of seven days to notify creditors that the company is unable to pay debts in full within 12 months.
- For voluntary arrangements, we acknowledge that IPs will exercise their discretion when handling a specific CVA and in the circumstances, accept that the discretion afforded to IPs in order to manage cases affected by the current crisis, is necessarily wide. IPs are reminded to document all decision-making and exercise of discretion.
3. Personal Insolvency
- For voluntary arrangements, we acknowledge that IPs will exercise their discretion when handling a specific IVA and in the circumstances, accept that the discretion afforded to IPs in order to manage cases affected by the current crisis, is necessarily wide. IPs are reminded to document all decision-making and exercise of discretion.
- We acknowledge that it is not likely to be possible to comply with the SIP 3.1 requirement to respond to debtor enquiries ‘promptly’ and to close IVAs ‘promptly’ and accepts that IPs will need to prioritise their work through the crisis period.
Additional Measures that have been announced
- Details of the Self Employed Scheme
- Details of the Furlough Scheme
This page will be updated regularly. Meanwhile, if you have any queries or need our support, please email us at [email protected].