Measure for measure

The Insolvency Amendment Rules 2010 SI 2010/686 (as corrected by SI 2010/734) which came into force on 6 April 2010 are part of a package of measures designed to modernise insolvency legislation. This modernisation process has, among other things, now seen the introduction of debt relief orders (introduced into part 7A (section 251A to 251W) of the Insolvency Act 1986 (IA)) and a new insolvency advertising regime introduced by the Insolvency (Amendment) Rules 2009 SI 2009/642.

Hearing locations

All hearings must now be in open court unless the court otherwise orders. This directly reverses the old situation where the default position was that hearings, at least before the district judge, were in chambers. This is significant on a practical level because it is likely to have an impact upon representation in terms of rights of audience under the Legal Services Act 2007.

Change of expression

There are changes in nomenclature and document format. For example, affidavits and expressions associated with them like 'deponent', 'exhibits', 'oaths', 'sworn' and 'swear' are out and now we have witness statements (rule 7.7A) verified by statements of truth and certificates of service. A quick look at rule 13.13(14A) which deals with expressions used generally in the rules will give a flavour.

Ex parte applications and leave of the court have also been jettisoned. We now have 'applications without notice to any other party' and the court now gives its 'permission' rather than its 'leave'. Furthermore, the court no longer makes decisions that appear 'fit'. It now makes decisions which are 'just'. Also, as a nod to the existence of cyberspace, the rules now generally adopt the concept of 'authentication' of a document rather than a signature. This is of course in an effort to facilitate electronic delivery (see rule 12A9).

Order of the day

Where in the rules reference is made to the number of days by which something is to be done, this means business days. This is one of the changes which may catch out the unwary. For example, certificates of compliance must now be filed five business days before the hearing rather than just five days before. On the other hand, many things that were required to be done within seven days must now be done within five business days. So, in reality often there is no change. In any event, there is power under rule 12A55 for the court to extend or shorten time.

Alignment with the CPR

From the point of view of the lawyer engaged in court proceedings, the main amendments are contained in parts 7 and 12A. Essentially, the rationale of the amendments is to align insolvency court procedure more closely with the Civil Procedure Rules 1998 (CPR).

Rule 12A17 imports the provisions of the CPR 6 concerning service within the jurisdiction to some, although by no means all, documents, provided the court does not make an alternative order. It is important to note that this rule does not apply to service of bankruptcy or winding up petitions or documents relating to such petitions or orders for administration bankruptcy or winding up. They continue to be dealt with in accordance with the relevant specific rule. However, CPR 6 provisions apply much more extensively to documents required to be served outside the jurisdiction by virtue of rule 12A20 and the revocation completely of the old rule 12.12.

Streamlined procedures

The opportunity has been taken to streamline paperwork. Where the filing of documents at court is not considered by the rule makers to have served a useful purpose it is no longer necessary. For example, rule 4.187 has been amended so a liquidator's notice of disclaimer under section 178 IA need no longer be filed at court (although it must be sent to the Registrar of Companies and HMLR if it relates to registered land).

In addition, rule 7.10A to D streamlines the procedure for block transfer orders where one insolvency practitioner with multiple appointments is to be replaced by another by reason of death, retirement, etc.

Arrests under a warrant

Of more interest are the provisions in rule 7.22 by which anybody arrested under a warrant for failing to attend a public examination or under section 364 IA must be brought to the court if possible rather than being taken directly to prison.

As a corollary to this, the county court is also permitted to discharge a warrant issued by the High Court (rule 7.19) where the debtor has been brought before it as a result of his arrest under such a warrant.

Reducing risk

The rules recognise that the obligation to advertise proceedings or the content of court records provided to creditors may put a debtor at risk of becoming the victim of violence. Rules 5.67 and 6.235B which refer respectively to IVAs and bankruptcy, give the court power to permit exclusion of the debtor's home and/or business address if disclosure may reasonably be expected to lead to violence against the debtor or a person residing with them.

If, however, the court makes such an order it should consider whether other information should be published which will identify the debtor to possible genuine creditors. An obvious example may be a former address.

Annulment of bankruptcy

A further useful substantive change to the original rules is that now contained in rule 6.211(6). For the purpose of annulment of bankruptcy, an undertaking by a solicitor to discharge the debts can be sufficient security to enable annulment without the need for a conditional order if the court is happy to accept that undertaking.

You will find a useful tracked version of how the old rules have been amended at https://www.insolvency.gov.uk/insolvencyprofessionandlegislation/ consolidation/UpdateFeb8-10.htm.

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