In this blog, I compare the responses to the EC Insolvency Regulation consultation – including: should Schemes of Arrangement be included? – and comment on today’s AiB release on planned changes to Bankruptcy. Also hidden within the BIS consultation responses is a view of great improvements to Gazette searches planned for this year…
Unanimous support for opting in to amended EC Insolvency Regulation
As I tweeted a week ago, the UK government has announced recently that it has decided to opt in to the proposal to amend the European Commission’s Regulation on insolvency proceedings, following unanimous support by those who responded to BIS’ consultation.
The ministerial statement and responses to the call for evidence can be found at: http://www.bis.gov.uk/insolvency/news/news-stories/2013/Apr/EUCallForEvidence
I noticed that the consultation responses were almost unanimous in one other respect; I thought that the voice for excluding Schemes of Arrangement from the Regulation’s scope – which would be possible under the revised Regulation, as currently proposed by the Commission – came through particularly loud and clear. Respondents cited the success stories that would not have been possible had Schemes been included in the Regulation; the fact that Schemes are often used for purposes other than insolvent restructurings; and that they are not always fully collective processes and thus do not really meet the criteria for proceedings included in the Regulations in any event.
There was a lone voice suggesting an alternative, however: appreciating the contentious nature of the issue, Paul Omar of Nottingham Trent University suggested a compromise whereby the jurisdictional bases for Schemes might be tightened up so that there should be more than just an arguable connection with the UK or benefit for creditors in order for UK courts to sanction such Schemes. I suspect that the other respondents will hope that such a compromise will not be necessary.
Other areas of apparent agreement between the respondents included a request for clarity over the proposed not-less-than 45 days timescale for foreign creditors to lodge claims; several parties had spotted that it was not clear whether this would apply, not only to submitting claims for dividend purposes, but perhaps also for voting purposes, which would be quite impractical, particularly for votes invited to commence proceedings. Several also asked for consideration to be given to providing mechanisms to avoid frivolous challenges to the opening of main proceedings, as these could create uncertainty and delays, which could de-rail some rescue or recovery plans.
Finally, I was interested in the response by the National Archives, which reported positively on the Gazette Platform project to improve free access to insolvency information “due for launch later this year”. The response included an illustration of one aspect of the planned new service: a timeline of insolvency events, so that all the key dates identified in Gazette notices for a single company (or insolvent individual?) appear on the same page – I like it!
More on the Scottish Bankruptcy Bill
The AiB’s equality questionnaire issued today (http://www.aib.gov.uk/publications/bankruptcy-bill-new-bankruptcy-scotland-act-2013-equality-questionnaire) includes a summary of the proposed changes in policy that are intended to materialise in the “New Bankruptcy (Scotland) Act 2013”. I haven’t cross-referred them to previous missives – and I am sure that readers who have attended an AiB stakeholder event will know these inside out – but I thought I would list those that made me raise an eyebrow:
• The AiB is continuing with the “No Income/No Asset” product for people who have been on income-related benefits for at least 6 months – and presumably this will have some benefits over LILAs, e.g. cheaper entry, swifter exit? Whilst I can see the advantages, it seems a shame that people in very low-paid employment might be barred access to a NINA.
• Mandatory advice from an approved money adviser prior to applying for any form of statutory debt relief – personally, I’m pleased to see this proposal repeated.
• “Altering the process for discharge of debtors so the trustee applies, showing cooperation with creditors (subject to appropriate appeals)” – how will this work? Does that mean that there will be no such thing as an automatic discharge period?
• Creditors will have to submit claims within 120 days of the trustee giving notice. “Where creditors do not submit their claims by this deadline, they would have to justify late submission or risk losing their dividend.” I see the advantage of putting some pressure on creditors to react more quickly, although personally I am not sure what is wrong with the current process (I’m guessing that Scotland is the same as E&W in this respect?) whereby a late-proving creditor cannot disturb a dividend, but can hope to catch up when the next dividend is declared. I also suspect that most of the difficulties in paying out complete dividends lie in creditors who have submitted claims but based on current information the trustee does not feel able to admit them.
Still, in general it’s all good stuff to see the AiB’s proposals gaining clarity and momentum.