Insolvency Oracle

Developments in UK insolvency by Michelle Butler

Tag Archives: 2016 Rules


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A Mixed Bag of Changes

Summer holiday anyone? 

Sadly, my attempts to clear my desk hit a speed bump with the landing of two SIs: the unexpected amendments to the IR16 and the not-so-unexpected-but-ETA-long-unclear amendments to the MLR17.  Add to that the HMRC change to the approved mileage rates, and the list of template changes is not far off three figures.

In this blog post, I set out what needs changing in the hope that I can save some of you the time working it all out.

The Insolvency (England and Wales) (Amendment) Rules 2026 can be found at: https://www.legislation.gov.uk/uksi/2026/561/contents/made

The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 can be found at: https://www.legislation.gov.uk/uksi/2026/621/contents/made

IR16 Changes

With effect from 21 June 2026, the following will be changed:

1. ADM: removal of appointment by fax options on QFCH out-of-hours appointment notice

2. ADM: removal of statement of date and time of Administrator’s appointment on Company/Directors appointment notices (both the form following notice of intention and the form with no notice of intention)

3. ADM: checklist change that electronic filings to court only require the delivery of one copy of each doc being filed (this change technically affects all case types, but I suspect that in practice ADM appointments is the only occasion it will be felt by IPs)

4. BKY: amendment to the R10.87 notice (notice that administration of the estate is complete, i.e. the form that accompanies the final report to creditors) as follows:

The Trustee will vacate office under Section 298(8) of the Act when, after the end of the prescribed period, the Trustee:

  • files with the Court a notice that the Trustee has given notice to the creditors under Section 331 of the Act, where the bankruptcy is based on a creditor’s petition; or
  • delivers to the Official Receiver a notice that the Trustee has given notice to the creditors under Section 331 of the Act, where the bankruptcy is based on a debtor’s application.

5. BKY: amendment to the final notice(s) to the court of objections to release or no objections received to reflect that the notice may go to the OR instead (in our doc packs, this is only a change to the notice header)

6. BKY: other docs/letters will probably need amending to reflect that in debtor’s application cases the final notice is destined for the OR only and that delivery of that notice to the OR results in the Trustee’s release (provided no objections were received)

7. BKY: checklist changes to reflect the above change to the closure process

Note that R10.87(6) requires a copy of the final notice to be sent to the OR in all cases (debtor’s application and creditor’s petition), so the only change is that the Rules now make clear that no delivery of the final notice to the court is required in debtor’s application cases and the delivery of the notice to the OR in those cases results in vacation of office and release (if no objections).

8. BKY: removal of the debtor’s address from progress (and final) reports

This is an odd change.  Dear IP 171 suggests that “identification details for the bankrupt” is a simple duplication of “identification details for the proceedings”, so the removal of the former makes no difference.  However, it does. 

R1.6 defines the ID of the bankrupt as their full name and residential address (unless disclosure is prohibited under Part 20), whereas it defines the ID of the proceedings as the bankrupt’s full name and the court/adjudicator’s reference.  Therefore, removing the ID of the bankrupt from R18.3 means there is no longer a requirement to state the bankrupt’s address in progress reports.

Why would they do this?  I have no idea!

Might they consider that it is a bit excessive to provide the bankrupt’s address long after the original order was made?  Maybe, but the requirement to ID the bankrupt remains in R1.29(c), which sets out the requirements for statutory notices to creditors etc.  This means that the R10.87 notice, which accompanies the final report, still needs to include the bankrupt’s address, so what is achieved by dropping it for progress reports?

This leads me to another question I’ve always had about the BKY rules.  What address is required to be disclosed on notices?  R1.6 suggests it is the bankrupt’s residential address at the time of the notice, but why?

Surely, the purpose of providing the bankrupt’s residential address is to help creditors track down their claim.  But what if the bankrupt moved after the commencement of the bankruptcy?  Would the Trustee need to provide to creditors the bankrupt’s new address (where the ID of the bankrupt is a statutory requirement)?  Wouldn’t this be a disproportionate disclosure of personal information?

If this is the kind of scenario that the Insolvency Service has sought to avoid by amending R18.3, then why did they not change R1.6 to reflect, say, that disclosure of the bankrupt’s residential address means their address at the time of the bankruptcy order?

9. ADM, BKY, CVL, WUC: perhaps check checklists to ensure they reflect R18.30, which now provides that, where there is a committee, any request for fees over that set out in the fees estimate should be directed to the committee (unless the court fixed the fee basis)

Dear IP explains that this was to address the scenario in which the creditors fixed the fee basis and later a committee was established.  The old R18.30 indicated that the additional fee request should go to the creditors, whereas now it makes clear that it should go to the committee.

While that change is fair enough, I think it resurrects an historic shady practice of first getting one’s fees approved by the general body of creditors and thereafter, often at the same meeting, establishing a committee and taking the view that the committee was not required to approve the fees as they had already been dealt with.  The Dear IP suggests that this practice – that the RPBs worked hard to put a stop to – is no longer dead.

The minor tweak of R18.30 also does not deal with the many other fees issues not satisfactorily addressed by the Rules… which brings me to another complaint.

Is that it?!

Dear IP 171 explains that these changes were identified from the first Rules Review and that there will be a consultation “in the coming quarter” in relation other proposals for change identified from that Review.

The first Rules Review report listed a number of other suggestions for change that appeared to me to be minor and technical, for example clarifying the use of “between” in Rs6.14 and 15.4, which in a previous Dear IP the Insolvency Service explained has a different meaning in each rule. 

The first Rules Review report also listed “various” other unspecified suggestions, which I hope included not a few of my own.  I submitted a consultation response for the first Rules review (MB-rules-review-response-04-07-21.pdf) in which I listed many issues that I believe are minor and/or technical.  While of course I accept that the Insolvency Service may disagree with the points I raised, I was disappointed to see that only one of my points – the R10.87 issue with a Trustee’s release in a debtor application case – has been included in the Amendment Rules.

What has happened to all the others?  Unless the forthcoming consultation makes clear that they are taking those forward, I’m afraid I have lost all enthusiasm for spending more of my own time pointing out the issues with the Rules.

MLR17 Changes

The MLR17 amendments take effect from 30 June 2026.  While very few will affect insolvency-related docs, I recommend taking a look at the following:

1. Purchaser AML checklist: amend any reference to the threshold for an occasional transaction, which is being changed from €15,000 to £12,000. 

Per the CCAB AML Guidance appendix for IPs, AML CDD is required by any Trustee in Bankruptcy who intends to carry out an occasional transaction (e.g. selling an asset), so the threshold change is relevant in those cases. 

Also, while technically sales dealt with by other office holders are not subject to the AML CDD requirements (unless the insolvent/MVL entity itself is AML-regulated), many IP firms’ procedures include a risk assessment of proposed asset sales in other cases and use the occasional transaction threshold as part of that assessment.  Therefore, you might also want to revisit those procedures.

The HVD threshold is also changing – from €10,000 to £10,000 – but I don’t think many firms expect to sell assets for suitcases full of cash, so I don’t imagine this change will need reflecting anywhere.

2. AML risk assessments (1): change “High Risk Third Countries” references to “FATF call for action countries”… but don’t forget their “grey list”

The Amendments have switched out High Risk Third Countries for the FATF call for action countries.  This means that strictly speaking EDD is no longer automatically required for clients established in most of the 25 countries that we’re used to focussing on, but instead only on the currently 3 “black list” countries (currently DPRK, Iran and Myanmar).

But of course the MLR Supervisors’ guidance encourages us to consider the risks inherent in a wider geographical scope in any event, so any client connection with any of the remaining 22 “grey list” countries may still be a risk factor that needs to feature in the firm’s Firm-Wide Risk Assessment and in case-specific risk assessment checklists/guidance.

Therefore, this change seems little more than cosmetic: I don’t think it has any practical effect on firm’s policies, procedures and controls, but if you update your docs to reflect the new terminology, it might demonstrate that you are clued up on the changes.

I suspect also that the .gov.uk High Risk Third Countries page may be renamed or abandoned in future, so you may wish to update any links in forms and guidance to https://www.fatf-gafi.org/en/countries/black-and-grey-lists.html

3. AML risk assessments (2): change “complex and unusually large” to “unusually complex or unusually large in each case given the nature of the transaction”

This is a verrrry subtle change, but again by making the change wherever this phrase appears in Firm-Wide Risk Assessments or case-specific risk assessment checklists/guidance, it shows you’re up-to-date.

HMRC Mileage Rate Changes

With effect from 6 April 2026, the HMRC-approved mileage rate has changed from 45p to 55p per mile (for the first 10,000 miles in a tax year): https://www.gov.uk/government/publications/rates-and-allowances-travel-mileage-and-fuel-allowances/travel-mileage-and-fuel-rates-and-allowances

Therefore, firms that seek to charge mileage as a Category 2 expense may wish to change their expense policy docs, expenses estimate templates and any other templates that quote the rate.

I also recommend that you have a close look at how you have proposed to set the mileage rate in the docs on existing cases where Category 2 expenses have already been approved.  For example, if your docs simply stated the rate at 45p per mile, there would be no automatic right for the firm to recoup mileage costs at 55p per mile even if the firm paid this to its employees.  However, if your docs noted that the rate is subject to change in line with any change in HMRC’s rates change, then you may feel confident to recoup mileage incurred since 6 April 2026 at 55p.

So is that everything?

Haha, of course not!

The Data (Use and Access) Act 2025 has been busy rolling out changes since it was made a year ago.  Again, most changes are – as far as I can tell – pretty inconsequential for day-to-day insolvency work… although I confess I’ve not read the full 276 pages plus 6 associated sets of regulations! 

Fortunately for me, Jo has agreed to take on that little project – thanks Jo! 😊


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The New Rules: Part 1… of many

0501-santa-fe

We’ve all heard overviews of the new Rules by now, but time is short – less than 5 months to go – and so it’s about time that we started delving into the nitty gritty.

 

Starting at the start

It would be wrong to assume that, with the exception of the SBEE changes that everyone has already talked about, the new Rules are simply the old rules in a different order. I thought that starting with the introductory Rules and definitions would be straightforward and frankly dull, but the new Rules are peppered with unexpected intricacies that make such assumptions dangerous.

 

New Rules, new approach to transitional provisions

No doubt you have heard that the new Rules are a departure from the tradition of leaving old cases to run out under the old rules. This has some advantages: no longer will we need to think twice about the date of an appointment before deciding how to approach a statutory matter, nor will we need to maintain old checklists, diaries and templates to cope with a variety of aged cases. Eliminating this complication should mean that we could run all cases, present and future, on one system… but is that true…?

 

If you don’t want the confusion, clear away pre-2010 CVLs (and MVLs)

The transitional provisions (Schedule 2 of the new Rules) refer specifically to cases commencing (i.e. orders in the case of bankruptcies (“BKYs”) and compulsory liquidations (“WUCs”)) before 6 April 2010:

  • BKYs & WUCs: this is the easy bit – the new Rules’ provisions on progress reports do not apply
  • CVLs: “a progress meeting required by section 104A of the Act” continues and “R4.223-CVL as it had effect immediately before 6 April 2010 continues to apply”
  • No specific reference to MVLs – did the Insolvency Service assume that all pre-2010 MVLs would be closed?

In pretty-much all other respects, the new Rules apply to these old cases.

What is “a progress meeting”?! Search all you like in the current Act and Rules, you won’t find one. And what is the relevance of S104A to meetings? S104A was the method used to replace the old S105 annual meetings by progress reports.

I think that the Insolvency Service planned for annual meetings to continue on old CVLs, as well as the old six-monthly R&Ps, which had been required under the old R4.223… but I accept that this takes a bit of a stretch of the imagination. Perhaps we will receive some clarity before April.

(UPDATE 23/03/17: the recently-issued Amendment Rules have changed the references to “progress meeting” and S104A so that it now refers to “meetings required by sections 93 and 105 of the Act”.  Therefore, it seems to me that annual meetings on pre-04/2010 MVLs and CVLs should continue to be convened after 04/2017.)

 

Perhaps also avoid calling a meeting to be held after 6 April 2017

Schedule 2 also includes transitional and savings provisions to enable meetings called before the Rules’ commencement date to be held after that date and for all the usual items resolved upon in meetings, e.g. fixing the basis of fees, to be decided. In a similar way, the old rules will apply also where an invitation to vote on a resolution by correspondence was issued prior to 6 April 2017 but where the deadline for voting falls afterward.

The Schedule includes potential catch-all references, e.g. “governance of the meeting”, stating that “the 1986 Rules relating to the following continue to apply”. Presumably, this will also cover matters such as adjournments.

It is not clear to me whether these transitional provisions will also work where a draft final report has been issued but where, say, R4.126(1D) kicks in after 6 April 2017. That is, what should happen where you have not complied with R4.49D, e.g. because something unexpected has occurred in the 8-week period? Should you follow old R4.126(1D) and issue a revised draft final report and fresh notice of a final meeting under the old rules? It looks like it to me, but I would prefer to avoid straddling the April date with any meeting convened under the old rules.

 

Other transitionals

Schedule 2 contains many other transitional and savings provisions, including:

  • old rules apply where any progress report became due pre-6 April 2017 but where it has not been issued by that date;
  • conversions from Administration (“ADM”) to CVL started under the old rules generally continue; and
  • all statements of affairs due on pre-6 April 2017 cases continued to be expected under the old rules.

 

(UPDATE 23/03/2017: the recently-issued Amendment Rules have resolved the issues explored in these next two sections.)

How long is one month?

The mind-bending Schedule 5, “Calculation of Time Periods”, also appears in Part 1 of the Rules.

It starts sensibly enough: “days” are calculated according to the CPR (there is no definition of “weeks” in the Rules).

There are two ways of calculating “months”, depending on whether the date specified is the start date (e.g. the time period within which a progress report should be issued or the progress report review period) or the end date. As I’m struggling to think of any specified end dates involving months, let’s look at a scenario where the start date is specified:

  1. the month in which the period ends is the specified number of months after the month in which it begins, and
  2. the date in the month on which the period ends is:
    • the date corresponding to the date in the month on which it begins, or
    • if there is no such date in the month in which it ends, the last day of that month.

If I’m reading this correctly, then one month from 10 April is 10 May – one month and one day.

 

Reporting transactions on a period-end date

Let’s say that you received some money on 10 April 2017 on a CVL that began on 10 April 2016. How would this be reported in your progress reports?

  • The review period of your first progress report would be 10 April 2016 to 10 April 2017, so you would report it.
  • The review period of your second progress report would be 10 April 2017 to 10 April 2018… err… so you would report it..?!

This cannot be right, can it?! It would skew all your R&Ps, as the c/f and b/f figures would not tally. In the same way, your time cost breakdowns would be confusing if you incurred any time costs on the threshold day.

What I’m struggling with is why the Insolvency Service has seen fit to redefine the length of a month: what was wrong with the way us mortals measure time?

(UPDATE 17/01/2017: the Insolvency Service responded to my query on their blog: “We have taken legal advice on this matter and will be looking at whether and how we can clarify the definition of a period expressed in months in Schedule 5 so that there is no day which occurs in two different reporting cycles.”  Phew!)

(UPDATE 23/03/2017: the recently-released Amendment Rules have fixed this – no more time-shifting: a month is a month long again.)

 

So what is the deadline for sending out progress reports?

Let’s take an ADM with a period end date of 10 April 2017. You have “one month after the end of the period” in which to deliver a progress report. Setting aside whether “after” starts the day after – which would add another day to your timescale – let’s assume that this period ends on 10 May 2017.

Ah, but there’s a catch. The report must be “delivered”, not “sent”, by this date. The new Rules define “delivery” as follows:

  • 1st class post is “treated as delivered on the 2nd business day after the day on which it is posted”; and
  • 2nd class post is “treated as delivered on the 4th business day after the day on which it is posted”.

Therefore, you need to factor the delivery times into your statutory timescale. If you left it until 9 May 2017 to put the progress reports in the post, you would be too late. When the new Rules refer to “deliver”, in fact they are referring to the time that the document is deemed to be received by the recipient.

 

So will every statutory deadline need to factor in the time to deliver the document?

Unfortunately, it is not that simple. For example, the new Rule on issuing progress reports in CVLs – R18.7 – sets the 2-month deadline with reference to the sending of the report, not its delivery. “Send” is not defined in the new Rules.  (UPDATE 23/03/17: the Amendment Rules have changed this “send” to “deliver”, so that all filing deadlines are now consistent.)

However, notwithstanding this inconsistency (I thought that making the rules consistent was one of the main objectives behind the new Rules!), you could do worse than factor time periods to deliver documents into your processes. At least that way you should always meet the deadlines (and you would avoid any debate over semantics -v- the perceived “spirit” of the Rules with your regulator).

 

Opting out

In her November Technical Update https://goo.gl/XBTAFV, Jo Harris summarised the new Rules under which creditors can send to office holders a notice asking to be excluded from most future standard circulars. This provision – along with the wider website use described below – are two significant changes introduced by the Small Business, Enterprise & Employment Act 2015 that appear in Part 1 of the Rules.

I won’t go into detail on these points, but I will just add to Jo’s observations:

  • Ensuring that you provide information on opting out in your “first communication with a creditor” could take some managing. You will need to make sure you include this when you first communicate with newly-discovered creditors. The new Rules are also silent on how this applies to a successor office holder.
  • As Jo mentions, you will need to designate opted-out creditors differently on your system, but also ensure that they are included in the exempted circulars, such as “notices of intended distribution” (R1.37)… or should that be “notices of proposed dividend” (R1.39)… or perhaps even “notices of intention to declare a dividend” (R14.29)!
  • If you are taking on a consecutive insolvency proceeding, you will need to ask the predecessor for a list of opted-out creditors, as you must exclude them from the defined circulars.

Personally, I don’t expect many creditors to opt out – after all, if they are not engaged enough to be interested in future updates, then are they likely to be sufficiently engaged to sign and return an opting-out notice? However, this new section will add yet another page (no really – the prescribed contents do go on a bit) of information to first circulars, which we will need to take care to get right.

 

Wider website use

Finally, this is something in the new Rules that put a smile on my face! Again as Jo explained in her Update, under the new Rules office holders will be able to issue to creditors just one notice explaining that future communications will only be uploaded to a website, rather than issue such a notice every time a communication is uploaded as is currently the case.

I have heard some unrest about this provision. Many feel that it will simply help to distant creditors even further from the process. I agree, it will. However, I do not feel that this is sufficient reason to avoid taking advantage of this provision. The Insolvency Service seems to have been charged with the aims of increasing engagement and reducing costs – two aims that are clearly in opposition to one another, as demonstrated also by the new Rules’ abolition of office holder-convened physical meetings – but I wonder how much engagement really is achieved by progress reports that are necessarily unwieldy in order to comply with the plethora of SIPs and statutory requirements. On the other hand, I think that the new provision allowing for website use alone most certainly will reduce costs.

 

Part 1: just the beginning

As I hope I’ve demonstrated, there are plenty of revisions in Part 1 of the new Rules that will require some thoughtful planning… and that generate more than the odd furrowed brow. I am looking forward to posing a few questions on the Insolvency Service’s forum, which we expect to be launched in the next few weeks.

If you would like to listen to my webinar that explores this Part in more depth and that will be available in the next few days, please drop a line to info@thecompliancealliance.co.uk.

The second webinar in this series, which will review the new Rules on Reporting and Remuneration, will be presented by Jo Harris in a few weeks’ time.