We published a blog update in May informing readers of the staggered implementation of the Small Business, Enterprise and Employment Act 2015 (the “SBEEA”). The SBEEA received Royal Assent on 26 March 2015 and a previous client alert, published in March, which detailed certain provisions of the SBEEA can be found here.
Further provisions of the Act came into force on 1 October 2015, along with a number of other aspects from different pieces of legislation affecting the insolvency industry. A summary of these changes are listed below:
Small Business, Enterprise and Employment Act 2015
Certain changes referred to at headings 1, 4 and 5 of our March client alert have now been brought into force. In summary, these include:
- Power for administrator to bring claims for fraudulent or wrongful trading;
- Power for liquidator or administrator to assign causes of action;
- Provisions as to the application of proceeds of office-holder claims;
- Amendments to the regulation of insolvency practitioners;
- Power to establish single regulator of insolvency practitioners; and
- New provisions on directors’ disqualification.
Deregulation Act 2015
Under the Deregulation Act 2015 (Commencement No.3 and Transitional and Saving Provisions) Order 2015 (the “Order”), the following key changes to the Deregulation Act came into force:
- Where directors or a company seek to make an out-of-court administration, the Order clarifies the provisions under paragraph 26 of Schedule B1 to the Insolvency Act 1986 (“IA 1986”) that a notice of intention to appoint administrators need only be given to “prescribed persons” where there are qualifying floating charges over that company’s assets;
- Administrators may now be released without seeking the approval of unsecured creditors where a statement has been made under paragraph 52(1)(b) of Schedule B1 to the IA 1986;
- Liquidators may now be released from a winding up order where that winding up order has been rescinded, with the release taking effect from a time determined by the court;
- Section 151 of the IA 1986 has been repealed, this section allowed the court to order payment of monies due to a company to be made into the Bank of England;
- In relation to after-acquired property of a bankrupt, the trustee in bankruptcy must serve notice on the banker in order to have any remedy against the bank if it pays out after-acquired property, regardless of whether the banker had notice of the bankruptcy;
- Repeal of the Deeds of Arrangement Act 1914;
- In relation to an application for making a director’s disqualification order, the Secretary of State or official receiver now has the power to require “any person” to provide them with company documents and records. Previously only the company’s liquidator, administrator or administrative receiver could be requested to provide or procure such information/documents;
- Insolvency practitioners can now be “partially authorised”. Insolvency practitioners who are partially authorised can only act in relation to companies or individuals; and
- The Secretary of State will no longer directly authorise insolvency practitioners, who will now be authorised by recognised professional bodies.
Insolvency Act 1986 (Amendment) Order 2015
- The level required for a creditor to bring a bankruptcy petition has increased from £750 to £5,000.
Insolvency Proceedings (Monetary Limits) (Amendment) Order 2015
- To be eligible for a Debt Relief Order, individuals must:
- owe up to £20,000 (previously £15,000);
- have assets worth up to £1,000 (previously £300); and
- have a maximum monthly surplus income of £50 (this requirement has remained unchanged).
Insolvency Practitioners (Amendment) Regulations 2015
- The regulations simplify the record-keeping requirements of insolvency practitioners, with insolvency practitioners now only needing to maintain records sufficient to explain decisions that “materially affect” the appointment, and the administration of the appointment by the insolvency practitioner and their staff.
Insolvency (Amendment) Rules 2015
- Insolvency practitioners must provide to creditors a written fee estimate and details of expenses which will, or are likely to, be incurred during the insolvency, before requesting creditors (or the court) to fix the basis of their remuneration on a time cost basis. If an insolvency practitioner anticipates that his fees will exceed the estimate, he must revert to creditors for their approval.
Enterprise and Regulatory Reform Act 2013 and Insolvency (Protection of Essential Supplies) Order 2015
- Under powers granted by the Enterprise and Regulatory Reform Act, this Order extends the protection already afforded to supplies of gas, electricity, water and telecommunications, to supplies of communications services and any supply facilitating anything to be done by electronic means. The protection takes the form of provisions which void contract terms that allow suppliers of relevant services to withdraw their supply or demand additional payments in return for continued supply of these essential services on a corporate and a personal insolvency. These changes will apply to contracts entered into on or after 1 October 2015.
If you would like any further detail on these changes and their impact, please do not hesitate to contact someone in the Commercial Restructuring & Bankruptcy team.