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New Insolvency Rules

  • Posted by Peter Anderson

The Government has announced that the publication of a new set of Insolvency Rules which will come into effect in April 2017.

Following lengthy consultation with insolvency practitioners, accountants and the legal sector, the Insolvency Rules have been re-written for the first time since 1986. The revised rules will incorporate changes made to insolvency regulations by Acts of Parliament over the past three decades, plus a number of new amendments intended to better reflect modern insolvency practices.

Efficient Case Handling

Most of the key changes introduced in the new regulations relate to rules governing communication between creditors and insolvent parties. These are as follows:


  • The obligation for creditors and insolvent parties to hold face to face meetings has been scrapped, freeing practitioners to manage proceedings remotely without having to bring distant parties together. Creditors, however, retain the right to request a meeting in person.
  • Electronic communications will now be permitted for formal correspondence between practitioners and creditors, removing the requirement to file all communication on paper.
  • Creditors will be able to opt out of receiving ongoing correspondence relating to a case, except any communication relating to a dividend.


The Insolvency Service argues that these changes will lead to proceedings progressing more efficiently, without being bogged down by delays relating to meetings being organised and paper communications being prepared and sent.


Another key change removes the requirement for a creditor to submit a claim for a dividend which amounts to under £1000. Insolvency practitioners will instead be able to use company records and documents to arrange payment automatically.

Industry Regulation

The new rules will also reflect changes to insolvency law made in legislation since 1986, such as in the Deregulation Act 2016 and Small Business, Enterprise and Employment Act 2016.


These include new powers of regulation handed to the the Insolvency Service over insolvency practitioners, such as the power to take action for charging unreasonable fees. The new Insolvency Rules also confirm that practitioners are to be authorised by professional bodies, and not directly by the government.


Other confirmed changes include the rules announced last year in relation to director misconduct, with expanded grounds for disqualification and a broader remit of matters a court can take into account when making a judgment.


Bankruptcy rules have also been altered to allow individuals to file online, seen as an important step in encouraging more people struggling with debt to consider bankruptcy as an option. The option of seeking a Debt Relief Order for personal debts up to £20,000 has also been confirmed, after the ceiling was raised from £15,000 last October.


The main provisions of the 1986 rules relating to company insolvency have been kept unchanged, including the options of administrative receivership and Company Voluntary Agreements (CVAs). The only tweak is that administrators will have to file a final progress report alongside a notice of commencement of liquidation proceedings.


If your business is facing issues with cash flow or debt, our Corporate Recovery team is committed to providing friendly support and advice with no obligation.



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