1 Citation and commencement

(1)    These Rules may be cited as the Insolvency (Amendment) (No 2) Rules 2002 and shall come into force on 1st January 2003.

(2)    References in these Rules to “the commencement date” are to the date referred to in paragraph (1).

NOTES
Initial Commencement
Specified date

Specified date: 1 January 2003: see para (1) above.

2 Interpretation

2Interpretation

(1)    In these Rules references to the “principal Rules” are to the Insolvency Rules 1986 and a Rule referred to by number alone means the Rule so numbered in the principal Rules.

(2)    These Rules shall be construed as one with the principal Rules.

NOTES
Initial Commencement
Specified date

Specified date: 1 January 2003: see r 1(1).

3 Amendments to Part 1 of the principal Rules

3Amendments to Part 1 of the principal Rules

(1)    Subject to paragraph (2), Part 1 of the principal Rules has effect subject to the amendments set out in Part 1 of the Schedule to these Rules.

(2)    The amendments to Part 1 of the principal Rules set out in Part 1 of the Schedule to these Rules do not apply in relation to a voluntary arrangement under Part I of the Act where—

(a)    a proposal is made by the directors of a company and before the commencement date the intended nominee has endorsed a copy of the written notice of the proposal under Rule 1.4(3);

(b)    a proposal is made by the liquidator or the administrator (acting as the nominee) and before the commencement date the liquidator or administrator (as the case may be) has sent out a notice summoning the meetings under section 3 of the Act as required by Rule 1.11; or

(c)    a proposal is made by the liquidator or the administrator of a company (not acting as the nominee) and before the commencement date the intended nominee has endorsed a copy of the written notice of the proposal under Rule 1.12(2);

and Part 1 of the principal Rules without the amendments made in Part 1 of the Schedule to these Rules shall continue to apply in such cases.

NOTES
Initial Commencement
Specified date

Specified date: 1 January 2003: see r 1(1).

4 Amendments to Part 4 of the principal Rules

4Amendments to Part 4 of the principal Rules

(1)    Subject to paragraph (2), Part 4 of the principal Rules has effect subject to the amendments set out in Part 2 of the Schedule to these Rules.

(2)    The amendments to Part 4 of the principal Rules set out in Part 2 of the Schedule do not apply in relation to—

(a)    a winding up by the court where the petition on which the winding-up order was made was presented prior to the commencement date; or

(b)    a voluntary winding up where the resolution for winding up was passed prior to the commencement date;

and Part 4 of the principal Rules without the amendments made in Part 2 of the Schedule to these Rules shall continue to apply in such cases.

NOTES
Initial Commencement
Specified date

Specified date: 1 January 2003: see r 1(1).

Liquidation97 Insolvency Law97

5 Amendments to Part 5 of the principal Rules

5Amendments to Part 5 of the principal Rules

(1)    Subject to paragraph (2), for Part 5 of the principal Rules there are substituted the provisions set out in Part 3 of the Schedule to these Rules.

(2)    The substituted Part 5 of the principal Rules set out in Part 3 of the Schedule to these Rules does not apply in relation to a voluntary arrangement under Part VIII of the Act where a proposal is made by a debtor and before the commencement date the intended nominee has endorsed a copy of the written notice of the proposal under Rule 5.4(3) and Part 5 of the principal Rules as it stood before the commencement of these Rules shall continue to apply in such a case.

NOTES
Initial Commencement
Specified date

Specified date: 1 January 2003: see r 1(1).

6 Amendments to Part 6 of the principal Rules

6Amendments to Part 6 of the principal Rules

(1)    Subject to paragraph (2), Part 6 of the principal Rules has effect subject to the amendments set out in Part 4 of the Schedule to these Rules.

(2)    The amendments to Part 6 of the principal Rules do not apply in relation to a bankruptcy where the petition was presented prior to the commencement date and Part 6 of the principal Rules without the amendments made in Part 4 of the Schedule to these Rules shall continue to apply in such a case.

NOTES
Initial Commencement
Specified date

Specified date: 1 January 2003: see r 1(1).

7 Amendment to Rule 13.9

7Amendment to Rule 13.9

After paragraph (2) of Rule 13.9 there is inserted—

“(3)    A reference to an “authorised person” is a reference to a person who is authorised pursuant to section 389A of the Act to act as nominee or supervisor of a voluntary arrangement proposed or approved under Part I or Part VIII of the Act.”.

NOTES
Initial Commencement
Specified date

Specified date: 1 January 2003: see r 1(1).

8 Amendments to Schedule 4 to the principal Rules

8Amendments to Schedule 4 to the principal Rules

(1)    In the index to forms in Schedule 4 to the principal Rules—

(a)    for the entries relating to Forms 1.1 to 1.4 there are substituted the entries set out in Part 5 of the Schedule to these Rules; and

(b)    after the entry for Form 5.4 there is inserted on a new line “5.5 Documents to be submitted to court under Rule 5.14”.

(2)    Subject to paragraphs (3) and (4), in Schedule 4 to the principal Rules—

(a)    for Forms 1.1 to 1.4 there are substituted Forms 1.1 to 1.19 as set out in Part 6 of the Schedule to these Rules;

(b)    for Forms 5.2 and 5.3 there are substituted Forms 5.2 and 5.3 as set out in Part 6 of the Schedule to these Rules; and

(c)    after Form 5.4 there is inserted Form 5.5 as set out in Part 6 of the Schedule to these Rules.

(3)    In any case to which paragraph (2) of Rule 3 of these Rules applies, sub-paragraph (a) of paragraph (2) of this Rule shall not apply and the forms prescribed for use in relation to voluntary arrangements under Part I of the Act as they stood before the coming into force of these Rules shall continue to be used.

(4)    In any case to which paragraph (2) of Rule 5 of these Rules applies, sub-paragraph (b) of paragraph (2) of this Rule shall not apply and the forms prescribed for use in relation to voluntary arrangements under Part VIII of the Act as they stood before the coming into force of these Rules shall continue to be used.

NOTES
Initial Commencement
Specified date

Specified date: 1 January 2003: see r 1(1).

9 Amendments to Schedule 5 to the principal Rules

9Amendments to Schedule 5 to the principal Rules

In Schedule 5 to the principal Rules the entries relating to Rule 1.30 and Rule 5.30 are deleted.

NOTES
Initial Commencement
Specified date

Specified date: 1 January 2003: see r 1(1).

Signature

Irvine of Lairg C

22nd October 2002, I concur, on behalf of the Secretary of State,

Melanie Johnson,

Parliamentary Under-Secretary of State for Competition, Consumers and Markets,

Department of Trade and Industry

29th October 2002,

EXPLANATORY NOTE

EXPLANATORY NOTE (This note is not part of the Rules)

These Rules make a number of changes to the Insolvency Rules 1986. These are set out in the Schedule to these Rules.

Part 1 of the Schedule to these Rules makes a number of amendments to the provisions of Part 1 of the Insolvency Rules which relate to company voluntary arrangements. Many of these are consequential on amendments made to the Insolvency Act 1986 by the Insolvency Act 2000. In particular—

(a)    a number of amendments are made in consequence of the bringing into force of section 389A of the Insolvency Act 1986 which creates the possibility of qualified persons other than insolvency practitioners acting as nominees or supervisors in relation to company voluntary arrangements (see for example, paragraph 5 of the Schedule);

(b)    provision is made to permit the holding of the meetings of members and creditors on different days (previously they had to be held on the same day) (see paragraph 6 of the Schedule which amends Rule 1.13(3) of the Insolvency Rules 1986);

(c)    the rules regarding creditors' entitlement to vote are amended so as to provide that creditors with unliquidated claims are always entitled to vote for £1 unless the chairman of the meeting agrees to put a higher value on the claim. This means that creditors with liquidated or unliquidated claims will be bound by an arrangement if for some reason they do not receive notice of the meeting;

(d)    a number of amendments are made in consequence of the changes to the Insolvency Act 1986 by the insertion of a section 4A which provides that a voluntary arrangement is to have effect notwithstanding that the members of the company do not vote in favour of it (see for example paragraphs 13 and 14 of the Schedule to the Rules);

(e)    a number of provisions are introduced in connection with the bringing into force of the provisions of the Insolvency Act 2000 which insert section 1A and Schedule A1 into the Insolvency Act 1986. These provisions allow the directors of eligible companies (broadly speaking, small companies) to obtain a moratorium with a view to obtaining the approval of a proposal for a voluntary arrangement.

Part 2 of the Schedule to these Rules makes a number of amendments to Part 4 of the Insolvency Rules 1986 so as to enable liquidators to recover the costs of bringing certain actions (eg under section 214 of the Insolvency Act 1986) from the assets of the company.

Part 3 of the Schedule to these Rules substitutes a new Part 5 of the Insolvency Rules 1986 which relates to individual voluntary arrangements. The new Part 5 takes account of amendments made to Part VIII of the Insolvency Act 1986 by the Insolvency Act 2000 which amends the provisions of the Insolvency Act 1986 relating to individual voluntary arrangements. The same amendments regarding voting rights are made as in relation to company voluntary arrangements.

Part 4 of the Schedule makes amendments to Part 6 of the Insolvency Rules 1986 so as to enable a trustee in bankruptcy to recover from the bankruptcy estate the costs of bringing certain actions (e.g actions under section 339 (transactions at an undervalue)).

Parts 5 and 6 of the Schedule make a number of amendments to Schedule 4 to the Rules which sets out the forms for use in connection with insolvency proceedings. Amendments are made to the forms for use in connection with voluntary arrangements.

The costs to business of the commencement of the provisions of the Insolvency Act 2000 are detailed in the Regulatory Impact Assessment prepared for that Act. Copies of the assessment are available from the Policy Unit, The Insolvency Service, 21 Bloomsbury Street, London WC1B 3QW.

Equity & Trusts99 Trusts & Trustees99 Company Voluntary Arrangements97 Consideration of Proposal for CVA92 Insolvency Law97