Sanction of Liquidator’s Actions – COMMENCEMENT DATED 26 MAY 2015
This is part of a series of posts on the Small Business, Enterprise & Employment Bill that has now come into force on 26 March 2015 following the grant of Royal Assent and is now the Small Business, Enterprise and Employment Act 2015 (“the Act”).
This series of posts is intended to update the readers of the key changes, which should radically transform the transparency of the marketplace as regards the operation, control, ownership and risk associated to limited companies in the UK.
We have not addressed all of the issues described in our previous posts, to avoid duplication, but would welcome any queries from the reader in this respect.
The commencement of these changes is different dependant on which part of the Act is being reviewed (Section 164 of the Act defines commencement) and we have highlighted below the relevant commencement dates. Where we below stated “to be announced” this means it has not yet come into force and will commence upon the making of a Commencement Order.
The changes as set out below will be extremely important to all directors, companies and individuals with business in the future and it cannot be emphasised too strongly how important it is that you are prepared for these proposed changes. At Francis Wilks & Jones we can advise on all matters subject to these posts.
Historically, where the appointed Liquidator wished to deal with creditors or issue proceedings, there were strict rules (Schedule 4 to the Insolvency Act 1986) which governed which decisions required the involvement of creditors (referred to as obtaining creditors’ “sanction” of such proposals). Similar rules apply to Trustees in Bankruptcy (as set out in Schedule 5 to the Insolvency Act 1986).
This often involved a timely and expensive (in terms of the fees of the Liquidator and his/her staff) process, the result of which there was often little or no response from creditors, who generally as disinterested in the procedure of the liquidation.
The Act has assisted the Liquidator and creditors by further limiting the areas requiring creditors’ sanction, which should in turn also reduce the Liquidator’s costs incurred in dealing with such steps.
This provision will commence very shortly and so Insolvency Practitioners are well advised to consider whether any sanction is strictly necessary for any actions after 26 May 2015. At Francis Wilks & Jones we can assist and advise on such matters.
