Monday, 6 April 2015

Small Business, Enterprise and Employment Act 2015: Insolvency

Insolvency Practitioners and amendment to D Report duties – COMMENCEMENT ORDER TO BE ANNOUNCED
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.
The Act has also now moved to increase the regulatory burden on Insolvency Practitioners and their report on directors’ conduct (which is usually a prerequisite before any disqualification proceedings are commenced).
In summary, and further to the previous blog, the changes as they affect IPs are as follows:
  1. An immediate report on the director’s conduct must be prepared by the Official Receiver or Administrator/Liquidator (“the Office Holder”) to the Secretary of State at the date of insolvency OR at any time within a period “ending with that date”.
  2. The report must be filed with the Secretary of State within 3 months or “within such longer period as the Secretary of State considers appropriate”.
  3. There is an additional obligation to update this report should the Office Holder become aware of any material changes or new evidence which should have been included in the original report.
  4. The initial conduct report is not required to be prepared and submitted by a second Insolvency practitioner appointment (for example where a liquidator is appointed after an administrator) unless new material comes to light which should have been included in the original conduct report.
  5. This will no doubt theoretically increase the reporting duties of Insolvency Practitioners at a time when their fees are subject to criticism and closer review.
Obviously for both Insolvency Practitioners and Directors these changes will have a serious impact and should you require advice on these changes please do not hesitate to contact Francis Wilks & Jones.