The Ministry of Justice has published the Pre-Action Protocol for Debt Claims (the “Protocol”), which comes into force on 1 October 2017. The Protocol applies to any business (including sole traders and public bodies) claiming payment of a debt (the “creditor”) from an individual (including a sole trader) (the “debtor”). It does not apply to business-to-business debts unless the debtor is a sole trader.

Aims of the Protocol

The aims of the Protocol are to:

The Insolvency Rules 2016 ("IR 2016") are due to come into force in England and Wales on 6 April 2017. Its purpose is to modernise and streamline the insolvency process in England and Wales in order to reduce the costs and potentially increase returns to creditors. IR 2016 incorporates the changes to insolvency law and practice brought about by the Deregulation Act 2015 and the Small Business, Enterprise and Employment Act 2015.

This article highlights the principal areas of change and their practical implications.

Background

This note addresses the changes to CVA's in the Rules.

Consolidation of the Rules

Rule 2.1 to 2.45 are applicable to CVA's (they were formerly found between 1.1 to 1.55 of the Insolvency Rules 1986 ("IR86")). There has been an element of consolidation of IR86 applicable to CVA's and relating to:

The opening of the retail water market next month (April 2017) will change the water sector on a fundamental level with most businesses in England being able to choose their preferred suppliers. There is no doubt that the opening of the market presents both opportunities and risks for water suppliers. The already low margins in the industry will naturally be squeezed through competition, but the race for new business could also drive behaviours that further damage suppliers' profitability.

Potential pitfalls of contracting in the new market

Pre-pack administrations are becoming more common. Four Holdings' purchase of Agent Provocateur illustrates the attraction of pre-packs — the ability to cherry-pick the best assets, acquire the goodwill of a well-known business that continues to trade, and retain its key staff without having to take on liabilities to creditors —and why existing management is likely to be supportive.

This article was first published in Building Magazine, Issue 10, 10 March 2017.

Does an adjudication enforcement trump an insolvency moratorium? A recent case in the TCC has provided clear guidance on the issue.

Creditors' Bankruptcy Petition

The rules for these petitions are contained in 10.6 to 10.33. This section also covers IVA supervisors making a petition. The good news is that under the new Rules, there are very few changes to the current procedure.

As well as the new Insolvency Rules coming into force on 6 April, there are over 100 amendments to the Insolvency Act that will come into force as well. These amendments are provisions from the Small Business, Enterprise and Employment Act 2015 ("SBEEA") and the Deregulation Act 2015 ("DA"), and are designed to facilitate and run alongside the new Rules.

Applications to Set Aside a Statutory Demand

Set Aside Applications were previously governed by rules 6.4 and 6.5. They are now governed by Rules 10.4 and 10.5.

Rule 10.4 - Application to Set Aside Statutory Demand

In summary, Rule 10.4 provides that a debtor may, after having been served with a Statutory Demand, make an application to court to have it set aside.

Disclaimer - Rules 19.1 - 19.11

The Rules relating to Disclaimer remain largely unchanged, except for bankruptcy and liquidation being included in the same section and some minor updates to the Act. The deadlines for all actions remain unchanged.

19.8 - Application for permission to disclaim in bankruptcy (section 315(4))

The notes in this section refer to changes within the Act as amended by the Deregulation Act 2015 and the Enterprise and Regulatory Reform Act 2013.