Statement of Insolvency Practice 3A(Scotland) on Trust Deeds - consultation
In 2011 the Recognised Professional Bodies (RPBs) moved to a principles basis for SIPs, combined with key compliance standards and with few references to legislation.
Trust Deeds are subject to the common law of Scotland and there is limited legislation to regulate the product. The profession has worked closely with the Accountant in Bankruptcy, with creditors and with other stakeholders in developing changes to the process. Trust Deeds have been the subject of two working parties spanning a period of over 18 months on which there was representation by IPs and th ICAS, the aim being to identify and agree on changes that the profession will make to provide a more transparent and better process.
Due to the limited legislation to regulate the Trust Deed process the RPBs have concluded in principle that there is a requirement for SIP3A to remain a prescriptive SIP, thereby providing much more detail on what is expected in a Trust Deed than would normally be provided for in a SIP. It is believed that by doing so the interests of creditors and of the debtor will be better served.
ICAS has shared a draft copy of the SIP with the Accountant in Bankruptcy and some changes offered by her have been incorporated. SIP3A has been issued for a consultation period of four weeks which ends on Friday 19 April 2013. The consultation document and questionnaire can be accessed at the following links -
Revised SIP3A(Scotland)
SIP3A(Scotland) questionnaire
JIC consultation on SIP16(Scotland) and SIP3(E&W) - individual voluntary arrangements
The Joint Insolvency Committee (JIC) is seeking views on revised versions of SIP3(E&W) and SIP16(Scotland). The JIC is also reviewing SIP13 - Acquisition of assets of insolvent companies by directors. The committee has chosen to review the SIP given the concerns voiced in some quarters about connected party transactions and phoenixism.
SIP3(E&W) - IVAs
IVAs are now the most common form of statutory solution for personal debt problems in England and Wales and as it has been some considerable time since SIP3(E&W) was revisited, the JIC decided in consultation with the regulators and the insolvency profession to carry out a review of SIP3(E&W).
The changes to SIP3(E&W) include the following:
- the drafting of the SIP now recognises that IVAs and CVAs are very different processes, so this revision focuses purely on IVAs.
- SIP3 CVA is currently being reviewed by the JIC and it is the committee's aim that both SIP3 IVA and SIP3 CVA for England and Wales will be introduced at the same time.
- the SIP focuses on the statutory responsibilities of the insolvency practitioner when acting as nominee or supervisor, but also recognises that diverse practices from sole practitioners to volume providers may offer IVAs and the SIP should work for all sizes of insolvency practice.
- the revised SIP adopts the principles and key compliance standards of all new SIPs and all legislative references have been removed.
Given that the look and feel of the revised SIP3(E&W) differs significantly from the current version of the SIP, the consultation period for this SIP will be 8 weeks. Comments on the revised draft should be submitted by Tuesday 14 May 2013. The consultation document and questionnaire may be accessed at the following links -
Revised SIP3(IVA)
Response form SIP3
SIP16(Scotland) - pre packaged sales in administrations
The reasons for this revision are as follows:
- to absorb the requirements contained in Dear IP 42 in the SIP so as to avoid insolvency practitioners having to follow two documents when completing SIP16 statements. Once the new SIP16(Scotland) is in force the Insolvency Service will withdraw Dear IP 42.
- to include in the SIP additional disclosures which have been identified by the Insolvency Service during their reviews of SIP16 statements as useful to aiding the understanding of the pre pack by creditors and others.
- to adopt the format of principles and key compliance standards used in new and revised SIPs since May 2011.
Revised SIP16(Scotland)
Response form SIP16
Please send your comments on the revised SIP3(E&W) and SIP16(Scotland) by Tuesday 14 May 2013.
Completed responses and comments should be emailed to - insolvencyconsultation@icas.org.uk or sent by post to:
Setutsi van Lare, ICAS, CA House, 21 Haymarket Yards, Edinburgh EH12 5BH
Bankruptcy Law Reform – Scotland
The AiB has issued an update on some of the provisions to be included in the forthcoming Bankruptcy Law Reform Bill. These mostly relate to changes to the Protected Trust Deed process and amendments to the Debt Arrangement Scheme (DAS) Regulations. Creditor petitions will continue to be dealt with by the courts, debts incurred within 12 weeks prior to bankruptcy will continue to be included as creditors and Commissioners will be retained. Acquirenda is to be standardised at a year in all personal bankruptcy processes.
The proposal to legislate for a minimum dividend in Trust Deeds has been dropped. There are provisions in the PTD Regulations providing that:
- Pre Trust Deed fees and outlays cannot be paid but must be included as creditors
- Trustees will no longer be able to charge their fees at an hourly rate in Trust Deeds, instead they will be required to charge a single, fixed, upfront fee augmented by further remuneration based on a percentage of funds ingathered through the administration of the case
- Equity will be frozen in a dwelling-house at the date the Trust Deed is granted
Further detail can be obtained by clicking on the link above.
AiB stakeholder events are expected to be held in March and April details of which will be released on the AiB website shortly.
Employment rights - increases in limits
Changes in the limits to payments made under employment rights legislation came into effect on 1 February 2013:
Rights protected under the Employment Rights Act 1996 -
- the limit on the weekly amount payable under the insolvency provisions of the Act is increased to £450
- the limit on the statutory guarantee payment payable to employees laid off work is increased to £24.20 per day
- the minimum basic award for unfair dismissal is increased to £5,500
- the maximum compensatory award for unfair dismissal is increased to £74,200
- the maximum amount of a week's pay for calculating the basic or additional award for unfair dismissal or for redundancy payment is increased to £450
Rights protected under the Trade Union and Labour Relations (Consolidation) Act 1992 -
- the award in relation to unlawful inducement relating to trade union activities or collective bargaining is increased to £3,600
- the minimum basic award for unfair dismissal is increased to £5,500
- the minimum compensation in relation to exclusion from a union in contravention to section 174 is increased to £8,400
Details can be accessed from the Employment Rights (Increase of Limits) Order 2012 (SI2012/3007).
Consultation on proposed changes to TUPE Regulations
The government has issued a consultation on proposed changes to TUPE Regulations. The consultation is on a range of proposals designed to ease the transfer process and to change the wording of particular provisions in TUPE to more closely reflect the Acquired Rights Directive and the case law of the Court of Justice of the European Union. The consultation which closes on 11 April 2013 may be accessed by clicking here.
HMRC National Insolvency Unit, Liverpool - new telephone number
HMRC advises that the National Insolvency Unit (NIU) Liverpool has had a new telephone system installed. This has resulted in a change of number for the NIU Helpdesk. The new Helpdesk number is 03000 540 808. No area code is required before dialling 03000. The Insolvency Public Notice will be updated with the new number as soon as possible.
Liquidation of Quantum Distribution (UK) Limited
Insolvency practitioners need to give careful consideration on whether or not it is appropriate to engage the services of the solicitor acting for the petitioning creditor as is demonstrated by the Opinion of Lord Hodge in the Liquidation of Quantum Distribution (UK) Limited. Lord Hodge remarked that insolvency practitioners are required to act in the best interests of the creditors as a whole. He was also concerned that the supervisory procedures of the court through the Court Reporter process had not been followed properly and requested that the Professional Bodies should bring the lessons of the case to the attention of their Members. Housing (Scotland) Act 2010 - Insolvency appointments in respect of Registered Social Landlords
The attention of IPs is drawn to the requirement under the Housing (Scotland) Act 2010 for the Scottish Housing Regulator to be notified both before and after any insolvency appointment in respect of Reigstered Social Landlords. Failure to issue the required notification will render the appointment invalid.
Further details can be accessed on the Insolvency Technical Legal Updates page.