Draft Deregulation Bill - Insolvency measures - Call for Evidence

Dear Stakeholder,

Draft Deregulation Bill – Insolvency measures – Call for Evidence

The draft Deregulation Bill was published on 1 July 2013. https://www.gov.uk/government/publications/draft-deregulation-bill  It contains a broad range of measures which are intended to reduce the burden of regulation on business, civil society, other organisations (including public sector bodies) and individuals. Many of the provisions of the draft Bill are concerned with specific areas of activity such as health and safety, rights of way, reduction in the qualifying period for the right to buy council housing, household waste, education and the administration of justice. The insolvency measures contained in the Bill are outlined below.

Pre-legislative scrutiny - The Joint Committee, chaired by Lord Rooker, was appointed by both Houses of Parliament on 17 July 2013 to conduct pre-legislative scrutiny into the draft Deregulation Bill and the policies underpinning it. The Joint Committee comprises six MPs and six Peers. It will take written and oral evidence and make recommendations in a report to both Houses. The Joint Committee is required to make its report by 16 December 2013.

Call for Evidence - The Joint Committee has invited interested organisations and individuals to submit written evidence as part of the inquiry. This first Call for Evidence focuses principally on the generic provision and general questions about the draft Bill. This is an open Call for Evidence on any issues about the draft Bill you wish to raise. Questions are provided on the attached document on the issues the Committee has initially identified as interesting but further, more specific, Calls for Evidence may be published later as other lines of enquiry emerge.

The Call for Evidence can be found at: http://www.parliament.uk/business/committees/committees-a-z/joint-select/draft-deregulation-bill/publications/

Insolvency measures – Your attention is particularly drawn to the insolvency provisions included in the draft Bill which are as follows;

Schedule 5 – Part 1 – paragraphs 1-3 – Deeds of Arrangement (explanatory notes 268-271)

• Repeal of Deeds of Arrangement Act 1914.

Schedule 5 – Part 2 – paragraphs 4-7 - Administration of Companies (explanatory notes 272-281)

• Enabling a company or the directors to appoint an administrator despite the presentation of a winding-up petition if the petition was presented during an interim moratorium.
• Removal of requirement to give notice of intention to appoint an administrator to persons themselves not entitled to appoint an administrative receiver or administrator in certain circumstances.
• Amendment to paragraph 98 of Schedule B1 to make it clear that where an administrator has been appointed by a floating chargeholder or by the company or directors and there are insufficient assets to enable a distribution to be made to unsecured creditors (other than under the prescribed part) there is no requirement for all creditors to resolve to give the administrator his/her release.

Schedule 5 – Part 3 – paragraphs 8-10 – Winding up of companies (explanatory notes 282-286)

• Removal of power of court to order payment into bank of England of money due to company
• Insertion of new subsection which provides that when a winding-up order is rescinded, the liquidator has his or her release with effect from the time the court may determine.

Schedule 5 – Part 4 – paragraph 11 - Disqualification of unfit directors of insolvent companies (explanatory notes 287-291)

• Amendment to section 7(4) of the Company Directors Disqualification Act 1986 to enable the Secretary of State or official receiver to request information that they consider relevant to a person’s conduct as a director directly from any person, including company officers.

Schedule 5 – Part 5 – paragraphs 12-16 – Bankruptcy (explanatory notes 292-303)

• Amendment to permit the court to appoint the official receiver or any insolvency practitioner as interim receiver in all circumstances.
• Removal of the requirement for the bankrupt to submit a statement of affairs in creditors petition cases unless requested by the official receiver.
• Amendment of section 307 of the Insolvency Act 1986 to facilitate banks offering accounts to undischarged bankrupts by taking bankers outside the scope of section 307(4) with a new provision preventing a trustee making a claim against a bank where the bank has not been served with notice by the trustee regarding after acquired property.

Schedule 5 – Part 6 – paragraphs 17- 22 – Authorisation of insolvency practitioners (explanatory notes 304-308)

• Repeal of provision for authorisation of nominees and supervisors in relation to voluntary arrangements, and insertion of a new provision enabling the Secretary of State to recognise bodies to authorise insolvency practitioners to act only in personal insolvency procedures or corporate insolvency procedures, in addition to both procedures as is the case now.
• Repeal of provision for authorisation of insolvency practitioners to be granted by competent authority.

Schedule 5 – Part 7 – paragraphs 23- 27 - Liabilities of administrators and administrative receivers of companies and preferential debts of companies and individuals (explanatory notes 309-312)

• Repeal of one element of the priority given to employees’ wages in certain insolvency proceedings as the type of employee contract it relates to no longer exists.

Deadline for submissions - The Joint Committee would appreciate written submissions on any of the questions on which you have evidence to contribute, or on any other matters relevant to the draft Bill. It is not necessary to address every question. The deadline for submissions is Monday 16 September. Please attach your evidence as a word document using this link: http://www.parliament.uk/business/committees/committees-a-z/joint-select/draft-deregulation-bill/written-evidence/submit-evidence-form/

Updates will be published on the following webpage: http://www.parliament.uk/business/committees/committees-a-z/joint-select/draft-deregulation-bill/

Thank you in advance for your contributions.

Nick

Nick Howard | Director of Policy | Policy Directorate | The Insolvency Service | nick.howard@insolvency.gsi.gov.uk | 4 Abbey Orchard Street, London, SW1P 2HT | 020 7637 6509 | www.insolvency.gov.uk