In an article published in icas.com on April 6, 2016, Mr. David Menzies, the Director of Insolvency covered the changes to Northern Ireland’s insolvency legislation. The modifications affect insolvency cases, the authorisation of IP’s in representing their clients, both companies and individuals, and the new measures introduced to strengthen the regulatory framework to further elevate the trust for the profession.
Changes to Northern Ireland’s insolvency regulations took effect on 1 April 2016
Some major changes were implemented to Northern Ireland’s insolvency regulations by way of commencement provisions to the Insolvency (Amendment) Act (Northern Ireland) 2016. The said changes have a big impact on the Insolvency regulatory system and the insolvency practitioners as it took effect on 1 April 2016. A number of these changes are similar to the provisions that had already been introduced in England, Wales and Scotland in October 2015.
The following are the key changes that affect insolvency cases:
- Liquidators are allowed to make negotiation calls for the debts and claims of their clients without sanction from the Court, creditors or company members.
- Trustees in bankruptcy are allowed to seek arbitration or negotiate debts and claims due to bankruptcy without the aid of a sanction from the Court, creditors, or the Department of Enterprise, Trade and Investment.
- Guidelines have been set in determining whether liabilities in tort are verifiable for bankruptcy, company liquidations and administrations. It has also set the rules in determining the date up to which debts incurred by companies which have successively been in liquidation and administration or vice versa are to be treated as debts for the purposes of the Insolvency (Northern Ireland) Order 1989 (the Insolvency Order).
- It abolishes the provision provided under the Insolvency Order which treats arrears due in respect of a non-existent holiday scheme as wages or salary.
- It abolishes Chapter 1 of Part 8 of the Insolvency Order that deals with deeds of arrangement.
- It amends Article 280 of the Insolvency Order to aid banks in offering accounts to undischarged bankrupts. This will protect banks from recovery action by trustees in bankruptcy by making sure that they are immediately notified of a debtor’s bankruptcy.
- It amends Article 10(2) of the Insolvency (Northern Ireland) Order 2005 to authorize the Department to dispense orders permitting both the societies registered under the Credit Unions (Northern Ireland) Order 1985 and the societies registered under the Industrial and Provident Societies Act (Northern Ireland) 1969 to go into a company arrangement or administration.
- It amends Article 24(7) of the Insolvency (Northern Ireland) Order 2005 to provide provisions for the Lord Chief Justice to be referred to regarding the creation of orders to generate a right of appeal to a court to disallow bankrupts in holding offices or positions with respect to discretionary decisions.
New system gives partial authorisation to IP’s
A new system will give partial authorisation to IP’s. This will mean that IP’s are now authorised in relation exclusively to companies, individuals, or both.
Measures for Strengthening the regulatory framework
Actions are also being undertaken to restructure the regulatory system for insolvency. The purpose of which is uphold the trust for the insolvency profession by reinforcing the foundation of the regulatory system.
Regulatory objectives for the Insolvency System:
- To provide a system that guarantees fair treatment for clients who are inconvenienced by the acts and omissions of IP’s, reflects the regulatory principles (transparent, accountable, proportionate, consistent and targeted only where action is needed) and guarantees reliable results;
- To nurture an environment of independence and competitiveness for the IP profession wherein superior services are provided at a reasonable cost high quality services are provided at a justifiable cost and where IPs serve with transparency and integrity and always placing the interests of all creditors in any particular case as their main priority;
- To promote the full growth capacity of the value and the timeliness of returns to the creditors; and
- To uphold public interest.
Changes to the Insolvency Order
The regulatory objectives and sanctions were adopted on 1 April 2016. These sanctions apply for RPBs’ actions or lapses in fulfilling their regulatory functions, or their failure to comply with a certain requirement. The power to apply to court to directly sanction an IP in the public interest will also took effect on or after 1 April 2016, regardless of the date of appointment of the IP as the office holder. The Department is also allowed to apply to court for the purpose of securing the compliance of a requirement that the Department has placed on an RPB. A stand-in provision to establish a single regulator of IPs is also initiated.
Related articles published in The mechanisms of personal insolvency in Ireland :
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