The Insolvency (Amendments) Rules 2015 come into effect on 1 October 2015 and bring in the requirements for preparing fees estimates and details of anticipated expenses and sending this information to creditors before the basis of remuneration is approved, either by creditors or a committee.
It will be very important to establish policies to ensure that you are fully compliant with the new rules. Useful, practical advice has been given in Dear IP 65 and Dear IP 68, issued last week, and this should be read, in full, by all members of your insolvency team. Gov UK – dear insolvency practitioner newsletter
There has been a lot of debate about whether a fees estimate can be sent to creditors before a S98 meeting, for example. Dear IP 68 advises that ‘What is important is that creditors are given sufficient time to make an informed decision about the reasonableness of the information provided’. Considering how long it can take any business to make an informed decision about a subject that it knows very little it seems most likely that this time cannot be given with the seven days’ notice of a S98 meeting. The resolution for approval of the fees estimate may be passed by correspondence after a creditors’ meeting has been held, again according to Dear IP 68.
Insolvency practitioners have established good professional relationships with creditors in the past in order to obtain proxies for S98 meetings. This was standard procedure in the 1980s and this should give insolvency practitioners the confidence that they will be able to work with creditors in the future.
Regrettably, the insolvency profession cannot turn to a new SIP 9 for guidance about the fees estimates. Compliance with the existing SIP 9 is still mandatory in all cases, however. The draft new SIP 9, issued for consultation earlier this year, may be used for ideas as to how fees estimates information may be presented to creditors. Please contact me if you would like to have a copy of the draft SIP 9.
Be wary of just using templates that ‘may do’, and changing the names as appropriate. The Pension Protection Fund, a major creditor, advised at a recent R3 regional meeting that it would be unlikely to approve fees estimates presented in this way. The PPF is looking for evidence of the work done by the insolvency practitioner. In my last newsletter I advised that you should keep a note of your decisions about how you propose to comply with the fees estimate rules so that you can show your RPB how you have used your professional judgement to comply with the rules.
The RMCSC Insolvency Guidelines have been brought up to date to include the fees estimates rules and the updated version is now available. The RMCSC Insolvency Guidelines cover all aspects of insolvency case administration and management, not just the office holder’s remuneration, and are an easy to use reference manual. The RMCSC Insolvency Guidelines may also be used as checklists.
Full compliance with the fees estimates rules demands the use of professional knowledge and judgement, especially at a time of confusion and uncertainty. Insolvency practitioners should have confidence in their ability to deal with difficult situations, making file notes detailing the decisions made and the reasons for them. The RMCSC Insolvency Guidelines can also help you. Please contact me on 07854 967976 or at email@example.com if you would like more information.
Caroline Clarks insolvency career started over 30 years ago and since 1994 RMCS has been handling insolvency compliance, specialising in regulation and compliance.
Contact: Caroline Clark
M: 07854 967976