It has already become apparent that a positive effect of the covid-19 lockdown is increased communication. At a time of change and uncertainty communication is vital both so that insolvency practitioners can communicate their concerns about how insolvency legislation and regulation will work during the lockdown and so that those responsible for the legislation and regulation can advise how it has been changed.
The Insolvency Service is currently sending weekly Dear IPs as a result of the covid-19 lockdown. Important articles from Dear IP 92 – 95 include:-
Dear IP 92 – The chair of the board of the Insolvency Service asks the insolvency profession to come together and support each other. The Insolvency Service is willing to act as a conduit for ideas and suggestions, while maintaining regulatory standards.
Dear IP 93 – Official Receivers’ offices have been shut and the staff are working from home. Postal communication is unlikely to be read as it will be delivered to the closed OR offices. Electronic signatures will be accepted and payment requisitions will be accepted by email. Further information about this can be found at https://content.govdelivery.com/accounts/UKIS/bulletins/282e055
Dear IP 94 – A reminder that Gazette notices can be placed by email using https://www.thegazette.co.uk/ or by fax. Some notices can be placed using a web form via the Gazette website. A web form can only be used for one notice at a time after registering for this facility at https://www.thegazette.co.uk/my-gazette/account?register=true
From 6 April 2020 the cap on the prescribed part will be increased from £600,000 to £800,000. This will not apply where the floating charge is created before 6 April 2020 and where there is not another floating charge created on or after 6 April 2020 that ranks equally or in priority. This means that it is the date the floating charge was created that decides whether the cap on the prescribed part will be £600,000 or £800,000 and it is therefore unlikely that this cap will apply in the immediate future.
Dear IP 95 – The Insolvency Service is changing systems so that more forms, requisitions etc can be submitted by email. CAU 103 and CAU 104, used to pay unclaimed dividends into the ISA, can now be sent by email to Customerservices.firstname.lastname@example.org and the funds paid into the ISA by electronic transfer.
The details of the account are as follows:-
Account: GBS RE Insolvency Service, sort code: 60-70-80, account no: 10003231, Reference: U/C *The surname of the insolvency practitioner*
Insolvency practitioners have to locate, secure and list the books and records of companies over which they have been appointed and previous Dear IP guidance has been that this means taking delivery of the books and records. The restrictions of covid-19 means that this is no longer possible and the Dear IP guidance has been changed to:-
‘Insolvency practitioners should continue to take all possible steps to locate and secure the records whilst keeping a detailed record of the action taken. They should also keep a record of their communications with directors regarding books and records, whilst the current restrictions are in place’.
HMRC has advised that it will support a minimum three month break from contributions in voluntary arrangements that are affected by covid-19 and it is emphasised in Dear IP 95 that there is no need to contact HMRC to ask for this. HMRC also expects that supervisors will exercise to the maximum any discretion given to them in the proposals and only contact creditors if this essential. It should be noted that HMRC is frequently a major creditor and is possibly giving this guidance in order to reduce the amount of amendments it may be asked to consider, but HMRC does not regulate the insolvency profession nor does it act for other creditors.
HMRC has advised that it has paused petitioning for bankruptcy or winding up unless there is evidence of fraud, for example, but other insolvency work will still be carried out.
HMRC also asks insolvency practitioners not to call the coronavirus helpline about new or insolvency cases but to use the appropriate Enforcement and Insolvency Service. The contact details are as follows:-
Company Administrations: HM Revenue & Customs Enforcement & Insolvency (EIS) Company Administrations, Brunel House, 2 Fitzalan Road, Cardiff, CF24 0EB
Members Voluntary Liquidations: HM Revenue and Customs Enforcement and Insolvency Service Newcastle MVL Team, Benton Park View, Longbenton, Newcastle upon Tyne, NE98 1ZZ. Email: email@example.com, telephone helpline: 0300 322 7815
Individual Voluntary Arrangements: HM Revenue and Customs Enforcement and Insolvency Service (EIS), Elgin House, 20 Haymarket Yards, Edinburgh, EH12 5WT.
Company Voluntary Arrangements: HM Revenue & Customs Enforcement & Insolvency (EIS) Company Administrations, Brunel House, 2 Fitzalan Road, Cardiff, CF24 0EB.
The government intends to introduce new insolvency legislation as soon as possible to deal with the problems created by the pandemic. This may include a moratorium from action from creditors, a new restructuring framework to bind creditors to a reorganisation plan, a temporary suspension of the wrongful trading legislation and legislation to ensure that businesses entering insolvency can continue to have essential supplies. Insolvency practitioners who have queries or suggestions about this can contact firstname.lastname@example.org and this would be an excellent example of the insolvency profession coming together and the Insolvency Service acting as a conduit for ideas, as asked in Dear IP 92.
Communication is vital to identify problems and find a way of solving them that is compliant and practical. Resorting to ‘coming to a deal’ is unlikely to be compliant and will put an insolvency practitioner at risk. RMCSC is continuing to provide insolvency and anti money laundering compliance consultancy services and to answer insolvency technical and compliance queries. Please contact me on email@example.com or 07854 967976 to arrange the insolvency compliance review that will assess the effect of the covid-19 lockdown and suggest practical ways of dealing with the expected increase in insolvency in the foreseeable future.