Insolvency profession grinds through new rules

The profession is licking its wounds after the most extensive changes to the
Insolvency Act came into effect, just four weeks after guidelines were
published.

From 6 April more than 500 amendments have been made to the Insolvency Act
1986. Unlucky, then, for senior insolvency professionals who were dragged away
from chargeable time to understand the changes, then train their teams just four
weeks before implementation.

One senior insolvency professional estimated the cost of implementation
across the Top 20 firms could reach £10m. This includes changing technology at
the firm, staff’s time away from cases, buying new publications and adding to
in-house training programmes.

“Four weeks isn’t a lot of time for such a wholesome change even if there was
quite a bit of indication,” said Tim Carter, head of insolvency at international
law firm, Stevens & Bolton. The changes to the Act were quite complex, he
explains.

Amendments include allowing practitioners to conduct virtual meetings through
the phone or web with creditors; greater transparency and flexibility on the
agreement of insolvency practitioner fees prior to an administration; and filing
documents at Companies House rather than to the courts.

Some of the provisions only apply to cases after the implementation date,
while other changes affects cases regardless of when they started, said Carter.

Despite the short timeframe given to the profession, it has been generally
welcomed as bringing the legislation into the 21st century. It is estimated the
changes will make annual savings of more than £40m, according to the Service.

Smaller practices could take on more cases with fewer overheads thanks to the
amendments, claims Melanie Giles, partner at Jones Giles.

“Four weeks wasn’t the end of the world, but eight would have been better,”
said Chris Laughton, restructuring and insolvency partner at Mercer & Hole.

Further reading:

Insolvency
Act: all change