The Insolvency Rules (England and Wales) 2016 (“IR2016”) came into force on 6 April 2016 applying to most corporate and personal insolvency regimes in England and Wales. However, there is still unfinished business for the Government and further regulation is expected to be introduced later this year to ensure the changes apply uniformly in all areas.
As explained in our blog Take Special Care last month, there is a degree of uncertainty surrounding the introduction of IR2016 and the application of the new rules to certain special regimes within the financial services sector.
Helpfully, Dear IP Issue 76, issued by the Insolvency Service to Insolvency Practitioners, has identified this issue and seeks to shed some light on it by confirming that:
- Nothing has changed as regards the treatment of Limited Liability Partnerships following the introduction of IR2016. There is an intention to issue a statutory instrument later in the year to update The Limited Liability Partnerships Regulations 2001 but until then, Insolvency Rules 1986 continue apply to LLPs.
- There is an intention to bring forward a further statutory instrument concerning the insolvency of financial institutions to take account of general corporate insolvency reforms which came into force in April 2017. The expectation is that the new instrument will disapply the application of the IR2016 to the majority of HM Treasury’s modified insolvency regimes while their impact is assessed and decisions are made about implementation. For a small number of regimes, the new statutory instrument will align HM Treasury’s modified insolvency regimes with the reforms.
Against a background where the IR2016 were designed to update, simplify and consolidate changes made to insolvency rules over the past 30 years, the number of caveats as to where the new regime applies does give rise for some concern and confusion.
We already have:
The Insolvency (England and Wales) Rules 2016;
The Insolvency (Amendment) Rules 2016;
The Insolvency (Amendment)(No.2) Rules 2016;
The Insolvency (England and Wales) Amendment Rules 2017; and
The Insolvency (England and Wales) Rules 2016 (Consequential Amendments) (Savings) Rules 2017.
These new rules have made necessary the requirement for significant amendments to the Insolvency Proceedings Practice Direction 2014 (“IPPD”). The Chancellor of the High Court has announced that an interim practice direction will be issued “in the near future” pending the introduction of a substantially amended practice direction “in due course.”
In the meantime, until the interim practice direction is published, the IR2016 are to be given effect in Court proceedings relating to insolvency matters in the Chancery Division. This is to be done by the IPPD being treated as not in effect where it contradicts the IR2016, but the practices set out in the IPPD may continue to be followed as sound guidance to the extent possible.
Are IR2016 therefore fit for the purpose that they were made? Time will tell but the early indications are that they are proving to be anything but the all-encompassing consolidation rules they were once promised to be.