TEMPORARY INSOLVENCY PRACTICE DIRECTION – AN UPDATE


In response to the current pandemic and the need to avoid the necessity for parties to attend court in person, a Temporary Insolvency Practice Direction (“TIPD”) has been drafted and came into force on 6 April 2020. John Vickery and Victoria Roberts discuss…

Subject to any amendment or revocation in the meantime, the TIPD will remain in force until 1 October 2020. The TIPD supplements the ‘Practice Direction – Insolvency Proceedings 2018” and applies to all insolvency proceedings in the Business & Property Courts, subject to regional variations outside London.

Below is a summary of the TIPD, please refer to the TIPD for detail.

The TIPD deals with the following topics:

– Matters affecting the Administration Procedure
• Filing notices of intention to appoint and notices of appointment of administrators
• Statutory Declarations required under Schedule B1 to the Insolvency Act 1986

– Adjournments and Listing
• The Adjournment of pending applications and petitions
• Listing of urgent hearings before a High Court Judge or an Insolvency and Companies Court Judge
• A temporary listing procedure for winding up and bankruptcy petitions
• The listing and hearing of other insolvency proceedings

– Hearing Procedure
• Remote Hearings

ADMINISTRATIONS
Filing notices of intention to appoint and notices of appointment of administrators

Time when the notice is treated as having been delivered to the court –
The TIPD confirms that the time when a notice of intention to appoint an administrator by a company or its directors (paragraph 27 of Schedule B1), a notice of appointment of an administrator by a company or its directors (paragraph 29 of Schedule B1) and a notice of appointment of an administrator by a qualifying floating charge holder (paragraph 18 of Schedule B1) shall be treated as having been delivered to the Court will be the time recorded in the Filing Submission Email (the Filing Submission Email being the automatic notification email received from the Court referred to in paragraph 5.3(1) of CPR Practice Direction 510).

The above only applies where the relevant notice is filed between 10.00am and 4.00pm on a day when the Courts are open for business, any notice filed outside those times will be treated as being filed at 10.00am on the day the Courts are next open for business.

The date of filing will affect the date of the start of any moratorium, and the start and end dates for the notice periods for the purposes of paragraphs 15 & 26 of Schedule B1 and of course the end date of the administration.

Notices may still be filed outside normal hours by a qualified floating charge holder under the procedure set out in Rules 3.20 to 3.22 of the Insolvency (England and Wales) Rules 2016 (“Rules”).

Statutory Declarations required under Schedule B1 to the Insolvency Act 1986

– The validity of statutory declarations not made in person

Ordinarily, a statutory declaration required under Schedule B1 which is not made in person before a person authorised to administer oaths may be a formal defect or irregularity which can be cured by the Court under Rule 12.64 if no substantial injustice is caused.

The TIPD provides a procedure for the making of statutory declarations otherwise than in person and if such procedure is followed then the failure to make the declaration in person before an authorised person will not by itself be regarded as causing substantial injustice.

The procedure is:
1. The statutory declaration must be made in a video conference with an authorised person;
2. The authorised person attests that the declaration was made by video conference; and
3. The statutory declaration states it was made by video conference.

ADJOURNMENTS & LISTING

– Pending Applications and Petitions
Other than urgent applications and winding up and bankruptcy petitions to be heard by an ICC Judge sitting in the Rolls Building, all applications and petitions listed for hearing prior to 21 April 2020.
If a matter has been adjourned which the parties consider to be urgent then they may apply under the urgent listing procedure (see below).

In relation to winding up petitions and bankruptcy petitions the ‘Temporary Listing Procedure for Winding up and Bankruptcy petitions’ shall apply. In the case of the ICC in London that listing procedure will apply immediately.

Mr Justice Snowden has issued guidance confirming that the temporary procedure for winding up and bankruptcy petitions will apply on the North and North Eastern Circuits immediately (referred to below as “the Guidance”).

– Urgent Hearings
The procedure to request an urgent hearing is set out in the TIPD and has been adopted in the Guidance.

The procedure commences by way of an email to the ICC judges’ clerks / BPC Court Staff setting out, among other things, the nature of the application, why it is urgent and that it can be dealt with by Skype for business of other remoted media (please refer to paragraph 5.1 for full details of requirements).
If appropriate, the matter will be allocated and a Skype (or other dial details) sent to the parties. In addition the Court will confirm other details such as to payment for the application.
The applicant / claimant / petitioner is responsible for providing a PDF bundle.
In addition the Guidance provides email addresses for Leeds, Liverpool, Manchester and Newcastle and lists certain applications which will be presumed to be urgent.

– Temporary listing procedure for winding up and bankruptcy petitions
Once this procedure is brought into effect by the court (now in the case of London ICC and the North and North Eastern Circuit) the court will allocate time slots for 2 or more petitions and provide a video or telephone conferencing link (Skype for Business or other method) and publish those on the daily court lists.

Any person intending to appear must serve the usual notice under Rule 7.14 complete with email address and phone number.
The onus is on the parties to ensure they are able to use the conference link provided.

– Other Insolvency Hearings
For these hearings the court will propose to the parties a video or telephone conference call to be organised either by the court or one of the parties. If the proposed method is acceptable, the court will provide directions or fix a short remote CMC for the purpose of directions in relation to conduct of the hearing, the technology to be used and any other required directions.

If any of the parties object to the initial proposed method submissions in writing or email should be made, including proposing an alternative method.

HEARING PROCEDURE

-Remote Hearings
The TIPD provides that unless otherwise ordered, all insolvency hearings will be conducted remotely, either by Skype for Business or by such other technology as is agreed by the court and parties beforehand.

If during the hearing the Judge decides it cannot continue the hearing will be adjourned and a new hearing date and time will be fixed by the court.

LOCAL GUIDANCE

– Local Business – Variations and Guidance for the North and North Eastern Circuits
Matters comprising Local Business as defined in paragraph 3.7 of the 2018 Practice direction already listed before an open court or a staffed court shall be heard in accordance with directions given by the judge in that court.

Matters comprising Local Business which are already listed in a suspended court will be heard remotely on the date and time fixed unless the judge at the suspended court orders otherwise.

Any new application received at an open court or a staffed court will be reviewed by a judge and, if the matter is Local Business, directions will be given on the application which may, if necessary, include the application being listed for an attended hearing at the nearest open court.

Any new applications or petitions which otherwise would have been issued in a suspended court should instead be issued in the nearest open court which has insolvency jurisdiction. Petitions which are required by the Rules to be presented in one of the hearing centres specified in Rule 10.11(4) should be titled with the name of the relevant centre but sent to the nearest open or staffed court with insolvency jurisdiction for issue on behalf of the relevant hearing centre. Applications to set aside statutory demands must be issued out of the nearest hearing centre identified in Insolvency Rule 10.48(4) which is open or staffed.

WRONGFUL TRADING

Not contained within the TIPD but a point to note nonetheless. On 28 March 2020 the UK government announced an intention to suspend wrongful trading laws retrospectively from 1 March 2020 for a period of 3 months (to be extended if necessary) to allow directors to continue to pay staff and suppliers without risk of personal liability should their company later become insolvent. No legislation has yet been passed to that effect however.

As always, please feel free to contact us on our usual contact details and we will be delighted to assist you with any queries that arise from this.