The Insolvency (England & Wales) Rules Getting into Creditors Voluntary Liquidation

Transcription

1 The Insolvency (England & Wales) Rules 2016 Getting into Creditors Voluntary Liquidation

2 The not so small print a disclaimer by any other name This presentation is based on Nova Consultants current understanding of the new Rules. All statements are made in the knowledge that the Rules and associated documents are currently incomplete and subject to amendment as advised by the Insolvency Service. The information presented should not be relied upon as advice. It represents only the personal opinion of the presenter and of Nova Consultants.

3 Programme All change! The demise of the s98 meeting The Members Meeting v Written Resolutions Planning for the SoA & SIP6 information Using the Deemed Consent procedure Holding a Virtual Meeting Physical Meeting requests Remuneration approval & Practicalities

4 All change! The demise of the s98 meeting Physical meetings are a thing of the past unless requested by creditors Replaced with decisions by creditors Which are made by deemed consent or at a virtual meeting for entry into CVL (R6.14(2)) Unless certain thresholds are met which enable creditors to request a physical meeting instead Pre-appointment planning will be critical

5 The Members Resolutions CA 06 law remains members still have to pass resolutions to wind-up the company & appoint a liquidator At a General Meeting or by written resolution [acceptable alternative] Directors effectively invite creditors to rubber stamp or appoint an alternative liquidator The members resolution to wind-up must be passed before the creditors decision (R6.14(3))

6 The Members Meeting On 14 days notice [unless Articles provide otherwise] short notice may be needed Requires 2 members present in person or by proxy [unless only 1 member] SoA must be made up to a date not more than 14 days before the date of the members resolution to wind-up And be delivered to creditors no later than by the business day before the Decision Date

7 The Members Meeting General Meetings may be more likely to be held at the Company s premises or location convenient to the members rather than the IP s premises given the demise of the s98 meeting IP s remote attendance of General Meeting

8 Written resolutions the alternative Not new - but may be used more post 6/4/17 s291 & s293 CA 06 allows the directors to issue written resolutions May be useful in owner managed businesses Need to use suspensory language and get them signed but not dated by members ahead of the creditors Decision Date Will then be dated on the creditors Decision Date

9 Planning for the SoA & SIP6 information SIP6 Decision Making the new SIP8 Interim version from 6 April until 31 December Principles-based approach as per all new SIPs BUT contains provisions of specific application to CVLs Financial information to creditors still required Ordinarily to be made available not later than the business day before the creditors Decision Date

10 Planning for the SoA & SIP6 information Send both out with decision notice where possible Where not possible - SoA by post thereafter (R1.50 only permits use of websites by an office holder ie, IP won t be office holder at this stage unless a Centrebind) - SIP6 information by post? information is not a Rules requirement, therefore it may be possible to give a website address for information availability with notices

11 SIP6 Key Information Information likely to be of interest to creditors: The date of the instructions to the IP & by whom Amounts paid re: the instructions & to whom Prior involvement & any threats to objectivity Summary of company s relevant trading activity & financial history (inc explanation of causes of failure, parent/associated company details, accounts extracts, details of any material transactions in last 12 months) SoA must be accompanied by deficiency a/c & names & professional qualifications of any valuers used

12 The Statement of Affairs (SoA) The SoA must: Be made up to a date not more than 14 days before the winding-up resolution is passed (R6.3) Delivered to creditors no later than on the business day before the Decision Date (R6.14(7)) If a Centrebind s99 requires directors to send SoA before end of 7 days beginning with the day after the day on which the winding-up resolution is passed

13 The Statement of Affairs (SoA) Re-verifying the SoA why? If physical meeting requested Winding-up resolution may get postponed (if Centrebind not intended) SoA may then be made up to a date more than 14 days before the eventual wind-up date Re-verify & date Rules don t require resend to creditors BUT updated version will need to be filed with Registrar (within 5 business days after completion of deemed consent or decision procedure R6.3(5))

14 Using the Deemed Consent procedure Basically a negative form of decision-making Creditors will be deemed to have made the decision unless >10% in value of creditors object to it By hours on the Decision Date BUT creditors who meet the 10:10:10 threshold can also request a physical meeting No requirement to Gazette but can do (R15.13(5))

15 Using the Deemed Consent procedure Objection threshold = 10% of creditors entitled to vote in a (qualifying) decision procedure Under R15.3 these are: Correspondence Electronic voting Virtual meeting Physical meeting (if requested) Any other decision procedure yet to be invented

16 Objecting to Deemed Consent in a CVL context If objection threshold met - physical meeting must be convened to consider nomination of liquidator instead (R6.14(4)) Objections - R1.2 requires proof in writing Directors must send meeting notice no later than 3 business days after 10% threshold met - (R15.6(5)) Physical meeting must not be held earlier than 3 business days after notice of meeting delivered And no later than 14 days after requisite level of objection (to deemed consent) was reached

17 Other ways of requesting a physical meeting in Deemed Consent context Creditors who meet the 10:10:10 threshold can also request a physical meeting (10% in value/10% in number/10 creditors) up to hours on Decision Date So 10 creditors eg, employees OR 10% of creditors in number who may be minority creditors, can still require directors to convene a physical meeting even if insufficient in value to object to Deemed Consent procedure

18 Holding a Virtual Meeting A meeting where persons who are not invited to be physically present together may participate in the meeting including communicating directly with all other participants in the meeting and voting (either directly or via a proxy holder) The Decision Date will be the date of the meeting Will adequate technology & procedures be in place by 6 April? May be more useful for nomination of a liquidator where desire for a meeting perceived or on larger cases

19 Holding a Virtual Meeting Rules not overly prescriptive about VMs Information on how to access the VM including telephone number, access code or password required must be provided Plus statement VM may be suspended or adjourned by the chair of the meeting VM must be Gazetted before or ASARP after notice of VM is delivered (R15.13)

20 Requesting a physical meeting in a VM context 10:10:10 threshold can request a physical meeting where a VM notice delivered Request must effectively be made before the Virtual Meeting on the Decision Date Remember members pass resolutions to wind-up & appoint a liquidator before the VM Members resolutions may get postponed if physical meeting requested notice requirements for physical meeting as in Deemed Consent scenario SoA may need re-dating

21 Triggering the CVL process Timing reminders Resolution to wind-up must be passed within 14 days of the date the SoA is made up to If creditors object to Deemed Consent procedure or physical meeting requirement triggered SoA may need re-dating for filing with the Registrar (but no requirement to re-issue to creditors) Decision on nomination of liquidator no less than 3 (clear) business days from date of notice delivery & no more than 14 days from winding-up resolution being passed

22 Approving pre-appointment fees R6.14 deals with liquidator s nomination only Insolvency Service have commented on their blog (20/1/17) that they consider pre-appointment fees to be remuneration R6.7 confirms SoA and decision costs can be approved as estate expense with approval Approval is by committee (if one formed) or by creditors or by the court if not (R6.17(5)) Can be obtained at same time liquidator s nomination considered (R15.11)

23 Approving pre-appointment fees BUT remuneration approval cannot be obtained via the Deemed Consent procedure (s246zf(2)) So must be approved at a Virtual Meeting or alternatively by another (qualifying) decision procedure eg, decision by correspondence run concurrently alongside nomination by Deemed Consent (nb, separate notice of this required) Any pre-appt costs paid prior to CVL requires statement on how much & to whom made to be delivered with SoA to creditors (R6.7(3))

24 Liquidation Committees Invitation to establish committee must be made whenever a decision sought from creditors (R6.19) Invite when liquidator s nomination being dealt with YES / NO response may be better Deemed Consent may be appropriate to deal with future invites eg, if requesting decision on increased fee estimate, an invite re committee formation must be given again

25 Scenario 1 - Appointment of Liquidator by Deemed Consent or Virtual Meeting Today is Wednesday 15 March Prepare SoA and SIP6 information If not issuing SoA/SIP6 info with Notice a separate circular will be needed Assuming SoA/SIP6 info completed, issue both with Notice today earliest Decision Date would be Thursday 23 March (allowing for 1 st class post delivery + 3 clear business days notice of decision) Latest date = Wednesday 29 March without having to redate SoA

26 Scenario 1 - Appointment of Liquidator by Deemed Consent or Virtual Meeting Deemed Consent - If 10% in value objection threshold not met by hours on Decision Date (s246zf) & 10:10:10 threshold not met for physical meeting request (s246ze) members choice of liquidator is confirmed via deemed consent Virtual Meeting If 10:10:10 threshold not met members choice of liquidator is confirmed at virtual meeting or alternative may be proposed at it Certificate of appointment - should be dated on the Decision Date

27 Scenario 2 - Physical meeting requested If nomination of liquidation by Deemed Consent objected to, as soon as threshold met, a physical meeting must be convened instead (R6.14(4)) In either process (Deemed Consent OR Virtual Meeting) if after Notice delivered, 10:10:10 threshold met for request for a physical meeting convene one (R6.14(6)) Requests for a physical meeting can be made up to hours on the Decision Date (Deemed Consent route) or the date of the meeting (Virtual Meeting) Monitor objection levels constantly

28 Practical considerations A recap Information gathering at the earliest date to prepare SoA and deal with SIP6 requirements will be critical Reliability of company information? Accurate creditor information remember employee and consumer claims need to go on separate schedules in SoA and must not be delivered to Registrar Do assets need valuing for purposes of SoA?

29 Practical considerations A recap If SoA/SIP6 information not ready to go out with Notices, will need to be delivered separately additional cost Rules don t provide for what happens if there is a failure to deliver the SoA before the Decision Date SoA may need re-dating if physical meeting requested Post-appt remuneration approval can be sought at same time as nomination of liquidator providing fees estimate/fee information delivered in advance of Decision Date to creditors

30 Practical considerations A recap General Meeting deal with before the virtual meeting, or the afternoon of the Decision Date may be more practical for the meeting if using deemed consent Written resolutions to be dated as at the Decision Date unless postponed due to physical meeting request The rules don t prohibit the members passing the resolutions ahead of the creditors Decision Date (ie, a Centrebind)

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