JOINT INSOLVENCY EXAMINATION. Notes to Candidates and Syllabuses for the Examination (2007)

Transcription

1 JOINT INSOLVENCY EXAMINATION Notes to Candidates and Syllabuses for the Examination (2007)

2 NOTES TO CANDIDATES 1. Exam Eligibility Candidates will be eligible to enter for the examination if: a. They are introduced by a professional body which is recognised under Section 391 and/or Section 389A of the Insolvency Act 1986 and meet the requirements of that body for entry to the examination; or b. They are seeking an insolvency authorisation direct from the Secretary of State for Trade and Industry and meet any criteria for authorisation specified by the Secretary of State at the date on which they apply to sit the examination or can reasonably expect to do so within 2 years of that date. c. They are seeking their insolvency authorisation direct from the Department of Economic Development in Northern Ireland and meet any criteria for authorisation specified by the Department of Economic Development at the date on which they apply to sit the examination or can reasonably expect to do so within 2 years of that date. 2. Candidates sitting the Personal Insolvency Paper Only a. Each candidate may normally make five attempts only at the paper. b. Candidates who pass the Personal Insolvency paper may then attempt the two Corporate Insolvency papers but must pass both papers at the same sitting. They will have five years in which to pass the two papers. 3. All Other Candidates a. Candidates may opt to attempt two of the three papers at one sitting. If they pass both of those two they will then have five years in which to pass the third. b. Candidates who attempt all three papers at the same sitting, and pass two, will also have five years in which to pass the third. c. Each candidate may normally make five attempts only at two or all three of the papers. d. A candidate who passes two of the papers and has not passed the third after a further five years may not normally re-enter the examination. e. Candidates who attempt either two or three papers and pass in one may then attempt the other two papers but must pass them both at the same sitting. They will have five years in which to pass the two papers. 4. All Candidates a. The pass mark in each paper is determined by the Board but is no greater than 50%. b. The Board retains discretion to vary the limits set down in 2. and 3. above, in individual cases. Any candidate seeking concessionary treatment should write to the Secretary. 2

3 Assessment 5. The examination, which will consist of three papers each of three hours, will be held in December each year on dates to be announced (in 2007 the examination will be held on 10, 11 and 12 December). 6. The subjects of the three papers will be Liquidations Administrations, Company Voluntary Arrangements and Receiverships Personal Insolvency 7. The overall emphasis of the papers will be practical. There will be four compulsory questions on each paper two questions attracting 20% of marks and two questions attracting 30% of marks. 8. The overall standard required will be such as to assess whether candidates have sufficient knowledge of insolvency law and practice to enable them to carry out the functions of an authorised insolvency practitioner. The standard will be broadly consistent with that required in the final qualifying examinations of the participating bodies. Candidates are not required to have experience in insolvency practice but the examination is essentially practical and relevant experience is an advantage Candidates will be expected to have the basic knowledge of taxation, accountancy and business law directly relevant to the performance of an office holder s duties in the practice of insolvency. The ability to communicate is of particular importance for those practising insolvency; some marks will therefore be awarded for the demonstration of that ability. Candidates should have developed their communications skills so that, for example, they are proficient in drafting reports to banks and to the court and letters to the parties involved in insolvencies. 9. Applications All applications must be submitted to the relevant authorising body (i.e. the recognised professional body of which the candidate is a member or student or the Secretary of State for Trade and Industry or the Department of Economic Development in Northern Ireland). Any enquiries about eligibility should be addressed to the relevant authorising body. The closing date for applications is 25 October Late entries will not be accepted for the examination. In their own interests, candidates are asked to submit application forms well in advance. No allowance will be made for any special circumstances nor for any error or omission by candidates, by any person acting on their behalf, or by the postal authorities. 10. Entry to a Hall a. Candidates may enter the examination halls up to half an hour after the start of a paper but must provide an explanation of their lateness which, together with their candidate number and time of arrival, will be reported to the Board. Such candidates will not be granted extra time but will have their performance and their reason for lateness considered by the Board when it comes to determine the results of the examination. b. Candidates who arrive more than half an hour after the start of a paper will not be admitted to the examination hall unless their lateness has been caused by 3

4 exceptional circumstances beyond their control and only then when permission for entry has been given by the Chief Invigilator. 11. Examination Materials a. Candidates are provided with lined and analysis paper and booklets and tags for fastening their papers together. b. Candidates must bring their own pens. c. Candidates may only use the calculators provided by the JIEB in the examination hall (SHARP EL-240 Calculator). d. In the examination room candidates will be supplied with the 8 th edition of the Butterworths Insolvency Law Handbook. e. Candidates may not take any book, paper or manuscript into the examination room. The copies of Butterworths Insolvency Law Handbook supplied by the Board must not be removed from the examination room. 12. Departure from an Examination Hall a. After a paper has begun, candidates who leave an examination hall without permission or unescorted will not be allowed to return. b. Candidates who leave during a paper, not intending to return, must hand in their answers to the Chief Invigilator. Candidates may not leave a hall during the first or last half hour of any paper unless there are exceptional circumstances and only then when permission has been obtained from the Chief Invigilator. c. At the close of a paper, candidates must remain seated until they are advised by the Chief Invigilator that they may leave. 13. Illness and Special Circumstances Candidates who wish to notify the Board of illness or other special circumstance that affects their examination performance should submit medical evidence or other documentation no later than 28 days after the examination. 14. Misconduct a. The Board will investigate any candidate suspected of having been involved in any irregularity or misconduct in connection with the examinations. b. It is the duty of the Chief Invigilator to report to the Board all cases of irregularity or misconduct in the examination hall. Chief Invigilators are empowered to stop the examination of candidates who conduct themselves improperly. Expulsion from the examination hall would be resorted to only when it is considered that such action is essential. c. Any unauthorised material introduced by candidates into an examination hall will be confiscated by the Chief Invigilator and may be retained for transmission to the Board if so required. d. Candidates may not pass any information from one to another during an examination unless expressly authorised to do so. 4

5 e. The Board reserves the right to withhold publication of the results of an examination of candidates pending investigation of any irregularity or misconduct in connection with an examination. 15. End of Work When a particular paper is declared to be over, candidates must stop writing immediately and put down their pens. They will be given a short time to assemble their answer folders and fasten their complete scripts using the tags provided. Candidates are responsible for ensuring that all their answers are included. 16. Results Results will be despatched by first class post on Friday 7 March Each candidate will receive a results letter showing an overall result of Pass, Referred, Fail. Marks achieved will be provided for each individual paper. The marking of papers and the results of such marking are final and binding for all candidates. Examination scripts will not be returned to candidates. The results will be published in a pass and referral list, and on the R3 website ( from 5pm on the results despatch date above. 17. Equal Opportunities The Joint Insolvency Examination Board aims to provide an assessment of excellent quality for students whatever their background. In pursuit of this aim, the JIEB is committed to using its best endeavours to ensure that all of its activities are governed by principles of equality of opportunity. It is intended that all students should receive equal treatment irrespective of political belief, gender, sexual orientation, age, disability, marital status, race, nationality, ethnic origin, religion or social background. 5

6 SYLLABUS DECEMBER Candidates must be able to demonstrate knowledge of the law and the practice of insolvency as it applies to all forms of personal and corporate insolvency procedures including: a. for candidates being examined under the law in England and Wales, a thorough working knowledge of the Insolvency Act 1986 (as it applies in England and Wales), the Company Directors Disqualification Act 1986, the Insolvency Rules 1986 all as from time to time amended, the EU Insolvency Regulations and any other primary or secondary legislation which is directly relevant to the performance of an officeholder's duties in the practice of insolvency in England and Wales. b. for candidates being examined under Scots law, a thorough working knowledge of the Insolvency Act 1986 (as it applies in Scotland), the Bankruptcy (Scotland) Acts 1985 and 1993, the Company Directors Disqualification Act 1986, the Insolvency (Scotland) Rules 1986 all as from time to time amended, the EU Insolvency Regulations and any other primary or secondary legislation which is directly relevant to the performance of an officeholder's duties in the practice of insolvency in Scotland. c. all candidates should have an awareness of how legislation, and insolvency guidance, other than that specifically mentioned in the syllabus, impacts upon insolvency in practice and the responsibilities of office holders. Candidates should have a working knowledge of cross border insolvency issues and need to be aware of licensing requirements, agency and other issues and any civil and criminal risks arising. Candidates will not, however be expected to have an in depth knowledge of industry specific legislation and will not be examined on the insolvency legislation in overseas regimes. 2. Examination questions will be set on the basis of European and UK legislation on insolvency and statements of insolvency practice in force on the 30th day of April for the year of the examinations. Knowledge of case law after 30 th April will not be specifically examined, however, demonstration of knowledge of recent case law may attract additional marks. 3. The following lists, the first based on the law in England and Wales and the second showing variants based on Scots Law, illustrate topics on which candidates may be expected to demonstrate their knowledge; they are not exhaustive. 6

7 PRECONDITIONS TO PRACTICE LIQUIDATIONS (ENGLAND AND WALES) Requirements for authorisation and bonding RPB Guides to Professional Ethics in Insolvency Statements of Insolvency Practice BEFORE INSOLVENCY - Advisory work in the period immediately preceding formal insolvency Definition and diagnosis of insolvency (but not turnaround management, investigation and reporting on, or the monitoring of, troubled businesses) Advice to directors and other stakeholders The choice of alternative insolvency procedures (including informal reconstruction) The interval between diagnosis of and entry into formal insolvency proceedings THE LAW AND PRACTICE OF MEMBERS' VOLUNTARY LIQUIDATIONS The procedures to place the company into liquidation Declaration of solvency Effect of becoming insolvent Effect of winding-up order Use of S110 schemes Distributions to shareholders (including in specie) THE LAW AND PRACTICE OF CREDITORS' VOLUNTARY LIQUIDATIONS The procedure to place the company into liquidation Effect of winding-up resolution Effect of winding-up order THE LAW AND PRACTICE OF WINDING-UP BY THE COURT Who may petition Grounds for petition The effect of the petition The provisional liquidator, appointment and duties The special manager, appointment and duties Disposition of assets after the winding-up petition The appointment of the liquidator The effect of a winding-up petition The effect of a winding-up order The relationship with the Official Receiver GENERAL MATTERS INSOFAR AS THEY RELATE TO EACH TYPE OF LIQUIDATION (as appropriate) Purpose of procedure Comparison with other relevant procedures Requirements for commencement Formalities of appointment Acceptance of appointment Notification of appointment Immediate action on appointment 7

8 LIQUIDATIONS - GENERAL MATTERS (as appropriate) contd Establishing control and communicating with third parties Bonding requirements Statement of affairs, to include its making out Preparation of a deficiency account Powers (including authorisations required) and duties (including duty to the insolvent, different classes of creditors and others) Establishing a strategy and asset realisation policy General principles of hiving down The ability to trade The financial control of trading and trading risk, to include the preparation of cash flow forecasts and trading budgets Insurance Dealing with existing contracts Selling the business or assets Rights to obtain information and assets Duty to investigate: - Company - Directors - Other office-holders Duty to report to: - Official Receiver - Secretary of State for Trade and Industry - National Criminal Intelligence Service Civil remedies and recovery of assets: - Wrongful trading - Preferences - Transactions at an undervalue - Transactions defrauding creditors - Extortionate credit transactions - Avoidance of floating charges Actions against directors and their personal liability Disqualification of directors Remuneration Reports to creditors and shareholders, to include the preparation of statements of estimated outcome Meetings of creditors and shareholders Committees of creditors Special classes of creditors (secured, preferential, retention of title, lien, hire purchase and leasing creditors) Charges and their validity Execution Distress Set-off Agreement and rejection of claims Ranking of claims Calculation of dividends to future, contingent and other creditors Calculation of the prescribed part Rights of contribution, subrogation and marshalling Disclaimer Contributories Accounting and banking arrangements, to include the preparation of abstracts of receipts and payments Investment of surplus funds 8

9 LIQUIDATIONS - GENERAL MATTERS (as appropriate) contd The Insolvency Practitioner's statutory record Returns to Court or Insolvency Service or Companies House Employees: - Rights - Office holder's duties - Dealing with VAT bad debt relief Public utilities Restriction on re-use of company names The effect of insolvency upon present and future tax liabilities, reliefs and repayments Vacation of office and release Closure requirements Financial markets and insolvency Consideration of environmental responsibilities Duties in respect of pension schemes Insolvent partnerships and limited liability partnerships Foreign registered companies Money Laundering The definition of money laundering under the Proceeds of Crime Act

10 ADMINISTRATIONS, COMPANY VOLUNTARY ARRANGEMENTS AND RECEIVERSHIPS (ENGLAND AND WALES) PRECONDITIONS TO PRACTICE Requirement for authorisation and bonding RPB Guides to Professional Ethics in Insolvency Statements of Insolvency Practice BEFORE INSOLVENCY - Advisory work in the period immediately preceding formal insolvency Definition and diagnosis of insolvency (but not turnaround management, investigation and reporting on, or the monitoring of, troubled businesses) Advice to directors The choice of alternative insolvency procedures (including moratoria and informal reconstruction) The interval between diagnosis of and formal insolvency THE LAW AND PRACTICE OF RECEIVERSHIPS Distinction between administrative and other receiverships Legal basis of receivership Relationship with chargeholder Receivership under fixed charges including Law of Property Act receiverships Effect of administration order Effect of liquidation Relationship with administrator or liquidator Sale of charged assets Rights of floating charge holders THE LAW AND PRACTICE OF ADMINISTRATIONS AND THEIR CONDUCT BY ADMINISTRATORS The purposes of administration The different routes into administration Who may appoint an administrator Status and duties of the administrator Effect of entering into administration Presentation and approval of the administrator s proposals Involvement of creditors Implementation of proposals Distributions Sale of charged assets Exit routes THE LAW AND PRACTICE OF COMPANY VOLUNTARY ARRANGEMENTS Relationship with liquidation and administration Contents and scope of proposals CVA proposal with moratorium Position and responsibilities of nominee Nominee's report Procedures before approval of proposals 10

11 GENERAL MATTERS INSOFAR AS THEY RELATE TO EACH OF THESE INSOLVENCY PROCEDURES (as appropriate) Requirement for approval Effect of approval of proposals Implementation of proposals by supervisor The calculation of the prescribed part Purpose of procedure Comparison with other relevant procedures Requirements for commencement Formalities of appointment Acceptance of appointment Notification of appointment Immediate action on appointment Establishing control and communicating with third parties Bonding requirements Statement of affairs, to include its making out Preparation of a deficiency account Powers (including authorisations required) and duties (including duty to the insolvent, different classes of creditors and others) Establishing a strategy and asset realisation policy General principles of hiving down The ability to trade The financial control of trading and trading risk, to include the preparation of cash flow forecasts and trading budgets Insurance Dealing with existing contracts Selling the business or assets Rights to obtain information and assets Duty to investigate: - Company - Directors - Office holders Duty to report to: - Insolvency Service Civil remedies and recovery of assets: - Preferences - Transactions at an undervalue - Transactions defrauding creditors - Extortionate credit transactions - Avoidance of floating charges Continuing powers of directors Actions against directors and their personal liability Disqualification of directors Remuneration Reports to creditors and shareholders, to include the preparation of statements of estimated outcome Meetings of creditors and shareholders Committees of creditors Special classes of creditors (secured, preferential, retention of title, lien, hire purchase and leasing creditors) Charges and their validity Execution Distress 11

12 ADMINISTRATION- GENERAL MATTERS contd Set-off Agreement and rejection of claims Ranking of claims Calculation of dividends to creditors Calculation of the prescribed part Rights of contribution, subrogation and marshalling Accounting and banking arrangements, to include the preparation of abstracts of receipts and payments The Insolvency Practitioner's statutory record Returns to Court or Companies House Employees: - Rights - Office holder's duties - Dealing with VAT bad debt relief Public utilities The effect of insolvency upon present and future tax liabilities, reliefs and repayments Vacation of office and release Closure requirements Consideration of environmental responsibilities Duties in respect of pension schemes Insolvent partnerships and limited liability partnerships Money Laundering 12

13 PERSONAL INSOLVENCY (ENGLAND AND WALES) PRECONDITIONS TO PRACTICE Requirements for authorisation and bonding RPB Guides to Professional Ethics in Insolvency Statements of Insolvency Practice BEFORE INSOLVENCY - Advisory work in the period immediately preceding formal insolvency work, including advice on alternative solutions for either debtor or creditor as appropriate Definition and diagnosis of insolvency (but not turnaround management, investigation and reporting on, or the monitoring of, troubled businesses) The choice of alternative insolvency and non-insolvency procedures (including formal moratoria and principles of non-statutory debt resolution solutions, e.g. debt management plans, consolidation loans, re-mortgaging, budgeting) Provision of information to the debtor The interval between diagnosis of and formal insolvency THE LAW AND PRACTICE OF INDIVIDUAL VOLUNTARY ARRANGEMENTS Relationship with bankruptcy The interim order The position of the nominee Contents and scope of proposals Nominee's report Procedures before approval of proposals Requirements for approval Effect of approval Implementation THE LAW AND PRACTICE OF BANKRUPTCY Relationship with voluntary arrangement Procedure for a debtor's petition Procedure for a creditor's petition The interim receiver, appointment and duties The receiver and manager, appointment and duties The special manager, appointment and duties Function of the Official Receiver The effect of the bankruptcy order The appointment of the trustee Bankruptcy offences The matrimonial home Dispositions of assets after the bankruptcy petition Annulment The general principles of the insolvency of partnerships Purpose of procedure Comparison with other relevant procedures Requirements of commencement Formalities of appointment Acceptance of appointment Notification of appointment Immediate action on appointment 13

14 GENERAL MATTERS INSOFAR AS THEY RELATE TO EACH OF THESE INSOLVENCY PROCEDURES (as appropriate) Establishing control and communicating with third parties Bonding requirements Statement of affairs, to include its making out Preparation of a deficiency account Powers (including authorisations required) and duties (including duty of the insolvent, different classes of creditors and others) Establishing a strategy and asset realisation policy The ability to trade The financial control of trading and trading risk, to include the preparation of cash flow forecasts and trading budgets Insurance Dealing with existing contracts Selling the business or assets Rights to obtain information and assets Duty to investigate: - Bankrupt Duty to report to: - Official Receiver Civil remedies and recovery of assets: - Preferences - Transactions at an undervalue - Transactions defrauding creditors - Extortionate credit transactions Remuneration Reports to creditors, to include the preparation of statements of estimated outcome Meetings of creditors Committees of creditors Special classes of creditors (secured, preferential, deferred, retention of title, liens, hire purchase and leasing creditors) Charges and their validity Execution Distress Set-off Agreement and rejection of claims Ranking of claims Calculation of dividends to creditors Rights of contribution, subrogation and marshalling Disclaiming assets Accounting and banking arrangements, to include the preparation of abstracts of receipts and payments The Insolvency Practitioner's statutory record Returns to Court or Insolvency Service Employees: -Rights - Office holder's duties - Dealing with VAT bad debt relief Public utilities The effect of insolvency upon present and future tax liabilities, reliefs and repayments Vacation of office and release 14

15 PERSONAL - GENERAL MATTERS contd Closure requirements Financial markets and insolvency Consideration of environmental responsibilities Insolvent Partnerships and Limited Liability Partnerships Money Laundering 15

16 JOINT INSOLVENCY EXAMINATION - DECEMBER SYLLABUS (SCOTLAND) PRECONDITIONS TO PRACTICE LIQUIDATIONS (SCOTLAND) Requirements for authorisation and bonding RPB Guides to Professional Ethics in Insolvency Statements of Insolvency Practice BEFORE INSOLVENCY - Advisory work in the period immediately preceding formal insolvency Definition and diagnosis of insolvency (but not turnaround management, investigation and reporting on, or the monitoring of, troubled businesses) Advice to directors The choice of alternative insolvency procedures (including informal reconstruction and moratoria) The interval between diagnosis of and formal insolvency THE LAW AND PRACTICE OF MEMBERS' VOLUNTARY LIQUIDATIONS The procedure to place the company into liquidation Declaration of solvency Effect of becoming insolvent Effect of winding-up order Use of S110 schemes Distributions to shareholders (including in specie) Final meeting prior to dissolution THE LAW AND PRACTICE OF CREDITORS' VOLUNTARY LIQUIDATIONS The procedure to place the company into liquidation Effect of winding-up resolution Effect of winding-up order THE LAW AND PRACTICE OF WINDING-UP BY THE COURT Jurisdiction of Scottish courts Who may petition Grounds for petition The effect of the petition The provisional liquidator, appointment and duties The interim liquidator, appointment and duties The special manager, appointment and duties Disposition of assets after the winding-up petition The appointment of the liquidator The effect of a winding-up petition The effect of a winding-up order Early dissolution 16

17 GENERAL MATTERS INSOFAR AS THEY RELATE TO EACH TYPE OF LIQUIDATION (as appropriate) Purpose of procedure Comparison with other relevant procedures Requirements for commencement Formalities of appointment Acceptance of appointment Notification of appointment Immediate action on appointment Establishing control and communicating with third parties Bonding requirements Statement of affairs, to include its making out Preparation of a deficiency account Powers (including authorisations required) and duties (including duty to the insolvent, different classes of creditors and others) Establishing a strategy and asset realisation policy General principles of hiving down The ability to trade The financial control of trading and trading risk, to include the preparation of cash flow forecasts and trading budgets Insurance Dealing with existing contracts Selling the business or assets Rights to obtain information and assets Duty to investigate: - Company - Directors - Other office-holders Duty to report to: - Department of Trade and Industry - Lord Advocate Civil remedies and recovery of assets: - Fraudulent trading - Wrongful trading - Unfair preferences - Gratuitous alienations - Extortionate credit transactions - Avoidance of floating charges Actions against directors and their personal liability Disqualification of directors Remuneration Reports to creditors and shareholders, to include the preparation of statements of estimated outcome Meetings of creditors and shareholders Committees of creditors Special classes of creditors (secured, preferential, retention of title, lien, hire purchase and leasing creditors) Securities and their validity Diligence Compensation (set-off) Adjudication on claims Ranking of claims Calculation of dividends to future, contingent and other creditors Catholic and secondary securities 17

18 GENERAL MATTERS INSOFAR AS THEY RELATE TO EACH TYPE OF LIQUIDATION (as appropriate) contd Right of relief and obligation to assign Contributories Accounting and banking arrangements, to include the preparation of abstracts of receipts and payments Investment of surplus funds The Insolvency Practitioner's statutory record Returns to Court or Companies House Employees: - Rights - Office holder's duties - Dealing with VAT bad debt relief Public utilities Restriction on use of company names The effect of insolvency upon present and future tax liabilities, reliefs and repayments Vacation of office and release Closure requirements Financial markets and insolvency Consideration of environmental responsibilities Duties in respect of pension schemes Insolvent partnerships and limited liability partnerships Money Laundering The definition of money laundering under the Proceeds of Crime Act

19 ADMINISTRATIONS, COMPANY VOLUNTARY ARRANGEMENTS AND RECEIVERSHIPS (SCOTLAND) PRECONDITIONS TO PRACTICE Requirement for authorisation and bonding RPB Guides to Professional Ethics in Insolvency Statements of Insolvency Practice BEFORE INSOLVENCY - Advisory work in the period immediately preceding formal insolvency Definition and diagnosis of insolvency (but not turnaround management, investigation and reporting on, or the monitoring of, troubled businesses) Advice to directors The choice of alternative insolvency procedures (including informal reconstruction and moratoria) The interval between diagnosis of and formal insolvency THE LAW AND PRACTICE OF RECEIVERSHIPS Legal basis of receivership Relationship with floating chargeholder Effect of administration order Effect of liquidation Relationship with administrator or liquidator Sale of secured assets Receiver over less than the whole of the assets Rights of floating charge holders THE LAW AND PRACTICE OF ADMINISTRATIONS AND THEIR CONDUCT BY ADMINISTRATORS The purposes of administration The different routes into administration Who may appoint an administrator Status and duties of the administrator Effect of entering into administration Presentation and approval of the administrator s proposals Involvement of creditors Implementation of proposals Distributions Sale of charged assets Exit routes THE LAW AND PRACTICE OF COMPANY VOLUNTARY ARRANGEMENTS Relationship with liquidation and administration Position of nominee Contents and scope of proposals Nominee's report Procedures before approval of proposals Requirement for approval Effect of approval of proposals Implementation of proposals by supervisor 19

20 GENERAL MATTERS INSOFAR AS THEY RELATE TO EACH OF THESE INSOLVENCY PROCEDURES (as appropriate) Purpose of procedure Comparison with other relevant procedures Requirements for commencement Formalities of appointment Acceptance of appointment Notification of appointment Immediate action on appointment Establishing control and communicating with third parties Bonding requirements Statement of affairs, to include its making out Preparation of a deficiency account Powers (including authorisations required) and duties (including duty to the insolvent, different classes of creditors and others) Establishing a strategy and asset realisation policy General principles of hiving down The ability to trade The financial control of trading and trading risk, to include the preparation of cash flow forecasts and trading budgets Insurance Dealing with existing contracts Selling the business or assets Rights to obtain information and assets Duty to investigate: - Company - Directors - Office holders Duty to report to: - Department of Trade and Industry - Lord Advocate Civil remedies and recovery of assets: - Unfair preferences - Gratuitous alienations - Extortionate credit transactions - Avoidance of floating charges Continuing powers of directors Actions against directors and their personal liability Disqualification of directors Remuneration Reports to creditors and shareholders, to include the preparation of statements of estimated outcome Meetings of creditors and shareholders Committees of creditors Special classes of creditors (secured, preferential, retention of title, lien, hire purchase and leasing creditors) Securities and their validity Diligence Compensation (set-off) Adjudication of claims Ranking of claims Calculation of dividends to creditors 20

21 GENERAL MATTERS INSOFAR AS THEY RELATE TO EACH OF THESE INSOLVENCY PROCEDURES (as appropriate) contd Calculation of the prescribed part Catholic and secondary securities Accounting and banking arrangements, to include the preparation of abstracts of receipts and payments The Insolvency Practitioner's statutory record Returns to Court or Companies House Employees: - Rights - Office holder's duties - Dealing with VAT bad debt relief Public utilities The effect of insolvency upon present and future tax liabilities, reliefs and repayments Vacation of office and release Closure requirements Consideration of environmental responsibilities Duties in respect of pension schemes Insolvent partnerships and including limited liability partnerships Money Laundering 21

22 PERSONAL INSOLVENCY (SCOTLAND) PRECONDITIONS TO PRACTICE Requirements for authorisation and bonding RPB Guides to Professional Ethics in Insolvency Statements of Insolvency Practice BEFORE INSOLVENCY - Advisory work in the period immediately preceding formal insolvency work, including advice on alternative solutions for either debtor or creditor as appropriate Definition and diagnosis of insolvency (but not turnaround management, investigation and reporting on, or the monitoring of, troubled businesses) The choice of alternative insolvency and non-insolvency procedures (including formal moratoria and principles of non-statutory debt resolution solutions, e.g. debt management plans, consolidation loans, re-mortgaging, budgeting) Provision of information to the debtor The interval between diagnosis of and formal insolvency THE LAW AND PRACTICE OF VOLUNTARY TRUST DEEDS Procedure Position of creditors The Protected Trust Deed THE LAW AND PRACTICE OF SEQUESTRATIONS Meaning of apparent insolvency Jurisdiction Functions of Accountant in Bankruptcy Procedure for a debtor's petition Procedure for a creditor's petition The effect of the award of sequestration Summary administration The interim trustee, appointment, functions and duties The permanent trustee, appointment, functions and duties The commissioners, appointment, functions and duties Recall of sequestration Debtors list of assets and liabilities The matrimonial home Examination of debtor Distribution of debtor's estate Discharge of debtor Discharge of Trustee The general principles of the insolvency of partnerships 22

23 GENERAL MATTERS INSOFAR AS THEY RELATE TO EACH OF THESE INSOLVENCY PROCEDURES (as appropriate) Purpose of procedure Comparison with other relevant procedures Requirements of commencement Formalities of appointment Acceptance of appointment Notification of appointment Immediate action on appointment Establishing control and communicating with third parties Bonding requirements Statement of affairs, to include its making out Preparation of a deficiency account Powers (including authorisations required) and duties (including duty of the insolvent, different classes of creditors and others) Establishing a strategy and asset realisation policy The ability to trade The financial control of trading and trading risk, to include the preparation of cash flow forecasts and trading budgets Insurance Dealing with existing contracts Selling the business or assets Rights to obtain information and assets Duty to investigate: - Bankrupt Duty to report to: - Accountant in Bankruptcy - Lord Advocate Civil remedies and recovery of assets: - Unfair preferences - Gratuitous alienations - Transactions defrauding creditors - Extortionate credit transactions Remuneration Reports to creditors, to include the preparation of statements of estimated outcome Meetings of creditors Committees of creditors Special classes of creditors (secured, preferential, deferred, retention of title, liens, hire purchase and leasing creditors) Securities and their validity Diligence Compensation (set-off) Adjudication on claims Ranking of claims Calculation of dividends to creditors Catholic and secondary securities Disclaiming assets Accounting and banking arrangements, to include the preparation of abstracts of receipts and payments The Insolvency Practitioner's statutory record Returns to Court or Accountant in Bankruptcy 23

24 GENERAL MATTERS INSOFAR AS THEY RELATE TO EACH OF THESE INSOLVENCY PROCEDURES (as appropriate) - contd Employees: - Rights - Office holder's duties - Dealing with VAT bad debt relief Public utilities The effect of insolvency upon present and future tax liabilities, reliefs and repayments Financial markets and insolvency Consideration of environmental responsibilities Insolvent partnerships and Limited Liability Partnerships Money Laundering 24