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Key Changes to Insolvency Rules in April 2017

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Posted in: Insolvency Law | News | Useful Information 29 May 17


The most significant changes to insolvency legislation (in England & Wales) in the last three decades were introduced on the 6th April 2017, aimed at modernising and updating present procedures. The Insolvency Act and Rules were introduced in 1986 and the existing rules and amendments were consolidated into a single set of new Rules designed to streamline systems and communication.

Insolvency solutions the same, but the aim is to improve the overall insolvency system, so that procedures are more efficient, creditor engagement is increased and costs are reduced.

Here we have a look at the key changes to Insolvency legislation;

Removal of Requirement to Hold Physical Creditor Meetings

Historically, a physical meeting was held to appoint an insolvency office holder. The majority of meetings were held with only the Insolvency Practitioner and Directors present, with few if any creditors attending. This added costs to the insolvent estate arguably was a waste of time.

Physical meetings have been abolished; instead creditors are asked to make decisions by correspondence, virtual meetings, or “deemed consent” (that is a proposed decision to which there are no objections from creditors). Physical meetings can still take place at the request of creditors if certain thresholds are met.

Electronic Communications with Creditors

The way we communicate has changed significantly in the last three decades, so the modernised Insolvency legislation is geared towards encouraging electronic communication and reduction in traditional postal communications between insolvency office holders and creditors.

There is more freedom to use emails and websites by lifting certain restrictions and limitations. Creditors can log into the Insolvency Practitioners’ website to access reports and decisions without the need for written communication or phone calls. This allows communication to be significantly faster and more cost effective.

Opting Out

Creditors who see no benefit from being actively involved in the insolvency process can opt out of receiving correspondence from office holders, but will still be contacted if dividends payments are available.

Small Debts

Creditors with claims of less than £1,000 no longer need to submit a formal proof of debt to the office holder. Instead these debts are automatically included on the list of creditors and admitted for dividend purposes unless the office holder is notified otherwise .

Final Meetings Abolished

To help speed up the insolvency process, final meetings are no longer called to conclude proceedings and formally release the Insolvency Practitioner from office, unless creditors object to the release of the office holder upon receipt of the final account of proceedings.

Deemed Consent

Office holders may work on the basis of deemed consent of creditors, whereby decisions are automatically ratified unless objected to by at least 10% in value or 10 in number of creditors, or simply 10 creditors. If an objection is received, a creditor can request a physical meeting be held to discuss their concerns.


An overhaul of the existing legislation has been under consideration for a number of years and the new changes have helped to modernise working practices. The language used in the new rules has also been modernised to make it more user friendly and help avoid misinterpretation.

The most positive changes are how office holders communicate with creditors. The use of digital communication should lead to more creditor engagement and speed up decision making.

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Robin Tarling

Advice you can trust.