The Insolvency Service has launched its Second Review of the Insolvency (England and Wales) Rules 2016 and the Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018. While this is formally a statutory post-implementation review, it is much more than a box-ticking exercise. The consultation provides an opportunity to influence how insolvency processes operate in practice and how the procedural framework should adapt to technological, commercial and regulatory developments over the next decade. As the consultation notes:
“the Rules cannot remain unchanged as the world moves on. Communication, technology, culture, and the day-to-day realities of personal and corporate finance continues to change at pace. It is crucial that the Rules are reviewed and amended where necessary.”
What is the review therefore seeking to achieve?
The Insolvency Service’s starting position is that the Rules remain broadly successful. The first post-implementation review conducted in 2022 concluded that the Rules were largely operating as intended, delivering the objectives of modernisation, simplification and consistency. However, stakeholders have continued to identify areas where procedural requirements create unnecessary cost, complexity or uncertainty.
Accordingly, the consultation has three overarching aims:
- Assess whether the Rules remain fit for purpose.
- Identify opportunities to reduce unnecessary administrative and regulatory burdens.
- Consider how the Rules should evolve to accommodate technological and commercial developments, including AI and digital assets.
There are several key themes:
1.Post-implementation review and burden reduction
The review looks at treatment of MSMBs, uncontested court applications, Gazette notices, information exchange, fee estimates, guidance and consistency.
2. Potential future rule changes
Topics include electronic communications, creditor committees, personal data, administrator appointments, small debt provisions, employee debts, fee approval mechanisms, replacement office-holder fees, decision-making timelines, opting out of correspondence and inflationary threshold reviews.
3. Future-proofing the Rules
The consultation seeks views on AI, digital communications, cryptoassets and other digital assets.
Many practitioners will recognise the challenge of low creditor engagement in routine cases and that there are some Rules that can create both administrative burden and uncertainty. The consultation appears to acknowledge this reality and seeks views on whether current procedures remain appropriate, and how processes could be simplified.
Areas of particular interest for insolvency practitioners will be electronic delivery of documents, fee approval mechanisms, decision-making timelines and out-of-court administrator appointments – given the day to day impact. But also “future proofing the rules” to deal with a world where insolvency estates increasingly contain digital assets, cryptocurrency and to manage the growth of AI is likely to peak the interest of many.
Overall, the consultation is focused on targeted modernisation rather than wholesale reform but it does invite respondents to respond generally on Rules or areas within the Rules where changes could bring real-world benefits. This is therefore an opportunity to share views with the Insolvency Service on how to make the Rules work better for all stakeholders. The consultation closes on 6 October.