It has been well publicised that The Insolvency Rules (England and Wales) 2016 (“IR’s 2016) had wide-ranging implications for the insolvency sector. One of the most significant changes was the abolition of automatic creditors’ meetings.
One of the main reasons for this change was to enable the use of modern communication, and streamline processes to save unnecessary expense.
So what does this mean for directors’? In the past company directors’ faced the daunting prospect of attending creditor meetings in person, the most common being the first meeting of creditors’ in an insolvent liquidation.
This often caused apprehension about the conduct of the meeting, and whether those involved would face questions about the company’s financial position, or the reasons for its failure.
It was a common misconception that these meetings would be attended by a room full of disgruntled creditors’. However the reality was usually that meetings were held, without anyone other than the director and the Insolvency Practitioner in attendance.
What happens now?
The IR’s 2016 provide that, an office holder can write to creditors’ with a proposal, and if no objection is received, that proposal is approved by ‘deemed consent’. Any of the following procedures can also be adopted as an alternative to ‘Deemed Consent’:-
- Voting by correspondence
- Electronic voting
- Virtual meeting
- Any decision making procedure which enables all creditors, to participate equally
Whereas the previous rule relied heavily on the use of physical meetings, the new rules provide that an office holder cannot convene a physical meeting unless they are requested to do so by either:-
- 10% of the creditors (in value)
- 10% of the total number of creditors
- 10 individual creditors
These changes to legislation mean that creditors’ meetings are no longer a necessity, and engagement with the process should be much more convenient.
The Business Debt Advisor team have embraced the changes and it is now a much simpler and less daunting process to take steps to wind up your company.
If you would like to talk to us about taking steps to wind up your business, please call us on 03339999689 or e-mail us at firstname.lastname@example.org