A year of 366 days – a wrinkle to catch the unwary

This is a nasty little change because it will affect accounting periods not just in new appointments, but in transitional cases too.

While the rest of the world is content with years of 365 days as standard, the new insolvency rules have decreed that in any period stated to be in months, such as the 12 required for progress reports in most case types, the period ends with the same day of the month as it began with. Thus, if you are appointed on 12 May 2017, the period of the first progress report will end on the 12 May 20128 and not 11 May 2018 as you might otherwise suppose (see rule 1.3 and Schedule 5).

Much consternation surrounded this idea when it was first encountered, because of possible confusions when accounting for time. Would there not be a danger of double counting the time between reporting days?

In case you were worrying about this, a kind of salvation Is suggested by Rule 15.2 which states that any decision other than by meeting is to be treated as made at 23.59 on the date of decision. So, for an appointment made by deemed consent on 12 May, the time account will effectively run from 00:01 on 13th to 23:59 on 12th.

Now, the general opinion is that most future CVL appointments will be made by deemed consent. But ADM appointments most often take effect at a given time, and CVL appointments at meetings (for time accounting purposes, at least) should be treated as made at the time the meeting is convened.  So, does this mean we have to run time accounts from say, 2.00 on the first day to 1.59 on the last day of the period? At risk of being contradicted by one of my successors at QAD[1], I think the practical and safe solution is to run all time accounts to the end of the final report day, but effectively tag on the time post-appointment from the first day (which can be done by reliance on separate coding of pre-appointment time in generic systems).  Of course, that potentially means the whole day in appointments made by the Court or the Secretary of State, but as one rarely gets handover on the day of appointment, itself, this problem should (usually) prove academic.

Just be careful with your first and second reports in all cases after the new rules come in, because the new reporting period will affect old cases, too. You will need to make sure that you don’t inadvertently miss a day’s charge, or double count it, from getting your reporting days confused.

Clear?

[1] And if they do say I am wrong, at least you will have adopted a consistent policy based on my advice.

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