VA’s revisited – happy, happy, happy!

Yes, I know, compliance consultants are not meant to say they are happy with anything, but there’s always a first time –

My first happy is that, after taking a little time off for a nervous breakdown, I have completed my new review packages for VA’s* (except moratorium CVA’s – life really is too short).

My second happy, is that (with the exception of the initial decision process – see my earlier blog on that subject) I can say that the fundamentals of VA’s remain largely the same.

And my third happy is about the R3 standard terms. As stated on their website and flagged in Dear IP, a new set of R3 standard terms is expected imminently – in fact a rather authoritative bird has chirped about the second week of June. So, if you have a VA in preparation, now, see if you can hold it up until the amended terms become available.

But if you can’t do that, the same bird has warbled that R3 think the old standard terms are fit for purpose in any event. I am not sure that is entirely true, because references to specific Rules like 12A.12-23 (use of websites for specific reports and conduct of meetings) probably don’t work in VA’s created after the Rule has actually been repealed. Some might suggest that because the successor rules are rarely significantly different to the 86 Rules, that one can just apply the former under the supervisor’s general discretion at paragraph 15 of the standard terms, but I am a little cautious about whether the Courts would agree so easily.   That said, if you are worried and can’t wait for the new standard terms, then why not amend the proposals themselves, so that the standard terms are only adopted with the new rule references substituted (see standard terms paragraphs 10(3), 22(3), 30, 46(2), 59(3), 62A(3), 62B(2), 71(2)(c) being the ones I have spotted).

You see – happy, happy, happy…

(*copies of all my new review checklists are available to purchase (free to clients, of course) on application – just ring or email me)

Committees – a short cut to agreeing remuneration?

Continuing the trawl through the new rules on Committees, it seems that the Insolvency Service have created a route by which to get a committee of your own nominees rather than rely on a vote by creditors. Because of the obvious ethical risks, some suggest that this is just an example of another cock-up in the drafting. But I think this could be a very useful means of getting Committees appointed in difficult or speculative cases, to avoid repeated applications to creditors for fee changes and the like.  Who knows – the Insolvency Service may even have decided it can trust us to be the professionals that the vast majority of us really are.

In summary, the new rules[1] seem to allow one to decide to have a committee and then establish it (the new expression for “constitute”) by the deemed consent process. Because of the obvious room for conflict in appointing a committee entirely made up of one’s own nominees, one would have thought that the new SIP 15 would have something to say about it, but no.

But until such time as a new SIP does appear or the Insolvency service amend the provision, here is some guidance on how you might think about using it –

  • If you think you should have a committee, seek out the creditors you believe most likely to serve and get their agreement, beforehand.
  • Conduct a check under the ethical code, to ensure that there are no self-interest or familiarity risks arising (e.g. you act regularly for that creditor in some other capacity, or they (or their representatives) are already acting on other committees where you are office holder).
  • Make sure the decision is justified by a clear note as to the reasons why you want a committee and why those particular creditors are being nominated.
  • Give notice that you will deal with the matter by deemed consent, and state that unless other nominations are made, the persons you have nominated will be its members.
  • You will also have to make provision in your notice for creditors to either object to the committee altogether or submit their own nominations in the period allowed. If you get more than five nominations altogether including your own, you will then have to either put the nominations up for a decision by meeting or perhaps invite (some of) your own nominees to stand down.
  • Make a clear record of the final process of appointing the committee, including any decision to keep one of the original nominees, rather than one from elsewhere.
  • Summarise that rationale in your letter to creditors and make sure the process of choosing committee members is made clear.
  • Be prepared for your RPB reviewer to give any fees decided by the committee, special attention.

There are other things about the processes of dealing with committees and remuneration that you will need to be aware of – this is not a one-stop solution to all the problems created by the fee proposal requirements. I hope to get out a general guidance paper on committees in due course, but for the moment I shall be interested to see what readers make of this.

[1] For those of you who are technically minded, read the new section 246ZF(4) from the SBEE in conjunction with new Rules 17.5, 3.39, 6.19 and 10.76.


Meanwhile in other news, the new SIP 15 arrives

Currently working through the new rules for committees, I thought I was going to mark practically all of it as “no significant change”, my favorite notation on my burgeoning spreadsheet.  But as you might expect, there is a little wrinkle in SIP 15.

In the past, SIP 15 required us to send details of the Committee’s duties to the committee, once formed, along with a copy of SIP 2. That has now gone from the SIP (yay) but been replaced by a requirement to advise creditors before inviting nominations, “on where they can access suitable information on the rights, duties and functions of the committee…”

Meanwhile, the Rules now require that creditors be given opportunity to form a committee whenever they are asked for a decision, or notified of a proposal for deemed consent. So, basically, every notice of that kind needs to carry the above information and if you aren’t already using a website to post information of this kind, you will have to enclose the information with your letter.

Happily, you can refer people to the current R3 Creditors advice (assuming it gets amended) which does have a section covering these points, but this change means that there has to be reference to the creditors guide in every decision process; not just with the first one and with all reports relating to remuneration, as currently required under SIP 9. Moreover, because the R3 advice does not contain a clear index or contents page, I think the RPB will require an extra reference to the particular webpage and the drop down, probably.

So, now you know.

STOP PRESS –  Watch out for my next blog on committees; being able to create them by the deemed consent process – a short cut to agreeing fees?


Preparing for the new legislation

So, having completed the last of my compliance visits the week before Christmas, I have started working through the detail of the new Rules and the changes in the Act, in preparation for 1 April – two spreadsheets, three paper files, four sets of legislation and several hundred cups of coffee. By the end of next month, I expect to make available two things –

  • A rule by rule guide to the changes in the Insolvency (England & Wales) Rules 2016.
  • The first of a series of updated compliance checklists for each main case type and the new, common parts, which can be used as final checks to ensure that your documents and forms cover the most essential features of the rules.

More on those things in a later blog.

But there are some areas of the new processes that really need more explanation. ICAEW and others are running all sorts of webinars and I suspect they will be great, but being a little old fashioned, I intend to write a limited series of guidance papers on key areas of the new legislation.  The first titles are

  • CVLs and how to get appointed safely.
  • Decisions, decisions, decisions.
  • Progress and closing reports – what, why, when and where

In between, I expect to blog on a range of topics in an attempt to help you through the process.

Oh, and by the way,

Happy New Year