Small Business, Enterprise and Employment Bill (HC Bill 117)

after paragraph 7 insert—

“7A Provision for enabling a creditor of an individual to elect to be, or to
cease to be, an opted-out creditor in relation to an office-holder for
the individual (within the meaning of section 383A), including, in
5particular, provision—

(a) for requiring an office-holder to provide information to
creditors about how they may elect to be, or cease to be,
opted-out creditors;

(b) for deeming an election to be, or cease to be, an opted-out
10creditor in relation to a particular office-holder for an
individual to be such an election also in relation to any other
office-holder for the individual.”

120 Sections 116 to 119: further amendments

Schedule 9 (abolition of requirements to hold meetings; opted-out creditors)—

(a) 15makes amendments relating to sections 116 to 119, and

(b) removes requirements to hold a general meeting of a company when
the company’s affairs are fully wound up.

Administration

121 Extension of administrator’s term of office

20In paragraph 76(2)(b) of Schedule B1 to the Insolvency Act 1986
(administrator’s term of office may be extended for up to six months by
consent) for “six months” substitute “one year”.

122 Administration: payments to unsecured creditors

(1) Schedule B1 to the Insolvency Act 1986 (administration) is amended as follows.

(2) 25In paragraph 65(3) (restrictions on distribution to unsecured creditors) for
“unless” substitute “unless—

(a) the distribution is made by virtue of section 176A(2)(a), or

(b)”.

(3) In paragraph 83 (power to move from administration to creditors’ voluntary
30liquidation), in sub-paragraphs (1)(b) and (2)(b), after “any)” insert “which is
not a distribution by virtue of section 176A(2)(a)”.

123 Administration: sales to connected persons

(1) Schedule B1 to the Insolvency Act 1986 (administration) is amended as follows.

(2) Paragraph 60 (power of administrators) becomes sub-paragraph (1) of that
35paragraph.

(3) After that sub-paragraph insert—

“(2) But the power to sell, hire out or otherwise dispose of property is
subject to any regulations that may be made under paragraph 60A.”

(4) After paragraph 60 insert—

“60A (1) The Secretary of State may by regulations make provision for—

(a) prohibiting, or

(b) imposing requirements or conditions in relation to,

5the disposal, hiring out or sale of property of a company by the
administrator to a connected person in circumstances specified in the
regulations.

(2) Regulations under this paragraph may in particular require the
approval of, or provide for the imposition of requirements or
10conditions by—

(a) creditors of the company,

(b) the court, or

(c) a person of a description specified in the regulations.

(3) In sub-paragraph (1), “connected person”, in relation to a company,
15means—

(a) a relevant person in relation to the company, or

(b) a company connected with the company.

(4) For the purposes of sub-paragraph (3)—

(a) “relevant person”, in relation to a company, means—

(i) 20a director or other officer, or shadow director, of the
company;

(ii) a non-employee associate of such a person;

(iii) a non-employee associate of the company;

(b) a company is connected with another if any relevant person
25of one is or has been a relevant person of the other.

(5) In sub-paragraph (4), “non-employee associate” of a person means a
person who is an associate of that person otherwise than by virtue of
employing or being employed by that person.

(6) Subsection (10) of section 435 (extended definition of company)
30applies for the purposes of sub-paragraphs (3) to (5) as it applies for
the purposes of that section.

(7) Regulations under this paragraph may—

(a) make different provision for different purposes;

(b) make incidental, consequential, supplemental and
35transitional provision.

(8) Regulations under this paragraph are to be made by statutory
instrument.

(9) An instrument containing regulations under this paragraph is
subject to annulment in pursuance of a resolution of either House of
40Parliament.

(10) This paragraph expires at the end of the period of 5 years beginning
with the day on which it comes into force unless the power conferred
by it is exercised during that period.”

124 Attachment of floating charges on administration (Scotland)

(1) Paragraph 115 of Schedule B1 (administration) to the Insolvency Act 1986 is
amended as follows.

(2) After sub-paragraph (1) insert—

“(1A) 5In Scotland, sub-paragraph (1B) applies in connection with the
giving by the court of permission as provided for in paragraph
65(3)(b).

(1B) On the giving by the court of such permission, any floating charge
granted by the company shall, unless it has already so attached,
10attach to the property which is subject to the charge.”

(3) In sub-paragraph (3), omit the words from “and” to the end.

(4) After that sub-paragraph insert—

“(4) Attachment of a floating change under sub-paragraph (1B) or (3) has
effect as if the charge is a fixed security over the property to which it
15has attached.”

Small debts

125 Creditors not required to prove small debts: company insolvency

In Schedule 8 to the Insolvency Act 1986 (provisions capable of inclusion in
company insolvency rules) after paragraph 13 insert—

“13A 20Provision for a creditor who has not proved a small debt to be treated
as having done so for purposes relating to the distribution of a
company’s property (and for provisions of, or contained in
legislation made under, this Act to apply accordingly).”

126 Creditors not required to prove small debts: individual insolvency

25In Schedule 9 to the Insolvency Act 1986 (provisions capable of inclusion in
individual insolvency rules) after paragraph 18 insert—

“18A Provision for a creditor who has not proved a small debt to be treated
as having done so for purposes relating to the distribution of a
bankrupt’s estate (and for provisions of, or contained in legislation
30made under, this Act to apply accordingly).”

Trustees in bankruptcy

127 Trustees in bankruptcy

(1) In the Insolvency Act 1986, before section 292 insert—

“291A First trustee in bankruptcy

(1) 5On the making of a bankruptcy order the official receiver becomes
trustee of the bankrupt’s estate, unless the court appoints another
person under subsection (2).

(2) If when the order is made there is a supervisor of a voluntary
arrangement approved in relation to the bankrupt under Part 8, the
10court may on making the order appoint the supervisor of the
arrangement as the trustee.

(3) Where a person becomes trustee of a bankrupt’s estate under this
section, the person must give notice of that fact to the bankrupt’s
creditors (or, if the court so allows, advertise it in accordance with the
15court’s directions).

(4) A notice or advertisement given by a trustee appointed under
subsection (2) must explain the procedure for establishing a creditors’
committee under section 301.”

(2) Schedule 10 makes consequential amendments.

20Voluntary arrangements

128 Time limit for challenging IVAs

In section 262(3)(a) of the Insolvency Act 1986 (time limit for challenging
voluntary arrangement), for the words from “the report” to “section 259”
substitute “the creditors decided whether to approve the proposed voluntary
25arrangement or, where a report was required to be made to the court under
section 259(1)(b), the day on which the report was made”.

129 Abolition of fast-track voluntary arrangements

(1) Omit sections 263A to 263G of the Insolvency Act 1986 (fast-track voluntary
arrangements (England and Wales)) and the cross heading immediately before
30section 263A.

(2) In consequence of the repeals made by subsection (1), in the Insolvency Act
1986—

(a) in section 282 (court’s power to annul bankruptcy order), in subsection
(4), omit “or 263D”, and

(b) 35in Schedule 4A (bankruptcy restrictions order and undertaking), in
paragraph 11, omit “, 263D”.

(3) Also in consequence of the repeals made by subsection (1), in the Enterprise
Act 2002—

(a) omit section 264(2) to (4) (orders to extend application of provisions of
40sections 263B to 263G of the Insolvency Act 1986),

(b) in Schedule 22, omit paragraph 2 (fast-track voluntary arrangements)
and the heading immediately before it, and

(c) in Schedule 23 (minor and consequential amendments), omit
paragraph 4(a) and the “and” immediately after it.

(4) 5The repeals made by this section have no effect in relation to a case where a
debtor has submitted the document and statement mentioned in section
263B(1) to the official receiver before this section comes into force.

Progress reports

130 Voluntary winding-up: progress reports

(1) 10The Insolvency Act 1986 is amended as follows.

(2) In section 92A (progress reports in members’ voluntary winding-up)—

(a) in subsection (1), for the words from “in the event” to “one year,”
substitute “where the company is registered in England and Wales”;

(b) in the heading, omit “at year’s end”.

(3) 15In section 104A (progress reports in creditors’ voluntary winding-up)—

(a) in subsection (1), for the words from “If the” to “one year,” substitute
“Where the company is registered in England and Wales”;

(b) in the heading, omit “at year’s end”.

(4) In the table in Schedule 10 (punishment of offences)—

(a) 20in the entry for section 92A(2), in column 2, omit “at year’s end”;

(b) in the entry for section 104A(2), in column 2, omit “at year’s end”.

Regulation of insolvency practitioners: amendments to existing regime

131 Recognised professional bodies: recognition

(1) In Part 13 of the Insolvency Act 1986 (insolvency practitioners), for section 391
25(recognised professional bodies) (as substituted by section 18 of the
Deregulation Act 2014) substitute—

“391 Recognised professional bodies

(1) The Secretary of State may by order, if satisfied that a body meets the
requirements of subsection (4), declare the body to be a recognised
30professional body which is capable of providing its insolvency
specialist members with full authorisation or partial authorisation.

(2) The Secretary of State may by order, if satisfied that a body meets the
requirements of subsection (4), declare the body to be a recognised
professional body which is capable of providing its insolvency
35specialist members with partial authorisation only of the kind specified
in the order (as to which, see section 390A(1)).

(3) Section 391A makes provision about the making by a body of an
application to the Secretary of State for an order under this section.

(4) The requirements are that—

(a) the body regulates (or is going to regulate) the practice of a
profession,

(b) the body has rules which it is going to maintain and enforce for
securing that its insolvency specialist members—

(i) 5are fit and proper persons to act as insolvency
practitioners, and

(ii) meet acceptable requirements as to education and
practical training and experience, and

(c) the body’s rules and practices for or in connection with
10authorising persons to act as insolvency practitioners, and its
rules and practices for or in connection with regulating persons
acting as such, are designed to ensure that the regulatory
objectives are met (as to which, see section 391C).

(5) An order of the Secretary of State under this section has effect from such
15date as is specified in the order.

(6) An order under this section may be revoked by an order under section
391L or 391N (and see section 415A(1)(b)).

(7) In this Part—

(a) references to members of a recognised professional body are to
20persons who, whether members of that body or not, are subject
to its rules in the practice of the profession in question;

(b) references to insolvency specialist members of a professional
body are to members who are permitted by or under the rules
of the body to act as insolvency practitioners.

(8) 25A reference in this Part to a recognised professional body is to a body
recognised under this section (and see sections 391L(6) and 391N(5)).

391A Application for recognition as recognised professional body

(1) An application for an order under section 391(1) or (2) must—

(a) be made to the Secretary of State in such form and manner as the
30Secretary of State may require,

(b) be accompanied by such information as the Secretary of State
may require, and

(c) be supplemented by such additional information as the
Secretary of State may require at any time between receiving the
35application and determining it.

(2) The requirements which may be imposed under subsection (1) may
differ as between different applications.

(3) The Secretary of State may require information provided under this
section to be in such form, and verified in such manner, as the Secretary
40of State may specify.

(4) An application for an order under section 391(1) or (2) must be
accompanied by—

(a) a copy of the applicant’s rules,

(b) a copy of the applicant’s policies and practices, and

(c) 45a copy of any guidance issued by the applicant in writing.

(5) The reference in subsection (4)(c) to guidance issued by the applicant is
a reference to guidance or recommendations which are—

(a) issued or made by it which will apply to its insolvency specialist
members or to persons seeking to become such members,

(b) 5relevant for the purposes of this Part, and

(c) intended to have continuing effect,

including guidance or recommendations relating to the admission or
expulsion of members.

(6) The Secretary of State may refuse an application for an order under
10section 391(1) or (2) if the Secretary of State considers that recognition
of the body concerned is unnecessary having regard to the existence of
one or more other bodies which have been or are likely to be recognised
under section 391.

(7) Subsection (8) applies where the Secretary of State refuses an
15application for an order under section 391(1) or (2); and it applies
regardless of whether the application is refused on the ground
mentioned in subsection (6), because the Secretary of State is not
satisfied as mentioned in section 391(1) or (2) or because a fee has not
been paid (see section 415A(1)(b)).

(8) 20The Secretary of State must give the applicant a written notice of the
Secretary of State’s decision; and the notice must set out the reasons for
refusing the application.”

(2) An order under section 391(1) or (2) of the Insolvency Act 1986 made before the
coming into force of this section is, following the coming into force of this
25section, to be treated as if it were made under section 391(1) or (as the case may
be) (2) as substituted by subsection (1) of this section.

132 Regulatory objectives

(1) After section 391A of the Insolvency Act 1986 (inserted by section 131) insert—

“Regulatory objectives

391B Application of regulatory objectives

(1) 30In discharging regulatory functions, a recognised professional body
must, so far as is reasonably practicable, act in a way—

(a) which is compatible with the regulatory objectives, and

(b) which the body considers most appropriate for the purpose of
meeting those objectives.

(2) 35In discharging functions under this Part, the Secretary of State must
have regard to the regulatory objectives.

391C Meaning of “regulatory functions” and “regulatory objectives”

(1) This section has effect for the purposes of this Part.

(2) “Regulatory functions”, in relation to a recognised professional body,
40means any functions the body has—

(a) under or in relation to its arrangements for or in connection
with—

(i) authorising persons to act as insolvency practitioners, or

(ii) regulating persons acting as insolvency practitioners, or

(b) in connection with the making or alteration of those
arrangements.

(3) “Regulatory objectives” means the objectives of—

(a) 5having a system of regulating persons acting as insolvency
practitioners that—

(i) secures fair treatment for persons affected by their acts
and omissions,

(ii) reflects the regulatory principles, and

(iii) 10ensures consistent outcomes,

(b) encouraging an independent and competitive insolvency-
practitioner profession whose members—

(i) provide high quality services at a cost to the recipient
which is fair and reasonable,

(ii) 15act transparently and with integrity, and

(iii) consider the interests of all creditors in any particular
case,

(c) promoting the maximisation of the value of returns to creditors
and promptness in making those returns, and

(d) 20protecting and promoting the public interest.

(4) In subsection (3)(a), “regulatory principles” means—

(a) the principles that regulatory activities should be transparent,
accountable, proportionate, consistent and targeted only at
cases in which action is needed, and

(b) 25any other principle appearing to the body concerned (in the case
of the duty under section 391B(1)), or to the Secretary of State (in
the case of the duty under section 391B(2)), to lead to best
regulatory practice.”

(2) In section 419 of the Insolvency Act 1986 (regulations for the purposes of Part
3013), at the end insert—

“(5) In making regulations under this section, the Secretary of State must
have regard to the regulatory objectives (as defined by section
391C(3)).”

133 Oversight of recognised professional bodies

35After section 391C of the Insolvency Act 1986 (inserted by section 132) insert—

“Oversight of recognised professional bodies

391D Directions

(1) This section applies if the Secretary of State is satisfied that an act or
omission of a recognised professional body (or a series of such acts or
omissions) in discharging one or more of its regulatory functions has
40had, or is likely to have, an adverse impact on the achievement of one
or more of the regulatory objectives.

(2) The Secretary of State may, if in all the circumstances of the case
satisfied that it is appropriate to do so, direct the body to take such steps

as the Secretary of State considers will counter the adverse impact,
mitigate its effect or prevent its occurrence or recurrence.

(3) A direction under this section may require a recognised professional
body—

(a) 5to take only such steps as it has power to take under its
regulatory arrangements;

(b) to take steps with a view to the modification of any part of its
regulatory arrangements.

(4) A direction under this section may require a recognised professional
10body—

(a) to take steps with a view to the institution of, or otherwise in
respect of, specific regulatory proceedings;

(b) to take steps in respect of all, or a specified class of, such
proceedings.

(5) 15For the purposes of this section, a direction to take steps includes a
direction which requires a recognised professional body to refrain from
taking a particular course of action.

(6) In this section “regulatory arrangements”, in relation to a recognised
professional body, means the arrangements that the body has for or in
20connection with—

(a) authorising persons to act as insolvency practitioners, or

(b) regulating persons acting as insolvency practitioners.

391E Directions: procedure

(1) Before giving a recognised professional body a direction under section
25391D, the Secretary of State must give the body a notice accompanied
by a draft of the proposed direction.

(2) The notice under subsection (1) must—

(a) state that the Secretary of State proposes to give the body a
direction in the form of the accompanying draft,

(b) 30specify why the Secretary of State has reached the conclusions
mentioned in section 391D(1) and (2), and

(c) specify a period within which the body may make written
representations with respect to the proposal.

(3) The period specified under subsection (2)(c)—

(a) 35must begin with the date on which the notice is given to the
body, and

(b) must not be less than 28 days.

(4) On the expiry of that period, the Secretary of State must decide whether
to give the body the proposed direction.

(5) 40The Secretary of State must give notice of that decision to the body.

(6) Where the Secretary of State decides to give the proposed direction, the
notice under subsection (5) must—

(a) contain the direction,

(b) state the time at which the direction is to take effect, and

(c) specify the Secretary of State’s reasons for the decision to give
the direction.

(7) Where the Secretary of State decides to give the proposed direction, the
Secretary of State must publish the notice under subsection (5); but this
5subsection does not apply to a direction to take any step with a view to
the institution of, or otherwise in respect of, regulatory proceedings
against an individual.

(8) The Secretary of State may revoke a direction under section 391D; and,
where doing so, the Secretary of State—

(a) 10must give the body to which the direction was given notice of
the revocation, and

(b) must publish the notice and, if the notice under subsection (5)
was published under subsection (7), must do so (if possible) in
the same manner as that in which that notice was published.

391F 15Financial penalty

(1) This section applies if the Secretary of State is satisfied—

(a) that a recognised professional body has failed to comply with a
requirement to which this section applies, and

(b) that, in all the circumstances of the case, it is appropriate to
20impose a financial penalty on the body.

(2) This section applies to a requirement imposed on the recognised
professional body—

(a) by a direction given under section 391D, or

(b) by a provision of this Act or of subordinate legislation under
25this Act.

(3) The Secretary of State may impose a financial penalty, in respect of the
failure, of such amount as the Secretary of State considers appropriate.

(4) In deciding what amount is appropriate, the Secretary of State—

(a) must have regard to the nature of the requirement which has
30not been complied with, and

(b) must not take into account the Secretary of State’s costs in
discharging functions under this Part.

(5) A financial penalty under this section is payable to the Secretary of
State; and sums received by the Secretary of State in respect of a
35financial penalty under this section (including by way of interest) are to
be paid into the Consolidated Fund.

(6) In sections 391G to 391I, “penalty” means a financial penalty under this
section.

391G Financial penalty: procedure

(1) 40Before imposing a penalty on a recognised professional body, the
Secretary of State must give notice to the body—

(a) stating that the Secretary of State proposes to impose a penalty
and the amount of the proposed penalty,

(b) specifying the requirement in question,

(c) 45stating why the Secretary of State is satisfied as mentioned in
section 391F(1), and