Small Business, Enterprise and Employment Bill (HL Bill 57)

(a) the creditors are to be treated as not having made a decision
about the matter in question, and

(b) if a decision about that matter is again sought from the
creditors, it must be sought using a creditors’ decision
5procedure.

(6) “Relevant creditors” means the creditors who, if the decision were to be
made by a creditors’ decision procedure, would be entitled to vote in
the procedure.

(7) In this section references to creditors include creditors of a particular
10class.

(8) The rules may make further provision about the deemed consent
procedure.”

(3) In Schedule 9 (provisions which may be included in individual insolvency
rules), after paragraph 11 insert—

“11A (1) 15Provision about the making of decisions by creditors, including
provision—

(a) prescribing particular procedures by which creditors may
make decisions;

(b) authorising the use of other procedures for creditors to make
20decisions, if those procedures comply with prescribed
requirements.

(2) Provision under sub-paragraph (1) may in particular include
provision about—

(a) how creditors may request that a creditors’ meeting be held,

(b) 25the rights of creditors and others to be given notice of, and
participate in, procedures,

(c) creditors’ rights to vote in procedures,

(d) the period within which any right to participate or vote is to
be exercised,

(e) 30the proportion of creditors that must vote for a proposal for
it to be approved,

(f) how the value of any debt should be determined,

(g) the time at which decisions taken by a procedure are to be
treated as having been made.”

(4) 35In section 385(1) (miscellaneous definitions relating to individual
insolvency)—

(a) after the definition of “the court” insert—

• ““creditors’ decision procedure” has the meaning given by
  section 379ZA(9);”;

(b) 40after the definition of “debt relief order” insert—

• ““deemed consent procedure” means the deemed consent
  procedure provided for by section 379ZB;”.

121 Ability for creditors to opt not to receive certain notices: company insolvency

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

(2) For the italic heading before section 246B substitute—

(3) After section 246B insert—

“246C Creditors’ ability to opt out of receiving certain notices

(1) Any provision of the rules which requires an office-holder of a
5company to give a notice to creditors of the company does not apply, in
circumstances prescribed by the rules, in relation to opted-out
creditors.

(2) Subsection (1)—

(a) does not apply in relation to a notice of a distribution or
10proposed distribution to creditors;

(b) is subject to any order of the court requiring a notice to be given
to all creditors (or all creditors of a particular category).

(3) Except as provided by the rules, a creditor may participate and vote in
a qualifying decision procedure or a deemed consent procedure even
15though, by virtue of being an opted-out creditor, the creditor does not
receive notice of it.

(4) In this section—

• “give” includes deliver, furnish or send;

• “notice” includes any document or information in any other form;

• 20“office-holder”, in relation to a company, means—

  (a)

  a liquidator, provisional liquidator, administrator or
  administrative receiver of the company,

  (b)

  a receiver appointed under section 51 in relation to any
  property of the company, or

  (c)

  25the supervisor of a voluntary arrangement which has
  taken effect under Part 1 in relation to the company.”

(4) After section 248 insert—

“248A Opted-out creditor”

(1) For the purposes of this Group of Parts “opted-out creditor”, in relation
30to an office-holder of a company, means a person who—

(a) is a creditor of the company, and

(b) in accordance with the rules has elected (or is deemed to have
elected) to be (and not to cease to be) an opted-out creditor in
relation to the office-holder.

(2) 35In this section, “office-holder”, in relation to a company, means—

(a) a liquidator, provisional liquidator, administrator or
administrative receiver of the company,

(b) a receiver appointed under section 51 in relation to any
property of the company, or

(c) 40the supervisor of a voluntary arrangement which has taken
effect under Part 1 in relation to the company.”

(5) In Schedule 8 (provisions which may be included in company insolvency

rules), after paragraph 5 insert—

“5A Provision for enabling a creditor of a company to elect to be, or to
cease to be, an opted-out creditor in relation to an office-holder of the
company (within the meaning of section 248A), 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 of a company
to be such an election also in relation to any other office-
holder of the company.”

122 Ability for creditors to opt not to receive certain notices: individual
insolvency

(1) 15The Insolvency Act 1986 is amended as follows.

(2) For the italic heading before section 379B substitute—

(3) After section 379B insert—

“379C Creditors’ ability to opt out of receiving certain notices

(1) Any provision of the rules which requires an office-holder to give a
20notice to creditors of an individual does not apply, in circumstances
prescribed by the rules, in relation to opted-out creditors.

(2) Subsection (1)—

(a) does not apply in relation to a notice of a distribution or
proposed distribution to creditors;

(b) 25is subject to any order of the court requiring a notice to be given
to all creditors (or all creditors of a particular category).

(3) Except as provided by the rules, a creditor may participate and vote in
a qualifying decision procedure or a deemed consent procedure even
though, by virtue of being an opted-out creditor, the creditor does not
30receive notice of it.

(4) In this section—

• “give” includes deliver, furnish or send;

• “notice” includes any document or information in any other form;

• “office-holder”, in relation to an individual, means—

  (a)

  35where a bankruptcy order is made against the
  individual, the official receiver or the trustee in
  bankruptcy;

  (b)

  where an interim receiver of the individual’s property is
  appointed, the interim receiver;

  (c)

  40the supervisor of a voluntary arrangement approved
  under Part 8 in relation to the individual.”

(4) After section 383 insert—

“383A Opted-out creditor”

(1) For the purposes of this Group of Parts “opted-out creditor” in relation
to an office-holder for an individual means a person who—

(a) 5is a creditor of the individual, and

(b) in accordance with the rules has elected (or is deemed to have
elected) to be (and not to cease to be) an opted-out creditor in
relation to the office-holder.

(2) In this section, “office-holder”, in relation to an individual, means—

(a) 10where a bankruptcy order is made against the individual, the
official receiver or the trustee in bankruptcy;

(b) where an interim receiver of the individual’s property is
appointed, the interim receiver;

(c) the supervisor of a voluntary arrangement approved under Part
158 in relation to the individual.”

(5) In Schedule 9 (provisions capable of inclusion in individual insolvency rules),
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
20the individual (within the meaning of section 383A), including, in
particular, 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) 25for deeming an election to be, or cease to be, an opted-out
creditor 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.”

123 Sections 119 to 122: further amendments

30Schedule 9 (abolition of requirements to hold meetings; opted-out creditors)—

(a) makes amendments relating to sections 119 to 122, and

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

Administration

124 35Extension of administrator’s term of office

In 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”.

125 Administration: payments to unsecured creditors

(1) 40Schedule B1 to the Insolvency Act 1986 (administration) is amended as follows.

(2) In 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
5liquidation), in sub-paragraphs (1)(b) and (2)(b), after “any)” insert “which is
not a distribution by virtue of section 176A(2)(a)”.

126 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
10paragraph.

(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) 15The Secretary of State may by regulations make provision for—

(a) prohibiting, or

(b) imposing requirements or conditions in relation to,

the disposal, hiring out or sale of property of a company by the
administrator to a connected person in circumstances specified in the
20regulations.

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

(a) creditors of the company,

(b) 25the court, or

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

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

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

(b) 30a company connected with the company.

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

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

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

(ii) 35a 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
of one is or has been a relevant person of the other.

(5) In sub-paragraph (4), “non-employee associate” of a person means a
40person 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)
applies 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) 5make different provision for different purposes;

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

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

(9) 10Regulations under this paragraph may not be made unless a draft of
the statutory instrument containing the regulations has been laid
before Parliament and approved by a resolution of each House of
Parliament.

(10) This paragraph expires at the end of the period of 5 years beginning
15with the day on which it comes into force unless the power conferred
by it is exercised during that period.”

127 Attachment of floating charges on administration (Scotland)

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

(2) 20After sub-paragraph (1) insert—

“(1A) In 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
25granted by the company shall, unless it has already so attached,
attach 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
30effect as if the charge is a fixed security over the property to which it
has attached.”

Small debts

128 Creditors not required to prove small debts: company insolvency

In Schedule 8 to the Insolvency Act 1986 (provisions capable of inclusion in
35company insolvency rules) after paragraph 13 insert—

“13A 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
company’s property (and for provisions of, or contained in
legislation made under, this Act to apply accordingly).”

129 Creditors not required to prove small debts: individual insolvency

In 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
5as having done so for purposes relating to the distribution of a
bankrupt’s estate (and for provisions of, or contained in legislation
made under, this Act to apply accordingly).”

Trustees in bankruptcy

130 Trustees in bankruptcy

(1) 10In the Insolvency Act 1986, before section 292 insert—

“291A First trustee in bankruptcy

(1) On 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) 15If when the order is made there is a supervisor of a voluntary
arrangement approved in relation to the bankrupt under Part 8, the
court 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
20section, 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
court’s directions).

(4) A notice or advertisement given by a trustee appointed under
subsection (2) must explain the procedure for establishing a creditors’
25committee under section 301.”

(2) Schedule 10 makes consequential amendments.

Voluntary arrangements

131 Time limit for challenging IVAs

In section 262(3)(a) of the Insolvency Act 1986 (time limit for challenging
30voluntary arrangement), for the words from “the report” to “section 259”
substitute “the creditors decided whether to approve the proposed voluntary
arrangement 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”.

132 Abolition of fast-track voluntary arrangements

(1) 35Omit sections 263A to 263G of the Insolvency Act 1986 (fast-track voluntary
arrangements (England and Wales)) and the cross heading immediately before
section 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) 5in 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
10sections 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) 15The 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

133 Voluntary winding-up: progress reports

(1) 20The 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) 25In 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) 30in 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

134 Recognised professional bodies: recognition

(1) In Part 13 of the Insolvency Act 1986 (insolvency practitioners), for section 391
35(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
40professional 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
specialist members with partial authorisation only of the kind specified
5in 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
10profession,

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

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

(ii) 15meet acceptable requirements as to education and
practical training and experience, and

(c) the body’s rules and practices for or in connection with
authorising persons to act as insolvency practitioners, and its
rules and practices for or in connection with regulating persons
20acting 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
date as is specified in the order.

(6) An order under this section may be revoked by an order under section
25391L or 391N (and see section 415A(1)(b)).

(7) In this Part—

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

(b) 30references 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) A 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 35 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
Secretary of State may require,

(b) be accompanied by such information as the Secretary of State
40may require, and

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

(2) The requirements which may be imposed under subsection (1) may
45differ 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
of State may specify.

(4) An application for an order under section 391(1) or (2) must be
5accompanied by—

(a) a copy of the applicant’s rules,

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

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

(5) The reference in subsection (4)(c) to guidance issued by the applicant is
10a 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) relevant for the purposes of this Part, and

(c) intended to have continuing effect,

15including guidance or recommendations relating to the admission or
expulsion of members.

(6) The Secretary of State may refuse an application for an order under
section 391(1) or (2) if the Secretary of State considers that recognition
of the body concerned is unnecessary having regard to the existence of
20one 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
application for an order under section 391(1) or (2); and it applies
regardless of whether the application is refused on the ground
25mentioned 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) The 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
30refusing 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
section, 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.

135 35Regulatory objectives

(1) After section 391A of the Insolvency Act 1986 (inserted by section 134) insert—

“Regulatory objectives

391B Application of regulatory objectives

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

(a) 40which is compatible with the regulatory objectives, and

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