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(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) 5In paragraph 83 (power to move from administration to creditors’ voluntary
liquidation), in sub-paragraphs (1)(b) and (2)(b), after “any)” insert “which is
not a distribution by virtue of section 176A(2)(a)”.

129 Administration: sales to connected persons

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

(2) 10Paragraph 60 (power of administrators) becomes sub-paragraph (1) of that
paragraph.

(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) 15After 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,

the disposal, hiring out or sale of property of a company by the
20administrator 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
conditions by—

(a) 25creditors 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,
means—

(a) 30a 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) a director or other officer, or shadow director, of the
35company;

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

(5) 40In 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.

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(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.

130 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 charge 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

131 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).

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132 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

133 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

134 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”.

135 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.

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(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

136 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

137 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 17 of the
Deregulation Act 2015) 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.

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(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.

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(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.

138 35Regulatory objectives

(1) After section 391A of the Insolvency Act 1986 (inserted by section 137) 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.

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(2) In 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) 5“Regulatory functions”, in relation to a recognised professional body,
means 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) 10regulating 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) having a system of regulating persons acting as insolvency
15practitioners that—

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

(ii) reflects the regulatory principles, and

(iii) ensures consistent outcomes,

(b) 20encouraging 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) act transparently and with integrity, and

(iii) 25consider 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) protecting and promoting the public interest.

(4) 30In 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) any other principle appearing to the body concerned (in the case
35of 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
13), at the end insert—

(5) 40In making regulations under this section, the Secretary of State must
have regard to the regulatory objectives (as defined by section
391C(3)).

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139 Oversight of recognised professional bodies

(1) After section 391C of the Insolvency Act 1986 (inserted by section 138) insert—

Oversight of recognised professional bodies

391D Directions

(1) This section applies if the Secretary of State is satisfied that an act or
5omission of a recognised professional body (or a series of such acts or
omissions) in discharging one or more of its regulatory functions has
had, 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
10satisfied 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) 15to 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
20body—

(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) 25For 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
30connection 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
35391D, 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) 40specify 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)—

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(a) must 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
5to give the body the proposed direction.

(5) The 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) 10state 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
15subsection 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) 20must 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 25Financial 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
30impose 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
35this 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
40not 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
45financial penalty under this section (including by way of interest) are to
be paid into the Consolidated Fund.

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

391G Financial penalty: procedure

(1) Before imposing a penalty on a recognised professional body, the
5Secretary 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) stating why the Secretary of State is satisfied as mentioned in
10section 391F(1), and

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

(2) The period specified under subsection (1)(d)—

(a) must begin with the date on which the notice is given to the
15body, and

(b) must not be less than 28 days.

(3) On the expiry of that period, the Secretary of State must decide—

(a) whether to impose a penalty, and

(b) whether the penalty should be the amount stated in the notice
20or a reduced amount.

(4) The Secretary of State must give notice of the decision to the body.

(5) Where the Secretary of State decides to impose a penalty, the notice
under subsection (4) must—

(a) state that the Secretary of State has imposed a penalty on the
25body and its amount,

(b) specify the requirement in question and state—

(i) why it appears to the Secretary of State that the
requirement has not been complied with, or

(ii) where, by that time, the requirement has been complied
30with, why it appeared to the Secretary of State when
giving the notice under subsection (1) that the
requirement had not been complied with, and

(c) specify a time by which the penalty is required to be paid.

(6) The time specified under subsection (5)(c) must be at least three months
35after the date on which the notice under subsection (4) is given to the
body.

(7) Where the Secretary of State decides to impose a penalty, the Secretary
of State must publish the notice under subsection (4).

(8) The Secretary of State may rescind or reduce a penalty imposed on a
40recognised professional body; and, where doing so, the Secretary of
State—

(a) must give the body notice that the penalty has been rescinded
or reduced to the amount stated in the notice, and

(b) must publish the notice; and it must (if possible) be published
45in the same manner as that in which the notice under subsection
(4) was published.