Insolvency Service Stakeholder Newsletter (Spring 2016)

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Spring 2016 Stakeholder Newsletter


Bankruptcy applications move online

In the last newsletter we outlined the changes to debtor bankruptcy due in April. April will soon be here and the practical steps to transfer debtor petitions out of the courts to the Insolvency Service are being finalised. 

From 6th April 2016, instead of going to court, individuals wanting to apply for bankruptcy will apply online via the central UK Government website, GOV.UK. 

ODS smart answers

Our new smart answers page has already gone live on GOV.UK, providing information on the different options available to help people deal with unmanageable debt.

From 6th April, people will also be able to access the online bankruptcy form on this site, if they decide that is the most appropriate solution for their circumstances. 

The intention is to provide information in one place, on a trusted government website which people visit when exploring what government services exist to help them with problem debt. The site will also prompt and provide individuals with details on how and where to contact an authorised debt advisor.

The decision to take bankruptcy out of the courts is one of the reforms being made to ensure that people in financial crisis get swift access to the right insolvency remedy: we know from our own research that many people are intimidated by the idea of going to court and so will not consider bankruptcy, even though they are in financial crisis and urgently need debt relief. The new online form will be easier to access and use than the current paper application.  

bankruptcy key

Applying for bankruptcy will still be a big step and one which people in financial distress generally only contemplate when they believe no other option is available to them.

However, we are trying to make the process as clear and straightforward as possible. People will be able to pay the fee online when they apply for bankruptcy, and will be able to pay by instalments (online payments only). The new adjudicator fee will be £130, replacing the current £180 court fee.

Applications for bankruptcy submitted online will be determined by an Adjudicator within the Insolvency Service. Once an order has been made, the case will transfer to the Official Receiver in the same way as it does in the current process.

The courts will accept any petitions made before or on 5th April 2016, regardless of the date of the hearing. No petitions will be accepted after 5th April 2016 but if a case is adjourned on or before 5th April 2016 it will continue to be dealt with by the court.

For more information, listen to this podcast we've recorded with the Money Advice Trust, explaining how the new online bankruptcy system will work.

Insolvency Rules 2016

Cut red tape regulation

As many people involved with insolvency will be aware, the Insolvency Service is working to update the Insolvency Rules. The new Rules will do three things:

  • Incorporate various changes in the law, which are intended to reduce the burden of red tape;
  • Consolidate the existing rules and their amendments into a single set of rules; and
  • Modernise the rules through updating the structure and simplifying the language.

We are currently working with the Insolvency Rules Committee to finalise the new Rules. We are making good progress and once we are through that process our Minister, Anna Soubry, will be in a position to decide on the commencement date for the new rules. 

We have noted what has been said about the need for sufficient lead in time between laying the Rules and their commencement, and will provide further updates as soon as we can.

Digital reporting on director conduct

disqualification regulation

The Small Business, Enterprise and Employment Act 2015 included insolvency provisions which changed some of the primary legislation around the UK’s insolvency regime; one of these related to how director conduct is reported to the Secretary of State.

Conduct reporting is an essential element of the director disqualification regime because it is the means by which cases are identified for investigation, the final results of which are the disqualification outcomes, which serve to protect the public by preventing people from abusing the privilege of limited liability.

On 22 February 2016 the secondary legislation was laid in Parliament which will enable the Conduct Assessment Service, a new digital process, to replace a paper based reporting system which has been in place since the 1980s.

The new Conduct Assessment Service will go live on 6th April 2016, when the secondary legislation comes into force. This is an online tool which about 1,800 insolvency practitioners and also the Insolvency Service’s Official Receivers will use to report on director conduct.

The team developing the service has been undertaking user research, working closely with a variety of insolvency practitioners and their staff to ensure that the service is suitable for use by firms ranging in size from locally based, single practitioner businesses to global accountancy practices.

Conduct reports will need to be submitted within 3 months of the company’s failure instead of the current 6 months. This will enable investigations to commence at an earlier stage than they are at the moment and should result in a reduction in the time taken to obtain disqualifications where they are in the public interest.

The move to online reporting will simplify the process for insolvency practitioners.

Reports on director conduct are required in respect of almost all companies (with very limited exceptions) which go into a formal insolvency procedure - in 2015 there were over 15,000 conduct reports required for corporate insolvencies. The legislative changes will reduce the number of reports received by the new service as, for example, where the same company is the subject of more than one type of insolvency procedure only one report will be required under the new process.

Further communications about the Conduct Assessment Service will be issued to insolvency practitioners over the next few weeks.  

Consequences of misconduct


Over the past few months – working with insolvency practitioners, other agencies and regulators – our Investigation and Enforcement team have achieved successes in tackling an array of company and individual misconduct. 

Cases have ranged from winding up a network of companies which sold over £36 million of untradeable carbon credits as investments to unsuspecting members of the public, to achieving a 12 year disqualification for a wine merchant who sold wine which didn’t exist.

Several recent cases have involved disqualifications for directors for breaching employment and immigration laws by employing illegal workers (e.g. at Bombay Blues restaurant in Glasgow and the Golden Paragon restaurant in Newcastle) or failing to pay the minimum wage (e.g. at Cygnets To Swans nursery in Manchester).

And in one high-profile case in February, two directors of a holiday tour operator used by Prince William and Prince Harry were disqualified for a total of 14 years; they failed to ensure that several charities, including Sentebale (a charity founded by Prince Harry and Prince Seeiso of Lesotho) and Nelson Mandela Children’s Fund, received over £200,000 which had been raised for charity under commercial participation agreements.

In some of the most objectionable cases, we have clamped down on scammers targeting people – often pensioners – who have already been tricked out of money once, claiming they can recover losses, for a large advance fee. Our Investigation and Enforcement team also achieved a 10 year ban for the director of a company which cold-called small businesses and individuals, duping them out of hundreds of thousands of pounds on the grounds that the money would be used to promote sexual awareness in young people.

The next set of quarterly enforcement statistics will be published in May, but in the meantime you can subscribe on GOV.UK to receive press releases about some of our most significant enforcement successes.  

Updating fees & funding


We have been looking at our funding regime to design a new, simple, transparent and more resilient fee structure that would accord with the Government's ‘Managing Public Money’ principles and place the Service on a more sustainable financial platform. 

More detailed information will be published in advance of any new fee structure being introduced.

Publications refresh

Guide to bankruptcy

The Insolvency Service is updating our online guidance. 

Our recently refreshed Guide to bankruptcy has received 23,034 views in the first quarter since publication. This is compared to 2,610 views of our old PDF guidance in the last quarter before it was retired. The new plain English guide provides our customers with full insight into what happens when they are bankrupt and has been published in easily accessible web copy.

Work continues on refreshing our other guidance documents and since the last edition we’ve published the following new items:

Read our publications refresh news story for further information.

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