New rules allow IPs to finally email creditors directly

The government has announced new measures designed to reduce the cost of insolvency procedures which it says will benefit creditors by £30m annually by making greater use of digital communication to speed up processes.

They include allowing insolvency practitioners (IPs) to communicate with creditors electronically, instead of by letters; reducing record-keeping requirements by IPs, which are only used for internal purposes; and allowing office-holders to rely on the insolvent's records when paying small claims, reducing the need for creditors to complete claim forms. Costs will be reduced by removing the requirement to pay out small dividends and instead using the money for the wider benefit of creditors.

The new regulations are part of government's response to the Red Tape Challenge. They will also remove requirements for office holders to obtain court orders for certain actions, such as extending administrations or posting information on websites, and will simplify the process of reporting director misconduct by introducing electronic forms to ensure faster action is brought against them.

Business Minister Jenny Willott said: 'When businesses do enter the stage of insolvency we need to make sure that the process is as smooth and straightforward as possible. One way of doing this is cutting burdensome red tape which makes insolvency proceedings less complicated and troublesome.'

Liz Bingham, president of insolvency trade body R3, welcomed the proposals saying: 'Introducing more electronic reporting and simplifying statutory reporting steps are long overdue.'

Some of the measures will require changes to primary legislation, and will be taken forward when parliamentary time permits, while others will be changed through secondary legislation as part of the rewrite of Insolvency Rules, due for completion in 2015/16.

A consultation on the proposals closes today, 24 January 2014 and can be viewed HERE

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

View profile and articles

Be the first to vote

Rate this article

Related Articles