Insolvency News, Issue 3 March 2021
This issue includes new guidance on marketing and advertising in the IVA sector, updated SIPs 3.2, 7 and 9 and advance warning that SIP 16 will also be updated soon due to new legislation.
In this issue
Three updated statements of Insolvency Practice are being issued, effective from 1 April 2021. These are Statement of Insolvency Practice 3.2 - Company voluntary arrangements (SIP 3.2), Statement of Insolvency Practice 9 - Payments to insolvency office holders and their associates (SIP9) and Statement of Insolvency Practice 7 - Presentation of financial information in insolvency proceedings (SIP 7).
SIP 3.2 and SIP 7 apply UK wide. There are different versions of SIP 9 for England and Wales, Scotland and Northern Ireland. The same principles apply in all the versions of SIP 9, but there are minor differences in the text of the SIPs due to differences in the law across the jurisdictions.
The SIPs were revised following a public consultation by the Joint Insolvency Committee. The consultation ran from 27 April 2020 until 20 July 2020. All insolvency practitioners were invited to comment on the draft SIPs, as well as others interested in insolvency. The responses to the consultation were reviewed by working groups made up of insolvency practitioners, creditor representatives and the Insolvency Service.
In October 2020, the government published its plans to reform the law around pre pack administrations and announced that it would bring forward legislation which would place certain conditions on connected person sales in administration. The draft regulations which will make these changes the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 have now been laid in Parliament, with a commencement date of 30 April 2021. As the regulations will introduce a requirement for a connected party purchaser to obtain a report from an independent and suitably qualified person before a pre pack can be undertaken, changes will need to be made to statement of insolvency practice 16 – pre-packaged sales in administrations (SIP 16) to align the content of the SIP with the new law. This will need to happen quickly. At this stage, as the regulations have just been published, all we are able to do is alert insolvency practitioners to the fact that there will be changes to SIP 16, and that these changes will have to be made with limited advance notice.
Marketing and advertising in the IVA sector, both by IPs and debt advice companies, is under considerable scrutiny at the moment. The Insolvency Service issued Dear IP 120 on the subject recently. We have also seen IPs approached by debt advice companies to lend their names to their websites to get around Google’s rules on debt advertising. Google allows adverts promoting debt services in the UK as long as the advertiser and provider of these services is appropriately authorised, i.e. is either (1) a licensed insolvency practitioner regulated by a Recognised Professional Body or (2) authorised by the Financial Conduct Authority to carry on debt adjusting and debt counselling and to hold client money.
We wouldn’t expect ICAEW IPs to be entering into contracts with organisations promoting debt advice services to lend their name to a website, where they have no other connection with the entity. The Insolvency Service is alive to this issue and where it has concerns has referred IPs to us, requesting that we investigate their connection with companies and websites using their names.
IPs in this sector can also expect to be asked whether they have taken referrals from the two companies named in the recent ASA rulings, either directly or by receiving cases from referrers who have sourced the referrals from those entities.
HMRC has advised us that the following helplines are now open:
- Administrations - 0300 322 9250
- Compulsory Winding Up - 0300 322 9209 (examiners) and 0300 322 9210 (support team)
- Voluntarily Arrangements - 0300 322 9251
- IVA – 0300 322 7838
- Trust Deeds - 0300 200 3873
- Debt Arrangement Scheme - 03000 513404
- Members Voluntary Liquidations 0300 322 7815
HMRC has asked though that insolvency practitioners only call with urgent enquiries. As staff are working to clear cases, time spent dealing with routine calls will erode the progress they will be able to make.
Company Voluntary Arrangements, a retailer's perspective
Join the Finance Director of Ann Summers, Paul Bedworth and CFO, John Boyle as they share their experiences and key learnings of working through the process of a company voluntary arrangement.
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Tune in to hear how money laundering regulations impact you as an Insolvency Practitioner.