New draft insolvency rules

The Insolvency Service has published the draft Insolvency (Amendment) (No. 3) Rules 2009. These Rules will make significant changes to the Insolvency Rules 1986 and aim to modernise insolvency practice by making insolvency procedures more efficient and cost-effective. The key changes would:

• Allow an insolvency office-holder to pay costs and expenses incurred before his appointment as an expense. This would, for example, allow an administrator to recover the costs incurred in negotiating a pre-pack sale of the assets of an insolvent company;
• Allow for the remuneration of insolvency practitioners on a fixed fee basis;
• Allow for electronic communication between insolvency office-holders and the creditors of an insolvent company or individual;
• Dispense with the need for a court to endorse a notice of disclaimer before it is valid; and
• Bring insolvency court proceedings more into line with the Civil Procedure Rules.

The Rules are set to come into force on 6 April 2010. A revised and consolidated set of Rules, which will replace the Insolvency Rules 1986, is expected to come into force in April 2011.