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The April 2020 Temporary Insolvency Practice Direction

8th April 2020

The April 2020 Temporary Insolvency Practice Direction

A new Temporary Insolvency Practice Direction (TIPD) has been introduced with a view to providing workable solutions for court users during the current COVID-19 pandemic.  A copy can be found here whilst the web link is here.  The TIPD should be read along with other recent judicial guidance issued by Chief ICC Judge Briggs for the ICC in London on 7 April 2020 (the ICC Guide, a copy of which can be found here) and by Snowden J for the North and North Eastern Circuits of the B&PC on 6 April 2020 (the NNE Guide, a copy of which can be found here), and the equivalent guidance issued (or to be issued) for other Circuits (collectively the Guidance Notes).  Paragraph 4.2 indicates that the Guidance Notes will become available here.

The situation is fluid and the solutions are bound to some extent to be arrived at pragmatically.  Nevertheless, the TIPD together with the Guidance Notes will provide some much-needed guidance for court users.  Undoubtedly the situation will develop and additional guidance will follow, so it is important for all court users to try to stay as up-to-date as possible.

The TIPD supplements the existing Insolvency Practice Direction (July 2018) and applies to all insolvency proceedings throughout the Business and Property Courts, subject to any variations outside London as directed by the relevant supervising judge.  It was passed on the evening of 3 April, came into force on Monday 6 April 2020 and will remain in force until 1 October 2020 (unless amended or revoked by a further insolvency practice direction in the meantime).

The TIPD has 9 paragraphs, the first two of which deal with definitions and application (the latter is summarised above).  The remaining 7 substantive paragraphs cover the following:

  • Notices in relation to out of court appointments under Schedule B1 to the Act
  • Adjournment of pending applications and petitions (generally)
  • Listing urgent matters (before the High Court or ICC)
  • Remote hearings
  • Temporary listing procedure for winding-up and bankruptcy petitions;
  • Other insolvency hearings
  • Provisions in relation to remote swearing of statutory declarations.

Notices for out of court appointments [Paragraph 3]

Paragraph 3 applies [Paragraph 3.2] to:

  • a Notice of Intention to Appoint an Administrator (NOI) by the company or its directors under para 27 of Sch. B1,
  • a Notice of Appointment of an Administrator (NOA) filed by a qualifying floating charge holder (QFCH) under para 18 of Sch. B1; and
  • a NOA filed by a company/its directors under para 29 of Sch. B1
    (collectively, Para 3 Notices).  :

Paragraph 3 further provides that:

  • Where CE-Filing any Para 3 Notices (notwithstanding anything to the contrary in PD510) the Notice shall be treated as delivered to the court at the date and time recorded in the Filing Submission Email. (as defined) for the purposes of Rule 1.46(2) [Paragraph 3.1], save that:
    Any NOI filed by the company/its directors under para 27 of Sch. B1 using CE-Filing outside the time period 10:00 hours to 16:00 hours on any day that the courts are open for business shall (for the purposes of Insolvency Rule 1.46(2)) be treated as delivered to the court at 10:00 hours on the day that the courts are next open for business.  Accordingly, the date on which the time period of ten days in para 28(2) of Sch. B1 shall begin is the date on which the courts are next open for business [Paragraph 3.3];
  • Similarly, any NOA filed by CE-File under para 29 of Sch. B1 outside that time period shall be treated as delivered to the court at 10:00 hours on the day that the courts are next open for business [Paragraph 3.4];
  • Electronic Working (as defined) may not be used to file a NOA under para 14 of Sch. B1 by a QFCH outside Normal Court Opening Hours:  any such NOA may only be filed outside Normal Court Opening Hours by the procedure set out in IR 2016 rr. 3.20 to 3.22 [Paragraph 3.6];
    In addition, all Para 3 Notices shall continue to be reviewed by the Court, as and when practicable, in accordance with paragraph 5.3 of PD510 and the validity and time at which the appointment of an administrator is effective shall not be affected by reason only of any delay in Acceptance of the Notice (within the meaning of paragraph 5.3(1) of PD510) [Paragraph 3.5].

Note that:

·       NOIs of the company/its directors are caught by the new provisions;

·       Para 3 Notices do not include a NOI filed by a QFCH under para 15 of Sch. B1.  The reasons for this omission are not made explicit.  It is unclear whether these can be filed using CE-Filing out of hours.

 

Directions regarding listing of Insolvency matters [Paragraphs 4-8]

Paragraphs 4 to 8 provide guidance as to the listing (including adjournment) and conduct of insolvency matters currently pending before the courts.  These provisions are supplemented by and need to be read in conjunction with Guidance Notes, including the ICC Guide and the NNE Guide.

Paragraph 4.1 provides that applications and petitions (other than petitions for winding-up and bankruptcy before an ICC Judge sitting in the Rolls Building in London) that are currently listed for hearing prior to 21 April 2020 are adjourned, to be re-listed in accordance with the Guidance Notes), save that:

  • Any party to a matter adjourned pursuant to Paragraph 4.1 who considers the matter to be urgent may make an application to court under Paragraph 5  [Paragraph 4.1.1];
  • Winding-up and bankruptcy petitions are to be dealt with in accordance with Paragraph 7 and the Guidance Notes [Paragraph 4.1.2].

Regrettably the text and layout of Paragraph 4 is a little confusing. Paragraph 4.1 (and the opening words of Paragraph 4.1.2) appears to exclude winding-up and bankruptcy petitions that are listed before an ICCJ sitting in the Rolls Building in London.  The procedure for re-listing urgent matters that is laid down in

Paragraph 5 only deals with re-listing urgent matters that were before a High Court Judge (in London or the District Registries) or an ICC Judge (in London).  It is presumed (though the TIPD does not make this entirely clear) that the procedure to be followed for re-listing urgent matters before District Judges in High Court District Registries or any insolvency matters in any County Court are to be dealt with in accordance with the Guidance Notes.

All matters that are to be heard in the near future will be heard remotely, by Skype for Business or BT MeetMe, or suitable alternative technologies to be agreed in advance of the hearing. It will be possible for parties to make submissions for variations; if need be the court can convene a short remote CMC to determine outstanding problems [Paragraphs 6 & 8].

Paragraph 7 sets out the “Temporary Listing Procedure for Winding-Up and Bankruptcy Petitions”.  Paragraph 7.4 makes specific provisions concerning supporting creditors who have given notice under IR 2016 r 7.14 in the context of a winding-up petition (but the TIPD is silent about the bankruptcy equivalent of a supporting creditor under IR 2016 r 10.19).

 

Statutory Declarations [Paragraph 9]

Although the TIPD provides some guidance over the making of a statutory declaration otherwise than in-person before a person authorised to administer the oath, it cannot change the substantive law.  It therefore simply observes that such a statutory declaration may constitute a formal defect or irregularity.  However, it further provides that:

  • The court may declare (pursuant to IR 2016 r 12.64) that this does not invalidate any insolvency proceedings to which the statutory declaration relates (unless the defect has caused irremediable substantial injustice) [Paragraph 9.1];
  • Where the method for making a statutory declaration using remote technology suggested in Paragraph 9.2 is followed, any defect or irregularity arising solely from the failure to make the statutory declaration in person before a person authorised to administer the oath shall not by itself be regarded as causing substantial injustice [Paragraph 9.2].

Contact

Please note that we do not give legal advice on individual cases which may relate to this content other than by way of formal instruction of a member of Hardwicke.  However if you have any other queries about this content please contact:

Sally Wollaston
Sally Wollaston
Business Development and Marketing Director
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