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Insolvency streamlined
Jul 8, 2010
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Insolvency amending rules came into force in April this year, modernising insolvency practices and procedures. Amy Gates reports on some of the more notable changes.
The new rules have made it much easier for a creditor to participate in
creditors’ meetings. These no longer have to be held at a pre-specified place
and in some circumstances, the use of electronic means is allowed to enable
‘attendance’ by a creditor for voting purposes.
Wider use of electronic communication also means that administrators or
insolvency practitioners can now provide notices and information to creditors
via a website. Any requirement for information to be provided ‘in writing’ now
also includes the use of electronic means, such as email.
The question of the use of e-mail in relation to insolvency proceedings arose in a recent case before the High Court. One factor the judge took into
consideration was that savings of around £50,000 could be made by the
administrators in the case if service of certain documents was allowed by
email.
Although this decision was made before the implementation of the 2010
rules, it gives an idea of the potential for reducing administrative costs. These more streamlined procedures should shorten the time involved in
administering winding-up and bankruptcy proceedings. It is to be hoped that the
savings in administration costs may result in more funds becoming available for
distribution between creditors.