The Temporary Insolvency Practice Direction: workable solutions during the current COVID-19 pandemic

The Temporary Insolvency Practice Direction: workable solutions during the current COVID-19 pandemic

Key Contact: Aisha Wardell

Author: Richard Armstrong

The new Temporary Insolvency Practice Direction (‘the Temporary IPD’) gives much-needed clarity for insolvency proceedings in the Business and Property Courts during the COVID-19 pandemic. It implements a number of changes and supplements the ‘Practice Direction – Insolvency Proceedings’ which came into force in July 2018. Its primary purpose is to is to avoid, where possible, parties attending court in person and to manage and reduce any disruption to proceedings caused by the pandemic.

The Temporary IPD, which will remain in force until 1 October 2020 unless amended or revoked in the meantime, deals with the following:

  1. Filing of notices of intention to appoint an administrator and notices of appointment of an administrator;
  2. The adjournment of all pending applications and petitions listed for hearing prior to 21 April 2020;
  3. The listing of urgent hearings;
  4. The arrangements for remote hearings;
  5. The temporary listing procedure for winding-up and bankruptcy petitions; and
  6. Procedure for swearing Statutory declarations.

The Temporary IPD applies to all insolvency proceedings in the Business and Property Courts subject to any variations outside London as directed by the relevant supervising Judge. It is indicative of the way in which the courts, in light of the current Covid-19 pandemic, have moved to an almost exclusively remote system.

The appointment of administrators

This issue is dealt with in Section 3 of the Temporary IPD. In an attempt to reduce any doubt as to the timing and validity of administrator appointments, the Temporary IPD provides the following:

  • where a company, director or qualifying floating charge holder uses CE-filing to file a Notice of Intention to Appoint an Administrator (‘NOI’) or Notice of Appointment of an Administrator ‘NOA’ during court hours (10:00 – 16:00),  the notice will be deemed as delivered to the court on the date and time stated in the Court’s automatic email acknowledging receipt (paras 3.1 and 3.2).
  • If CE-filing of an NOI or NOA is made outside court hours by a company or director, the notice shall be deemed delivered at 10am on the day that the court is next open. This reflects the provisions of the Insolvency (England & Wales) Rules, and makes it easier to calculate the start and end of the ten day interim moratorium period triggered by the filing of a NOI;
  • A NOA by a qualifying floating charge holder cannot be CE-filed outside court hours. If a qualifying floating charge holder wishes to appoint an administrator outside court hours, then they must do so via the procedure set out in rules 3.20 to 3.22 of the Insolvency Rules 2016, namely by fax or email.

Adjournment and re-listing of pending applications and petitions due to be heard before 21 April 2020

Section 4 deals with hearings which are listed to take place prior to 21 April 2020. It provides that all applications, petitions and claim forms which are due for hearing prior to 21 April 2020 are adjourned, and will be re-listed for a later date. That re-listing will take place in one of three ways:

  • By way of urgent application of one of the parties pursuant to section 5 of the Temporary IPD
  • In the case of winding-up or bankruptcy petition, in accordance with the listing procedure found in section 7 of the Temporary IPD for winding-up and bankruptcy petitions
  • In accordance with guidance notes applicable to each hearing centre to be issued by the supervising judge for that hearing centre.

Remote hearings

Hearings, in accordance with Section 6 of the Temporary IPD, will now take place remotely unless otherwise ordered. The procedures for such remote hearings are set out in Section 4 (hearings due to take place before 21 April 2020), Section 5 (urgent hearings), Section 7 (winding-up and bankruptcy petitions) and Section 8 (all other insolvency hearings).

Section 8 envisages that all hearings which are already listed to take place after 21 April 2020, save bankruptcy and winding up petitions, will happen at their allotted date and time, where possible, either by way of a video hearing via Skype for Business or telephone hearing via BT MeetMe, organised by the Court. A remote case management conference can be put in place to make directions in relation to a particular hearing, if needed.

Statutory Declarations

The Temporary IPD has clarified, in light of the social distancing measures imposed due to the COVID-19 Pandemic, that it is open to parties to swear statutory declarations relating to insolvency procedures otherwise than in person.

This issue is dealt with in Section 9 of the Temporary IPD and gives the Court scope to uphold the validity of appointments where statutory declarations are:  

  • made by way of video conference between the declarant and the attestor (i.e. the solicitor/commissioner for oaths);
  • stated on their face that they were made in this way, and the attestor confirms as such in writing when attesting.

For more information or advice please contact our litigation team.

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