Chapter 3 - The Insolvency Practitioner: key professional issues Flashcards
(39 cards)
Criteria to act as an IP?
Cannot act if disqualified (i.e bankrupt or subject to debt relief order)
Not be disqualified as a director
Must be an individual (not a company)
Must be authorised by a RPB
Must have in place security/insurance/bond
Bonding - what is the purpose? and what is the General Penalty Sum and the Specific Penalty Sum?
Level of bond set out in IP regulations 2005 - given to compensate creditors for any breaches of duty by an IP that may result in financial loss.
General Penalty Sum = £250,000
Specific Penalty Sum = is calculated by reference to estimated assets in case. Maximum £5,000,000 and Min £5,000
When must a progress report be completed in a compulsory liquidation and when must it be completed by?
Liquidator must produce a progress report for the first year of their appointment and every year thereafter until cease to act. R18.8
Must be sent to CH, creditors and members within 2 months of the end of the period that the report relates.
No progress report is required for any period after the liquidator has sent a draft final report to creditors.
When must a progress report be completed in a CVL or MVL and when must it be completed by?
Liquidator must produce a progress report for each year on commencement of the date if their appointment and every year thereafter until cease to act. R18.7
If ceases to act the period for which the new liquidator must produce reports is unaffected.
Must be sent to CH, creditors and members within 2 months of the end of the period that the report relates.
No progress report is required for any period after the liquidator has sent a draft final report to creditors.
When must a progress report be completed in an administration and when must it be completed by?
Administrator must produce a progress report for the period of 6 months commencing on the date the company went into liquidation. R18.3
Period unaffected by change in administrator.
Report must be sent to creditors and CH within 1 month of the end of the period to which the report relates.
When must the final report in an administration be filed by?
R3.55 deals with final progress reports. Final report must be filed at CH within 5 business days of the end of the administration.
Copies must be sent to all persons who received a copy of the administrators proposals as soon as reasonably practical.
When must a progress report be completed in a bankruptcy and when must it be completed by?
Trustee must produce a progress report for the first year from the date of his appointment and every year thereafter until he ceases to act. R18.8
Progress report must be sent to all creditors within 2 months of the end of the period to which the report relates.
When must a progress report be completed in a CVA, when must it be completed by and who does it need to be sent it?
Supervisors of a CVA must circulate a report covering 12 months from the commencement of the CVA, set out progress and the prospects of success.
Report must be sent within 2 months of end of the period to which it relates to:
- CH
- The Company
- The bound creditors
- The members of the company (unless court gives permission not to circulate)
- The company auditors unless the company is in liquidation
If within the 2 month period the supervisor becomes obliged to circulate final report, the annual report does not need to be sent.
What 3 things might a supervisor in an IVA be required to do?
When must a progress report be completed in an IVA and when must it be completed by?
R8.28 supervisor must keep accounts and records and where the IVA authorises supervisor to:
- carry on debtors business (unusual, they usually do it themselves)
- realise assets of debtor
- otherwise, administer or dispose of any of the debtors (or estates) funds
Once in every 12 month period (from date of approval) deliver reports on progress and prospects to the debtor and all creditors bound by agreement.
Must be delivered within 2 months of the end of the 12 month period. If obligation to deliver final report arrives during that 2 month period, then don’t need to deliver the earlier 12 month report.
What are the reporting deadlines in a administrative receivership for progress reports?
Within 3 months of appointment must sent out initial report (S48) to creditors and CH.
Thereafter must send out R&P to each member of creditors committee, CH, the company and appointer 2 months after the end of 12 months from date of appointment and then yearly.
Final account must be sent within 2 months of ceasing to act.
What are the reporting deadlines in a fixed charge receivership?
The receiver must, within 1 month after the end of 12 months from date of appointment, and every subsequent 6 months deliver account of R&P to CH (S38)
Rule for use of website and how soon must a hard copy of report be sent if requested?
Rule 1.50 - future documents can be posted on website without further notice.
When requested, the hard copy must be sent within 5 business days at no charge.
How long must an IP keep records?
Records must be kept for at least 6 years after the IP obtains his release from office or if later the date on which his bond ceases to have effect.
How long do creditors have to reject decision procedure and request physical meeting?
5 business dates from date of delivery of the notice
What value is needed for a deemed consent procedure to fail?
10% in value of creditors object
How many/what % of creditors need to request a physical meeting to take place?
10% value
10% in number of creditors
10 creditors
Name three basis’s for calculation of remuneration
As a % of assets distributed or realised
By reference to the time given
As a fixed fee
Name four things that should be considered when deciding remuneration
Complexity of the case
Any responsibility of an exceptional kind which falls on office holder
The effectiveness with which the office holder appears to be carrying out duties
The value and nature of the property that the office holder has to deal with.
Who authorises remuneration in a compulsory liquidation? What happens if it is not fixed with in what time period?
The liquidation committee is there is one or a decision of creditors
If remuneration is not fixed within 18 months of appointment the Schedule 11 scale rate charge applies.
In a compulsory or CVL, if a liquidator is not happy with fee, what can they do?
Apply to court to fix remuneration. Application must be made on 14 days notice to the committee or creditors.
If the company was in administration immediately prior to going into liquidation does the basis of remuneration still apply?
Yes
However any request for authorisation of time costs for the liquidation period must be done separately.
If a liquidator realises assets for a secured creditor holding a fixed charge, can the liquidator take their remuneration from the proceeds of sale?
Yes
Who authorises remuneration in a CVL?
What happens if it is not fixed within what time period?
The liquidation committee if there is one, or meeting of creditors.
If it is not fixed within 18 months from date of appointment, the court will fix the remuneration.
Who authorises remuneration in an MVL?
What happens if it doesn’t get fixed?
Fees agreed in general meeting.
In default, the court can fix the liquidators remuneration provided that they have made an application to the GM and applies within 18 months of appointment. and give 14
days notice to the contributories of the company