The Insolvency (Amendment) Rules 2002

Explanatory Note

(This note is not part of the Rules)

These Rules amend the Insolvency Rules 1986 (S.I. 1986/1925) (“the 1986 Rules”) in the light of Council Regulation (EC) No. 1346/2000 of 29th May 2000 on insolvency proceedings, OJ No. L160, 30.06.00. p.1 (the “EC Regulation”) which comes into force on 31st May 2002.

The EC Regulation aims to provide for the efficient and effective functioning of cross-border insolvency proceedings in the European Union. Information concerning the EC Regulation is provided in the Guidance Notes issued by the Insolvency Service which may be found, together with the text of the EC Regulation, on the Insolvency Service website, the address of which is www.insolvency.gov.uk.

The main amendments to the 1986 Rules are—

• to provide procedures for the conversion of company and individual voluntary arrangements and administration into winding up for companies and bankruptcy for individuals on the application of a liquidator appointed in another EU member State (“a member State liquidator”) in main proceedings (“member State liquidator” and “main proceedings” are defined by new definitions by reference to the EC Regulation inserted into the 1986 Rules);

• to note particular rules in the 1986 Rules to which the right of a member State liquidator to participate in proceedings on the same basis as a creditor is relevant, for example, entitlement to vote under Rules 2.22 (administration), 4.67 (winding up) and 6.93 (bankruptcy);

• to provide, under the 1986 Rules, for giving notice of insolvency proceedings, and to give notice of various steps taken in such proceedings, to member State liquidators;

• to provide, under the 1986 Rules, for the right of a member State liquidator appointed in main proceedings or a temporary liquidator to be able to apply for the appointment of a provisional liquidator of a company or an interim receiver of an individual (“temporary administrator” is defined by a new definition by reference to the EC Regulation inserted into the 1986 Rules);

• to provide a procedure allowing a liquidator of a company being wound up voluntarily under Part IV of the Insolvency Act 1986 to apply to court (using a newly prescribed form) for the confirmation of the proceedings, such confirmation being a pre-requisite for recognition of a voluntary winding up in other member States under the EC Regulation;

• to remove conflicts between the EC Regulation and the Rules, for example, in new Rule 6.116(3) in relation to the rights in rem (secured rights) of creditors where the secured assets are in other member States;

• to make provision with regard to voting at creditors' meeting and proving for dividends in insolvency proceedings where the EC Regulation applies; and

• to provide revised forms, among others forms, for petitions and orders which require petitioners and courts to consider the applicability of the EC Regulation to the proceedings in question.