The Insolvency Practitioners (Amendment and Transitional Provisions) Regulations 2024

Amendment of the Insolvency Practitioners Regulations 2005

2.—(1) Schedule 2 (requirements for security or caution and related matters) to the Insolvency Practitioners Regulations 2005(1) is amended as follows

(2) In paragraph 1 (interpretation), in the appropriate places, insert the following definitions—

““relevant losses” means the losses referred to in paragraph 3(1)(b);

“SPS indemnity period” has the meaning given in paragraph 3(3)(c)”.

(3) In paragraph 3(1)(c), for “paragraphs 4 to 8” substitute “paragraphs 4 to 8ZD”.

(4) In paragraph 3(2), for paragraph (a) substitute—

“(a) that claims in respect of relevant losses will be paid up to an aggregate maximum sum for each case where the insolvency practitioner acts (“the specific penalty sum”), together with interest on relevant losses calculated at a rate above the Sterling Overnight Index Average;”.

(5) In paragraph 3(2), for paragraph (b) substitute—

“(b) that claims in respect of relevant losses, together with interest, will be paid out of a further sum of £750,000 (“the general penalty sum”) if—

(i) a specific penalty sum is not in force in relation to a case, or

(ii) any amounts payable under a specific penalty sum are insufficient to meet all claims arising out of a case;”.

(6) In paragraph 3(2)(e), for “losses of the kind mentioned in sub-paragraph (1)” substitute “relevant losses”.

(7) In paragraph 3(2), after paragraph (e), insert—

“(f) for the payment of the following costs and expenses reasonably incurred or charged by the successor insolvency practitioner—

(i) the costs and expenses of investigating the suspected fraud or dishonesty;

(ii) the costs and expenses of making a claim under the bond, including costs incurred in providing documents or evidence or responding to requests for further information;

(iii) the costs and expenses of obtaining expert advice (including legal advice) in relation to a claim or potential claim under the bond;

(iv) the costs and expenses of administering the insolvent estate, which duplicate costs incurred or charged by an insolvency practitioner before the successor insolvency practitioner’s appointment to act in the relevant case.”.

(8) In paragraph 3(3), omit the “and” after paragraph (a).

(9) In paragraph 3(3)(b), at the end insert, “, provided the time limit satisfies the requirements of paragraph 8ZA (minimum run-off period); and”.

(10) In paragraph 3(3), after paragraph (b), insert—

“(c) for a limit on the surety or cautioner’s liability under the specific penalty sum by reference to a specified period of time (“the SPS indemnity period”) during which the relevant losses may arise following the insolvency practitioner’s appointment to act in a case, subject to paragraphs 8ZC (minimum SPS indemnity period) and 8ZD (notification of expiry).”.

(11) After paragraph 8, insert—

“Minimum run-off period

8ZA.— (1) The terms of the bond must provide a minimum period of two years during which a claim may be made in respect of relevant losses in a case.

(2) This period must begin with the date on which the insolvency practitioner is released or discharged in that case.

(3) The reference to “released or discharged in that case” includes the insolvency practitioner being released or discharged from office in a subsequent capacity in that case.

(4) Where the insolvency practitioner holds office in a subsequent capacity in that case, the period must begin with the date of release or discharge from that office.

Interest period

8ZB.   The interest referred to in paragraph 3(2)(a) is calculated from the date of the relevant loss to the date of payment of the claim for that loss.

Minimum SPS indemnity period

8ZC.— (1) The length of any SPS indemnity period must be no less than 6 years beginning with the date of the insolvency practitioner’s appointment to act in a case, provided the SPS indemnity period can be extended for further periods with the consent of the surety or cautioner.

(2) Where the surety or cautioner is asked to give its consent, such consent must not be unreasonably withheld, but may be given subject to reasonable conditions, including payment of an additional premium.

Notification of expiry

8ZD.— (1) The surety or cautioner must deliver a notice to the insolvency practitioner and their authorising body no less than 60 days before the date on which any security or caution under a specific penalty sum is due to expire or otherwise cease to have effect for a reason other than the insolvency practitioner’s release or discharge in a case.

(2) The notice must be in writing or in electronic form and contain the following information:

(a) the date the specific penalty sum is due to expire or otherwise cease to have effect;

(b) whether the surety or cautioner is willing to agree to an extension or renewal of the specific penalty sum; and

(c) details of any conditions attached to the extension or renewal, such as the payment of an additional premium.

(3) The specific penalty sum will continue in force until such date as the surety or cautioner has complied with this paragraph, unless otherwise agreed by the parties to the bond.”.

(1)

S.I. 2005/524, amended by S.I. 2009/3081; there are other amending instruments but none are relevant.