Changes to Statements of Insolvency Practice 16 and 13: Effective 30 April 2021
New regulations which are due to come into effect on 30 April 2021 will impose additional obligations on connected person purchasers in administrations.
The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 which are due to come into effect on 30 April 2021 will impose additional obligations on connected person purchasers in administrations.
These legislative changes mean that changes need to be made to Statement of Insolvency Practice 16 (SIP 16) – pre packaged sales in administrations, and additionally to Statement of Insolvency Practice 13 (SIP 13) - disposal of assets to connected parties in an insolvency process, also need to be changed to align the content of the standards with the law. No changes have been made to the SIPs other than those required by the change in the law.
What are the changes?
The Joint Insolvency Committee has amended SIP 16 to remove references to the Pre Pack Pool and to replace these with reference to the statutory obligation placed on a connected person purchaser to obtain the opinion of an evaluator. The regulations apply to transactions that take place within 8 weeks of the appointment of an administrator. This extends the scope of the regulations beyond pre pack administrations to all administrations within that time frame. That means equivalent changes had to be made to SIP 13 as it applies to any connected party transaction in an insolvency process.
The new SIPs are effective from 30 April 2021.
No changes in Northern Ireland at this time
Northern Ireland has yet to enact equivalent legislation, though it is expected to adopt similar requirements by 29 June 2021. Until that time, the changes to SIP 16 and SIP 13 will only apply in England and Wales and Scotland.
Statement of Insolvency Practice 4 - disqualification of directors
When new legislative provisions for the reporting obligations of insolvency office holders on the conduct of those who formerly controlled a company came into effect from 6 April 2016 it was intended that Statement of Insolvency Practice 4 (SIP 4) - disqualification of directors would be withdrawn.
However, there were still some ongoing cases where an office holder was able to submit a paper conduct return rather than use the online reporting tool. The Insolvency Service has informed the Joint Insolvency Committee that all such cases should now be complete.
SIP 4 will therefore be withdrawn effective 30 April 2021.