The revised Practice Direction: Insolvency Proceedings (July 2018)
This note deals with the changes that have been introduced to the Practice Direction – Insolvency Proceedings that came into force on 25 April 2018 (“the April PDIP”) by the revised Practice Direction – Insolvency Proceedings that came into force on 4 July 2018 (“the July PDIP”: a copy of which can be found here). The changes introduced by the July PDIP were introduced in order to iron out some of the mistakes and anomalies that had appeared in the April PDIP. It is not intended here to go over the changes that were introduced by the April PDIP (on which see the earlier note here). This note is therefore intended as a supplement to that earlier note.
New Transition Provision
The first point to note is that the July PDIP introduces a new paragraph 2.2 that provides for transition and savings in relation to applications and petitions that were already on foot prior to 4 July 2018. There is a slight ambiguity in the phrase “the date of commencement of this IPD” in this provision, since it appears to refer to 4 July 2018, but one reading might be better understood as meaning 25 April 2018 (the date of the coming into force of the April PDIP). It remains to be seen how the Court interprets this.
Distribution of business
By far the most significant changes are those relating to the distribution of business in paragraph 3 of the July PDIP. This represents a significant departure from paragraph 3 as it appeared in the April PDIP.
First, it is important to note that the old paragraph 3.2 in the April PDIP has been deleted. This means that the subsequent sub-paragraphs have been renumbered through to 3.7 (which used to be 3.8).
Secondly, what are now paragraphs 3.6 & 3.7 (equivalent to the old 3.7 & 3.8) have been comprehensively revised and expanded. Of particular importance to note are the following:
(i) The wording of the introductory section of paragraph 3.6 has been amended to make it clear it refers to new applications made within existing proceedings as well as new proceedings. The options have now been given their own subparagraphs.
(ii) Subparagraph 36(b) now reads “Central London County Court”, where the equivalent passage in the April PDIP had read the RCJ. (The latter must have been in error and the change is therefore to be welcomed.)
(iii) A new subparagraph 3.6(c) introduces a new route of transfer “specialist judges”.
(iv) The definition of “Local Business” (in relation to which paragraph 3.6 transfers do not apply) has been greatly expanded in the new paragraph 3.7. This now includes, among other matters, private and public examinations and applications for possession against the bankrupt or under ToLATA.
In addition there have now been added a number of new paragraphs under paragraph 3: namely, the new paragraphs 3.8 to 3.10. These essentially deal with what is to happen upon such transfers as are envisaged in the new paragraphs 3.6. In effect, these provide for how the judge in the receiving court should deal with the matter so transferred: it sets out a number of options open to the judge in the receiving court (paragraph 3.9), which include sending all or part of the matter transferred back to the court that just transferred it. The criteria to be applied by the judge in the receiving court when taking these decisions are set out in paragraph 3.8.
There are a number of difficulties with this new regime. The first is that the requirement to transfer in paragraph 3.6 are said to be mandatory (“shall”) and apparently automatic, and yet the options set out in 3.6(a)-(c) are no longer the binary and mutually exclusive options that essentially are now in (a) and (b) but also include a new option (c). It is not clear how this is to be actioned in practice. Secondly, the options available to the receiving court are a little baffling. Since it is clearly envisaged that one result might be that the case or part of it goes straight back again whence it came, it would surely have been better to give the discretion to the transferor court with a presumption in favour of transfer and fairly comprehensive guidelines as to the limited circumstances where it would be appropriate to choose another course. The transfer and re-transfer scenario (whether as to part or the whole of the proceedings) is surely a recipe for files getting hopelessly lost for very long periods, if not forever. No doubt we shall find out. I am aware form woeful accounts reaching me that the transfers to the RCJ under the equivalent provisions in the April PDIP have already caused some problems.
It is also perhaps a pity that the parties were not given the opportunity to have more or even some say in the process under 3.6. On the other hand, the expansion of what had been the extremely narrow definition of “Local Business” in the April PDIP to the reasonably rounded list in what is now paragraph 3.7 is certainly to be welcomed.
In addition to the above, there are some relatively minor amendments as well as some missed opportunities.
- The website references within the July PDIP have all been changed (passim).
- There are some minor revisions to the wording of 3.3(3) & (5) (formerly 3.4) and a superfluous “and” has been added to the end of the introductory section of what is now 3.4 (formerly 3.5).
- An extra “)” has been inserted into line 2 of paragraph 7.1 that spoils the sense of the parenthesis.
- Sadly, no attempt has been made to insert any kind of assistance in relation to how to fill out the Notice of Appointment with the correct date and time (so as to reconcile paragraph 31 of Schedule B1 with IR 2016, rr 3.24(1)(j) and 3.25(2)(k), a notable lacuna in the April PDIP.
- The grammatical errors in paragraph 9.10.3 have, sadly, not been corrected but the sense is clear.
- The extraneous additional “4” has now been deleted from paragraph 10.1(2).
- A reference to the relevant Rule has been added to paragraph 11.4.6.
- What had been paragraph 12.5.3 has very sensibly been split, so that the second part is now located in a separate (new) 12.5.4 (with minor additions).
- In the April PDIP, the numbering of paragraph 17.3 (which dealt with applications under s 263N(5) of the Act to appeal from the adjudicator) went wrong half way through, producing anomalies that lasted into the next set of provisions on corporate insolvency appeals. This has now been ironed out and the result is 17.3 deals with s 263N appeals and 17.4 deals with corporate insolvency appeals, as was originally intended.
- However, no attempt has been made to address the rather anomalous exclusion of Deputies in what is now 17.2(3), 17.4(3), 17.4(4) and 17.4(7). One unhappy consequence of this is that where an appeal is listed alongside (and to follow on from) an application for permission to appeal, this cannot be listed before a Deputy, even though in some cases (see 17.4(6)) the appeal itself could have been heard by a Deputy.
- The mistaken internal reference in paragraph 21.7(d) to “paragraph 19.4 above” has been corrected to “paragraph 21.4 above”. Sadly, the equivalent mistake in para 21.4.4 to “this paragraph 19.4.4” has not been corrected, but should be taken to read “this paragraph21.4.4”.
This content is provided free of charge for information purposes only. It does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.
Please note that we do not give legal advice on individual cases which may relate to this content other than by way of formal instruction of a member of Gatehouse Chambers. However, if you have any other queries about this content please contact: