COVID-19 – temporary insolvency practice direction
The new Temporary Insolvency Practice Direction gives much-needed clarity for insolvency proceedings in the Business and Property Courts during the COVID-19 pandemic.
On 6 April 2020, a new Temporary Insolvency Practice Direction (TIPD) came into force in relation to all insolvency proceedings in the Business and Property Courts, with the aim of overcoming some of the problems arising from the current COVID-19 pandemic. As things stand, the TIPD will remain in force until 1 October 2020, but it may be amended or revoked as the situation around the COVID-19 pandemic progresses. Its main intention is to avoid the need for parties to attend Court in person, and to take into account that the Court will be operating with limited staff and resources for the current time.
To ensure that the Court’s time and resources are saved for urgent applications, all applications, claims and petitions in relation to insolvency proceedings listed before 21 April 2020 will be adjourned (except for winding up and bankruptcy petitions to be heard before an Insolvency and Companies Court Judge (ICC) sitting in the Rolls Building). The guidance note issued in relation to insolvency proceedings in the Rolls Building in London (the London Guidance Note), states that:
- Non-urgent hearings are intended to be re-listed within 6 weeks from 21 April 2020 (so by 2 June 2020).
- Priority shall be given to re-listed hearings over the listing of any new non-urgent hearings.
- Non-urgent matters will be listed where possible, considering the availability of judges, clerks and technology.
- All insolvency hearings will be conducted remotely by Skype for Business or other similar technology as agreed between the parties and the Court.
If any party disagrees with the Court’s proposed method, it can contact the Court and other parties via email or CE-File with an alternative proposal, and the judge will make a decision as to how the hearing will take place after receiving submissions from all parties on the proposed alternative method. The Court can also schedule a remote case management conference ahead of a hearing to discuss the conduct of the hearing, including in relation to the technology to be used.
The judge can adjourn a hearing if it is decided that the hearing is not suitable to be held remotely, for whatever reason.
The London Guidance Note states that the following applications, claims and petitions are considered urgent hearings:
- applications made pursuant to section 17 of the Company Directors’ Disqualification Act 1986 (i.e. applications for leave under a disqualification order)
- applications made pursuant to section 216 of the Insolvency Act 1986 (i.e. permission to act as a director of a company with a prohibited name)
- public interest winding up petitions
- applications to convene a meeting for a members’ scheme of arrangement
- capital reduction claims
- cross-border merger claims.
Where a party considers that a matter which has been adjourned is urgent, it may apply to have it re-listed by emailing the ICC Judges’ clerks (or the relevant High Court Judge clerk), setting out:
- the nature of the application, claim or petition
- why it is urgent
- estimated time for pre-reading and hearing
- number of parties required to attend
- confirmation that the hearing can be conducted by Skype for Business, another stated remote communication application, or telephone.
The clerk will then:
- allocate the hearing to a judge and send a video link invitation
- confirm whether the application, claim or petition should be issued and paid for via CE-File or whether an undertaking to issue and pay the fee will be required
- endorse the application, claim form or petition via CE-File in the usual way or email the parties with details on the time and date of the hearing.
Petitions for bankruptcy and winding up
For petitions for bankruptcy or winding up, the Temporary Listing Procedure for Winding up and Bankruptcy shall apply. Under this procedure, the Court will allocate time slots for groups of 2 or more petitions, with each time slot given a designated video or audio meeting link which will be published on the daily cause list. An alternative link may be arranged via the Court clerks if any of the parties are unable to use the link. Any person who wishes to appear on the hearing of a petition must deliver a notice of intention to appear on a petition in accordance with Rule 7.14 of The Insolvency (England and Wales) Rules 2016 (the IR), and provide an email address and telephone number.
Appointment of administrators
The TIPD also confirms that a Notice of Intention to Appoint an Administrator and a Notice of Appointment of an Administrator by a company, its directors or a qualifying charge holder will be considered as delivered to the Court at the date and time recorded in the filing submission of the Court’s online CE-File.
Any Notice filed outside of normal Court working hours (10:00 – 16:00 on a day in which the Courts are open for business) will be considered as delivered to the Court at 10:00 on the next day in which the Court is open. The Court’s CE-File cannot be used to file a Notice of Appointment of an administrator under paragraph 14 of Schedule B1 of the Insolvency Act 1986 (the IA) by the holder of a qualifying floating charge outside normal working hours. To file such a Notice outside normal working hours the parties should instead follow the procedure set out in Rule 3.20 to 3.22 of the IR.
Where Schedule B1 of the IA requires a person to provide a statutory declaration, a statutory declaration that is not made in-person before a person authorised to administer the oath may amount to a formal defect or irregularity. The TIPD allows for the statutory declaration to be made by video conference with the person authorised to administer the oath if that person attests that the statutory declaration was made via video conference and the statutory declaration itself states it was made by video conference.
Due to the impact of the COVID-19 pandemic and the lockdown introduced by the UK Government, the Court system was required to consider how it could best adapt to continue to host hearings while following all relevant restrictions. The TIPD has given clear guidance as to what parties in insolvency proceedings can expect while Courts are operating with limited staff and resources.
Any party currently in insolvency proceedings should continue to monitor the date of any upcoming hearing in case of adjournment, and to apply to have the hearing re-listed if it considers the matter is urgent. Once details of a hearing to be conducted via video or audio link have been given by the Court, it would be wise to test the relevant technology ahead of time to ensure any issues can be resolved. This is especially so for litigants in person, who may not have the benefit of having used this technology extensively before, as many legal representatives may have.
Although we envisage that the technology may not work smoothly all of the time and there are likely to be obstacles, it will be interesting to see what, if any, new processes may be permanently adopted once the lockdown ends and the Courts can conduct in person hearings once again.