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SIP and Ethics Code Consultations

Statement of Insolvency Practice 6

The Joint Insolvency Committee (JIC) is consulting on the operation of Interim STATEMENT OF INSOLVENCY PRACTICE 6 ENGLAND & WALES – DECISION MAKING (SIP 6), published on 10 March 2017 effective from 6 April 2017.

The Interim Statement of Insolvency Practice superseded and replaced the following Statements, in England and Wales only, from the effective date.

SIP 8 ENGLAND & WALES - SUMMONING AND HOLDING MEETINGS OF CREDITORS CONVENED PURSUANT TO SECTION 98 OF THE INSOLVENCY ACT 1986 (SIP 8)

SIP 10 ENGLAND & WALES – PROXY FORMS (SIP 10)

SIP 12 ENGLAND & WALES – RECORDS OF MEETINGS IN FORMAL INSOLVENCY PROCEEDINGS (SIP 12)

The equivalent SIPs in Scotland and Northern Ireland remain in force.

Background

Practitioners will be aware of the legislative changes that came into effect on 6 April 2017 with the commencement of the Insolvency (England & Wales) Rules 2016. The consequence of these legislative changes, particularly in relation to the manner in which formal decisions of the creditors are obtained, was that a number of the former Statements of Insolvency Practice (SIPs 8, 10 and 12) were no longer appropriate reflections of expected standards in light of the new legislation, and in some instances would have conflicted with the new legislative provisions.
The Interim SIP 6 was developed by a working party of the Joint Insolvency Committee comprising insolvency practitioners and representatives of HMRC and the Insolvency Service and approved by the authorising bodies on an interim basis, without the usual public consultation. The decision to do this was taken because of the time constraints of the Rules implementation and the need to ensure that practitioners continued to have an appropriate regulatory framework in which to work, concurrently with the implementation date of the new Rules. Therefore, the SIP was issued on an interim basis, with the intention that it will be consulted upon, reviewed and amended (if necessary) and thereafter issued in its final form on or around 31 December 2017.
The following approach was used in revising the SIP

  • The SIP adopts the principles and key compliance standards format used for all new SIPs;
  • The SIP applies to all office holders in all forms of insolvency proceedings, when obtaining a formal decision of the creditors via a deemed consent process or a qualifying decision procedure;
  • The SIP additionally applies when assisting directors in their obtaining a decision of the creditors for the voluntary winding up of a company;
  • SIP 10 and SIP 12 were largely superseded by specific provision within the new Rules. To the extent that regulatory provision was considered necessary in addition to the legislative requirements, this was incorporated into the principles and key compliance standards within SIP 6.
  • The former SIP 8 required significant amount of information to be provided to the meeting of creditors held under s.98 of the Insolvency Act. Given that, in most instances, there is no longer be a physical meeting of the creditors for this purpose (appointment will usually be by deemed consent or virtual meeting), consideration was given to what information creditors might reasonably expect in order to make an informed decision and when that information ought reasonably to be provided.  Consequently, elements of the information previously required by SIP 8 were retained in paragraph 12, but in a less prescriptive manner. The SIP provides that this information should be available to creditors not later than the business day prior to the decision date, where they request it. This was intended to be a proportionate provision, the operation of which is now being specifically reviewed in the below consultation at Question 5.
  • JIC is also interested in feedback as to whether the interim SIP prevents innovative practices in decision making or fails to prevent other inappropriate practice. Question 8 is intended to capture respondents’ views on either of these topics.

 
Consultation
 
This consultation is issued on 1 September 2017 and will run for a period of 6 weeks, closing on 13 October 2017.
 
Thereafter, consultation responses will be reviewed with a view to making any necessary amendments to the Interim SIP which, once approved by the authorising bodies, will be issued providing the customary notice period of one month prior to its effective date.

SIP 6 Consultation Version

SIP 6 Consultation Questionnaire  
 

Statement of Insolvency Practice 11


The Joint Insolvency Committee (JIC) is consulting on a revised version of Statement of Insolvency Practice 11 - THE HANDLING OF FUNDS IN FORMAL INSOLVENCY APPOINTMENTS.

The draft SIP has been developed by a JIC working group comprising members of the profession from firms of different sizes with views obtained from creditor representatives.

The current SIP 11 dates back to 2007 and is not thought to adequately or fully reflect current practice structures and the banking products used by Insolvency Practitioners or the practices in which they work.  The main change is to provide greater clarity around the need for proportionate safeguards and financial controls, so that creditors and other stakeholders can be confident that funds are held appropriately and securely and that their interests are adequately protected.
 
In revising SIP 11 the working group took the following approach:
 
·        adopting the principles and key compliance standards format used for all new SIPs;
·        futureproofing the SIP by not referring to specific products or media, as these are subject to continual development, rather the characteristics that an estate account should possess are described;
·        providing a robust and flexible framework in which the need for proportionality is recognised;
·        requiring practitioners to review and document the adequacy of their internal funds handling arrangements.

It is intended that the revised SIP will apply UK wide.

We look forward to hearing from you with your consultation response.  

The consultation closes on 12 September 2017
 

SIP 11 - Consultation VersionSIP 11 Consultation Questionnaire


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Revision of Insolvency Code of Ethics

  
The Joint Insolvency Committee (JIC) is consulting on a revised version of the Code of Ethics applicable to insolvency practitioners.
The draft Code of Ethics (the draft Code) has been developed by a JIC working group comprising a variety of insolvency stakeholders including HM Revenue and Customs, Max Recovery and representatives from the Recognised Professional Bodies (the RPBs).
An explanatory note has been produced to accompany the consultation which sets out in more detail the background to the need to revise the Code and the approach adopted in developing the draft Code.
 
The JIC working group have also recognised that activities leading to insolvency appointments, particularly in the personal/consumer debt insolvency arena, bear little recognition to the landscape when the Code was introduced. Services offered by firms or groups in which IPs operate are far greater than the accountancy or legal practice in which IPs have traditionally been associated with.
 
The sections within the Code pertaining to Obtaining specialist advice and services, Fees and other types of remuneration and Obtaining insolvency appointments are of key concern given developments since the Code was last reviewed. It is felt that this area is of such fundamental importance that specific consultation on stakeholder views should be undertaken prior to deciding on whether the Code should be revised in these areas. Further context to consultation in this area is also provided in the explanatory note.
 
It is intended that the revised Code of Ethics will apply UK wide.
The consultation closes on 25 July 2017



Insolvency Code of Ethics - Consultation Version (Tracked)

Insolvency Code of Ethics - Consultation Version (Clean)

Consultation explanatory note

Insolvency Code of Ethics consultation questionaire

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Revision of Statement of Insolvency Practice 15

The Joint Insolvency Committee (JIC) is consulting on a revised version of Statement of Insolvency Practice 15 – reporting and providing information on their functions to committees in formal insolvencies and SIP 15 (Scotland) -  reporting and providing information on their functions to committees (and commissioners in sequestrations) in formal insolvencies.

The draft SIP has been developed by a JIC working group comprising members of the profession from firms of different sizes with views obtained from creditor representatives.

The current SIP 15’s date back to 2005 so the revised version of the SIP looks quite different from that which is currently in force. The main change is that the new draft acknowledges that creditors should be in a position to make an informed decision on whether they wish to seek nomination. It also recognises that information may be made available to creditors through a variety of mediums.
In revising SIP 15 the working group took the following approach:

·         adopting the principles and key compliance standards format used for all new SIPs;
·         removing all legislative references;
·         futureproofing the SIP by disentangling the information guides from the SIP itself.

In conjunction with R3, updated information guides for each of the insolvency processes have been developed and will be published at the same time the new SIP becomes effective.

It is intended that the revised SIP will apply UK wide.

We look forward to hearing from you with your consultation response.  

The consultation closes on 12th September 2016
 

Consultation Draft SIP 15
Consultation Questionnaire SIP 15


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Revision of Statement of Insolvency Practice 13 - acquisition of assets by connected parties in an insolvency process


The Joint Insolvency Committee (JIC) is consulting on a revised version of Statement of Insolvency Practice 13 - acquisition of assets by connected parties in an insolvency process. The draft SIP has been developed by a JIC working group comprising members of the profession (from firms of different sizes) and creditor representatives. 

The current SIP 13 (acquisition of assets of insolvent companies by directors) dates back to 1997, so the revised version of the SIP looks quite different from that which is currently in force. The main change is that the new draft acknowledges that creditors and other interested parties want to know about transactions with connected parties generally and not just those involving directors. It’s proposed therefore that the revised SIP will apply to all connected party transactions in personal and corporate insolvency. There’s questions in the response form asking for views on this approach.

In revising SIP 13 the working group took the following approach:
  • drafting the SIP requirements in a proportionate way and without being onerous, recognising that it may apply to low value transactions;
  • focusing on a narrative explanation of the transaction rather than prescribing the information which should be disclosed;
  • adopting the principles and key compliance standards format used for all new SIPs;
  • removing all legislative references with the exception of the definition of connected party;
  • using, wherever possible, language which is consistent with Statement of Insolvency Practice 16.

It is intended that this SIP will apply UK wide.  We look forward to hearing from you with your consultation response.  The consultation closes on 11 May 2016 

SIP 13 Consultation Questionnaire (Word) 
SIP 13 Disposal of Assets to Connected Parties in an Insolvency Process (Word)

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SIP 9 Consultation July 2015


In July 2013, Professor Elaine Kempson published her Report to the Insolvency Service “Review of Insolvency Practitioner Fees”, which concluded that market controls on insolvency practitioners fees where not always working as intended, particularly where there was no controlling secured creditor.  That report was followed by an Insolvency Service Consultation on proposals for “Strengthening the regulatory regime and fee structure for insolvency practitioners”.  The outcome of that consultation was to suggest a number of changes to the way in which practitioners are both regulated and remunerated.

On 3rd March 2015 the Insolvency (Amendment) Rules 2015 were laid before Parliament, and will come into effect on 1st October 2015. In summary, these rules provide that insolvency practitioners must provide an estimate of their fees in advance of the approval of the basis of their remuneration in respect of those elements that they propose to take on a time cost basis. The rules also provide for the provision of an estimate of the expenses an insolvency practitioner anticipates that they will incur.  The new rules will apply to insolvent liquidation, bankruptcy and administration cases commenced after 1st October 2015.

These legislative changes have necessitated a revision of SIP 9, which does not currently cater for the provision of the estimates that will be required by statute as of October.

Changes to SIP 9

The look and feel of the revised SIP 9 differs significantly from the current version of SIP 9 as the emphasis is placed upon the qualitative value of the information provided to creditors (and other interested parties) rather than the format in which that information is supplied, or suggested to be supplied. This represents a significant departure from previous iterations of the SIP; a departure which is explained in more detail in an Explanatory Note. It is proposed to issue the Explanatory Note concurrently with the SIP to assist practitioners in understanding the new regulatory requirements.

The revised SIP adopts the principles and key compliance standards of all new SIPs and all legislative references have been removed. It is intended that this SIP will apply in England and Wales only, as the new legislation does not currently extend to Scotland or Northern Ireland.

The draft SIP and Explanatory Note have been developed by a JIC working group comprising members of the profession (from firms of different sizes) and creditor representatives.

Please send us your comments on the draft SIP and the Explanatory Note by 4th September 2015.

SIP 9 - Consultation draft 2015 (PDF)
SIP 9 - Explanatory note consultation 2015 (PDF)
SIP 9 - Consultation questionaire 2015 (PDF)
SIP 9 - Consultation questionaire fill in using PC 2015 (Word)
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SIP 16 Consultation January 2015


The JIC is now seeking views on the revised SIP. As the draft contained in Teresa Graham’s report has been in the public domain for more than 6 months and formed part of the recommendations accepted by Government, the JIC is consulting for a 4 week period and is solely seeking views on whether it will be practical for an insolvency practitioner to comply with the requirements contained in the revised version of the SIP.

Please let us know your views. If you don’t think it will be feasible for an insolvency practitioner to comply with the SIP, please explain why that is the case.

Please direct your response / comments to Alison Curry, Head of Regulatory Standards & Support at: alisonc@ipa.uk.com, by the consultation closing date of 2 February 2015.

SIP 16 – CONSULTATION DRAFT JAN 2015 (Word)
SIP 16 – CONSULTATION DRAFT JAN 2015 (PDF)

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SIP 3 – company voluntary arrangements


In spring 2013, the Joint Insolvency Committee (JIC) consulted on a revised version of SIP 3 for individual voluntary arrangements. At that time the JIC announced that steps were being taken to produce separate SIPs for IVAs and CVAs as these were very different processes. JIC is now consulting on a revised SIP 3 for CVAs.

Changes to SIP3

The look and feel of the revised SIP 3 - CVA differs significantly from the current version of SIP 3 but follows the same format as the draft SIP 3 for IVAs.
The SIP focuses on the statutory responsibilities of the insolvency practitioner when acting as nominee or supervisor, but also recognises that an insolvency practitioner may also propose a CVA. Where the SIP applies only to CVAs proposed by directors the relevant paragraphs are identified as “directors’ proposal”.

The revised SIP adopts the principles and key compliance standards of all new SIPs and all legislative references have been removed. It is intended that this SIP will apply UK wide as there are no jurisdictional issues.
Please send us your comments on the revised draft by 7th January 2014.

Click to Download documents:

Revised SIP 3 (PDF 93KB/5 pages)
Response form SIP 3 - fill in using pen (PDF 77KB/2 pages)
Response form SIP 3 - fill in electronically (Word 40KB/2 pages)
 
 
 
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