COVID-19: Temporary Practice Direction – practical impacts for insolvency practitioners

The Temporary Insolvency Practice Direction 2020 (the “PD”) was put in place on 6 April 2020 to supplement the Practice Direction on Insolvency Proceedings (July 2018) and provide more flexibility for court users during the coronavirus pandemic. It is currently intended to remain in force until 1 October 2020 and applies to all insolvency proceedings in the Business and Property Courts, subject to variations outside London by the relevant supervising judge. 

The PD also serves to clarify a couple of areas in which there has been much recent debate, namely out of court administration appointments, and the administering of statutory declarations. 

We’ve outlined the key features below: 

Filing notices of intention to appoint an administrator (“NOI”) and notices of appointment of an administrator (“NOA”) 

In an attempt to reduce any doubt as to the timing and validity of appointments, the PD provides that: 

• where a company, director or qualifying floating charge holder uses CE-filing for an NOI or NOA, thenotice will be deemed as delivered to the court on the date and time stated in the CE-filing submission email;
• If a filing of an NOI or NOA is made outside court hours by a company or director, the notice shall be deemed delivered at 10am on the day that the court is next open. This reflects the provisions of the Insolvency (England & Wales) Rules, and makes it easier to calculate the start and end of the ten day interim moratorium period triggered by the filing of a NOI; and
• the timing and/or validity of CE-filed notices should not be affected by way of delay by the court of accepting the notice.

Statutory declarations 

There are conflicting views as to whether statutory declarations can be made and oaths administered remotely or using electronic means – we now have means of meeting virtually that clearly couldn’t have been contemplated when the law on these came into effect in the nineteenth century!  While comprehensive reform will surely follow eventually, the PD assists now, at least in the context of administrations. 

Acknowledging that statutory declarations made other than in-person may be defective, and would therefore potentially lead an NOI or NOA to be defective, the PD gives the Court scope to waive such defect and uphold the validity of appointments where statutory declarations are:  

• made by way of video conference between the declarant (g.the director) and the attestor (i.e. the solicitor/commissioner for oaths);
• stated on their face that they were made in this way, and the attestor confirms as such in writing when attesting.

It is open to the Court to waive other defects generally under Rule 12.64 providing there is no ‘substantial injustice’ to parties concerned, but following this blueprint will now be the safest course to ensure administrators are appointed validly.  

Other provisions of the PD 

To avoid so far as possible the need for parties to attend court in person (and acknowledging courts may need to operate with limited staff and resources): 

• Hearings and applications listed before 21 April 2020

All except bankruptcy and winding up petitions will be adjourned.  There is a mechanism for applying for urgent matters to be listed, and video conferencing arrangements for those hearings which do take place. 

• Temporary Listing Procedure for winding-up and bankruptcy

Time slots will be allocated for groups of petitions, with participants in each group being provided with a link to Skype or an alternative. Details will be published on the daily cause list. Anyone who intends to appear at the hearing will need to deliver a notice of intention to appear.   

For further information on this article, please contact our Restructuring & Insolvency Team.