INSOLVENCY PART 1 INTRODUCTORY Citation, commencement and interpretation 1 1 These Regulations may be cited as the Insolvency Practitioners Regulations 1990. 2 These Regulations shall come into force on 1st April 1990. 3 In these Regulations except where the context otherwise requires:– “Accountant in Bankruptcy” shall be construed in accordance with section 1 of the Bankruptcy (Scotland) Act 1985 ; “ the Act ” means the Insolvency Act 1986; “application” means an application made by an individual to the competent authority for authorisation under section 393 of the Act to act as an insolvency practitioner; “associate” shall be construed in accordance with section 435 of the Act; “authorisation” means an authorisation to act as an insolvency practitioner granted under section 393 of the Act; “the Bankruptcy Act ” means the Bankruptcy (Scotland) Act 1985; “business” includes the carrying on of any trade, profession or vocation and the discharge of the functions relating to any office or employment; “commencement date” means the date on which these Regulations come into force; “Crown employment” shall be construed in accordance with section 121(2) of the Employment Protection Act 1975 ; “the insolvency legislation” means the following enactments:– the Act; the Insolvency Act 1985 ; Parts XVIII to XXI of the Companies Act 1985 ; Part VII of the Employment Protection (Consolidation) Act 1978 ; the Bankruptcy Act 1914 ; the Deeds of Arrangement Act 1914 ; the Bankruptcy Act; the Bankruptcy (Scotland) Act 1913 ; and the provisions of the enactments repealed by Schedule 1 to the Companies Consolidation (Consequential Provisions) Act 1985 relating to insolvency; and “insolvency practice” means the carrying on of the business of acting as an insolvency practitioner or in a corresponding capacity under the law of any country or territory outside Great Britain, and for this purpose acting as an insolvency practitioner shall include acting as a trustee in sequestration or a judicial factor on the bankrupt estate of a deceased person; “insolvency practitioner” shall be construed in accordance with section 388 of the Act; “insolvency proceedings” means any of the proceedings under the Act and the Bankruptcy Act in which a person may be appointed to act as an insolvency practitioner; “insolvency work experience” means engagement in work related to the administra tion of the estates of persons in respect of which an office-holder has been appointed; and “higher insolvency work experience” means engagement in work related to the administration of the estates of persons in respect of which an office-holder has been appointed where the work involves the management or supervision of the conduct of a case on behalf of that office-holder; “interim trustee” has the same meaning as in the Bankruptcy Act; “office-holder” means a person who acts or has acted as an insolvency practitioner, a trustee in sequestration, or a judicial factor on the bankrupt estate of a deceased person or in a corresponding capacity under the law of any country or territory outside Great Britain; “permanent trustee” and “trust deed for creditors” have the same meanings as in the Bankruptcy Act; “relevant time” in relation to an individual making an application or his application means the time of making the application. Revocation 2 1 The Insolvency Practitioners Regulations 1986 (“the principal Regulations”), the Insolvency Practitioners (Amendment) Regulations 1986 , the Insolvency Practitioners (Amendment) Regulations 1989 and the Insolvency Practitioners (Amendment) ( No. 2) Regulations 1989 are hereby revoked. 2 Notwithstanding paragraph (1), the said Regulations shall continue to apply and have effect in relation to:– a any application made before the commencement date in respect of which:– i no authorisation has been granted; or ii no written notice under section 397(2) of the Act has been given by the competent authority; or iii no written notice under section 398 of the Act has been given by the authority, before the commencement date; or b any withdrawal of an authorisation pursuant to a notice under section 394(2) of the Act given before the commencement date. 3 Notwithstanding paragraph (1), the principal Regulations, other than Part II thereof, and the Insolvency Practitioners (Amendment) Regulations 1986 shall continue to apply and have effect in relation to any person appointed to act as an insolvency practitioner in relation to any person before the commencement date in so far as he continues so to act in relation to that person on or after the commencement date pursuant to that appointment or to a subsequent appointment to act as an insolvency practitioner within the scope of regulation 11 of the principal Regulations made on or after the commencement date. PART II AUTHORISATION OF INSOLVENCY PRACTITIONERS Application of this Part 3 The Regulations in this Part apply in relation to:– a any applications made to a competent authority on or after the commencement date; and b any withdrawal of an authorisation pursuant to a notice under section 394(2) of the Act given on or after the commencement date. Matters for determining whether an applicant is fit and proper 4 1 Without prejudice to the generality of section 393(2)(a) or (4)(a) of the Act, in determining whether an applicant is a fit and proper person to act as an insolvency practitioner the matters to be taken into account shall include:– a whether the applicant has been convicted of any offence involving fraud or other dishonesty or violence; b whether the applicant has contravened any provision in any enactment contained in the insolvency legislation or in subordinate legislation made under any such enactment or any provision of the law of a country or territory outside Great Britain which corresponds to such legislation; c whether the applicant has engaged in any practices in the course of carrying on business appearing to be deceitful or oppressive or otherwise unfair or improper, whether unlawful or not, or which otherwise cast doubt upon his probity or competence for discharging the duties of an insolvency practitioner; d whether, in respect of any insolvency practice carried on by the applicant at the date of or at any time prior to the making of the application, there were established adequate systems of control of the practice and adequate records relating to the practice, including accounting records, and whether such systems of control and records have been or were maintained on an adequate basis; e whether the insolvency practice of the applicant is, has been or, where the applicant is not yet carrying on such a practice, will be, carried on with the independence, integrity and the professional skills appropriate to the range and scale of the practice and the proper performance of the duties of an insolvency practitioner; f whether the applicant, in any case where he has acted as an insolvency practitioner, has failed to disclose fully to such persons as might reasonably be expected to be affected thereby circumstances where there is or appears to be a conflict of interest between his so acting and any interest of his own, whether personal, financial or otherwise, without having received such consent as might be appropriate to his acting or continuing to act despite the existence of such circumstances. 2 In this regulation “applicant” includes, where it is proposed to withdraw any authorisation on the grounds that the holder is not a fit and proper person, the holder of the authorisation. Education and training and experience 5 1 The requirements with respect to education and practical training and experience which are prescribed for the purposes of section 393(2)(b) of the Act are set out in regulations 6, 7 and 8 below which shall apply to applicants for authorisation as specified in this regulation. 2 Regulation 6 shall apply to all applicants other than an applicant who:– a was born on or before 15 December 1951; or b at the relevant time is the holder of an authorisation. 3 Regulations 7 and 8 shall apply to all applicants other than an applicant who at the relevant time:– a is the holder of an authorisation; and b i has been appointed an office-holder in at least one case under the law of England and Wales or Scotland; or ii has acquired not less than 500 hours of higher insolvency work experience; within the period of three years immediately prior to the relevant time and in determining whether an applicant falls within this sub-paragraph the provisions of regulation 8(2) below shall apply. 6 An applicant to whom this regulation applies by virtue of regulation 5(2) must at the relevant time possess one or more of the academic qualifications listed in Part I of Schedule 1 to these Regulations or such other academic or professional qualifications as shall indicate the attainment of an equivalent level of education to that attested by that qualification or, as the case may be, those qualifications. 7 An applicant to whom this regulation applies by virtue of regulation 5(3) must at the relevant time have passed the Joint Insolvency Examination set by the Joint Insolvency Examination Board or have acquired in, or been awarded in, a country or territory outside the United Kingdom professional or vocational qualifications which indicate that the applicant has the knowledge and competence that is attested by a pass in that examination. 8 1 An applicant to whom this regulation applies by virtue of regulation 5(3) must either:– a have been appointed an office-holder in not less than 30 cases within the period of 10 years immediately prior to the relevant time; or b i have been first employed by a person carrying on insolvency practice in that practice not later than 10 years prior to the relevant time; and ii within the period of 10 years referred to in sub-paragraph (a) above have acquired not less than 7,000 hours of insolvency work experience whether in the employment of a person carrying on an insolvency practice or as an office-holder; and iii satisfy the condition set out in sub-paragraph (c) below. c The condition referred to in sub-paragraph (1)(b)(iii) is that the applicant must show he satisfies one of the following three requirements:– i he has been appointed an office-holder in at least 5 cases within the period of 5 years immediately prior to the relevant time; or ii he has acquired 1,000 hours or more of higher insolvency work experience within such period; or iii he can show that within such period he has achieved one of the following combinations of appointments as an office-holder and hours acquired of higher insolvency work experience:– a not less than 4 cases and 200 hours; b not less than 3 cases and 400 hours; c not less than 2 cases and 600 hours; d not less than 1 case and 800 hours. 2 In determining whether an applicant falls within paragraph (1) above:– a no account shall be taken of any case where:– i he was appointed to the office of receiver or to a corresponding office under the law of a country or territory outside Great Britain by or on behalf of a creditor who at the time of appointment was an associate of the applicant; or ii in a members' voluntary winding up or in a corresponding procedure under the laws of a country or territory outside Great Britain, he was appointed liquidator at a general meeting where his associates were entitled to exercise or control the exercise of one third or more of the voting power at that general meeting; b where the applicant has been an office-holder in relation to:– i two or more companies which were associates at the time of appointment; or ii two or more individuals who were carrying on business in partnership with each other at the time of appointment; he shall be treated as having held office in only one case in respect of all offices held in relation to the companies which were associates or in respect of all offices held in relation to the individuals who were in partnership as the case may be. 3 Where in order to satisfy all or any of the requirements set out in paragraph (1) above an applicant relies on appointment as an office-holder or the acquisition of insolvency work experience or higher insolvency work experience in relation to cases under the laws of a country or territory outside Great Britain, he shall demonstrate that he has no less than 1,400 hours of insolvency work experience or higher insolvency work experience in cases under the law of England and Wales or Scotland acquired within the period of the two years immediately prior to the relevant time and that where appropriate he has a good command of the English language. 4 For the purposes of sub-paragraph (1)(b) above employment by a person carrying on insolvency practice includes Crown employment in the Insolvency Service of the Department of Trade and Industry. 5 For the purposes of paragraph (1) above, the reference to an insolvency practitioner in the definition of office-holder in regulation 1(3) shall be construed in accordance with section 388 of the Act but without regard to subsection (5) of that section and references to an office-holder who has been appointed or to a person who has been appointed an office-holder shall include the official receiver in any case where the official receiver is or has been an office-holder whether by virtue of his office or otherwise. 6 For the purposes of paragraph (1) above a person carrying on insolvency practice includes a firm or partnership. Fees 9 The fee to accompany an application to which the Regulations in this Part apply shall be:– a in a case where, at the relevant time, the applicant is the holder of an authorisation, £100; and b in any other case, £200. Maximum period of authorisation 10 No authorisation granted pursuant to an application to which the Regulations in this Part apply shall continue in force for a period of more than 3 years from the date on which it is granted. PART III THE REQUIREMENTS FOR SECURITY AND CAUTION FOR THE PROPER PERFORMANCE OF THE FUNCTIONS OF AN INSOLVENCY PRACTITIONER Application of this Part 11 Save as provided in regulation 2(3) above, the Regulations in this Part apply in relation to any person appointed on or after the commencement date to act as an insolvency practitioner in relation to any person. Requirements for security or caution 12 1 For the purposes of section 390(3)(b) of the Act the requirements in respect of security or caution for the proper performance of the functions of an insolvency practitioner are that:– a there is in force at the time when an insolvency practitioner is appointed to act in relation to any person a bond which complies with the requirements set out in Part I of Schedule 2 to these Regulations under which the surety or cautioner is liable in the general penalty sum of £250,000; and b there is issued under that bond as soon as reasonably possible after the appointment of the practitioner a certificate of specific penalty in respect of the practitioner acting in relation to that person under which the specific penalty sum is not less than the value of that person’s assets estimated in accordance with Part II of the said Schedule; and c where, at any time before the practitioner obtains his release or discharge in respect of his acting in relation to that person, he forms the opinion that the value of the assets comprised in the estate of that person is higher than the penalty sum under the current certificate of specific penalty (being a penalty sum less than £5,000,000), there is issued forthwith a further certificate of specific penalty in respect of the practitioner acting in relation to that person under which the penalty sum is at least equal to that higher value or £5,000,000 (whichever shall be the less). 2 In paragraph (1)(c), “the current certificate of specific penalty” means the certificate for the time being in force which has been issued pursuant to paragraph (1)(b) or (c), as the case may be. 3 The bond referred to in paragraph (1) shall be retained by the recognised professional body or, as the case may be, the competent authority by which the practitioner has been authorised to act as an insolvency practitioner. Exceptions in relation to requirements for security or caution 13 Where an insolvency practitioner who is appointed to be:– a provisional liquidator in the winding up by the court of a company is subsequently appointed to be liquidator of that company; or b liquidator in a voluntary winding up of a company is subsequently appointed to be liquidator in the winding up of that company by the court; or c interim trustee in the sequestration of the estate of any person is subsequently appointed to be permanent trustee in the sequestration of the estate of that person; or d an administrator of a company is subsequently appointed to be a liquidator of that company pursuant to section 140 of the Act; and a certificate of specific penalty is issued under regulation 12(1) in respect of the earlier or earliest such appointment, it shall not be necessary for such a certificate to be issued in respect of the subsequent appointment of the practitioner in any of those circumstances. Registration and filing requirements in England and Wales 14 1 Where an insolvency practitioner is appointed to act in relation to a company as a liquidator in a voluntary winding up or as an administrative receiver he shall, within 14 days of receipt of the certificate, deliver to the registrar of companies for registration a copy of any certificate and of any further certificate of specific penalty issued in respect of his so acting. 2 Where an insolvency practitioner is appointed to act in relation to a company or another person in any capacity specified in section 388(1) or (2) of the Act other than one specified in paragraph (1) above he shall, within 14 days of receipt of the certificate, file in the court having jurisdiction in relation to that person under the Act any certificate and any further certificate of specific penalty issued in respect of his so acting. 3 In this Regulation:– a “company” means a company which the courts in England and Wales have jurisdiction to wind up; and b “administrative receiver” means such a receiver appointed otherwise than under section 51 of the Act (appointment of receivers under the law of Scotland). Registration and filing requirements in Scotland 15 1 Where an insolvency practitioner is appointed to act in relation to a company as a liquidator, provisional liquidator, administrator or supervisor of a voluntary arrangement approved under Part I of the Act or as an administrative receiver, he shall retain in the sederunt book kept under Rule 7.33 of the Insolvency (Scotland) Rules 1986 the principal copy of any certificate and of any further certificate of specific penalty issued in respect of his so acting and shall, within 14 days of the receipt of such certificate or further certificate, deliver a copy of it to the registrar of companies for registration. 2 Where an insolvency practitioner is appointed to act as interim trustee or permanent trustee or as trustee under a trust deed for creditors, he shall retain in the sederunt book kept for those proceedings the principal copy of any certificate and of any further certificate of specific penalty issued in respect of his so acting and shall, within 14 days of the receipt of such certificate or further certificate, deliver a copy of it to the Accountant in Bankruptcy for retention by him. 3 In this Regulation:– a “company” means a company which the courts in Scotland have jurisdiction to wind up; and b “administrative receiver” means a receiver appointed under section 51 of the Act (appointment of receivers under the law of Scotland) who is an administrative receiver. PART IV RECORDS TO BE KEPT BY INSOLVENCY PRACTITIONERS Application of this Part 16 Save as provided in regulation 2(3) above, the Regulations in this Part apply in relation to any person appointed on or after the commencement date to act as an insolvency practitioner in relation to any person. The records to be kept 17 1 In respect of the estate of each person in relation to whom an insolvency practitioner acts in any of the capacities specified in section 388 of the Act and in respect of the security or caution maintained by the practitioner for the proper performance of his functions in relation to that estate in compliance with section 390(3) of the Act, the practitioner shall maintain a record of all such matters as are specified in Schedule 3 to these Regulations as are applicable to the case and shall make forthwith upon the occurrence of any events specified in that Schedule the appropriate entry in the record. 2 Each record maintained pursuant to paragraph (1) shall be kept in such a way as to be capable of being produced by the insolvency practitioner separately from any other record. Inspection of records 18 1 The records maintained pursuant to this Part shall be produced by the insolvency practitioner to the authorising body or any duly appointed representative of such a body on the giving by the body or its representative of reasonable notice to the practitioner: and for the purposes of this Part the “authorising body” in relation to any practitioner shall be the professional body by virtue of membership of which that practitioner is authorised to act, or the competent authority which granted his authorisation, whichever the case may be. 2 The records maintained by any insolvency practitioner authorised by virtue of membership of a professional body recognised under section 391 of the Act shall be produced by that practitioner to the Secretary of State on the giving by the Secretary of State of reasonable notice to the practitioner. 3 Where the records are maintained in a non-documentary form references in this Part to their production include references to producing a copy of the records in legible form. Notification 19 The insolvency practitioner shall notify the authorising body of the place where the records required to be maintained under this Part are so maintained and the place (if different) where and the manner in which they are to be produced pursuant to Regulation 18 above. Preservation of records 20 The insolvency practitioner shall preserve every record required to be maintained under this Part for a period of 10 years from the date on which the practitioner is granted his release or discharge in respect of that estate or the date on which any security or caution maintained in respect of that estate expired or otherwise ceased to have effect whichever shall be the later. John Redwood Parliamentary Under-Secretary of State, Department of Trade and Industry 5th March 1990