There have been various articles and warnings recently about delays at Court. Most of these have concentrated on the delay in obtaining hearing dates, but there is also a significant problem with filing dates as well. I wrote to the court service, copying in the main regulators and I reproduce the text below. The Court Service have not seen fit to reply. I will chase it up, but until I extract a response and can update you further, I wanted you to know that the problem exists.
Text of an email sent to the Court Service on 7 December 2005:
“I am an ex-compliance officer with ACCA who now conducts compliance reviews for insolvency practitioners, whoever their regulator. As a result, I conduct detailed reviews of the insolvency appointments of some 30 to 40 insolvency practitioners every year. I have recently noticed a recurring theme that appears to be caused by the Court, rather than by any operation of insolvency law or policy and I am therefore raising this issue with you rather than the Insolvency Service. I have, however, copied in the Insolvency Service and representatives of the three largest regulatory bodies so that they are made aware of the problem.
Various requirements in the insolvency legislation require papers to be filed at Court and in some the date of filing is particularly critical. I have now seen several individual voluntary arrangement (IVA) cases, across a mixture of large and small practices with varying degrees of technical compliance, where papers that were sent to court for filing have been filed up to a month later. In the worst case, the nominee’s report filed under rule 5.14 of the Insolvency Rules 1986 was not filed by the High Court until after the meeting referred to in the report had been held and in many cases the report was only filed a few days before the meeting. The problem with this is that rule 5.17 states that the meeting may not be held until 14 days after the report has been filed in court and then goes on to say that the meeting must be held within 28 days of the filing date.
As a result, an Insolvency Practitioner is prevented from proposing a meeting date in his report that is more than 28 days from when the report could (and should) be filed, but may not be able to hold the meeting if the Court has been so slow in filing the papers that there are no longer 14 days between filing and the original meeting date. In the most recent case I dealt with, a practitioner rang the court exactly 14 days before the meeting to confirm that the report had been filed and the meeting could be held and was told that ‘Insolvency filing is only done on Saturdays as overtime, so we’ve got a backlog. That case should be looked at in the next couple of weeks’. Fortunately, the practitioner’s phone call was enough to jump the queue and the papers were filed in time.
Given the recent decision in Re Cabeltel and the related Practice Direction, it cannot be appropriate for an Insolvency Practitioner to have to incur the cost of ringing the Court and asking them to do something required by statute or incur additional costs to the creditors by re-issuing papers and re-scheduling meetings. Equally, in the large number of approved arrangements where the insolvency practitioner was not aware that papers had not been filed by the Court, through no fault of the practitioner, there is at least a technical doubt about whether the meetings held are now valid. The insolvency legislation makes no provision for a meeting to be held within 2 weeks of the report’s filing date and practitioners may be faced with having to apply to court, at disproportionate cost, to have each ‘invalid’ voluntary arrangement ratified. This would then raise the question of whether a judge has jurisdiction to overrule a statutory requirement in the public interest or to avoid manifest unfairness, as would be the case if an otherwise approved and valid arrangement had to be recommenced or abandoned because the Court Service failed in its duty.
I would be grateful if you would look into this from two perspectives:
1) What the Court Service intends to do about resourcing courts so that papers that are required to be filed are not stockpiled and dealt with ‘in due course’; and
2) What can be done, by Practice Direction or otherwise, to confirm that cases ‘invalidated’, for no other reason than that the court failed to file papers when required to do so, are still valid without further application to the court by the practitioner.
Please note that all, or part, of your reply may be issued to my clients to guide them on the action they should take in their affected cases.”
