Our last two Blog articles about pre-appointment fees in administrations and what costs should be deducted when calculating the net property have something in common, the Court not addressing issues that are key to IPs. However, we do not lay the blame at the doors of the Court. Their role is to interpret the legislation, not to draft new sections where the Insolvency Act is deficient. IPs have had to fudge both issues since the legislation was introduced when they are so important that they could do with greater certainty, not least to avoid arguments with their regulators over interpretation. We think that the Insolvency Service should consult and legislate on these points to eradicate any doubt.
Although the SIPs are being reviewed and may yet become more relevant and streamlined, the introduction of SIP 16 has increased the amount of work an administrator has to do pre-appointment and immediately on taking office. Without some clarity on how those costs can be recovered, we think that the increased disclosure, which is of dubious benefit to unsecured creditors anyway, will merely increase the cost and regulatory burden.
The Insolvency Service is in the middle of its review of the secondary legislation and consolidation of the legislation. The first tranche of the revision to the insolvency rules and regulations dealt with advertising on the stated expectation that cost savings will be passed on to creditors, an expectation that we have already suggested may be optimistic. We hope that further revisions will address issues such as these, which are important both for IPs and as key parts of a homogeneous insolvency regime.
