We have recently heard that a monitor criticised an IP for not including sufficient information about dividends paid to creditors in the receipts and payments account issued to creditors. As a result, I would take this opportunity to remind you that SIP 7 requires receipts and payments accounts to contain details of not only the total amount distributed to the different classes of creditor, but also the date and rate of the dividend(s) paid.
The 2010 rules set out detailed requirements in respect of the contents of the receipts and payments account to accompany final progress reports in MVLs and CVLs. However, for annual progress reports in MVLs and CVLs, and all progress reports in administrations, compulsory liquidations and bankruptcies the 2010 Rules do not specify any required contents for the accompanying receipts and payments account. Even the new MVL and CVL disclosure does not require the date and rate of dividend to be disclosed.
We assume that SIP 7 applies in respect of cases commenced before 6 April 2010, but there has to be some doubt about its application to cases commenced on or after 6 April 2010. SIP 7 was issued back in 1998 and so for liquidations commenced after 6 April 2010 the legislators had the opportunity to take into account SIP 7 when revising the legislation. They chose not to, which suggests that it could be sufficient to just comply with the legislation when preparing annual and final progress reports in all case types, although that then gives rise to inconsistency in the information provided and you may prefer instead to ensure that you always fully comply with SIP 7.
SIP 7 is going to be reviewed as part of the Joint Insolvency Committee’s review of SIPs and hopefully that review will take into account the difference in the detailed presentational matters between annual and final progress reports and also case types in the legislation. We would hope that the principles based approach seen in recent SIPs is extended to the new SIP 7 so that it does not impose additional disclosure requirements where the recently revised legislation has not.
