Monday, January 12, 2015

The 18 month rule…continued

We first went on the offensive about the so-called 18 month rule in July 2014 in our Blog article here. We did make it clear at the time that although we had significant reservations about the Insolvency Service’s interpretation of the relevant rules, we would not recommend ignoring them and we suggested that you should seek advice. We also said that notwithstanding whether the 18 month rule really worked, it just makes more commercial sense to get your fees approved early. In fact we said “To address the issue in practice, since it is probably not worth going to war with the Regulator of Regulators on the topic, and they will have directed your Regulator how they expect the rule to be read, we recommend that you seek fee approval as early as possible in the proceedings. That way, you will be seeking approval earlier in the proceedings when creditors are more likely to be interested and prepared to vote, and if you have a problem case you will know about it early and plan your work with that knowledge in mind.”

We expected it to meet with deafening silence and so we were a bit surprised when, in December, ICAEW’s Blog contained an article here referring to “some compliance providers and trainers” casting doubt on the Insolvency Service interpretation. Interestingly, even that article setting out the Insolvency Service view says “The Insolvency Services have issued the caveat that this is only their opinion, and individual IPs may want to take their own legal advice.” I am not sure that our article really said much that was different from this, but if our comments were in any way out of order we obviously recant any heresy forthwith.  

Interestingly, when commenting on the ICAEW Blog article recently, while unaware of our prior Bog article, Michelle Butler set out similar arguments to our original doubts in her Insolvency Oracle Blog here.

So, in summary and at the risk of getting burnt for repeating a heresy after recanting (please excuse the Wolf Hall references but I have spent the last couple of weeks speed reading Hilary Mantel in readiness for the new BBC series), although we don’t think that the Insolvency Service are right and instead think that the rules, as written, say something else, you should refrain from winding up either your Regulator or the Regulator of Regulators and you should do so by seeking early fee approval in all cases, whether the 18 month rule as written really works or not.