Thursday, August 04, 2016

Dear IP 72, OR’s Technical Guidance issued



Since Dear IP 72 was published, the IS have also updated their internal guidance for Official Receivers (“OR”) which is contained in chapter 17 of their Technical Manual.  Whilst it is internal Guidance, it is available under the Freedom of Information provisions and can be found by clicking here.  It expands on Dear IP 72 in some areas and clarifies some points, which begs the question why not just provide the text from that guidance in the Dear IP rather than trying to precis it?

A couple of points we noticed when reading the OR’s Technical Guidance.  First, clarification for those who have a relationship with HMRC to investigate cases.  Dear IP 72 suggested that if HMRC are the majority creditor then it will be a rota appointment, but the Guidance indicated that in cases where HMRC “are pursuing recoveries more actively than usual and other cases in which they have a special interest” then a rota appointment is not appropriate and they will nominate an IP.

Secondly, a point that was not covered in Dear IP 72.  According to the internal guidance, when the OR decides that “the next insolvency practitioner on the rota will not have the skills required to administer the estate, for example where assets are located abroad”.  In that situation the OR can seek the appointment of an IP they consider has the necessary skills out of turn from the rota “or otherwise”.  The internal guidance does indicate that these should be rare occasions, but does the IP actually know enough about the IP firms on their rotas to make such a judgement without first asking the IP themselves whether it is a case they are capable of administering?  After all, having the necessary skills and resources to deal with a case is something for the IP to consider under the Insolvency Code of Ethics before taking on a case.  The implication of the internal guidance is that IPs would not follow the Code of Ethics if they were approach by the OR about such a job.

Finally, since Dear IP 72 was released we also had the inaugural Insolvency Live! Event hosted by the IS.  In her opening remarks the Agency Chief Executive, Sarah Albon, confirmed that creditors can appoint an IP in a case if they want.  I was in the audience and was very pleased to hear that announcement being made, but at the moment it is at odds with both Dear IP 72 and the OR’s Technical Guidance.  Perhaps we will have a Dear IP 73 that clarifies the position and addresses the differences between Dear IP 72, the OR’s internal guidance and the Agency Chief Executive’s statement?