Thursday, March 23, 2017

Secret meetings are not appropriate!

The Insolvency Rules (Engl….No, wait! If you are reading our Blog, you know what we mean by New Rules, so we’ll call them that from now on. So; starting again.

The New Rules are supposed to reduce cost, which has failed spectacularly from what we are seeing already, and increase creditor engagement. We have our doubts about the latter, given that physical meetings have been done away with unless requisitioned, but we have now seen a more worrying suggestion.

Another firm in our line of work, asked some “reps from the Insolvency Service” whether, when convening a virtual meeting it would be ok to just tell people that there will be a virtual meeting and then only provide a phone number or email address to contact and ask for the access details and password for the meeting. The idea behind the suggestion is to make virtual meetings more manageable and provide a way of ensuring that only genuine creditors can get access to the meeting. The Insolvency Service reps said it was ok.

We think that such an approach is wholly wrong. Anyone thinking that after our last article we were going to start agreeing with the Service can relax. We are firmly back on the war path. In terms of the rules, the relevant requirement for notices in virtual meetings are dealt with in rule 15.5(a). That says that the notice must include “any necessary information as to how to access the virtual meeting including any telephone number, access code or password required;” We are sure that reading that to allow you to just tell creditors to get back in touch to find out how to join is plainly wrong.

In addition, if we park the technical argument for a moment, let’s just try a bit of common sense. If such an approach was allowed, would you, in the past, have sent out notices that said “I am convening a meeting, but I won’t tell you where it will be held unless you ask me?”. Of course not, but isn’t that what you would be doing with a virtual meeting? Secret meetings, now there’s a new approach to transparency!

Somewhere between the pure technical argument and the slightly hysterical common sense argument, we think that there is also a significant principle at stake that overrides the IP’s convenience. If we are trying to encourage creditor engagement, any extra steps in a process create barriers to engagement. For example, it is already known that if a firm runs a complaints system that requires a creditor to re-submit their complaint if they are not satisfied with the original decision, many complainants simply won’t bother. That is why many regulators want a single stream for complaints where information is escalated automatically. Similarly, it is known that many people don’t switch banks or utility suppliers because it is just too much hassle. If we start making creditors ask how to get into a meeting, we are creating barriers just to serve our own interest.

We have to make it clear that, reverting to our traditional combative view of almost anything said by the Insolvency Service, we consider that when you issue notices for a virtual meeting you have to include the access and password details in the notice, and that any requirement for the creditor to get back in touch to request access details is both technically and practically wrong. We are afraid that you will have to find another way of ensuring that only genuine creditors can get access to the meeting.