Wednesday, March 28, 2018

Notices to creditors to opt out

In CVLs we have seen instances where the notice to creditors to opt out has just been put on a website and creditors have then been directed to it in the initial letter to them following the appointment of the liquidator.  We have sought clarification from Policy Division of the Insolvency Service (IS) as to whether that approach is permitted given that rule 1.39 says that “the office-holder must, in the first communication with a creditor, inform the creditor in writing that the creditor may elect to opt out of receiving further documents relating to the proceedings.” 

The IS have now responded to us and indicated that their view is that, because of the wording used in rule 1.39, the information about opting out cannot just be put on a website and must be included as part of the first communication with creditors.  Their reasoning for that approach is that “if a website is to be used then a notice must be sent to the creditors explaining how to get access etc (see rules 1.49 and 1.50).  That would mean that there are communications before the use of the website in which the option to opt out would need to be explained.”

The information on opting out can either be included in the body of the first letter to creditors, or sent as an enclosure to that letter.  While we have seen it most often in CVLs the comments in this Blog apply equally to other case types.