Insolvency Rules 2016 - MVL's
Tuesday, 11th April 2017
MVL's are dealt with in Part 5, chapters 1 and 2 of the new rules so, if you're sitting comfortably, I'll begin.
r.5.1 sets out the additional requirements to those in s.89 IA
In terms of the basic requirements for the Declaration of Solvency, there's little significant change - all of the directors (or a majority of them) have made full inquiry and, having done so, are of the opinion the company will be able to pay its debts in full (with interest at the Official Rate) within a specified time, not exceeding 12 months.
Out goes the old form 4.7 (the Stat Dec itself embodying the Statement of Affairs) and in its place comes r.5.1 (2) which sets out the prescribed information to go into the Stat Dec. It will no longer be necessary to describe the assets in detail e.g. "Balance at bank, Cash in hand or Marketable securities" etc etc but instead it will be necessary to show assets by class i.e. subject to a fixed or a floating charge and those assets which are uncharged. In addition, the amount available to preferential creditors must also be shown.
The obligations to show debts due under fixed and floating charges remain along with a summary of the amount due to unsecureds (now with a separate figure for accrued interest), the estimated cost of the Liquidation and the estimated return to shareholders.
r.5.2 replaces r.4.139 and forms 4.27 and 4.28 (sole and joint appointment respectively) and requires more detailed practical information to be provided including the Liquidator's contact details
r.5.3 applies to the MVL of authorised deposit takers and, amongst other things, requires notice of the members' meeting to be given to the FCA and the scheme manager
r.5.4 replaces r.4.140 and forms 4.29 and 4.30 and deals with appointment by the court. Amongst other things, the rule requires the Order to include the name of the court and the Judge making the order
r.5.5 simply states the cost of the Liquidator's security is an expense of the Liquidation
r.5.6 deals with the Liquidator's resignation which remains limited to ill health, ceasing to practice, conflicts of interest or a change of personal circumstances. r.5.6(2) onwards sets out the formalities which must be followed.
r.5.7 and r.5.8 deal with the removal of the Liquidator by the court and members' meeting respectively
r.5.9 replaces r.4126A and deals with the Liquidator's final account which must be delivered in draft at least 8 weeks' before being Gazetted instead of the previous month. r.5.9(3) provides for requests for information and applications to the court
r.5.14 to 5.16 deal with misconduct on the part of the Liquidator and at r.5.15 includes the power of the court, in certain circumstances, to set aside transactions and order the payment of compensation for loss sustained.