Temporary Insolvency Practice Direction revived (in part) – but caution advised re remote swearing

The Temporary Insolvency Practice Direction 2020 (the TIPD) was originally put in place on 6 April 2020 to supplement the Practice Direction on Insolvency Proceedings (July 2018) and provide more flexibility for court users and staff during the Covid-19 pandemic, including the rapid adoption of remote hearings. It applied to all insolvency proceedings in the Business and Property Courts (subject to variations outside London). We covered the key features of the TIPD for Insolvency Practitioners in our previous article – one of the most notable being to (in effect) allow for statutory declarations required for out-of-court administration appointments to be made remotely using a prescribed protocol.

The TIPD was originally intended to remain in force until 1 October 2020 but was “replaced and extended” a number of times, in substantially the same form, to keep pace with the ongoing restrictions as the pandemic unfolded. In common with several government support measures, the TIPD came to an end on 30 September 2021 – although a fresh Temporary Insolvency Practice Direction was published on the Courts and Judiciary Tribunals website on 6 October 2021 (the new TIPD).

What now?

In terms of remote hearings, it was announced by the Courts and Tribunals Judiciary on 15 September 2021 that all hearings under half a day in the Business and Property Courts will take place remotely by default, subject to there being a particular reason why an in-person hearing is appropriate. Similarly, the default format for hearing bundles will be electronic rather than hard copy unless so requested by the presiding judge.

The new TIPD is deemed to have came into force on the lapse of the previous TIPD and will remain in force unless amended or revoked by a further Insolvency Practice Direction. It is intended to retain those parts of the previous TIPD that were not concerned with workable solutions for court users – i.e. it covers:

• The deemed filing of notices of intention and notices of appointment of administrators, or for the purposes of obtaining a moratorium;
• The ongoing waiver of defects in statutory declarations sworn remotely

Remote statutory declarations

Many practitioners have become accustomed to the convenience of remote swearing, usually by way of video conference such as a Teams or Zoom call, and the reinstatement of a TIPD providing for this is clearly welcome and in line contemporary working practice generally. However, points to bear in mind are:

1. Remote swearing is still defective

The wording of the new TIPD (as with the previous TIPDs) makes clear that the a statutory declaration made other than in-person before a person authorised to administer the oath may be defective. By way of reminder, for a statutory declaration to be valid it must have been made in the physical presence of:

• • A solicitor;

  • A Commissioner for Oaths – a person authorised to verify legal documents, like statutory declarations, by the Chief Justice; or

  • A Notary Public – a lawyer who specialises in the authentication of legal documents internationally.

The person taking the statutory declaration should be independent, not acting for the directors, company or insolvency practitioner. Further, the recent authority of Galer v Mond (as administrator of SFPL Limited) & anr [2021] EWHC 1952 (Ch) makes clear that if a deponent is abroad then their options will be to arrange to meet (in person) either (i) one of the categories of professionals listed above, or (ii) a person with authority to administer an oath in that jurisdiction.

2. TIPD waiver of defects doesn’t extend to MVLs

The effect of the new (and previous) TIPDs is to waive (when the protocol is followed) formal defects that may arise from remote swearing to the extent that may threaten the validity of an administrator’s appointment only. It does not waive any defects in swearing generally, and notably the TIPD does not extend to statutory declarations made in connection with other processes – such as declarations of solvency in relation to members’ voluntary liquidations (MVLs). Practitioners may need to consider a conservative approach bearing mind the original swearing requirements, particularly in matters that are likely to become contentious.

3. TIPD is by its nature temporary – what next?

Although the new TIPD does not have a designated expiry date, it is a non-permanent measure that acts as a sticking-plaster as regards defects in remote statutory declarations. In terms of permanent reform, stakeholders such as the Insolvency Lawyers’ Association have responded to The Law Commission’s 14th Programme of Law Reform to put modernisation of swearing practices on the agenda. How quickly permanent reforms could be put into place remain to be seen, but as a first step The Law Commission aim to publish its final programme during the first half of 2022.

For further information on this update, please contact a member of our Restructuring & Insolvency Team or our Real Estate Team or visit our dedicated CIGA & beyond hub.