Dear Insolvency Practitioner,
In this, the fifty sixth of the “Dear IP (NI)” series, I should like to deal with the following issues:
- Family Home Re-vested Automatically but Bankrupt, Land Registry and Other Parties Not Formally Notified
- Disclaimer Notifications to Land & Property Services
- Revised SIP 3.1 (Individual Voluntary Arrangements) and Volume IVA Provider Monitoring Guidance Published (Dear Insolvency Practitioner Issue 156 – Insolvency Service England and Wales)
1. Family home re-vested automatically but bankrupt, Land Registry and other parties not formally notified
The Insolvency Service has recently dealt with several IP cases where the IP has been released without formal action having been taken to re-vest the family home and consequently the cases have had to revert to the OR to deal with this matter. If it is considered that a family home property is in negative equity to such an extent that it will not come into positive equity within the three year period from the date of adjudication, the IP should take action under Rule 6.229D to shorten the three year period. IPs should note that it is not acceptable to take no action on the basis that the property will automatically re-vest after three years.
The trustee’s interest in a family home may:
- vest in the bankrupt automatically on the expiry of the 3 year period provided for by Article 256A(2) of the Insolvency (Northern Ireland) Order 1989
- vest in the bankrupt earlier as a result of the trustee having sent notice to the bankrupt under Rule 6.229D, or
- vest in the bankrupt following the dismissal of application by the trustee for a Court order
In each, if title to the property is registered in the Land Registry and entries have been to record that the owner has been made bankrupt or that title to the property has become vested in a trustee, the trustee is required, under Rule 6.229A of the Insolvency Rules (Northern Ireland) 1991, within 7 days of the date of the vesting, to make such application or applications to the Registrar of Titles as are necessary to show on the appropriate register that the trustee’s interest in the dwelling house has vested in the bankrupt.
However, if title to the property is registered in the Registry of Deeds, there is no longer any requirement for the trustee to submit any documents to that registry in any of the cases.
Paragraph (3) of Rule 6.229B, which had required a certificate to be lodged by the trustee, has been revoked by Rule 27 of the Insolvency (Amendment) Rules (Northern Ireland) 2015 (S.R. 2015 No. 262). It is the bankrupt’s responsibility to take any action required to have the restoration of his or her title evidenced in the Registry.
The requirement to notify the bankrupt and, where applicable, the spouse, civil partner and other third parties as detailed in paragraphs (4) and (5) of Rules 6.229A and Rule 6.229B remains the responsibility of the trustee. In the case of unregistered land the trustee is required by paragraph (1) of Rule 6.229B to issue a certificate of vesting to the bankrupt.
Omitting to attend to these matters will, in future cases result in the Trustee being re-appointed to deal with this matter.
Any enquiries regarding this article should be directed towards Elizabeth Donaldson, Insolvency Practitioner Unit, telephone 028 9054 8561, email Elizabeth.Donaldson@economy-ni.gov.uk
2. Disclaimer notifications to Land & Property Services
The Insolvency Service has recently dealt with several IP cases where no formal action has been taken to disclaim secondary properties deemed to be in negative equity and of no interest to the bankruptcy estate. The cases have had to revert to the OR to deal with this matter as the IP had been released. Article 288 of the Insolvency (NI) Order 1989 provides authority for the trustee to disclaim any property comprised in a bankrupt’s estate which is un-saleable or not readily saleable or is such that it may give rise to a liability to pay money or perform any other onerous act. A secondary property that is in negative equity should therefore be disclaimed.
The effect of a disclaimer is to end the trustee’s interest in a property, and it also ends the bankrupt’s interest in the property.
Land & Property Services has requested to always be notified when a liquidator/trustee issues a disclaimer in respect of a property. Rules 4.199 and Rule 6.177 make provision for a liquidator/trustee to give notice of a disclaimer to any person who, in his opinion ought, in the public interest or otherwise, to be informed of it.
Notifications of disclaimers should be sent to Land & Property Services at: LPS Insolvency Team, Lanyon Plaza, 7 Lanyon Place, Belfast BT1 3LP.
Any enquiries regarding this article should be directed towards Elizabeth Donaldson, Insolvency Practitioner Unit, telephone 028 9054 8561, email Elizabeth.Donaldson@economy-ni.gov.uk
3. Revised SIP 3.1 (Individual Voluntary Arrangements) and Volume IVA provider monitoring guidance published (Dear Insolvency Practitioner Issue 156 – Insolvency Service England and Wales)
A revised SIP 3.1 (Individual Voluntary Arrangements) has been published by each of the recognised professional bodies (RPBs), with an implementation date of 1 March 2023.
The SIP, agreed by the Joint Insolvency Committee, has made amendments to key areas of the SIP including but not restricted to requirements to:
The debtor
- allow the debtor time to consider the proposal once it has been drafted
- ensure communications with the debtor are clear and understandable, especially in relation to the debtors’ obligations, and signpost debtors to sources of help if the nominee believes they may not understand these
- set out clearly the length of the IVA, including any changes, because of equity provisions in the proposal which could extend the original term
- provide bespoke advice tailored to the individual debtors’ circumstances, avoiding the use of generic terms, explanations, advantages or disadvantages.
Work referrers
- ensure that the nominee has performed adequate due diligence on any work referrers and that advice provided is kept as part of the IVA records. Any shortcomings in that advice should be rectified by the nominee
- document details of any direct or indirect payments made for referrals and how that represents value for work/services provided.
The nominee
- provide further detail on the nominee’s assessment of the debtor's financial circumstances and on what should form part of that assessment
- obtain third party consent to use an individual’s income if they are not subject of the IVA
- explain the role and powers of the supervisor
- record details of discussions with key creditors, how debts will be valued for voting purposes and, where a creditor is to be treated differently, an explanation as to why.
In addition, the Insolvency Service is reissuing the guidance to RPBs on monitoring volume IVA providers. This guidance sets out clearly the expectations on RPB monitoring of volume providers.
The guidance has been developed in conjunction with the RPBs to reflect the developments in the volume IVA/PTD market over the past few years.
Main areas of focus
The guidance has been revised to focus on the RPBs’ monitoring activities in relation to the Insolvency Practitioners’ responsibilities for both their own marketing and advertising activities and those of any work referrers they engage, including their quality, accuracy and legality.
A similar focus has been given to the monitoring of Insolvency Practitioners’ responsibilities in relation to debt advice provided not only by themselves but also anyone referring work to them.
Furthermore, the guidance strengthens the RPBs’ monitoring toolkit by including a requirement for Insolvency Practitioners to retain debt advice call recordings and relevant written records for 6 years. This requirement extends to any work referrers the Insolvency Practitioner may engage.
Other areas of the guidance have also been revised to ensure that it remains in line with the updated SIP 3.1, advertising guidance and recent changes in the IVA/PTD landscape.
Any enquiries regarding this article should be directed to email: IPRegulation.Section@insolvency.gov.uk