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First Review of the Insolvency (England and Wales) Rules 2016

The Insolvency Service has just published the First Review of the Insolvency (England and Wales) Rules 2016 following a consultation ( the Review ).

One of the important areas noted for possible reform concerns the judgment in Manolete Partners plc v Hayward and Barrett Holdings Ltd & Ors [2021] EWHC 1481.

In that case Hugo Groves successfully acted for the directors who were facing claims assigned by a liquidator to Manolete . Those claims included pure “office holder” claims under IA 1986 and other claims; the other claims included a s.212 Misfeasance application (albeit Manolete was not an office holder) , and “ordinary” claims (including a s.423 IA claim).

Chief ICC Judge Briggs (relying on long standing authority ) agreed with Hugo’s submissions that the Insolvency Application should only continue if the appropriate claim fee (£10,000) was paid. The judgment of Chief ICC Judge Briggs is detailed and made a number of substantive and powerful points concerning the substance and history of s.212 IA applications , s.423 IA claims and the position of assignees .

The Review notes the need to issue different sets of proceedings was not actually caused the introduction of the new Insolvency Rules in 2016 (IR 2016) but it has agreed to consider the issue of possible reform to IR 2016.

In practice there is little difficulty in issuing claim proceedings (paying the correct fee) and immediately transferring them into the ICC where they arise out of the same facts. Whether it is appropriate to allow an assignee (as opposed to an ordinary litigant) to run a liquidator’s s.212 Application, or a s.423 claim (which is not an insolvency proceeding) is another matter that raises substantive questions . There are clearly deep waters here but they may be difficult to navigate by reviewing IR 2016 alone.