On 2 October 2020, the Lord Chancellor approved and signed a new Temporary Insolvency Practice Direction (‘TIPD’) which came into force on that day, and replaced the previous Temporary Insolvency Practice Direction, which had come into force on 6 April 2020 and expired on 1 October 2020.
The TIPD is intended to supplement, rather than replace, the existing July 2018 Insolvency Practice Direction (as amended). Its stated aim is to address the practical ramifications of the COVID-19 pandemic on insolvency work, by avoiding the need for litigants to attend court, encourage the continued use of CE-filing, and easing the administrative burden on court staff, who are potentially operating with more limited resources.
It applies to all cases in the Business and Property Courts, subject to regional variations implemented by the relevant supervising judge for such courts dealing with this sort of work, which are based outside of London.
Paragraph 4 of the TIPD sets out the listing procedure for Winding-Up and Bankruptcy Petitions. The ‘default’ position is for the hearing to be a remote hearing conducted via either video or telephone. The parties are to supply email addresses and/or phone numbers no later than 2 clear business days before the hearing date. Any other persons (such as supporting creditors) who intend to appear at any such remote hearing must deliver a notice of intention to appear on the petition (Rule 7.14 and/or Rule 10.19 of the Insolvency Rules 2016), together with their contact details.
Other Insolvency Hearings are addressed in paragraph 5 of the TIPD; these may be conducted either as remote, in-person or hybrid hearings, with the parties being directed to liaise with each other to decide upon the method for the hearing in advance.
The TIPD dovetails with the Insolvency Practice Direction relating to the Corporate Insolvency and Governance Act 2020, the operation of which was recently extended until 31 December 2020. Part 2 of Schedule 10 to the 2020 Act places restrictions on creditors’ ability to file a winding-up petition. In particular, a petition may not be filed without a statement explaining ‘the reasoning for non-payment of the debt, alongside the creditors grounds for believing that either:
(i) coronavirus has not had a financial effect on the company; or
(ii) the facts would have arisen even if coronavirus had not had a financial effect on the company.
The petition also needs to contain a summary of the grounds relied upon by the petitioning creditor for the purposes of this coronavirus test.
The TIPD will remain in force until 31 March 2021, unless amended or revoked by subsequent Practice Directions before that date.