The Insolvency Practice (Bankruptcy) Rules 2016 have now been released. Parts 1 and 2, which deal with registering and disciplining practitioners, are set to commence on 1 March 2017.
Part 3, which contains the general rules relating to the administration of estates, will not commence until 1 September 2017.
The Rules provide much of the detail for the Insolvency Practice Schedule (Bankruptcy) which was inserted at the end of the Insolvency Law Reform Act 2016 however it should be noted that the Rules are a separate suite of changes to the proposed reduction of the discharge period discussed in our last circular.
Registered Trustees should note that from 1 March 2017 they are required to undertake at least 40 hours of continuing professional education (CPE) during each year as a condition of their ongoing registration.
Other notable changes and additions to the Rules include that:
- The regulator must publish on the register, details of any disciplinary action taken in relation to a practitioner and any conditions placed on their registration. The ability of the regulator to publish such information publicly is supported to assist in improving community confidence in the regulation of practitioners by making the timing of disciplinary actions transparent;
- The maximum percentages of remuneration that were previously allowed under the old Bankruptcy Regulationshave been increased. Now, where a registered trustee seeks to have his or her remuneration approved on a percentage of the money received from the administration, the percentage must not exceed:
- if the money received is $30,000 or less - 20%;
- if the money received is between $30,001 and $50,000 - 20% for the first $30,000 and 17.5% for the remaining amount; or
- if the money received is above $50,000 – 20% for the first $30,000, then 17.5% for the next $20,000, and 15% for the amount above $50,000;
- It is no longer necessary to provide a remuneration claim notice, unless a regulated creditor or debtor has elected to receive it (Rule 70-47(2)). A remuneration claim notice sets out the details of the remuneration claimed by the trustee and is one of the three notices previously required to be issued to a bankrupt and creditors in relation to this information. This simplification reflects the concerns from industry participants that the requirements to give notices were excessive;
- Division 70 of the Rules specify a number of situations where a request for information need not be complied with, despite falling within the category of a ‘reasonable request’ under the Insolvency Practice Schedule (Bankruptcy). This rule provides that it is not reasonable for a trustee to be expected to comply with a request for information, provide a report or produce a document to the creditors, if the trustee in good faith, is of the opinion that:
- complying with the request would substantially prejudice the interests of one or more creditors, or a third party, and that prejudice outweighs the benefits of complying with the request;
- the information, report or document would be privileged from production in legal proceedings on the ground of legal professional privilege;
- disclosure of the information, report or document would found an action by a person for breach of confidence;
- there is not sufficient available property to comply with the request;
- the information, report or document has already been provided; or
- the request is vexatious.
This rule has the effect of providing practitioners with further grounds for refusing a creditor’s request for information in circumstances where it would otherwise be considered a ‘reasonable request’ that had to be complied with.
Continuing professional education
We are interested in finding additional ways to assist in your professional education requirements under the new regime. Please let us know if you have any particular areas of law or practice in which your firm may be interested in arranging a seminar presentation.
The bankruptcy circular
We are interested to hear from you on your views about interesting topics that might be covered in future editions of this circular.
Feel free to circulate this to your clients and free to get in touch if you would like to discuss any of the above.
Otherwise, we look forward to working with you in 2017.