The creditor opt-out process
If you are a creditor within an insolvency procedure, the Insolvency Rules 2016 (IR16) have created a new procedure which will allow creditors to ‘opt out’ from receiving correspondence from an Office Holder. The Insolvency Rules 2016 come into force on 6th April 2017.
An Office Holder is an Insolvency Practitioner or Official Receiver who is either a Supervisor, Administrator, Receiver, Liquidator or Trustee of an estate as created by one of the formal insolvency (or solvent) processes as laid out in the Insolvency Act 1986, as amended, (IA86).
As an opted-out creditor, they will not receive documents from the Office Holder unless the IR16 state that they have to have the document even though they are opted-out, for example, if there is a change of Office Holder, the new contact details have to be sent to all creditors, even the opted-out creditors.
Therefore a creditor can be as engaged as much or as little as they wish in the insolvency procedure. This article is to answer some of the questions that will arise during this new process.
Why would a creditor want to become an opted-out creditor?
They have no wish to receive Office Holder progress reports, notices of a decision process, or similar documents, in relation to the insolvency proceedings.
When can a creditor become an opted-out creditor?
A creditor may at any time elect to be an opted-out creditor. R1.38(1)
How can a creditor become an opted-out creditor?
The creditor’s election to opt out must be by a notice in writing authenticated and dated by the creditor. R1.38(2)
A creditor becomes an opted-out creditor when the notice is delivered to the Office Holder. R1.38(4)
Can a creditor change their mind?
An opted-out creditor will remain an opted-out creditor for the duration of the proceedings unless the opt out is revoked. R1.38(5)
How can a creditor revoke their election to opt out?
The creditor may at any time revoke the election to opt out by a further notice in writing, authenticated and dated by the creditor and delivered to the Office Holder. R1.38(6)
The creditor ceases to be an opted-out creditor from the date the notice is received by the Office Holder. R1.38(7)
What does Authenticated mean?
R1.38(2) states that the notice has to be authenticated. The IR16 defines what this actually means within R1.5:
- R1.5(1) A document in electronic form is sufficiently authenticated if the identity of the sender is confirmed in a manner specified by the recipient.
Or... where the recipient has not so specified, if the communication contains or is accompanied by a statement of the identity of the sender and the recipient has no reason to doubt the truth of that statement.
- R1.5(2) A document in hard copy form is sufficiently authenticated if it is signed.
- R1.5(3) If signed by an individual on behalf of a body of persons, the document must also state the position of that individual in relation to the body.
And... a body corporate of which the individual is the sole member, the document must also state that fact.
What must an Office Holder do?
The Office Holder must, in the first communication with a creditor, inform the creditor in writing that the creditor may elect to opt out of receiving further documents relating to the proceedings.
There will be guidance with the first communication which contains all of the relevant information for a Creditor.
Please speak to Julie Beavis for further advice.