Corporate Insolvency and Governance Act 2020.
Delivery or Service of a Section 10 / Condition B Notice.
On the 10th January 2022 I wrote to our clients regarding the concurrent service of Section 10/Condition B notice with a statutory demand. That update can be read by clicking here.
An issue occurs when there is no person holding a senior position within the company or corporation available to accept service at the registered office. Whilst the Insolvency Rules allow for the statutory demand to be left at the registered office or handed to an employee or some other person authorised to accept service, the Section 10 or Condition B notice cannot.
This created the odd scenario where personal service of a Condition B notice is in fact more onerous than that of a statutory demand or winding up petition. Nor does is seem reasonable that whilst delivery by the post is permitted under 1.42 of the Insolvency Rules, that personal delivery to the registered office by a professional process server is not.
I have now received a response from the Senior Technical Advisor at the Insolvency Service, following my raising this matter with R3 – The Association of Business Recovery Professionals.
Clarification Given
The Insolvency Service’s Technical Team have clarified to me that this interpretation of the rules is correct and that when writing the rules that they envisaged that the notice would be delivered by post rather than engaging the more formal route of instructing a process server.
In an email to Tremak dated 20th January 2022 they explain:
‘It is correct that a ‘Condition B’ notice under schedule 10 of CIGA is “delivered” in accordance with rules 1.42 to 1.45 of the Insolvency (England and Wales) Rules 2016. This does mean that if personal delivery is chosen it should follow the provisions of the CPR as set out in the legal advice you obtained, so by “leaving it with a person holding a senior position within the company”.
I understand in drafting the legislation this was a point considered. From a policy perspective in drafting the emergency measures for the pandemic a “Condition B” notice was designed to be a reasonable alternative in engaging with debtors than a statutory demand. It was introduced to provide a route to show that creditors had reached out and tried to engage with the company during the difficulties of the pandemic.
It was generally envisaged that the notice would be delivered by post rather than engaging the more formal route of instructing a process server during the ‘lockdown’ restrictions. Where personal service was chosen the provisions of paragraph 1(6)(b) of schedule 10 would have allowed the notice to be served on the secretary or director (where their home address was known) on the basis that it was not practicable to deliver the notice to the registered office. This would have fulfilled the CPR provisions for “delivered”.
Given that the CIGA rules are due to expire in March 2022 it seems unlikely that the rules will be amended.
UK and International Process Serving
Tremark Associates are able to undertake the personal service of documents throughout the UK and the world.
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Feedback Welcome
Should you have any questions or points you would like to raise regarding to this subject, I would be delighted to hear from you. Please contact me via mark.hodgson@tremark.co.uk.
