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CIGA Warning – Serving a Section 10/Condition B Notice Concurrently with a Statutory Demand.


CIGA Warning – Serving a Section 10/Condition B Notice Concurrently with a Statutory Demand.

Serving a Section 10/Condition B Notice Concurrently with a Statutory Demand.

We have recently been made aware of a potential issue in relation to the concurrent service of Statutory Demands and Schedule 10/Condition B Notices on companies. Schedule 10 Notices are the notices under CIGA which are a temporary measure through the pandemic.

The Insolvency Service Rules state that service should be effected in accordance with CPR Rules in the absence of any specific provision within the Insolvency Rules. There is a specific provision for service of the Statutory Demand within the rules, however there no such provision for the Schedule 10/Condition B Notices.

CIGA simply states that the Schedule 10/Condition B Notice should be ‘delivered’ to the registered office.

1.42-1.44 of the Insolvency Rules relates to ‘delivery’ of documents.

Postal delivery of documents
1.42.—(1) A document is delivered if it is sent by post in accordance with the provisions of this rule.

(2) First class or second class post may be used to deliver a document except where these Rules require first class post to be used.

(3) Unless the contrary is shown—

(a)a document sent by first class post is treated as delivered on the second business day after the day on which it is posted;

(b)a document sent by second class post is treated as delivered on the fourth business day after the day on which it is posted;

(c)where a post-mark appears on the envelope in which a document was posted, the date of that post-mark is to be treated as the date on which the document was posted.

(4) In this rule “post-mark” means a mark applied by a postal operator which records the date on which a letter entered the postal system of the postal operator.

Delivery by document exchange
1.43.—(1) A document is delivered to a member of a document exchange if it is delivered to that document exchange.

(2) Unless the contrary is shown, a document is treated as delivered—

(a)one business day after the day it is delivered to the document exchange where the sender and the intended recipient are members of the same document exchange; or

(b)two business days after the day it is delivered to the departure facility of the sender’s document exchange where the sender and the intended recipient are members of different document exchanges.

Personal delivery of documents
1.44.  A document is delivered if it is personally delivered in accordance with the rules for personal service in CPR Part 6. (The rules for ‘personal’ service under CPR Part 6 are under 6.22 and 6.5(3) – in the case of a company this is ‘(b) a company or other corporation by leaving it with a person holding a senior position within the company or corporation)’

Therefore, there does not appear to be any provision within the rules for ‘delivery’ of the Schedule 10 /Condition B Notice by way of leaving it at the registered office (CPR 6.20 allows for this, however rule 1.44 of Insolvency Rules does not allow for this as it states only the Part 6 rules for ‘personal’ service may be used). The Schedule 10 must be either posted, or handed personally to a person holding a senior position.   This means that in cases where the Statutory Demand is letterboxed or left at the registered office, or handed to an employee or some other person authorised to accept service, this actually does not meet the service requirements for the accompanying Schedule 10.

How you can deal with this…..

In cases where there is any ambiguity as to whether the service meets the requirements for Schedule 10, we suggest you speak with your client to suggest you (or they) send a further copy of the documents by first class pre-paid post to the registered office address. This will then satisfy the requirements for Schedule 10.

Comment:

The anomaly in the Insolvency and Civil Procedure Rules concerning the personal service of Section 10/Condition B Notices is obvioulsy an oversight.

Thousands of companies are registered at a service address where there is no physical presence of any diretor or employee of the company.

The rules allow for service on the registered office by regular postal delivery but not by a professional process server unless he or she can meet with a director. We can not believe that it was intended for personal service of a Section 10/Condition B notice to be more onerous than that of a Statutory Demand or a Winding up petition –  the ulitimate sanction.

This anomaly in the rules has now been reported to R3 -The Association of Buisness Recovery Professionals by Mark Hodgson of Tremark Associates and we hope that clarification will be issued shortly.

Feedback Welcome

Should you have any questions or points you would like to raise relating to this subject,  I would be delighted to hear from you. Please contact me via mark.hodgson@tremark.co.uk.

If you would like more information on our process serving please click here.

Links

The Corporate Insolvency and Governance Act 2020 – Coronavirus Amendment of Schedule 10 Regulations 2021

1.42-1.44 of the Insolvency (England and Wales) Rules 2016

Civil Proceedure Rules – Part 6

Companies Act 20016 – Service of Documents on Company


About The Author

Mark Hodgson is the Managing Director of Tremark Associates, one of the UK’s leading providers of investigative services. Mark formed Tremark aged just 25 in 1995 and has over 30 years experience in private investigations and commercial debt recovery industries. He is a leading figure and a campaigner for regulation of the Industry and past President of the Association of British Investigators, a member of the World Association of Detectives, The Chartered Institute of Credit Management, The Institute of Paralegals and an associate member of R3 -The Association of Business Recovery Professionals. Mark splits his time between the Leeds and London Offices. He is a dad of two, a keen runner, cyclist and a Leeds United season ticket holder.


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