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Clarity provided – Serving a Section 10/Condition B Notice under CIGA

Clarity provided – Serving a Section 10/Condition B Notice under CIGA

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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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.