The Insolvency Service has announced new consolidated rules will replace the current legislation to reflect modern business practice in April 2017.
These rules have been developed by working with the insolvency profession and have been approved by the insolvency review committee.
They will replace the insolvency rules of 1986 and its 28 subsequent amendments in a bid to make the insolvency process more efficient.
Changes to the rules include enabling electronic communications with creditors and removing the automatic requirement to hold physical creditors meetings.
As well as this they will enable creditors to opt out of further correspondence, at any time, and for small dividends to be paid by the office holder without requiring a formal claim from creditors.
The Insolvency Service said some of the changes are a result of amendments to the primary legislation made by several acts.
These include the Enterprise and Regulatory Reform Act 2013, the Deregulation Act 2015 and the Small Business, Enterprise and Employment Act 2015.
The rules will be re-drafted to make them easier for users to understand as well as becoming gender neutral.
An example of the restructured rules is the separation of winding-up provisions into three separate parts.
There will be a members’ voluntary liquidation, creditors’ voluntary liquidation and compulsory liquidation.
The new rules will be reviewed five years after they come into practice and the Insolvency Service will continue to work on amending further legislation such as the insolvent partnerships order.