In a leaked letter to stakeholders the IS' director of policy, Nick Howard, explained work is well underway to replace the existing 1986 rules.
The IS is currently preparing a first draft of these rules with drafting lawyers in a bid to begin a six-month consultation process in the summer of 2012.
The regulatory body has earmarked October 2013 as the launch date for the proposed changes.
Howard wrote: "These new rules will replace the 1986 Rules with a better structured and clearer set of rules, removing drafting inconsistencies and restating existing provisions using modern language and less duplication.
"We are continuing to work with drafting lawyers on the preparation of a first draft of these rules.
"This work is proving time consuming as we address the many inconsistencies and drafting suggestions identified, including many that have been raised by stakeholders."
Howard added the IS has established and is already in discussions with a 'Focus Group' to ensure users' needs will be met with the new rules.
The IS plans to reveal the final version of the rules "well before the implementation date" – a move will also depend on other insolvency policy proposals such as the current consultation about reforms to the petition process for bankruptcy and court winding-up.
The letter added that, in the meantime, specific changes will be made to the 1986 Rules where necessary.
In April 2011 the IS announced ministerial approval had been granted to work on the final phase of the modernisation process which aims to restructure and replace the 1986 Rules.
Since coming into force the rules have been amended more than 20 times.
By Andy Pearce