Explanatory note

These Rules make an amendment to Rule 13.12 of the Insolvency Rules 1986 (S.I. 1986/1925) (“the Rules”).

Rule 13.12 defines “debt” in relation to the winding up and administration of a company. Rule 13.12(2) is amended to extend the interpretation of debt to include claims founded in tort where all of the elements required to bring an action against the company exist at the time the company goes into liquidation or enters administration, except that the claimant has not yet suffered any damage and does not therefore, at that time, have a cause of action against the company. When read with Rule 12.3 of the Rules this interpretation has the effect of extending the category of debts provable in a winding up or administration.

The amendment made by these Rules will apply to all companies which enter administration or go into liquidation on or after the commencement date, other than where that administration or liquidation is immediately preceded by an administration (subject as follows) or liquidation which commenced before that date. The amendment will also apply to a company which, on the commencement date, is subject to an administration order made on a petition presented before 15 September 2003 and which goes into liquidation on or after the commencement date. Such an administration is governed by the provisions of Part 2 of the Insolvency Act 1986 which were in force prior to the coming into force of the amendments made by the Enterprise Act 2002. There is no provision for proofs of debt and distribution of assets in that Part of the Insolvency Act 1986.

No regulatory impact assessment has been prepared in relation to these Rules, as they will not impose any significant costs on business.