# The Insolvency Practitioners (Amendment and Transitional Provisions) Regulations 2024, Note: Explanatory note


(This note is not part of the Regulations)
These Regulations amend Schedule 2 to the Insolvency Practitioners Regulations 2005 (“the 2005 Regulations”), subject to transitional and saving provisions in regulation 3. Schedule 2 to the 2005 Regulations sets out requirements relating to the form of bond which an insolvency practitioner must keep in force whilst acting in respect of an insolvent. Claims may be made against such a bond in the event of losses caused or facilitated by the fraud or dishonesty of the insolvency practitioner.
Regulation 2(4) substitutes paragraph 3(2)(a) of Schedule 2 to the 2005 Regulations to require interest to be paid on losses caused or facilitated by the fraud or dishonesty of the insolvency practitioner. The rate of interest must be a rate above the Sterling Overnight Index Average (known as SONIA).
Regulation 2(5) substitutes paragraph 3(2)(b) of Schedule 2 to the 2005 Regulations to:
increase the general penalty sum from £250,000 to £750,000;
extend the availability of the general penalty sum to cases where a specific penalty sum is not available.
Regulation 2(7) inserts a new paragraph (f) in paragraph 3(2) of Schedule 2 to the 2005 Regulations, which requires the bond to provide for payment of the following reasonable costs of the successor insolvency practitioner:
costs of investigating the fraud or dishonesty;
costs of making a claim under the bond;
costs of obtaining expert advice;
duplicate costs of administering the insolvent estate.
Regulation 2(9) (which amends paragraph 3(3)(b) of Schedule 2 to the 2005 Regulations), together with the new paragraph 8ZA (which regulation 2(11) inserts into Schedule 2 to the 2005 Regulations), set a minimum run-off period of 2 years during which a claim may be made under the bond.
Regulation 2(10) (which inserts a new paragraph (c) into paragraph 3(3) of Schedule 2 to the 2005 Regulations), together with the new paragraph 8ZC (which regulation 2(11) inserts into Schedule 2 to the 2005 Regulations), make provision about minimum specific penalty sum indemnity periods. Where a bond limits the surety or cautioner’s liability under the specific penalty sum by reference to a maximum period during which any losses must have arisen, this period must not be shorter than 6 years from the date of the insolvency practitioner’s appointment in a case and must be extendable.
Regulation 2(11) (which inserts a new paragraph 8ZD into Schedule 2 to the 2005 Regulations) makes provision about notifications which the surety or cautioner must give to the authorising body and the insolvency practitioner before a specific penalty sum expires (or otherwise ceases to have effect).
Regulation 3 sets out transitional and saving provisions for the changes made by these Regulations.
A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary sector or community bodies is foreseen.

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Source: https://www.legislation.gov.uk/uksi/2024/1090/note (the official version)
Page: https://openlegislation.uk/insolvency-practitioners-amendment-and-transitional-provisions-regulations-2024/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.