# The Insolvency Practitioners Regulations 2005, Paragraph 3: Terms of the bond


(1) The bond must—
(a) be in writing or in electronic form;
(b) contain provision whereby a surety or cautioner undertakes to be jointly and severally liable for losses in relation to the insolvent caused by—
(i) the fraud or dishonesty of the insolvency practitioner whether acting alone or in collusion with one or more persons; or
(ii) the fraud or dishonesty of any person committed with the connivance of the insolvency practitioner; and
(c) otherwise conform to the requirements of this paragraph and paragraphs 4 to 8ZD.
(2) The terms of the bond shall provide—
(a) that claims in respect of relevant losses will be paid up to an aggregate maximum sum for each case where the insolvency practitioner acts (“the specific penalty sum”), together with interest on relevant losses calculated at a rate above the Sterling Overnight Index Average;
(b) that claims in respect of relevant losses, together with interest, will be paid out of a further sum of £750,000 (“the general penalty sum”) if—
(i) a specific penalty sum is not in force in relation to a case, or
(ii) any amounts payable under a specific penalty sum are insufficient to meet all claims arising out of a case;
(c) for a schedule containing the name of the insolvent and the value of the insolvent's assets to be submitted to the surety or cautioner within such period as may be specified in the bond;
(d) that where at any time before the insolvency practitioner obtains his release or discharge in respect of his acting in relation to an insolvent, he forms the opinion that the value of that insolvent's assets is greater than the current specific penalty sum, a revised specific penalty sum shall be applicable on the submission within such time as may be specified in the bond of a cover schedule containing a revised value of the insolvent's assets;
(e) for the payment of relevant losses, whether they arise during the period in which the insolvency practitioner holds office in the capacity in which he was initially appointed or a subsequent period where he holds office in a subsequent capacity;
(f) for the payment of the following costs and expenses reasonably incurred or charged by the successor insolvency practitioner—
(i) the costs and expenses of investigating the suspected fraud or dishonesty;
(ii) the costs and expenses of making a claim under the bond, including costs incurred in providing documents or evidence or responding to requests for further information;
(iii) the costs and expenses of obtaining expert advice (including legal advice) in relation to a claim or potential claim under the bond;
(iv) the costs and expenses of administering the insolvent estate, which duplicate costs incurred or charged by an insolvency practitioner before the successor insolvency practitioner’s appointment to act in the relevant case.
(3) The terms of the bond may provide—
(a) that total claims in respect of the acts of the insolvency practitioner under all bonds relating to him are to be limited to a maximum aggregate sum (which shall not be less than than £25,000,000); ...
(b) for a time limit within which claims must be made , provided the time limit satisfies the requirements of paragraph 8ZA (minimum run-off period); and
(c) for a limit on the surety or cautioner’s liability under the specific penalty sum by reference to a specified period of time (“the SPS indemnity period”) during which the relevant losses may arise following the insolvency practitioner’s appointment to act in a case, subject to paragraphs 8ZC (minimum SPS indemnity period) and 8ZD (notification of expiry).

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Source: https://www.legislation.gov.uk/uksi/2005/524/schedule/2/paragraph/3 (the official version)
Page: https://openlegislation.uk/insolvency-practitioners-regulations-2005/schedule-2/paragraph-3
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.