1.3 IP Regulation and bonding requirements

Question 1

What are the 4 Recognised professional bodies?

Answer 1

Institute of Chartered Accountants in England & Wales (ICAEW)

 Insolvency Practitioner Association (IPA)

 Institute of Chartered Accountants in Scotland (ICAS)

 Institute of Chartered Accountants in Ireland (CAI)

Question 2

Who make up the JIC - Joint Insolvency Committee?

Answer 2

RPB representatives
Staff members from those bodies
Lay members
Representatives of the Insolvency Service

Question 3

Who has responsibility for development of the Code of Ethics and SIPs?

Answer 3

JIC - Joint Insolvency Committee?

Question 4

What does the JIC do?

Answer 4

 JIC is made up of RPB representatives, staff members from those bodies, lay members and representatives of the Insolvency Service

 Develops, improves and maintains insolvency standards from a regulatory, ethical and best practice perspective

 It has responsibility for the development and revision of the Code of Ethics applicable to insolvency practitioners, Statements of Insolvency Practice and Insolvency Guidance Papers

 Comments on legislation

Question 5

Who approves the form of the bond?

Answer 5

Secretary of State

Question 6

What obligations are there on the surety?

Answer 6

The surety under takes to be jointly and severally liable for losses caused by fraud and dishonesty of IP

 Or a person in connivance with an IP

 Includes IP staff but only where IP also involved

Question 7

How much is the ‘general penalty’ (bond)?

Answer 7

£250,000 per IP (not per case)

Question 8

How much is the specific penalty (bond) per case

Answer 8

Where an insolvent’s assets are less than £5,000, the specific penalty shall be £5,000

 Where an insolvent’s assets are greater than £5,000,000 the specific penalty shall be £5,000,000

Total claims limited to a maximum of £25,000,000

Question 9

How do you calculate a specific bond?

Answer 9

Amount of specific penalty in respect of each case shall equal at least the value of the insolvent’s assets

 But ignoring the value of any assets charged to a third party or held on trust
 IMPORTANT re: family home in personal insolvency
 IMPORTANT re: fixed charges in corporate insolvency

 Identify and exclude secured sums

Intention is to compensate for potential loss:
 Bond for the amount that creditors would lose if all unsecured sums were lost or stolen

Question 10

What is the monthly cover schedule (bordereau)?

Answer 10

Schedule containing name of individual/ company and value of assets submitted to surety within set time limits

 Requirement to notify surety of increase in asset levels

 Increased assets = increased exposure

 And when case closed so that surety no longer has potential liability

Question 11

When must the schedule/ bordereau be filed?

When must the schedule be copied to the RPB?

Answer 11

Within 15 days of the end of the month in which the appointment commences, the IP must send to the surety a schedule detailing:
 New appointments
 Increased cover requirements in existing cases
 Case closures

Copied to RPB within 20 days of end of month

Question 12

What happens if bordereau is filed late?

Answer 12

must provide information why late

At surety’s discretion whether allowed