Official Report: Minutes of Evidence

The Chairperson (Mr Brett): I am delighted to welcome Claire McNamee, who is the conveyancing and non-contentious business lead at the Law Society; Richard Craig, who is a partner at Mills Selig; and Maria Glover. Colleagues, you are very welcome. I am happy to hand over to you to give the Committee an overview of the Bill.

Ms Claire McNamee (Law Society of Northern Ireland): Perfect. Thank you for the invitation for the Law Society of Northern Ireland to appear before the Committee today. We welcome the objective of updating the legislation, especially when it comes to administrative matters such as removing requirements for physical meetings, for example. The only point that we raised — it was not an objection — was about the statement of affairs being changed to being necessary only when requested by the official receiver. As noted in our submission, the society remarked on the criminal offence arising from not providing a statement of affairs within the allotted 21 days. Following the consultation response, the insolvency service proactively contacted the society and noted that, in practice, it uses a non-statutory preliminary enquiries questionnaire. It used that in all cases in 2023 and 2024. No issues have been reported by the insolvency service in relation to that. The society is of the view that, if the insolvency service is satisfied with the arrangements, we do not have an objection.

That being said, it is noted that there is a change, in that a statutory document is to be replaced with a non-statutory one. There might be potential legal challenges if a bankrupt were, for example, to say that they had not received a request to complete the questionnaire. When it comes to a preliminary enquires questionnaire, the offence is in providing false information, not in failing to return the questionnaire in the first place.

We are keen that any changes are, where possible, supported by appropriate guidance and training to bed in the changes for the profession and the public on the relevant websites.

In closing, we note that the insolvency service was very proactive in engaging with us when we responded to the consultation.

The Chairperson (Mr Brett): Thank you. Does anyone else want to comment, or is that it? Yes?

Ms McNamee: Yes, that is all.

The Chairperson (Mr Brett): No problem at all.

Ms McNamee: We do not have any formal objection to the changes. It is just to note that one discrete point.

The Chairperson (Mr Brett): OK. The wording is "when requested". Do you think that the words "when requested" should be removed and that there should be an automatic entitlement, or do you think that that can be dealt with in guidance following the Bill's passage?

Ms McNamee: There are a couple of queries there. If the preliminary enquiries document, for example, was to become a statutory document that was to be furnished, that might be —. If the insolvency service thinks that that is an easier document to use and it is easier for members or a bankrupt to fill in, to then replace that —. If a statement of affairs was then requested — for example, someone who was maybe reluctant to provide information —. It is the offence. When you remove the stick, as such, of having to furnish something, that is where we have identified a risk. However, if the insolvency service is satisfied —.

The Chairperson (Mr Brett): You are satisfied.

Ms McNamee: Yes.

Ms D Armstrong: Good morning to Claire and colleagues. Thank you for coming in this morning. I have one question. I can understand the move from the statutory requirement to the provision of a statement of affairs on request. Should the Bill include a clear enforcement pathway for cases where a bankrupt fails to respond or provides incomplete information?

Ms Maria Glover (Law Society of Northern Ireland): My view is that that is already provided for within the High Court's general jurisdiction. If a bankrupt fails to comply, the official receiver or the trustee in bankruptcy has the ability to revert to a court to seek directions or apply to extend the period of their bankruptcy by suspending their discharge from bankruptcy.

Ms D Armstrong: That will be made clear. Thank you. I was looking at the topic of digitally excluded creditors. What safeguards do you recommend to ensure that they are not disadvantaged by the move to virtual meetings?

Ms McNamee: I am happy for you to take that one.

Ms Glover: In the first instance, the role of the insolvency practitioner and the official receiver will be to identify any potential creditors, debtors or bankrupts who might have an issue with access to digital services. In a lot of these cases, you will have institutional creditors, and the vast majority of those cases run out as standard. With individuals who are personal creditors, it is obvious that that might be an issue. One safeguard would be to always retain an option for people to effectively decide how they receive communication from the insolvency service or from the trustee in bankruptcy directly. There are a number of agencies that assist with that in the voluntary sector. Any opportunity to signpost to the voluntary sector and the legal profession would be an important safeguard.

Ms D Armstrong: Thank you for your answers.

Mr Honeyford: You mentioned the "stick". If we remove it, do you think that there is enough power to make sure that everything is completed? I am just checking.

Ms McNamee: It is a difficult one. If the insolvency service said, "We did over 130 last year, and we did not have any issues", in theory, potentially, there is, because of the engagement there, and, as Maria said, the inherent jurisdiction of the court. You might have a particular bankrupt who is wilier in certain things. Then it is a question of whether there is an option to consider whether the preliminary enquiries document actually becomes a statutory document, because it is a contempt of court to not complete it within those 21 days. It is just whether or not that option to replace the statement of affairs with the preliminary enquiries questionnaire had been considered. If insufficient information was revealed in the questionnaire, you could demand a more comprehensive statement of affairs.

Mr Honeyford: Would you prefer it to be made statutory?

Ms Glover: It was not clear to us in the first instance on what basis the statement of affairs was being effectively removed as a compulsory requirement. We looked back at the Deregulation Act 2015, upon which the Bill is based, and it was not clear from that. I think that the wording was that there was not enough awareness from bankrupts that they needed to address it.

When we engaged with the insolvency service, it made clear that, effectively, it asks every bankrupt to complete a preliminary examination questionnaire, which runs to over 32 pages. It is extremely comprehensive. It is one of the very first things that the insolvency service does. We have some reservations about the fact that we are now moving away from a statutory form as such, because if someone makes themselves bankrupt, they complete a statutory form, lodge it with the court and have it sworn before a solicitor. This removes some of those elements. It removes the element of having to have it sworn before a solicitor, and we can see from our engagement with the insolvency service that there are practical advantages in not having it as a statutory form, because the questionnaire can be more flexible and can adapt to the time. It could adapt, for example, to bounce-back loans and maybe include a question on that more readily, whereas, with a statutory form, it might be more cumbersome to include more topical issues. I can see both sides. I am always a bit reluctant to move from a statutory form, but the preliminary examination questionnaire, as a document, works extremely well. That is a long, convoluted answer.

Mr Honeyford: No, no; you are saying that it is a balance.

Ms Glover: Yes.

Mr Honeyford: Thank you. I just wanted to clarify that.

Mr Middleton: Thanks, folks, for your briefing. I wanted to add a question around the digitisation, but you have answered that. Point 9 in your briefing paper says that you would:

How do you see that? Is that done through the insolvency service? Is that right? What else can be done in respect of capacity?

Ms Glover: Training generally originates from the regulating bodies of the insolvency practitioners or of the solicitors, so I imagine that that is an issue that the Law Society will focus on in continuing professional development (CPD) when there have been any changes. That CPD will take a variety of formats. There will be in-person events and webinars that will provide a general summary. This is a very niche area of law, so there is engagement with the accountants' profession, the solicitors' profession and the actual licensed insolvency practitioners. It will take a very formal context. There are a whole swathe of documents available to the public on the insolvency service website that may need to be adjusted . Some of the documentation is excellent. It is very user-friendly. There is a guide to bankruptcy, in particular, that I am thinking of. There may need to be modest adjustments.

Generally, the Bill is trying to bring us in line, so we are not necessarily innovating here, but there are some minor things that could trip people up if they are not aware of the change in legislation, so bulletins will go out from the professional bodies. There may need to be a public notice on the insolvency service website, but the CPD requirement is something that the Law Society always excels in.

Mr Middleton: You are well across it. Thank you.

Ms McNamee: The insolvency service has been really proactive. We are actively engaged with it to make training that is helpful from its perspective and relevant to our members.

Mr Middleton: Thank you.

The Chairperson (Mr Brett): Is there anything else that you would like to put on the record now while you have the opportunity?

Ms McNamee: As I said, we did not really have an objection.

The Chairperson (Mr Brett): No. An observation.

Ms McNamee: It is in the solicitor profession to nitpick. [Laughter.]

The Chairperson (Mr Brett): No, 100%. We appreciate your time. Thank you very much indeed for that.