The Insolvency (Amendment) Rules 2008
These Rules amend the Insolvency Rules 1986 (“the principal Rules”). Rule 4.218 of the principal Rules (general rule as to priority) is amended by replacing paragraph (1)(a), with new paragraphs (1), (2) and (3)(a). Additionally, new Rules 4.218A to 4.218E are inserted after Rule 4.218 of the principal Rules. Rule 2 makes transitional provision and Rule 3 provides for the principal Rules to be amended by the Rules in this Order. Rule 4 of these Rules amends Rule 4.218 of the principal Rules so as to provide expressly for the expenses of a liquidation to be payable also out of the proceeds of any legal proceedings which the liquidator has power to bring in his own name or bring or defend in the name of the company and also for the recovery of expenses and costs relating not only to the conduct but also to the preparation of any such legal proceedings. The provision is extended so to apply also to proceeds arising out of any awards made under arbitration or dispute resolution procedures or of any compromise or settlement of any legal action or dispute reached prior to a judgement or award being made. Correspondingly also included as costs or expenses of liquidation are those properly incurred in the preparation or conduct of arbitration or dispute resolution procedures and negotiations leading to a settlement or compromise of any legal action or dispute. Rule 5 inserts new Rules 4.218A to 4.218E into the principal Rules. These new provisions are derived from the power to make exceptions to the amendment made by section 1282(1) of the Companies Act 2006 (c.46) to the Insolvency Act 1986 (c.45).