If creditors want to change the Insolvency Practitioner in a liquidation they need to requisition a decision procedure to remove a liquidator. Although there are two other ways to remove the liquidator it is by far the most common one used by creditors.
The other two options are an application to the court or a request for the liquidator to voluntarily surrender their position and permit another practitioner to take over. These are less likely to be successful. Creditor removal of a liquidator is hard when attempted by an application to the court and a liquidator may be reluctant to surrender office.
The requisition method involves convening what is referred to as a decision procedure which used to be known as a creditors meeting.
What Is A Decision Procedure?
A decision procedure is a vote by creditors on a decision about a matter concerning the liquidation (or any insolvency procedure).
The types of decision procedures are set out in Rule 15.3 of the Insolvency (England and Wales) Rules 2016 which are:
- Correspondence;
- Electronic voting;
- Virtual meeting;
- Physical meeting; or
- Any other decision-making procedure which enables all creditors who are entitled to participate in the making of the decision to participate equally.
How Does A Creditor Requisition A Decision Procedure To Remove A Liquidator?
Rule 15.18 of the Insolvency (England and Wales) Rules 2016 sets out the process for creditors to requisition a decision to remove a liquidator.
The creditor should inform the liquidator of:
- The purpose of the decision procedure;
- List the creditors in agreement with the request and the amount of their claims;
- Provide confirmation from creditors of their support for the requisitioned decision.
Alternatively, if the requisitioning creditor has a claim at 25% or more by value they can submit a statement confirming they have sufficient voting power.
In the case of a Creditors Voluntary Liquidation, the requirement to obtain at least 25% of creditors by value relates to creditors who are not connected (directors, shareholders and their associates).
Once the liquidator has been notified of a requisitioned decision by a creditor, time starts running for the Creditor Decision Deposit and for a schedule of costs to be provided by the liquidator to the creditor.
