Terms of Engagement2018-11-15 12:41:19


Terms of Engagement

Provision of Services Regulations 2009

Cromwell Insolvency Limited trading as Cromwell & Co Insolvency Practitioners and Liquidations Online is a limited company registered in England and Wales under registration number 10152348, with its registered address being 5 Mercia Business Village, Torwood Close, Coventry, CV4 8HX. Cromwell Insolvency Limited is a body corporate and a list of its members is available for inspection at its registered office. The professional indemnity insurers of Cromwell Insolvency Limited are Mapledown Underwriting LLP c/o Lockton Companies LLP, North Quay, Temple Back, Bristol, BS1 6FL. The territorial coverage is Great Britain, Northern Ireland, Channel Islands and the Isle of Man.

Ethical Considerations

Prior to being asked by the Board to carry out any professional work relating to an insolvency appointment, no director or employee of Cromwell & Co Insolvency Practitioners has had any connection with the Company, its directors or members, other than to provide the Board with general insolvency advice, that would give rise to any threats to the Fundamental Principles of the Insolvency Code of Ethics.

When carrying out any professional work relating to an insolvency appointment, we as Insolvency Practitioners are bound by the Insolvency Code of Ethics. Further information can be found here . Please note that we cannot accept an insolvency appointment where a threat under the ethical fundamental principles is identified.

Complaints Procedure

We are committed to providing a professional, fair and efficient service to all parties involved in an insolvency process, including creditors, directors, shareholders, bankrupts and debtors. We are happy to receive your feedback should you be dissatisfied with our service.

It is inevitable that complaints will arise due to the nature of the work Insolvency Practitioners undertake. In the majority of cases, complaints arise due to a lack of understanding of the legislation under which Insolvency Practitioners are required to act. The actions of an Insolvency Practitioner may be seen as wrong or unfair by complainants, as the duties of the Insolvency Practitioner are usually misunderstood.

Our Complaints Procedure

In the first instance, a written complaint should be addressed to the appointed Insolvency Practitioner dealing with your matter. They will acknowledge receipt of your complaint at the earliest opportunity and will endeavour to respond within a period of 21 days. This period of time will give the Insolvency Practitioner sufficient time for them to investigate the complaint. In order for us to assist in dealing with your complaint as quickly and efficiently as possible, your letter of complaint should include as much detail as possible, and in all cases include the following:

  • Your name and address;
  • The full name of the insolvency case together with any court name and number if applicable;
  • Copies of any relevant correspondence and documents relating to the complaint;
  • The name of the person or persons against whom your complaint is made;
  • Full details of what you feel went wrong or has not been handled properly; and
  • An explanation of how you would like us to resolve your complaint.

Following your initial letter of complaint, you may be asked to provide further information or to explain additional details of your complaint. All further information must be in writing and addressed to the Insolvency Practitioner dealing with the complaint.

In the event that your complaint is not resolved, please contact Kieran Bourne, our duly appointed Client Care Officer at Cromwell & Co Insolvency Practitioners, 5 Mercia Business Village, Torwood Close, Coventry, CV4 9GP.

The Insolvency Complaints Gateway

In the unfortunate event that we cannot resolve your complaint, you can refer the complaint to The Insolvency Complaints Gateway www.gov.uk/complain-about-insolvency-practitioner. The Insolvency Complaints Gateway will review the complaint and decide whether it is appropriate to refer the matter to the Insolvency Practitioner's authorising body.

The Insolvency Service, the body responsible for running the Insolvency Complaints Gateway, encourages all complaints to be made via the internal complaints process of the firm in respect of which the complaint is being made, in the first instance. Complaints should only be referred to the Insolvency Complaints Gateway if an attempt to resolve the matter using the firm's internal complaint process has proved unsuccessful.

If your complaint is against the way that an Individual Voluntary Arrangement has been handled and you remain dissatisfied in the way that your complaint has been managed, in addition to writing to the Insolvency Complaints Gateway you may also write to The Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR.

Restrictions on Re-use of an Insolvent Company's Name

We draw to your attention to the provisions of Section 216 and 217 of the Insolvency Act 1986, which are briefly explained below.

A director that has held office within 12 months prior to a company being placed into insolvent liquidation is prohibited from using any name by which the company was known, including any trading name(s), or a name which is similar as to suggest an association with that company.

The restriction from using a prohibited name applies for the period of 5 years beginning with the day on which the company is placed into liquidation, and except with the permission of the Court, a director cannot be a director of any other company that is known to be a prohibited name, or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of any such company, or in any way, whether directly or indirectly, be concerned or take part in the carrying on of an unincorporated business under a prohibited name.

There are, however, statutory exceptions to the restriction imposed by section 216 of the Insolvency Act 1986 and these are set out in rules 22.1 to 22.7 of the Insolvency (England and Wales) Rules 2016.It is a criminal offence to contravene section 216 of the Insolvency Act 1986, and if a person acts in contravention of this section they are liable on conviction to imprisonment and/or a fine. In addition, by virtue of section 217 of the Insolvency Act 1986, a person who is involved in the management of a company in contravention of section 216 is personally liable for any debts of the company incurred during the period of that involvement.

Each director should seek independent legal advice to ensure that they do not contravene section 216 or if they wish to take advantage of any of the statutory exceptions. Further information can be found here.

Quotation / Payment

Any quotation provided by us for a creditors' voluntary liquidation will be solely for the preparation of a Statement of Affairs as required under Rule 6.3 of the Insolvency (England and Wales) Rules 2016, and for seeking a decision from the creditors on the nomination of a liquidator. This is commonly known as a 'Statement of Affairs Fee'.

The quotation figure provided must be paid for in full and an engagement letter must be signed and returned to us by the Board of directors before we can commence any work on your behalf.

Should we be appointed liquidator, and if creditors so resolve, additional remuneration and/or expenses may be claimed by us under Section 115 of the Insolvency Act 1986 and Rules 18.15 – 18.38 of the Insolvency (England and Wales) Rules 2016, for any post-liquidation works undertaken by us. These costs will be payable from asset realisations only as an expense of the liquidation. Directors and/or shareholders will not be personally liable to contribute any additional sums towards the Statement of Affairs Fee over and above the quotation provided.

Our Practice fee recovery policy can be downloaded and viewed here, which includes details of our current charge-out rates and our basis for charging disbursements.

Should you withdraw your instructions following payment of the quotation amount, we will be entitled to deduct reasonable costs for any works undertaken, on a time cost basis subject to our practice fee recovery policy, and payment for any disbursements incurred.

Should you decide to make payment using a debit / credit card, we use Stripe Payments Europe Ltd (“Stripe”), a company incorporated in Ireland and with offices at 1 Grand Canal Street Lower, Grand Canal Dock, Dublin, to process such payments. Stripe charge a fee of 1.4% + 20p for European cards and 2.9% + 20p for non-European cards for all payments processed. Stripe's charges will be deducted from the principal amount paid and are not charged in addition to the fee quoted.

Once we have received your full instructions, you waive the right to any cooling off period.

Termination of Instructions

We reserve the right of withdrawing from any instruction if we consider that a voluntary liquidation is not the most appropriate solution for dealing with your company's affairs, or if any conflict of interest is identified.

Services to be Provided

We will advise and assist the Board in relation to the winding up of the Company, hold discussions or negotiations with the Company's creditors, in particular any secured lenders and/or crown creditors, assist the Board in dealing with the formalities of compiling the relevant documentation, including a Statement of Affairs, assist with a decision procedure on the nomination of a Liquidator, instruct agents to advise on the value of the Company's business and assets, if required, and instruct any other relevant professional advisors to advise on matters relating to the proposed liquidation.

Please note that we can only provide advice to the Company acting by its Board. Our role is not to advise the individual directors in their personal capacity, or as a shareholder or guarantor. If any director should require advice on the implications of their company's liquidation, they should seek their own independent legal advice.

Voluntary Liquidation Procedures

Find out more information on the Creditors Voluntary Liquidation procedure (CVL).

Find out more information on the Members Voluntary Liquidation procedure (MVL).

What Are Your Responsibilities?

Directors have the following duties leading up to the appointment of a liquidator:

  • The Board will remain responsible for the affairs of the Company until the appointment of a liquidator. It is under a duty to preserve the company's assets and minimise its liabilities for the benefit of creditors;
  • The Board must ensure that any action that it takes will not result in any creditor or member, or group of creditors or members, being preferred;
  • No further payments should be made to existing creditors of the Company, nor should the Company obtain any further goods or services on credit;
  • Credit and charge cards issued to Directors and staff should no longer be used;
  • Delivery of any further goods or services previously ordered, but which are no longer required, should not be accepted;
  • No assets should be disposed of;
  • The Board should take care not to allow any of the Company's creditors to obtain possession of any assets pending investigation of their entitlement to such possession by a subsequently appointed liquidator. Creditors seeking to recover goods supplied, including those supplied pursuant to retention of title clauses embodied in their conditions of sale, should similarly not be allowed to remove any items from the Company's or other premises;
  • The Company should not supply any goods to existing creditors except on a pro forma payment basis;
  • No goods should be despatched with carriers or hauliers who are owed money by the Company;
  • If the Company's bank account is overdrawn, no further funds should be paid into it. Cash or cheques received by the Company should be handed over to us for payment into a Client Account. Depending on the source of such funds and any relevant security over them, these funds may be utilised, inter alia, in defraying the costs and expenses of calling and holding the meetings of members and seeking a decision from the creditors on the nomination of a Liquidator and any ongoing operational expenses necessary for the beneficial realisation of the Company's assets. Further we shall utilise these funds to discharge our fees for the assistance in the preparation of the estimated Statement of Affairs and ancillary documentation, together with the costs of any instructed agents and solicitors. Any remaining balance will be held pending confirmation of the appointment of a Liquidator by the creditors. In the event that the appointment of an Insolvency Practitioner employed by us is not ratified by the creditors, any surplus funds held will be handed over to the duly elected Liquidator, after the deduction of our fees and costs;
  • The Board authorises us to instruct agents of our choosing to value the assets of the Company, if necessary, and to pay their reasonable expenses incurred in undertaking the valuation out of any Company funds received by us prior to Liquidation, or as an expense of preparing the statement of Company's affairs;
  • The Board must ensure that all assets of the Company should be properly insured and all liability insurances such as for employees, products property owners and public should be maintained. The appropriate premiums should be paid such that adequate insurance cover remains in force until such time as the liquidator confirms that alternative arrangements are in place;
  • The Board must deliver up to us all the books and records of the Company. These are required by us to enable sufficient information to be provided to creditors regarding the financial affairs of the Company;
  • The Board should prepare, with our assistance where necessary, a statement of the Company's affairs in the prescribed form, together with additional explanatory information for presentation to the creditors;
  • Please ensure that neither members of the Board of Directors nor any member of staff speaks to the press or media. If appropriate, a formal press release will be prepared and this will be made available for distribution by the Board;
  • Where 20 or more employees are to be dismissed, formal consultation procedures must be followed and documentation completed and the Board authorises us to instruct specialist employment lawyers to provide advice to the Board; and
  • The Board should provide us with details of any known health and safety breaches in the last 3 years and deliver up to us the Company's accident book and any inspection or safety certificates held in respect of the Company's plant and machinery.

Should you be any doubt regarding your obligations or require an explanation about any of the above, please contact us to discuss them.

It is important that the above procedures are followed, as failure to do so could result in penalties or personal liability being incurred by members of the Board under the provisions of the Insolvency Act 1986.

Information and Co-operation Which We Require from the Board of Directors

It is important that we work closely together and that the Board deals with any queries that we raise, both fully and promptly, in order that the company may be placed into liquidation without delay and the various statutory requirements complied with.

Our Changing Role in an Assignment

Liquidating a company is a complex legal process subject to regulatory requirements in the insolvency legislation, Statements of Insolvency Practice (SIPs) and those of our regulatory bodies. As the assignment develops, our role changes and it is important that we make you aware of how this may affect you.

Initially, as the company's advisor, we owe a primary duty to the company, acting by its Board.

When appointed liquidator, we will have to take a more independent and balanced approach, arranging for independent valuations of assets and recording information about the company's affairs and dealings without compromising our future duty as liquidator. Any advice that we provide from this point onwards will have to remain independent to avoid compromising the potential appointment as liquidator.A liquidator owes a primary duty to the creditors of a company. A liquidator will seek to realise and distribute the assets of a company and to try and maximise realisations for the benefit of creditors. They have to investigate the company's affairs and file a report to the Secretary of State under the Company Directors Disqualification Act 1986 (CDDA).

Money Laundering Provisions

As a professional services provider, we are required under money laundering legislation to identify and maintain a record of all new clients.

Under Regulation 41 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“the Regulations”), any personal data obtained from you may only be processed for the purposes of preventing money laundering or terrorist financing. We will not be permitted to process personal data for any other purpose unless it is permitted under an enactment or we have obtained the consent of the person whose data it is. Cromwell Insolvency Limited (Company Number: 10152348) is a data controller for the purposes of the Data Protection Act 1998. Further information can be obtained at:

https://www.legislation.gov.uk/ukpga/1998/29/schedule/1

https://www.legislation.gov.uk/uksi/2017/692/pdfs/uksi_20170692_en.pdf

Accordingly, as part of our duties we are required to obtain certain information from you. As a minimum, we will request sufficient information to enable us to properly identify the Directors and the beneficial owners of the Company, that is shareholders who control, directly or indirectly, more than 25% of the voting rights of the Company, together with any other person or Company who exercises control over the management of the Company. In this regard we will require in respect of each instructing Director and beneficial owner the following information where they are individuals:

  • A copy of a valid passport or both parts of a driving licence (with picture); or
  • A copy of some other form of photo ID and a bank statement, utility bill or council tax bill addressed to the individual that is less than 6 months old.

Options

An options summary is located at https://www.cromwellinsolvency.co.uk/wp-content/uploads/2017/04/OS.pdf for ease of reference. This document sets out a comparison of some of the key concerns that directors appear to have when considering their options when a company is insolvent.

A company insolvency solutions guide can also be downloaded at https://www.cromwellinsolvency.co.uk/wp-content/uploads/2017/04/SG.pdf. This document sets out the statutory and non-statutory options of an insolvent company.

Client Accounts

Our policy on the holding of funds in our client account is as follows:

  • Prior to the appointment by creditors, all funds received may be held briefly on trust in our practice client account. This practice does not receive interest on this account, nor does it recover any bank charges incurred on the lodgements made. It is arranged this way for ease of administration and taxation. If funds are to be held for a longer period prior to the appointment, a pre-appointment account will be opened in the name of the Company to hold the funds on trust until the appointment of a Liquidator.
  • On appointment, a separate client account shall be operated on a similar basis. Such funds will be held separately to any other client funds.
  • Where the balance of Company funds is unlikely to attract a significant amount of interest they will be placed in a non-interest-bearing account.

Regulatory

Kieran Bourne is licensed to act as an Insolvency Practitioner in the United Kingdom by the Insolvency Practitioners Association (Membership Number: 104611) (Insolvency Practitioner Number: 19012). He is also a member of the Association of Business Recovery Professionals (“R3”) (Membership Number: 0016847).

All Insolvency Practitioners are bound by the rules of their professional body, including any that relate specifically to insolvency. Information of Mr Bourne’s professional/regulatory body can be found at www.insolvency-practitioners.org.uk.

In addition, Insolvency Practitioners are bound by Statements of Insolvency Practice (SIPs), details of which can be found at www.r3.org.uk/what-we-do/publications/professional/statements-of-insolvency-practice/e-and-w.

All Insolvency Practitioners are required to comply with the Insolvency Code of Ethics, a copy of which can be found at www.insolvency-practitioners.org.uk/regulation-and-guidance/ethics-code.

VAT

Cromwell Insolvency Limited is registered for VAT under registration number 271 2152 35.

Summary

It is important that you understand that these terms of engagement are legally binding. You should ensure that you are in agreement with the detail set out above before formally instructing us.