Overview of the new Insolvency Practitioners regime
The amendment of ADGM Insolvency Regulations in 2022 and enactment of the new sub-ordinate rule marked commencement of the enhancement of the insolvency practitioner framework in ADGM.
- The amended regulations can be viewed on the ADGM website here: Relevant Legislation
- The new rule is available here: Relevant Legislation
Prior to enhanced framework being introduced, the insolvency practitioners were regulated through a number of provisions in the ADGM Insolvency Regulations 2015 and the Commercial Licensing Regulations 2015 (Conditions of Licence and Branch Registration) Rules 2021.
The enhanced framework is now aligned with international best practices, which allow for an increased number of insolvency practitioners to practice within the ADGM and improve how the ADGM Registration Authority regulates and monitors insolvency practitioners. The enhancements provide greater protection for insolvent parties and creditors.
The new rule contains registration requirements, including:
- being in continued employment with, or a member, director or partner, of a firm or body corporate registered within or outside the ADGM;
- holding a membership with a recognized professional body (or satisfying ‘fit and proper’ criteria); and
- providing evidence of insolvency experience. The insolvency practitioner also must provide evidence of professional indemnity insurance and a security bond.
There is no annual renewal requirement in the new rule, but a registered insolvency practitioner must annually provide the Registrar with an insolvency practitioner return, which include details of insolvency appointments in the last 12 months and statements concerning compliance with the Insolvency Practitioner Rules.
For insolvency practitioners already registered with the Registrar, a ‘transition period’ of 6 months from the publication of the Insolvency Practitioner Rules is introduced to enable existing insolvency practitioners to apply for a registration under the Insolvency Practitioner Rules. Failure to do so will result in the insolvency practitioner being removed from the Registrar and ineligible for appointments under the Insolvency Regulations 2022.