In his latest Coffee Break Briefing, Insolvency Expert Malcolm Niekirk explores the role of formal and informal meetings of creditors, how the rules around creditor decision-making have evolved and when a physical meeting may still be the most appropriate option.
He also looks at how deemed consent works, when the Rule of Ten can be used and why informal meetings can play an important role in helping creditors understand more complex proposals before a formal decision is necessary.
You can watch a recording of the webinar below.
What is the purpose of a creditors’ meeting?
A useful starting point is to consider what a meeting is actually intended to achieve.
Most business meetings fall into one or more of these three categories:
- Informative – where the purpose is to explain or share information.
- Consultative – where the aim is to gather views, knowledge and feedback, often before a decision is made outside the meeting.
- Decisive – where attendees are required to make a formal decision.
Historically, meetings of creditors often combined all three.
For example, under the now repealed section 98 procedure in a creditors’ voluntary liquidation (CVL), creditors were invited to a formal meeting. They would hear about the company’s position. They could ask questions. After that, there would be formal votes on appointing the liquidator, approving fees and setting up a creditors’ committee.
How did the 2016 Insolvency Rules change creditors’ meetings?
The Insolvency (England and Wales) Rules 2016 came into force on 6 April 2017 and significantly changed the way creditor decisions are made.
A key part of the reforms was a move away from routine physical meetings. In most cases, creditors now make formal decisions through a qualifying decision procedure or by deemed consent. That is instead of attending a meeting in person.
These are all allowed as ‘qualifying decision procedures’:
- Voting by correspondence;
- Virtual meetings;
- Electronic voting; and
- Physical meetings (but only when demanded by creditors); and
- Other fair procedures that give eligible creditors an equal opportunity to participate.
The 2016 rules made changes that meant the insolvency profession was relatively well prepared for the increased use of remote communication needed during the Covid-19 pandemic (and which has now become familiar).
How does deemed consent work?
Deemed consent allows a proposed decision to take effect without creditors having to cast a formal vote. In effect, a deemed consent resolution goes through ‘on the nod’. The resolution is passed, if no creditors object.
The resolution is also passed if only a few creditors object. The key threshold is 10% by value. If creditors object, but they represent less than 10% by value, the decision is treated as approved. If objections reach 10% or more, the decision does not pass.
Suppose the deemed consent resolution fails. In most cases, the person proposing it can then abandon it. Or they can put it forward again, but must then use a qualifying decision procedure.
Remember that the rules are different where the decision is about appointing a liquidator in a creditors’ voluntary liquidation (CVL).
What is different about appointing a liquidator in a CVL?
Rule 6.14 sets out the process for appointing a liquidator in a creditors’ voluntary liquidation (CVL).
The same 10% objection threshold applies. If objections represent less than 10% by value, the proposed appointment is treated as approved. If objections reach 10% or more, the appointment does not go ahead.
The important difference is what happens next. Unlike the usual deemed consent process, the directors cannot simply abandon the decision. They must put the appointment back to creditors, and this time the decision must be made at a physical meeting. They cannot use any other type of decision procedure.
At the outset, the directors can use either deemed consent or a virtual meeting. But they cannot use any other type of decision procedure. This makes Rule 6.14 different from the general procedure.
Suppose you think, from the start, that a physical meeting is the best approach. You could approach a significant and co-operative creditor to ask them to object to the deemed consent proposal. Assuming they have 10% of the votes, or more, that will trigger the requirement for a physical meeting.
What is the Rule of Ten?
Creditors also have the right to require a physical meeting under the ‘Rule of Ten’ (equivalent link for individual insolvencies).
Creditors can insist on a physical meeting when they amount to at least:
- 10% by value; or
- 10% of creditors by number; or
- 10 individual creditors.
They can demand that before or after you send them notice of the proposed resolution.
The Rule of Ten therefore empowers creditors when they think something would be better considered at a physical meeting.
When can an informal meeting be useful?
The Rules have greatly reduced the use of meetings for formal decision-making. But, informal meetings can still be very useful.
They can be particularly useful where a proposal is complicated, creditors have different interests or there is a need to explain the wider position before asking creditors to make a formal decision.
Malcolm gives an example. It was a proposed voluntary arrangement for a property investment business with a number of joint ventures.
Some creditors were simply owed money. Others also held interests in one or more joint ventures.
Some of the joint ventures appeared to have equity and could potentially generate a return for both the creditor and the voluntary arrangement. Others appeared to be in negative equity and could result in further claims being brought into the arrangement.
The proposal therefore needed to deal with a number of different creditor interests and possible outcomes.
Why did an informal meeting help?
The nominee felt that creditors would be more likely to understand and engage with the proposal if the wider picture was explained to them early.
Therefore they arranged an informal meeting.
Creditors were told from the outset that the purpose of the meeting was to inform and consult them, rather than ask them to make a formal decision.
The meeting was used to explain the debtor’s circumstances, how the voluntary arrangement would work, the likely terms of the proposal and the expected timetable. Creditors were also given the opportunity to ask questions and raise any concerns before the formal decision-making stage.
What happened next?
Many creditors attended the informal meeting. They asked lots of questions. Some had professional advisors (other insolvency practitioners) with them.
There was some confusion about there being no formal vote at the meeting. Some of the creditors had expected to vote (despite the explanations). In any event, the discussion was very useful. It clarified what creditors wanted from the process. They were very clear that they wanted the later decision-making meeting to be a physical meeting, not a virtual meeting.
As a result, a number of creditors signed a hand-written Rule of Ten request at the end of the informal meeting. An informal creditors’ committee was formed, pending the formal meeting. (And later they were formally set up as the formal committee.)
Many creditors went on to attend the formal meeting. They approved the proposed voluntary arrangement. The arrangement then progressed broadly as expected and was ultimately successful.
What are the key points to remember?
Physical meetings have not disappeared entirely, but their role has changed.
Under the current rules, they are used less frequently for formal creditor decisions.
Informal meetings can be valuable as informative or consultative meetings. Insolvency practitioners can use them to explain events or strategy to creditors, give them time to ask questions, or where their views may help the insolvency practitioner develop the strategy.
Remember that the rules under r6.14 (appointing liquidators in a CVL) are different from those for other decisions by creditors. In most cases, a failed deemed consent proposal can potentially be abandoned or reconsidered using another decision procedure. Under r6.14 a failed deemed consent process must be picked up at a physical meeting. In other cases, the failed resolution can be abandoned, or picked up by a decision procedure (but not a physical meeting, unless creditors have called for one under the Rule of Ten).
The Rule of Ten remains an important safeguard. Creditors can use it to call for a physical meeting where they believe this is the most appropriate way for a decision to be considered.
Insolvency Coffee Break Briefings
Thank you for reading the summary for this Coffee Break Briefing. You can watch the full, detailed webinar here. If you have any questions after reading this article, please don’t hesitate to get in touch with our bright and experienced team. Call us on 01202 499255, or fill out the form at the top of this page, for a free initial chat.
Malcolm’s next Coffee Break Briefing will take place on Monday 9 November 2026.
He will also be attending the SESCA Insolvency Seminar at Denbies, Dorking, on Thursday 15 October 2026, followed by the R3 SPG Forum in Stratford from 11–13 November 2026. The next Frettens Insolvency Conference will take place in the New Forest in June 2027.
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