Creditors harmed by dishonest case handling rarely recover the time value or the cost of putting a case back on track. Northern Ireland has moved to change that. The Insolvency Practitioners (Amendment and Transitional Provisions) Regulations (Northern Ireland) 2025 - SR 2025 No. 177 - were made on 12 November 2025 and take effect on 9 December 2025, signed by Economy Minister Dr Caoimhe Archibald. They rewrite the bond terms every insolvency practitioner operating in Northern Ireland must maintain while in office.
The reforms toughen the mandatory protection. The general penalty sum rises from £250,000 to £750,000 and can now respond where a case has no specific penalty sum in place, or where the case‑specific cover is insufficient. Interest on losses caused or enabled by an IP’s fraud or dishonesty must be paid at a rate above the Sterling Overnight Index Average (SONIA), with interest running from the date of loss until the claim is paid. This is a clear shift towards compensating estates for delay as well as principal loss.
In practice, if estate funds are misapplied and months pass before a claim is resolved, the surety must now meet principal and SONIA‑linked interest rather than a token amount. The instrument does not fix the margin over SONIA, but it removes any ambiguity about whether interest is payable at all and anchors compensation to a transparent benchmark widely used in sterling markets.
The bond must also meet the real costs of cleaning up a compromised case. A successor practitioner’s reasonable costs in investigating suspected fraud, preparing and evidencing the claim, taking expert advice (including legal advice) and re‑administering the estate where work has to be repeated are expressly covered. That should prevent the estate paying twice for the same steps when dishonesty by a previous appointee forces rework.
Two time limits, long used by sureties to narrow exposure, are tightened in favour of creditors. A minimum two‑year run‑off now applies: claims must be capable of being made for at least two years after the practitioner is released or discharged in the case, including any later office they hold in the same case. Separately, if a bond tries to limit liability by saying losses must arise within a set period after appointment - the “specific penalty sum” (SPS) indemnity period - that period cannot be shorter than six years from appointment and must be extendable.
On extensions, the rules state the surety’s consent must not be unreasonably withheld. Consent can carry reasonable conditions, including an additional premium. The practical test will bite when a contested estate approaches the six‑year mark and creditors or a successor IP seek a longer window to capture losses that emerge late.
Expiry can no longer happen quietly. At least 60 days before any SPS is due to expire or otherwise cease (for reasons other than the office‑holder’s release or discharge), the surety must notify both the practitioner and their authorising body. The notice must state the intended expiry date, whether the surety will extend or renew, and on what terms. Critically, the SPS continues in force until the surety has complied with this notice duty, unless the parties agree otherwise.
The legislation also pins down key definitions. “Relevant losses” are those arising from an IP’s fraud or dishonesty, and the “SPS indemnity period” is the period during which such losses may arise after appointment. Precision matters here: disputes often turn on when a loss occurred and when interest starts to run - under these rules it is from the date of the loss, not discovery or complaint.
Transitional arrangements cushion the shift. The new terms do not apply to a bond issued before 1 January 2027 where the practitioner was appointed in that case before 1 January 2027, including any later office in the same case. Between 9 December 2025 and 31 December 2026 the Department for the Economy may approve bond forms that comply either with the pre‑9 December 2025 rules or with the new regime, giving sureties and authorising bodies a year to refit templates.
For practitioners, the job now is to audit bond schedules and endorsements. During the transitional window to 31 December 2026 the Department can approve either pre‑existing or updated forms, but those taking new appointments from 9 December 2025 would be wise to move early: ensure wording delivers SONIA‑linked interest, the £750,000 general penalty sum, the two‑year run‑off, a six‑year SPS indemnity period with an extension mechanism, and explicit cover for a successor’s investigative and duplicate administration costs. Engagement letters and internal checklists should be updated to reflect the 60‑day notice safeguard and to diarise SPS expiry dates.
Creditors should not assume cover is automatic or adequate. Ask the office‑holder to confirm the live specific penalty sum for the case, the SPS indemnity period end date, any extensions obtained, and whether the surety has served - or failed to serve - a 60‑day expiry notice. The increased general penalty sum is welcome, but at £750,000 it may still be small against losses that can arise in larger corporate failures; early scrutiny remains essential.
The Department has published no regulatory impact assessment, asserting no significant impact on the private, voluntary or public sector. That reads optimistic. SONIA‑linked interest, longer claim windows and wider cost cover are likely to feed into premiums, particularly for higher‑risk profiles. If those costs stop estates funding a second round of work and restore some deterrence, creditors may judge the trade‑off worthwhile.
The real test will come with the first claim where a surety resists an extension or disputes “duplicate” costs. Authorising bodies will have to police compliance and treat silent expiry as a breach. For creditors, these rules add new angles to pursue recovery when misconduct is alleged and remove familiar defences that have too often left estates short while bonds sat only partly engaged.