Role of the insolvency practitioner could be reduced

The Insolvency Service has today launched a consultation which may see the role of insolvency practitioners reduced and the courts become more involved.

The Insolvency Service launched a consultation which proposes to give company directors a "restructuring moratorium" to provide businesses with "breathing space" to negotiate with creditors.

The applications would be made in court where creditors can be represented. According to the proposals insolvency practitioners would be involved in "key stages" of the application process, although their role has yet to be clarified.

The government agency is proposing to allow companies three months to negotiate a repayment deal. The restructuring moratorium would temporarily prevent creditors taking any action against a company such as petitioning a winding up order or a landlord repossessing premises.

The minister responsible for the insolvency Service, Edward Davey, said he encouraged anyone in restructuring to "study" the proposals set out in the consultation.

The changes will make the insolvency process in the UK similar to the administration process, US Chapter 11 scheme. US insolvencies are generally overseen by the courts, as opposed to the UK where they are overseen by insolvency practitioners.

The consultation is due to close in 12 weeks from today.

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