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07 Nov 2011
THE GOVERNMENT has today launched a consultation to remove court participation in bankruptcies.
Business minister Edward Davey (pictured) announced proposals for a streamlined bankruptcy and company liquidation system, which eased burdens on the UK courts.
MP Davey said: "Courts have an important role to play in bankruptcy and winding up applications where there is a real dispute between parties. But in simpler cases where there is no real disagreement, a more streamlined route into bankruptcy is needed.
"These reforms should help to deliver better outcomes, reduce unnecessary burdens on creditors and debtors and bring substantial savings for the taxpayer.
"It is essential that we get the detail right, particularly in relation to the level of safeguards required to ensure better results for debtors, while respecting creditors' rights. That is why I strongly encourage all interested parties to respond to this consultation."
The consultation entitled ‘Reform of the process to apply for bankruptcy and compulsory winding up petition reform' includes provisions for online bankruptcy applications. Submitting false information will become a criminal offence and debtors could pay a bankruptcy charge in installments – it currently costs £525 to file for the insolvency process.
Justice minister Jonanthan Djanogly, said the government wants to create an "efficient system" where courts are used as a last resort.
The consultation is due to close on 31 January 2012.
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Visitor comments Add your comment
Proposals raise a few questions
The Minister’s consultation on petitions raises a few questions. Debtors’ petitions, subject to safeguards for spotting bankruptcy tourism, are clearly fit for an administrative route and one would hope that their removal from court processes would speed up the relief for debtors, and go some way to unclogging the court system. Looking at creditor petitions is more complicated. I have suggested for many years that the court’s time is wasted in dealing with so many unopposed company winding up petitions. The company can file notice of intention to oppose if it has a dispute. However, I would be concerned if, a dispute having been raised, the bona fides of that dispute was removed from judicial consideration and allocated to a civil servant, even if called an adjudicator. I am also less than sanguine about bankruptcy petitions presented by creditors being dealt with outside the court process, even if the same proviso for filing notice of intention to oppose exists. The courts provide safeguards for the individual, and many debtors do not manage to deal with the issues until the hearing. If the order were made administratively with the attendant costs and difficulty of setting aside/annulment, then many debtors could find themselves further in the mire without the opportunity to deal with the debt or any dispute which may exist. Bankruptcy has always been carefully dealt with by the courts particularly because of the serious effects on an individual and it should not in my view be removed from judicial consideration unless the debtor volunteers to surrender to the civil service.
Posted by: Frances Coulson, Moon Beever Solicitors, 09 Nov 2011 | 10:10