CHANGES TO THE insolvency process could see creditor meetings reduced to just one rather than the litany that currently take place.
Business minister Jo Swinson has unveiled a consultation to cut the red tape in the insolvency process with a raft of reductions put forward.
Chief among them is a reduction in creditor meetings unless 10% or more of creditors ask for one or the insolvency practitioner (IP) believes one is necessary. Currently IPs must hold several meetings throughout the process to keep creditors informed of the decisions they make such as: dividend payments; votes on the organisation's future; and asset realisation achievements.
The government estimates that creditors could save £36m annually by cutting the needless processes during insolvency.
Among the suggestions put forward are "modernising" the way IPs communicate with creditors, such as better use of online tools including websites and emails. The consultation also suggests the abolishment of "unnecessary" IP record keeping.
Practitioners could also rely on records from the collapsed business when calculating dividend repayments reducing the need for creditors' to fill out laborious claim forms. It has also been suggested that the process in which IPs report to the Secretary of State about the conduct of directors will be streamlined.
Business Minister, Jo Swinson, (pictured) said: "Businesses need to use modern practices to be able to compete in today's market place. Removing unnecessary barriers will reduce the cost of administering insolvencies and benefit creditors."
Philip King, chief executive of the Institute for Credit Management, said:
"We believe that making insolvency processes more efficient and harnessing new technology to streamline the process still further will ultimately enhance the creditors' position, reduce the overall cost of administrations, and further improve the relationship between creditors and IPs."
The consultation will run for 12 weeks from 18 July.
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