Insolvency experts could be set for collision with the government over amendments to the long-awaited Insolvency Bill which this week entered its second reading at the beginning of a crowded House of Commons sitting.
The Bill, which completed its passage through the Lords in July, aims to help rescue viable businesses that face short to medium-term financial difficulties and promote enterprise.
Louise Brittan, insolvency partner at Baker Tilly, said: ‘There are definitely mixed feelings – although there is relief it has finally reached parliament, the moratorium has raised serious concerns.’
Small companies will be allowed to make company voluntary arrangements (CVAs) with their creditors through a moratorium, which will give time for the company to draw up a rescue plan.
Insolvency practitioners are concerned that they, rather than courts, will be burdened with decisions on granting these breathing spaces.
Insolvency partner Nick Oliver at Moon Beever said: ‘The measures could open the way for actions by creditors against practitioners, if they feel voluntary arrangements were issued without adequate funds or care.’
A spokesman for insolvency body R3 attacked government for not listening to informed comment but hoped that a ‘more workable rescue mechanism’ would emerge.
Practitioners have also raised concern that the Bill has been introduced in parliament before completion of a DTI/ Treasury review on company rescue, and at a time when parliament has such a packed agenda, especially relating to environmental legislation.