BusinessBusiness RecoveryDTI defends lifting bankruptcy ban on MPs

DTI defends lifting bankruptcy ban on MPs

Trade minister Melanie Johnston has defended scrapping the ban on bankrupts acting as MPs or magistrates under the government's proposed reform of bankruptcy law.

And she made it clear in the Commons that similar restrictions on local councillors, school governors, regional flood defence committees and a host of other public office holders would either be removed under provisions in the Enterprise Bill or under orders set out in other legislation.

Johnson said magistrates would be dealt with under new discretionary procedures operated by lord chancellor Irvine and only reckless personal bankrupts – against whom a court agrees bankruptcy restriction orders – will continue to be barred.

Johnson denied the government’s aim was to remove the stigma attached to bankruptcy and claimed ministers continue to believe in personal responsibility and that ‘if bankrupts can pay they should pay’.

But she said most financial difficulties resulted from the break up of personal relationships, ill health or unemployment.

She faced protests from Tory and Liberal MPs who warned the easing of bankruptcy rules, with some cases lasting less than a year, would lead to a massive increase in bankruptcies, forcing banks and credit institutions to be more restrictive towards unsecured lending.

The minister said earlier that insolvency rules were being amended to allow liquidators to recover costs for actions such as recovering money from directors for wrongful trading – a point raised on behalf of PricewaterhouseCoopers – and promised new regulations would allow administrators or liquidators access to funds to pursue recalcitrant debtors.

Related Articles

Carillion collapse: The week so far and industry reaction

Business Recovery Carillion collapse: The week so far and industry reaction

11h Emma Smith, Managing Editor
Kingston Smith & Partners appointed trustees in bankruptcy of ex-Newcastle United footballer

Business Recovery Kingston Smith & Partners appointed trustees in bankruptcy of ex-Newcastle United footballer

13h Emma Smith, Managing Editor
Carillion: PwC appointed as special managers – what happens now?

Business Recovery Carillion: PwC appointed as special managers – what happens now?

3d Emma Smith, Managing Editor
Investment firm acquires Avon Steel Company Limited

Business Recovery Investment firm acquires Avon Steel Company Limited

1m Emma Smith, Managing Editor
Manchester law firm enters into administration

Business Recovery Manchester law firm enters into administration

1m Emma Smith, Managing Editor
KPMG appoints new global head of insolvency

Business Recovery KPMG appoints new global head of insolvency

2m Emma Smith, Managing Editor
EY hired by Carillion to review finances

Accounting Firms EY hired by Carillion to review finances

6m Alia Shoaib, Reporter
Using insolvency as a debt recovery tool

Business Recovery Using insolvency as a debt recovery tool

7m Emma Smith, Managing Editor