Ministers have backed down over plans to force banks to give notice before appointing a company receiver, after a claim that financial institutions are too quick to force companies into receivership. In a major U-turn signalled in last week’s Insolvency Bill, introduced by trade secretary Stephen Byers, the DTI dropped clause 10, which would have affected the change. Professional condemnation of the clause has persuaded ministers to rethink their plans. Alan Bloom, president of the Association of Business Rescue Professionals, or ^R3, said that the move was a positive one. ‘I am relieved the government has acted to improve Company Voluntary Arrangements (and the removal of the clause) is a welcome development. There was scarcely any support for this proposal and it would have caused chaos.’ The Bill introduces a minimum 28-day moratorium into small company voluntary arrangements to allow directors to produce a rescue plan and a fast-track means to disqualify unfit directors. More unpopular measures include allowing the secretary of state to appoint an unlicensed insolvency practitioner to act as a supervisor during a CVA, which critics say will confuse the public. The bill expects insolvency practitioners to make a statement on whether they believe a deal will be accepted by creditors. Practitioners fear this will place them in the frontline if things go wrong. Begbies Traynor partner Ron Robinson said: ‘We will have to second guess the success of a CVA and why should I be sued if somebody says that they do not want the deal?’ In a surprise move, the government has pledged to publish a paper to introduce the UN-backed Model Law. This would allow cross-border insolvencies to proceed more quickly by introducing recognition of legal systems across jurisdictions.
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