Alan Bloom, the head of the firm’s corporate restructuring practice, welcomed the new legislation, but warned:’The Bill reserves the right for the Secretary of State to enable people other than licensed insolvency practitioners to take on the role of supervisor in a company voluntary arrangement.
‘I think this is wholly inappropriate and that this highly specialised role should only be undertaken by those who have an insolvency licence as a mark of their technical competence and experience.’
On the Bill in general, he added:’Any new legislation which is designed to improve the prospects of business rescue must be welcomed.’For many years the profession has been frustrated by the absence of an automatic stay on creditors? actions in company voluntary arrangements. This means that right up to the point where a scheme has been voted for by the creditors, any individual creditor can put the company into liquidation.
‘Under the new legislation, as long as a scheme looks reasonable and a licensed insolvency practitioner has reviewed it and monitors it, the company will get the benefit of 28 days initially to put a proposal to creditors. This will almost certainly improve the number of businesses that can be rescued.’
He also said:’The Bill also provides for a speeding up of the process of dealing with company directors disqualification. Historically, this process has taken longer than it might and any steps to streamline it and speed it up are to be welcomed.
‘The DTI needs to continue to distinguish between directors who are culpable for business failure and who are irresponsible in their dealings with creditors, as opposed to those who have merely made mistakes or have been the victims of particular circumstances.’
Bloom is also president of the Association of Business Recovery Professionals.
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