Insolvency protection move delayed

Shadow trade minister Richard Page said nominees should have a right to apply to the courts for protection to meet the threat that creditors, directors and members of the company might challenge his acts.

But he said he was delaying further debate until the report stage when MPs have a chance to reconsider making changes to the Government’s Insolvency Bill and debate further alterations.

The issue emerged at the start of committee debates on details of the proposed legislation, when Great Grimsby Labour MP Austin Mitchel referred to an article in Accountancy Age warning that MPs on the committee are on course for an ‘Insolvency Bill Clash’.

Mitchell said the article predicted there would be amendments to the bill – delayed for months in the Lords – over ‘serious concerns’ among insolvency practitioners, quoting a partner at Moon Beever warning that the way could be open for actions by creditors against practitioners if they felt voluntary arrangements were issued without adequate funds or care.

Mitchell protested: ‘That shows a concern for vested interests.’

And he complained: ‘Such criticism is being made at a late stage of our consideration of a properly formulated Bill that provides an effective means of widening the rescue provisions contained in previous legislation.’

He described this as ‘ominous’ because it meant last minute amendments or changes later by regulation, to which he would be opposed.

Mitchell went on to call for moratoriums to last 90 days instead of 28 and renew bitter attacks on the banks and the professions. He also criticised the regulation of insolvency practitioners, listing eight bodies, including the English, Scottish and Irish institutes of chartered accountants, the Association of Certified Accountants and others, protesting: ‘It is ludicrous that 1,834 insolvency practitioners are regulated by eight bodies.’

Page said nominees should be able to apply to the courts for directions, not as a carte blanche but when required.

But competition and consumer affairs minister Dr Kim Howells said it was ‘unnecessary’ to provide nominees with power to apply to the court because nominees would be taking commercial decisions, while directors would remain in charge of the companies.

He said: ‘The court should not be used to provide nominees with a means of avoiding decisions that are rightly for him to take, or to gain the court’s endorsement for an intended course of action.’

Insolvency Bill on collision course

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