New insolvency procedures, including a fast-track disqualificationlvent companies and more time for companies in financial difficulties to establish a rescue plan. procedure for unfit company directors bypassing the courts, are planned by the government.
Corporate affairs minister Nigel Griffiths revealed the proposals in a Commons written answer, in which he also foreshadowed a major shake-up of the regulation of the insolvency profession alongside the reform of liquidation and bankruptcy procedures.
He said: ‘I intend to introduce legislation to improve the efficiency and effectiveness of the procedure for disqualifying unfit company directors.
‘This will make it possible for a person who, under present law, is or could be subject to an application for a disqualification order, to give a legal undertaking to the Secretary of State for Trade and Industry which would have the same legal effects as a disqualification order made by a court.
‘I also wish to make it easier for firms in financial difficulty to make voluntary agreements with their creditors by introducing the option of a moratorium to give the company’s management a breathing space within which to put a rescue plan to creditors.
‘A working party is reviewing the current state of regulation in the insolvency profession and recently issued a consultation paper, Insolvency practitioner regulation – ten years on.
‘Responses to that will inform their report to the Secretary of State and the insolvency recognised professional bodies.’
Brendan Guilfoyle, president of the Society of Practitioners of Insolvency, urged the government to move swiftly. ‘Every month’s delay will see around 60 companies go bust that would almost certainly have been rescued by this measure.’
Another working party, chaired by Mr Justice Ferris, is considering remuneration of office-holders and is expected to report in the Spring.
The findings and conclusions of both groups will be given consideration when received.
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