Insolvency to be revamped.
The government this week announced a complete overhaul of the process of administration as it revealed its proposals for a new insolvency regime.
Melanie Johnson, minister for competition, consumers and markets, this week revealed a series of reforms to Britain’s insolvency laws in a white paper entitled Productivity and Enterprise: Insolvency – a second chance.
The proposals include the restriction of administrative receivership – the process by which banks appoint a receiver to a distressed business – to transactions in the capital markets, and reforms to administration, making it ‘simpler and quicker’.
But R3, the Association of Business Recovery Professionals, immediately warned that the reforms could have unintended consequences, such as endangering the sale of businesses as a going concern.
R3 president Roger Oldfield said that, because administration takes place through courts, the loss of receivership could slow down business recovery.
A senior government official said: ‘We will design a shortened procedure so (creditors) can appoint administrative receivers more quickly.’ This will allow the court to create interim administrations in which the administrator has to report within 14 days.
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