BusinessBusiness RecoveryNew Act throws insolvency wide open

New Act throws insolvency wide open

The insolvency market will be thrown wide open under the Enterprise Act as banks are forced to abandon their 'preferred insolvency panels' to deal with practitioners appointed by companies, according to experts.

Link: Fears surface over personal insolvency surge

Under the Act, passed at the end of the last parliament, administrative receivership has been abolished and companies have been given more control in the event of an insolvency. Companies will also have the task of nominating administrators instead of main creditors like the banks.

The changes are likely to spell the end for the traditional ‘panels’ of preferred insolvency specialists used by banks and end what have so far been close relationships.

John Alexander, head of corporate recovery at Carter Backer Winter, said: ‘The use of panels would probably fall out of use going forward.’

Technically however, banks still retain the power, as floating charge holders, to veto company decisions. Insolvency practitioners are hoping banks will honour the spirit of the law by not using this power unless absolutely necessary.

‘Administrators now have the role to act for all creditors, not just the banks. There is no reason why the bank should want to appoint its own administrator,’ said Alexander.

Related Articles

Carillion CFO blew whistle over 'sloppy accounting' months before collapse

Business Recovery Carillion CFO blew whistle over 'sloppy accounting' months before collapse

3m Alia Shoaib, Reporter
Toys R Us UK and Maplin enter into administration after failing to secure buyers

Business Recovery Toys R Us UK and Maplin enter into administration after failing to secure buyers

3m Alia Shoaib, Reporter
How to avoid a Carillion collapse

Business Recovery How to avoid a Carillion collapse

4m Russell-Cooke
Carillion collapse: The week so far and industry reaction

Business Recovery Carillion collapse: The week so far and industry reaction

4m Emma Smith, Managing Editor
Kingston Smith & Partners appointed trustees in bankruptcy of ex-Newcastle United footballer

Business Recovery Kingston Smith & Partners appointed trustees in bankruptcy of ex-Newcastle United footballer

4m Emma Smith, Managing Editor
Carillion: PwC appointed as special managers – what happens now?

Business Recovery Carillion: PwC appointed as special managers – what happens now?

4m Emma Smith, Managing Editor
Investment firm acquires Avon Steel Company Limited

Business Recovery Investment firm acquires Avon Steel Company Limited

6m Emma Smith, Managing Editor
Manchester law firm enters into administration

Business Recovery Manchester law firm enters into administration

6m Emma Smith, Managing Editor