They predict doom and gloom as the number of bankruptcies skyrocket leaving insolvency experts, both within the government insolvency service and in private firms, completely swamped and unable to cope.
Many also fear the ‘soft touch’ bankruptcies will make individual voluntary agreements a thing of the past, despite the fact this type of settlement is more suitable to the difficulties faced by some individuals. All this uncertainty and dissatisfaction has left observers wondering to whom the government was listening when it drafted the legislation.
Admittedly the large majority of insolvency practitioners are more used to dealing with the more lucrative corporate recovery side and the number of proper bankruptcy specialists can be counted on one hand. And many insolvency practitioners, relieved that they got some sort of working insolvency regime after the disastrous previous Insolvency Act, are unwilling to criticise the new reforms.
But surely the government wants a bankruptcy system that works for the UK, not a poor imitation of the US regime. When drafting the new laws, then trade secretary Stephen Byers talked about fostering an entrepreneurial culture by adopting US-style rules that favour honest businessmen who fail due to external circumstance – not their own crookedness.
But with the US now trying to update its bankruptcy regime and make it more like ours, it looks to many bankruptcy experts on this side of the Atlantic like we have adopted the worst bits of the US system as well as ditching the best of our own.