Are more changes afoot for insolvency practitioners?

Are more changes afoot for insolvency practitioners?

Restructuring & Insolvency analysis: Ian Defty, a director in the niche London insolvency firm of DDJ Insolvency Limited, discusses the likely implications of the Small Business, Enterprise and Employment Bill for licensed insolvency practitioners.

 What does the Bill seek to cover for insolvency professionals?

It is a sad fact that there is always a desire by the government to tinker with the insolvency profession. Recently that tinkering has led to the new Small Business, Enterprise and Employment Bill. In my view, the insolvency industry manages very well with the legislation that it is presented with, but unfortunately the government constantly feels it has to amend its own legislation at a whim.

The current Bill snuck in a number of new ideas, not limited to:

  • seeking to bring in powers for liquidators or administrators to assign causes of action
  • the abolition of the requirements to hold creditors meetings
  • the ability for creditors to be no longer required to prove for small debts
  • an amended definition for shadow directors

The majority of these matters were included in the Bill without any reference to stakeholders, in particular the insolvency industry.

The Bill does cover changes in the company directors' disqualification regime, and although comments were sought by government, they have been largely ignored.

I understand that the government accepts that 'the devil is in the detail' but it is not sufficient to say that when there are so many unknowns.

Does this meet the concerns of the majority of the respondents to the Trust and Transparency paper in your view?

The Trust and Transparency paper sought to provide just that for users. It is difficult to see how, for example, removing the ability of creditors to seek the appointment of their chosen officeholder can provide 'trust' to the creditor industries, yet alone those creditors who are individuals or small concerns.

 If not, what more do you think still needs to be done by the government to meet these concerns?

Between the insolvency industry and the courts it is fair to say that insolvency is working very well. The small tinkering brought in by this Bill will not make any changes for the better. The profession needs to be working more with its creditors, not seeking to disenfranchise them.

In reality, how likely do you think it is that the Secretary of State for Business Innovation and Skills will claim compensation from disqualified directors in the future

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About the author:
Eleanor qualified in 1998 into the insolvency team at ASB law. She became a partner in 2005, and went on to head up the Recovery & Insolvency team. Whilst traditionally specialising mainly in contentious corporate insolvency matters, in recent years she has moved into the non contentious arena, in particular specialising in company administrations.