Cut the red tape

Cut the red tape

Creditors could save over £36m by the government’s latest proposals which would cut pointless processes during insolvency proceedings. The proposals are part of the government’s Red Tape Challenge and have been set out for consultation. The consultation will close on 18 July 2013.

What is the government consulting on?

Hot on the heels of the recently announced Trust and Transparency Consultation announced by the Department for Business, Innovation and Skills (BIS), comes another consultation, from the Insolvency Service, called Red Tape Challenge—changes to insolvency law to reduce unnecessary regulation and simplify procedures.

The aim is to consult with insolvency professionals on how insolvency processes can be improved, cutting out unnecessary red tape while retaining a suitable protection for creditors.

What is the government proposing?

Potential measures set out in the paper deal with processes undertaken by insolvency practitioners such as the keeping of records and sanction requirements among others. The hope is to reduce the amount of red tape (and therefore ultimately costs) that insolvency practitioners have to currently go through.

The measures include:

  1. reducing the number of physical meetings of creditors (which are often poorly attended) by only requiring one where the office-holder thinks it necessary or where at least 10% of creditors ask for one
  2. reducing the role of the courts for consensual creditor petitions (where judicial input is not needed)
  3. using more electronic communication with creditors, with links to website information
  4. reducing the need to seek prior approval of creditors for certain actions clearly in their interest
  5. abolishing unnecessary IP record keeping requirements
  6. allowing office-holders to rely on the insolvent’s records when paying small claims, reducing the need for creditors to complete claim forms
  7. reducing costs by providing that where the cost of making a very small dividend payment exceeds a minimum amount, it is not made but instead should be used for wider benefit of creditors, and
  8. streamlining and modernising the process by which IPs report to the Secretary of State on the conduct of directors of insolvent companies

The consultation runs for 12 weeks from 18 July 2013. Inevitably any measures that are agreed upon will involve a change to legislation

To have your say on the consultation, click into the Insolvency Service website.

 

Related Articles:
Restructuring and Insolvency image
New criminal liability for deficient defined benefit pension schemes—the impact on restructurings and corporate transactions
Restructuring and Insolvency |
10 min read
Restructuring and Insolvency image
Brexit—a deal that leaves recognition of UK insolvency procedures uncertain
Restructuring and Insolvency |
1 min read
Restructuring and Insolvency image
Reintroduction of UK Crown Preference from 1 December 2020
Restructuring and Insolvency |
8 min read
Restructuring and Insolvency image
Brexit materials for Restructuring & Insolvency practitioners
Restructuring and Insolvency |
6 min read
Latest Articles:
INSOL Europe/Lexis®PSL launch Joint Project on ‘How EU Member States recognise insolvency and restructuring proceedings of a third country’
Restructuring and Insolvency |
3 min read
sun
Sailing into the sunset—cruise port operator given go-head for scheme of arrangement (Re Port Finance Investment Ltd)
Restructuring and Insolvency |
9 min read
New criminal liability for deficient defined benefit pension schemes—the impact on restructurings and corporate transactions
Restructuring and Insolvency |
10 min read
Lexis®PSL announces variations to R3 standard form COVID-19 CVA proposal (Northern Ireland) for administration exits and debt waivers
Restructuring and Insolvency |
7 min read