UK insolvency changes: What you need to know
A package of changes made through the Deregulation Act 2015, Small Business Enterprise and Employment Act 2015 and associated secondary legislation come into effect on 1 October 2015. These will modernise and strengthen the insolvency process.
A significant number of changes come into effect on 1 October 2015 which will impact on insolvency practitioners and the insolvency regulatory system. The changes are being introduced through commencement of the Deregulation Act 2015, Small Business Enterprise and Employment Act 2015 and associated secondary legislation.
The UK is ranked as one of the best insolvency regimes in the world according to the World Bank with some of the highest rates of returns to creditors and returning money quicker and at lower costs than in the US, Germany and France. The amendments are aimed at increasing transparency and trust in the UK insolvency regime and making it even more efficient.
The main changes will:
- Introduce a set of statutory objectives for the regulation of insolvency
- Strengthen the regulation of insolvency practitioners and the Insolvency Service's role as oversight regulator
- Reform the authorisation of insolvency practitioners and allowing IPs to be authorised solely in relation to individuals, companies or both.
- Provide a tougher disqualification regime to deal with delinquent directors
- Allow compensation orders to be made and undertakings to be given which would result in disqualified directors being penalised financially for the losses to creditors as a result of their misconduct
- Extend the powers of administrators to raise bring fraudulent or wrongful trading actions
- Simplify arrangements for appointing and releasing administrators
- Introduce a requirement in England & wales to get an up front estimate of fees agreed by creditors when an insolvency practitioner wishes to operate on a time and rate basis. Any subsequent variation to this estimate must also be agreed by creditors
- Modernises the provisions for essential suppliers to insolvent businesses. This will enhance the ability of IPs to secure the supply of essential IT and utility services while trying to rescue a business
- Bring up to date the monetary amounts for debt relief orders and creditors petitions for bankruptcy in England and Wales. This will allow greater access to debt relief for financially vulnerable people and remove the risk of bankruptcy from individuals with very small amounts of debt.
Further details on all of the measures are available in the following articles:
- Insolvency regulation strengthened
- Delinquent directors face tougher sanctions
- Measures introduced to improve efficiency in UK insolvencies
- Enhancements made to insolvency in England and Wales