New proposals have been announced by the Insolvency Service intended to:
- enhance the re-structuring regime by enabling struggling companies greater time in which to rescue the business by providing a short moratorium of twenty eight days to enable a ‘rescue plan’ to be put forward.
- provide the Insolvency Service with new powers to ban or fine directors of dissolved companies who, for instance, deliberately dissolve companies in order to evade debt.
It is hoped that the implementation of such proposals will:
- help safeguard jobs.
- ensure that directors do not easily walk away from their financial responsibilities.
- avoid the dissolution of companies by directors with the intent of walking away from pension payment obligations to employees.
These proposals are anticipated to represent the most dramatic changes to the insolvency regime in many years and follow the damaging effects from the collapse of organisations such as BHS and Carillion.
Stuart Frith, President of insolvency and restructuring trade body R3, said:
“R3 welcomes the government’s announcement that it is progressing its corporate insolvency proposals, which should help to ensure that the UK’s insolvency and restructuring framework retains its world-class status.
Our members have long raised concerns that some directors are deliberately dissolving businesses to avoid paying their debts. A strengthened disqualification regime will be an important part of ensuring that directors are less likely to walk away from their responsibilities.”
How Can We Help? | Kangs Insolvency & Directors’ Obligations Advice Solicitors
Company directors are obliged to observe strict standards of conduct imposed by detailed and complex legislation.
It would appear that the imminent escalation in the investigative powers of the Insolvency Service will expose directors to increased levels of scrutiny.
Any breach of directors’ duties may well result in severe consequences including fines, disqualification and even criminal proceedings (if offences are uncovered as part of an investigation).
If you receive a letter from the Insolvency Service, we would advise that you contact our team through one of our undermentioned solicitors who will be happy to answer any questions and guide you appropriately.
Please feel free to call: