Small Business, Enterprise and Employment Bill: Insolvency fact sheets Contents

Transcription

1 1 Small Business, Enterprise and Emplyment Bill: Inslvency fact sheets Cntents Directr Disqualificatin and Inslvency General Aims... 2 Administratin: sales t cnnected persns (prepack administratins)... 3 Regulatin f inslvency practitiners and Pwer t establish single regulatr f inslvency practitiners... 4

2 2 Directr Disqualificatin and Inslvency General Aims Aims f the measures: Increase creditr engagement in the inslvency prcess by encuraging the use f decisin-making prcesses fit fr the 21 st century. Encurage the use f mre mdern methds f cmmunicatin between inslvency ffice-hlders and creditrs. Remve administrative burdens that add n value fr creditrs. Strengthen mechanisms that cmpensate creditrs fr directr miscnduct. Measures will: Change the way ffice-hlders cmmunicate with creditrs by remving the requirement t hld physical meetings in every case, and instead replacing them with a prcess f deemed cnsent, r in certain circumstances a decisin making prcess such as a virtual meeting, electrnic vting, r a meeting by crrespndence. Creditrs will still be able t demand a physical meeting. Our gal is t increase creditr engagement by allwing develpment f cmmunicatin as technlgy imprves. Final meetings f creditrs, fr which there is rarely any creditr interest, will be ablished. Allw creditrs with n further interest in the inslvency t pt ut f receiving rutine crrespndence and reprts frm the ffice hlder. This will nt include crrespndence with regard t payment f a dividend. Give administratrs the same pwer that liquidatrs have t take civil actins against directrs and thers, n behalf f the general bdy f creditrs, where they have caused a cmpany t trade wrngfully r fraudulently. Allw liquidatrs and administratrs t assign certain legal claims t a 3 rd party (such as a creditr r claims firm) that currently nly the liquidatr/administratr may pursue. Backgrund: The Gvernment s Red Tape Challenge inslvency theme asked stakehlders fr views n hw unnecessary regulatin culd be reduced and prcedures culd be mdernised and simplified. Respnses prduced a package f measures aimed at reducing csts and imprving returns t creditrs. Thse that require changes t primary legislatin are being taken frward in this Bill and will deliver the first f the savings that will arise frm the ttal package f measures. The measure t allw administratrs and liquidatrs t assign inslvency claims was part f the Gvernment s Transparency and Trust cnsultatin last year, being ne f a package f measures t increase trust by making unfit directrs mre accuntable fr their actins.

3 3 Administratin: sales t cnnected persns (prepack administratins) Aims f the measure: T prvide greater cnfidence t unsecured creditrs and ther affected stakehlders that a pre-pack represents the best utcme fr them. Measure will: Create a reserve pwer t make regulatins t either prhibit administratin sales t cnnected parties r make regulatins t impse cnditins r requirements t allw a cnnected party administratin sale t prceed Specific utcmes and impacts: Shuld the nn-legislative slutins in respect f administratin sales t cnnected parties, recmmended by the independent reviewer (see backgrund) nt change behaviur/increase cnfidence in such sales; it may be necessary t exercise the pwer. Backgrund: An independent review int pre-pack administratins (Graham review) was published n 16 June The reviewer recmmended a number f vluntary, nn-legislative slutins t imprve utcmes and cnfidence in the prcess. The Review als recmmended that the gvernment take a pwer t enable it t swiftly legislate t tackle prblems if the vluntary package did nt have the desired effect. The SS agreed t all recmmendatins. The review fcused n pre-pack administratins. A pre-pack administratin is a special type f administratin (nt defined in legislatin) A pre-pack is cmmnly understd t mean a sale that is agreed prir t the appintment f the administratr, and which is effected n, r shrtly after the appintment f the administratr. The Review recmmended hwever that the pwer shuld target all sales ut f administratin t cnnected parties, rather than just pre-packs, t avid the unscrupulus delaying sales t avid legislatin targeted slely at pre-packs. The Graham review fund that the biggest harm t creditrs ccurred in sales t cnnected parties. A sale t a cnnected party is where the inslvent business is sld t a purchaser previusly invlved with the inslvent business. The mst cmmn frm f cnnectin is where smene is a directr f bth the inslvent and purchasing business. Rughly 2/3rds f pre-packs invlve a cnnected party sale.

4 4 Regulatin f inslvency practitiners and Pwer t establish single regulatr f inslvency practitiners Aims f the measure: Strengthen the regulatry framewrk fr IPs t deal effectively and efficiently with pr perfrmance and abuse and prvide greater cnfidence in the inslvency prfessin Measure will: Intrduce Regulatry bjectives: these will prvide regulatrs with a clearer, enhanced framewrk within which t carry ut their activities. They will prvide the versight regulatr with a framewrk n which t hld the regulatrs t accunt. These bjectives will include: having a system f regulating persns acting as inslvency practitiners which delivers fair treatment and cnsistent utcmes; encuraging an independent and cmpetitive IP prfessin whse members deliver high quality services and are remunerated at a rate which is fair and reasnable fr the nature f the wrk prperly undertaken; maximising the value f returns t creditrs; and prtecting and prmting the public interest Prvide a range f sanctins fr the versight regulatr t ensure that apprpriate actin is taken where a regulatr is nt acting in accrdance with the regulatry bjectives. The sanctins are; direct a regulatr t take actin; impse a financial penalty; issue a reprimand; revke a regulatr s recgnitin; and (where it is in the public interest) apply t curt t directly sanctin an IP. The reserve pwer t establish a sle regulatr wuld nly be used if the prpsed changes t the current system f self-regulatin d nt have the desired effect (f increasing cnfidence in the regime). Backgrund: IPs are given a cnsiderable amunt f pwer and discretin within inslvency legislatin s it is essential they are apprpriately regulated. There are currently 8 different regulatry bdies, fr a relatively small prfessin (1,355 appintment takers). The current system suffers as a result f having n clear legislative framewrk against which regulatry activities can be assessed and the regulatrs held t accunt. The SS as versight regulatr des nt currently have sufficient and prprtinate pwers t hld the regulatrs t accunt where abuse ccurs. This lack f apprpriate pwers f sanctin leaves the versight regulatr in a weak psitin and undermines the credibility f the regulatry regime.

5 Crwn cpyright 2014 Yu may re-use this infrmatin (nt including lgs) free f charge in any frmat r medium, under the terms f the Open Gvernment Licence. Visit write t the Infrmatin Plicy Team, The Natinal Archives, Kew, Lndn TW9 4DU, r psi@natinalarchives.gsi.gv.uk. This publicatin is als available n ur website at Any enquiries regarding this publicatin shuld be sent t: Department fr Business, Innvatin and Skills 1 Victria Street Lndn SW1H 0ET Tel: If yu require this publicatin in an alternative frmat, enquiries@bis.gsi.gv.uk, r call BIS/14/1137