Tinkering would seem to describe the current legislative approach to insolvency – rarely a good model for effectiveness and efficiency. Separate corporate and individual insolvency licensing is an astonishingly wasteful and regulatory introduction in the Deregulation Bill,
The crass removal in the Small Business Enterprise and Employment Bill of insolvency practitioners’ ability to convene a physical creditors meeting (without significant creditor support) is inefficient and costly – again the opposite of what was apparently intended. We will lose many opportunities to obtain information from and engage with the creditors in whose interests we act. We will also face enquiry and hostility from creditors who have lost money, who are deprived of the opportunity of challenging those responsible and who cannot fully participate in meetings by telephone or video link.
Another challenge is likely to be getting to grips with the Insolvency Rules 2015 (although they are not expected to come into force until the following year).
Then there are the lost opportunities to address the conflicts between employment and the rescue culture, not to mention the creeping extension of the reach of insolvency expenses, when what is needed are better mechanisms to facilitate business rescue through insolvency procedures. The 1986 Insolvency Act was largely based on the Cork Report and although not all the recommendations of Sir Kenneth Cork’s committee found their way onto the statute book, we did at least have a reasonably co-ordinated and cohesive approach to the whole subject. Since then we have seen an increasing mish-mash of half-baked policy, poorly implemented and with little real consultation. However, insolvency reform is not a vote winner and the situation is unlikely to change any time soon.
Meanwhile, those of us in the insolvency profession must continue to seek to influence policy for the better. At the time of writing, encouraging your local MP to sign early day motion 673 to preserve the insolvency exemption from the Jackson litigation costs reforms would be a good place to start.
Date: 9th February, 2015
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