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Corporate insolvency regime consultation launched

Corporate insolvency regime consultation launched

A consultation has been launched by the Insolvency Service into the Office of Fair Trading’s proposals for changes to the regime governing corporate insolvency.

The Market for Insolvency Practitioners in Corporate Insolvencies report was published last June and recommended changes to ensure creditors received the best outcome.

Edward Davey, the minister in charge of the insolvency regime, said the consultation was of great significance to anyone affected by insolvency, including accountants for contractors, as it contains proposals to set up an independent complaints body. It is an opportunity to comment on how the government can make sure unsecured creditors get a fair deal when a company goes under.

In addition to the complaints body, the consultation considers reform to the regulatory framework and amendments to the legislation concerning administration and liquidation.

Insolvency Practitioners Association chief executive, David Kerr, said he particularly welcomed the proposals to set up the new complaints body.

Philip King, from the Institute of Credit Management, also welcomed the consultation saying that any initiative that improves the outcome for unsecured creditors has to be applauded.

The president of R3, the insolvency trade body, whilst welcoming the consultation, said he thought unsecured creditors wanted to take a more active role in insolvency proceedings. He pointed out that they have the ability to influence decisions but rarely get the opportunity to engage in the process.

When a company goes under it is very unusual for there to be enough money left to pay all the unsecured creditors. This leads to frustrated unsecured creditors but does ensure that secured creditors will continue lending, he added.

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Image: Everything Must Go by R_SH

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