R3, the Association of Business Turnaround Professionals has called on the successful party of the 2015 general election to reform the insolvency regime in order to provide a better outcome for small businesses, taxpayers, and indebted individuals.
The reforms potentially include a significant change to the personal insolvency regime, greater engagement from government creditors and greater returns to small businesses from football insolvencies.
R3 chief executive Graham Rumney said: “The UK’s insolvency regime is already the world’s 7th best, according to the World Bank, but there is still plenty of room for improvement. The challenges that face business and personal finances are constantly changing and it is important the insolvency regime is regularly reviewed and updated to keep pace with those changes.”
“The 2010 general Eelection saw a turning point in the insolvency landscape as insolvencies hit a post-financial crisis peak. 2015 could be another turning point.”
“The conditions that have helped put downward pressure on corporate insolvencies are changing; personal insolvencies are already on the rise, even before an interest rate hike.”
R3 has also focused on delinquent directors, calling for insolvency litigation to be made permanently exempt from the 2012 Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act, which expires in April 2015.
The funding from the LASPO Act ensures legal can be taken action against directors of insolvent companies who have wrongly, negligently, or fraudulently taken creditors’ money.
Rumney said: “Insolvency is about striking the right balance between creditors’ and debtors’ needs. Sometimes, existing legislation and regulation can make this balance difficult to achieve.”
Source: Insolvency News