The new government should make building on the recent progress made in strengthening the business recovery regime a priority during the forthcoming Parliament to help give more troubled companies the chance to recover and thrive.
That’s the view of Allan Kelly, chair of insolvency trade body R3 in the North East and a restructuring partner with Baker Tilly North East, who was speaking after the Conservative Party took a surprise majority at the General Election.
Allan Kelly says: “Any kind of company can hit financial difficulties at any time, and it’s essential that the business insolvency regime is as robust as possible, in order to allow for the maximum number of positive outcomes to be reached.
“Some real progress has been made over the last year on issues relating to both corporate and personal insolvency, and we’d expect to see positive outcomes resulting this year as the changes begin to bed in, particularly around the numbers of struggling yet viable businesses that can be saved.”
Earlier this year, a campaign led by members of R3 in the North East and backed by several regional MPs succeeded in securing a U-turn from the government on the implementation of costly legal changes to the insolvency regime.
The changes planned under the 2012 Legal Aid, Sentencing and Punishment of Offenders Act, known as the ‘Jackson reforms’, would have made it very difficult for insolvency practitioners to retrieve money for creditors from rogue directors as they would no longer have been exempt from the wider crackdown on ‘no-win, no-fee’ legal funding.
Insolvency cases were temporarily exempted from the Jackson reforms to allow time for alternative funding mechanisms to be found, and after lobbying from R3 and other bodies,the exemption was extended, with no time limit set when it might next come up for review.
Government plans to stop utilities and technology services suppliers from making changes to their terms for struggling but viable businesses were also announced at the start of 2015 after four years of work by R3 through its “Holding Rescue To Ransom” campaign.
Allan Kelly is now calling for the new administration to reintroduce a charge of criminal bankruptcy to the statute books to help make the return of money from fraudsters to their victims easier and quicker than it is at present.
He continues: “Having Criminal Bankruptcy Orders available would allow for the retrieval of funds from defendants more effectively than is possible under the current system of confiscation or criminal orders. They would mean all of an individual’s assets could be realised to repay victims, rather than just the proceeds of crime, and would also make overseas assets easier to retrieve.
“Insolvency practitioners already have significant powers to investigate fraud and find redress for victims. At the moment, these powers are only used in a limited number of situations, and increasing the opportunities to use insolvency practitioners’ powers would help bring fraudsters to justice and ensure victims are properly compensated.
“A permanent extension for insolvency from the Legal Aid, Sentencing and Punishment of Offenders Act would also be very welcome, and would give a greater degree of certainty for both the insolvency profession and businesses that could be facing future problems.”