Government announces raft of new insolvency powers

Blog Insolvency

The Government has announced a range of new measures to “improve the opportunities” of financially-distressed companies.

The Insolvency Service, which published the report, said the new tools will help protect creditors, employees and other stakeholders in companies teetering on the edge of insolvency.

Among these, the Government will offer “viable” companies more time to restructure or seek new investment to rescue their business, who may be facing creditor action.

Likewise, these tools will also include a new restructuring plan procedure that will provide an “alternative option” for businesses to rearrange how they will pay their debts.

Under these measures, the Insolvency Service said companies will be supported through a rescue process to prevent terminating supplier contracts “solely by virtue of a company entering an insolvency process”.

The Government says it has learned its lesson following several recent high-profile corporate failures, in which creditors, employees and other stakeholders have been treated unfairly in insolvency procedures.

It says companies should take on the responsibility of protecting its workers’ pensions, as well as small suppliers and jobs when it risks entering insolvency.

“These proposals include new powers for the Insolvency Service to investigate directors of dissolved companies, enhancements to existing antecedent recovery powers and the ability to disqualify directors of holding companies who unreasonably sell insolvent subsidiaries,” the report says.

“Proposed reforms will help strengthen the UK’s business environment which is a key part of the UK’s Industrial Strategy – the Government’s long-term plan to build a Britain fit for the future – ensuring the UK remains one of the best places to start and grow a business and is an attractive place to invest.”