In August the Cabinet Office launched an insolvency legislation theme in the context of its Red Tape Challenge, a two-year initiative it began in April 2011 with the aim of simplifying the regulatory framework over key areas ofUKenterprise.
As part of the challenge, the Government invited comment on insolvency, which closed at the end of September, during which time anyone with a relevant view was invited to comment on insolvency legislation that they consider being burdensome or over-complicated.
The aim of the theme was to review and modernise the Insolvency Rules, which set out the detail of how insolvency procedures are administered. And the Government believes that the Red Tape Challenge is a unique opportunity to ask the public and business for their views on insolvency law issues.
Of particular interest to the Government were comments about the insolvency law framework, particularly on what stops a company doing business effectively and how it can reduce burdens and simplify the practice. The Government also wanted to know whether it could improve guidance to insolvency practitioners, creditors and people who are overwhelmed by their debts.
Amongst the responses given were comments that the current court fee for personal bankruptcy is far too high at £700, which is a 47 per cent increase on the 2011 figure.
Also, it was suggested by some that it should be easier to impose financial penalties on directors who persist with trading and dissipating assets beyond a reasonable amount of time until a creditor forces them to stop.
An announcement of any resulting proposals or legislation arising from the red tape challenge will be given in due course.
Tim Close is an accountant specialising in business insolvency, debt recovery and business rescue.