The Insolvency Service has announced the launch of a consultation document designed to “cut needless processes during insolvency proceedings.”
Published today (18 July) by business minister Jo Swinson, the paper includes proposals aimed at saving creditors upwards of £36m a year by cutting down on unnecessary ‘red tape’.
Swinson said: “Businesses need to use modern practises to be able to compete in today’s market place. Removing unnecessary barriers will reduce the cost of administering insolvencies and benefit creditors.”
The paper, part of the government Red Tape Challenge, includes measures under review for:
• reducing the number of physical meetings of creditors (which are often poorly attended) by only requiring one where the office-holder thinks it necessary or where at least 10% of creditors ask for one;
• reducing the role of the courts for consensual creditor petitions (where judicial input is not needed);
• using more electronic communication with creditors, with links to website information;
• reducing the need to seek prior approval of creditors for certain actions clearly in their interest;
• abolishing unnecessary insolvency practitioner (IP) record keeping requirements;
• allowing office-holders to rely on the insolvent’s records when paying small claims, reducing the need for creditors to complete claim forms.
• reducing costs by providing that where the cost of making a very small dividend payment exceeds a minimum amount it not be made but instead should be used for wider benefit of creditors;
• streamlining and modernising the process by which IPs report to the Secretary of State on the conduct of directors of insolvent companies.
Michael Fallon, minister of state for business and enterprise, said: “Many of the proposals being consulted on were put forward by creditors and others affected by the law.
“This is an excellent example of stakeholders working together through the Red Tape Challenge to improve efficiency and benefit business.”
Earlier this month proposals were put forward to transfer the regulation of 60 insolvency practitioners (IPs) from the government to independent regulators, as part of the Red Tape Challenge.
The consultation will run for 12 weeks from 19 July 2013. Any changes to the current system will require legislation.