Insolvency trade body R3 has called on the winning party of the 2015 general election to reform the current insolvency regime to provide a better deal for small businesses, taxpayers, and indebted individuals.
R3 has called for reform to the current insolvency regime that includes a “comprehensive” overhaul of the personal insolvency regime, greater engagement from government creditors in insolvencies and more money to be returned to small businesses from football insolvencies.
Graham Rumney, chief executive of R3, 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 targeted ‘rogue’ 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.”