Businesses in Britain will need a debt of at least £5,000 ($7,711/€6,742) to post for bankruptcy under new legislation, up from the previous figure of £750 ($1,156/€1,011).
The changes to the insolvency law came in on 1 October 2015, with more following on 10 October and in April 2016, with the key changes affecting “both companies and individuals”, Lexology reported.
Creditors will also be encouraged to explore other debt collection methods before bankruptcy, while insolvency practitioners (IP) will be limited in the fees they can charge creditors on a time-cost basis. The IPs must also provide binding fee estimates at the outset of the insolvency process, acting as an effective cap on fees.
Regulated professional bodies will authorise IPs in personal and corporate cases as part of the 2015 Degulation Act, while regulators can take action and impose financial penalties on IPs, with the oversight regulator able to apply for a direction sanction against an IP “where it is in the public interest”.
A single insolvency regulator is also being proposed should the reforms “fail to build confidence in the industry”. The new legislation also means directors can be disqualified when they have been convicted of a company-related offence overseas or wen they have instructed a disqualified director.
The court must also consider the nature and context of the harm caused by the director’s misconduct and their actions in relation to other previously failed companies.
The new legislation generally only applies to a director’s conduct where it has occurred on or after 1 October 2015.