Progress, but at too high a price?

Article Abstract:

The UK Dept. of Trade and Industry (DTI) proposed rules on company rescue contains some elements that many fear could 'endanger the heart of the rescue culture.' The proposals are intended to simplify company rescue and to make it cheaper and more accessible. One of these is the 28-day moratorium during which creditors' rights of action will be suspended and the liquidation of the insolvent company will be put on hold. Another proposal requires the holder of a floating charge to provide the bankrupt company five working days' notice of its plan to designate an administrative receiver. While many of elements of the DTI document are acceptable, the provisions that may undermine the effectiveness of receiverships are being criticized. What the business community is expecting from the DTI proposals is the introduction of additional rescue schemes and not substitutes for administrative receivership.

United Kingdom, Laws, regulations and rules, United Kingdom. Department of Trade and Industry, Bankruptcy reorganizations, Bankruptcy reorganization

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An irksome obligation

Article Abstract:

The principal duty of an insolvency practitioner (IP) is the collection of assets and the maximization of realizations to ensure that asset distribution is as advantageous as possible for affected creditors. Legislation, however, imposes other ancillary duties on IPs. One of these ancillary duties is the task of aiding prosecuting authorities in the investigation of misconduct on the part of the people who were involved in the management of the insolvent business. Unfortunately, this ancillary duty sometimes interferes with the main task of IPs. It is in relation to the conflict that arises between these two duties of IPs that a recent decision of the House of Lords must be examined. The decision, which came in the Arrows case, highlights the degree of responsibility that IPs assume when they are asked to participate in official investigations of managerial misconduct.

Investigations, Bankruptcy

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Drain the bath but grab the baby

Article Abstract:

The UK's Dept. of Trade and Industry are finalizing their proposals for the reform of the country's insolvency laws. An announcement on the final shape of these proposals is expected in the spring of 1995. Most experts in the insolvency arena are aware that changes are needed in the UK's framework of laws, particularly in the area of company voluntary arrangements. The UK is not the only country reforming its insolvency laws. Since the mid-1980s, several industrial countries have begun reform programs, with France, Canada and Australia having advanced the most ambitious ones. While these countries are known to need drastic reform, most experts believe that the UK does not, hence the expectation that any proposals will result only in the fine-tuning of the existing system, which is widely considered to be one of the most effective around.

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