The Insolvency Service has launched a consultation which could see the roll of insolvency practitioner reduced and the courts become more involved.
The consultation proposes to give company directors a ‘restructuring moratorium’ to provide businesses with ‘breathing space’ to negotiate with creditors.
Applications are to be made in court where creditors can be represented then insolvency practitioners would be involved in ‘key stages’ of the application process. However, their role has yet to be decided.
The government agency is going to allow companies three months to negotiate a repayment deal. The restructuring moratorium could effectively prevent creditors taking any action against a company such a petitioning a winding up order or a landlord repossessing premises.
Edward Davey, the minister responsible for the insolvency service, said that he ecouraged anyone in restructuring to ‘study’ the proposals set out in the consultation.
The changes to the insolvency process in the UK will make it similar to the administration process, US Chapter 11 scheme. US insolvencies are generally overseen by the courts, as opposed to the UK where they are overseen by insolvency practitioners.