Insolvency Practitioners and the General Election

What Should the Government Address? The View of an Insolvency Practitioner

Not only did June’s general election leave us with a minority Conservative government in a hung parliament, it also left us with uncertainty in many areas, including business. Certainly the period of uncertainty for the country will continue, especially as the Brexit negotiations have now started in earnest. However, from the point of view of Insolvency Practitioners, whether we are dealing with liquidations, or helping to turn businesses around, it is important that the UK retains its reputation as a good place to do business as well as being rated world class for its insolvency and restructuring regime. This article looks at some of the key things we believe that the government should address in the near future in relation to Insolvency and Restructuring.

Brexit and Insolvency Practitioners

In previous articles, which reflect the thinking of the Insolvency Practitioners’ industry in the UK, we have stated that we believe that the benefits of the EU’s Regulation on Insolvency and also the Recast Brussels Regulation need to be preserved. This is because these regulations allow the insolvency and restructuring profession to function across borders smoothly and effectively. Our opinion has not changed. Along with the rest of our industry, we believe that the preservation of these regulations is a vital part of the Brexit settlement.

The Framework for Corporate Insolvency

It is a concern that with a minority government, and the time pressures that the Brexit process will place on legislative time, the government’s proposals for the reform of the UK’s corporate insolvency framework might not progress with the speed we, as insolvency practitioners, would like. In particular, we look forward to the outcome of the May 2016 consultation regarding how the insolvency framework supports business rescue as far as possible, as well as the maximisation of returns to creditors.

There are further implications of Brexit as well as some international concerns. Firstly the EU’s new ‘Insolvency and Second Chance’ Directive might not apply to the UK depending upon the settlement, the implications of which are uncertain. Beyond the EU we are aware that other countries are looking to improve their own insolvency frameworks. Singapore, for example, has ambitions to become a major international hub for insolvency and restructuring. It is for these reasons that the UK’s own framework for Corporate Insolvency needs to remain competitive and up to date.

Encouraging Businesses Facing Difficulties to Seek Help and Advice Sooner

The role of the Insolvency Practitioner is evolving rapidly from one of simply reacting to when businesses become insolvent, to offering the support and advice that can help businesses to restructure and resume profitable trading.

We are aware that the government is committed to help business start ups and help existing businesses scale up through its Industrial Strategy. It hopes to achieve this by improving access to finance and the management skills that they need to improve. This we welcome, of course. At the same time, it would make sense for the government to work closely with the Insolvency industry, especially Insolvency Practitioners, to encourage existing businesses facing difficulties to seek expert advice as soon as possible. It is a fact of life that most businesses face difficulties and challenges at some stage along the way. When they do, it is important that they receive the best chance of recovery and long term survival.

Contact our Team of Insolvency Practitioners for Help and Advice

The uncertainty that the election result gave us is not good for business. However, in the areas of Brexit, the framework of corporate insolvency and the speed with which businesses in difficulties seek help and advice, as outlined above, it is clear that the insolvency profession has an important role to play.

If you or your business is facing difficulties, please contact us or call us on 0121 200 2962 for an initial chat at our Birmingham headquarters. The quicker you get in touch, the more we can do to help.