New Insolvency Act receives Royal Assent

Citation

(2001), "New Insolvency Act receives Royal Assent", Property Management, Vol. 19 No. 2. https://doi.org/10.1108/pm.2001.11319bab.021

New Insolvency Act receives Royal Assent

New Insolvency Act receives Royal Assent

Keywords: Insolvency, Legislation

The UK Government's commitment to support viable businessess and encourage entrepreneurship was demonstrated when the Insolvency Act 2000 received Royal Assent.

The Insolvency Act will:

• •

  give small companies in financial difficulty the option of a breathing space within which to put a rescue plan (a Company Voluntary Arrangement (CVA)) to their creditors;

• •

  improve the efficiency and effectiveness of the procedure for the disqualification of unfit company directors.

The initial period of the CVA moratorium will be for 28 days. This period can be extended by up to a further two months.

The Insolvency Act 2000 makes other technical amendments to improve operation of the current provisions in the Insolvency Act 1986 and the Company Directors Disqualification Act 1986.

Competition and Consumer Affairs Minister, Dr Kim Howells, said:

I am delighted that this Act has received Royal Assent.

The new provision in the CVA procedure will help give more time to businesses experiencing short-term problems to agree a rescue proposal with their creditors.

This will stop creditors taking legal action against the assets of the company before it has had the chance to agree a solution to the problem with them.

On the speeding up of the procedure to disqualify company directors, Dr Howells added:

The power to disqualify unfit company directors is an important safeguard for consumers, to protect them and the rest of the marketplace against rogue directors.

Currently disqualification can only be achieved by means of legal proceedings and there are often delays in getting disqualification cases through the courts. The Insolvency Act 2000 provides that, where there is agreement, disqualification can be achieved administratively.

The procedure should now be more efficient and effective, ensuring that consumers and the business community are given earlier protection, in some cases at a reduced cost.

Implementation of the Act will take place when the necessary secondary legislation is ready next year.