The bill includes a number of measures the government has been consulting on as part of the Red Tape Challenge and a recent consultation on insolvency regulation. We very much welcome the majority of the proposals which aim to update existing legislation. Indeed, proposals to simplify reports on director conduct in insolvencies is an area where we have been campaigning for reform for a number of years.
However, R3 is concerned about the measure to abolish the requirement to hold creditor meetings. This proposal goes against the government’s objectives for encouraging engagement and transparency with creditors and could undermine confidence in the insolvency regime. We strongly urge the Government to reconsider this proposal.
The measure to enable the Government to have a reserve power to legislate on pre-packs in a connected party sale should the Teresa Graham recommendations not be adopted by the market was expected. However with the Graham measures only just published, the profession and creditor community must be allowed enough time to review and implement the proposals before any such power is enforced. As Teresa Graham identified, pre-packs benefit the UK economy and are a valuable tool in business rescue. Any legislative changes should take care not to undermine that value.
Restructuring and insolvency