In March of this year, the Insolvency Service announced the introduction of two acts: Small Business, Enterprise and Employment act 2015 and the Deregulation Act 2015. Both of these acts make amendments which ‘strengthen and modernise’ the insolvency regime. Many of these measures are effective as of 01 October 2015.
Notable effects of this legislation are as follows:
- The Secretary of State will no longer directly authorise Insolvency Practitioners (IPs), they will instead now be authorised by Recognised Professional Bodies however if the Secretary is not satisfied that the Professional Body is fulfilling its role as a regulator correctly, they maintain the power to step in and sanction an IP where it is in the best interests of the public.
- IPs are now also eligible for partial authorisation, so may only be authorised to act solely for businesses or for individuals, you should be mindful of this when passing a case to an IP you have not used previously.
- It has been held that banks will not be held accountable if a customer withdraws funds from an account after being declared bankrupt if they have not previously been made aware. In return for this, banks have reportedly agreed to offer basic banking facilities to bankrupt individuals.
- A disqualified director of a business could be required to pay the amount of money that a creditor has lost as a result of his or her misconduct. Additionally, compensation may be sought for misconduct occurring on or after 01/10/2015.
- Debt Relief Order limits and creditor petition level limits have increased as follows:
- The maximum level of debt an individual can have will increase from £15,000 to £20,000
- The maximum level of assets an individual is allowed under a DRO will increase to £1000 from £300 (This is not to include the vehicle of a vehicle, which is to remain fixed at £1000)
- The Bankruptcy petition level is to increase from £750 to £5000 in order to remove the risk of bankruptcy and the costs involved from those with small debts.
- Liquidators are now required to provide a fee estimate detailing costs, rates and predicted expenses in completing the liquidation prior to the commencement of the liquidation. It is vital that creditors are given sufficient time to make an informed decision as to how reasonable they feel the estimated costs are
Should you need help or advice regarding insolvency matters, debt solutions, Debt Relief Orders or any other topics mentioned in this article, please do not hesitate to contact us here.