Insolvency Service: Consultation to ‘streamline’ process for bankruptcy and company winding up

The Department for Business Innovation and Skills’ Insolvency Service have today presented an awaited consultation paper proposing to streamline the bankruptcy and compulsory winding-up application process.

The Insolvency Service said: “The Government wants to see a more efficient service for all concerned, saving time and money when businesses and consumers get into trouble, and delivering better outcomes for both creditors and debtors.  It could mean some debt cases would not need to go before the courts (emphasis added).

Whilst the electronic submission of petition applications is entirely sensible, the consultations’ real headline is an absolute and unexpected innovation (not a ‘streamline’ at all) in seeking to appoint an ‘Adjudicator’ (of the Insolvency Service) to process insolvency applications as opposed to judicial oversight by a Registrar (of the Companies Court).

This appears to be an attempt to remove the Court from the process in large numbers of bankruptcy and winding up petitions. The proposal is that where there is no dispute between the parties (which it seems is only revealed by a defended petition), the Court would be completely removed from the bankruptcy or winding up process which in effect would become somewhat automated and lacking discretion.

We act regularly for individuals, partnerships and companies facing petitions (and for parties who bring such petitions) and we are dismayed that judicial scrutiny in these matters is being intimated as unimportant when in fact it is paramount. Those who exercise the power to petition for the winding up of businesses or the bankruptcy of individuals should have their actions judicially monitored and scrutinised and those who face such petitions ought to enjoy full access to the body of legal remedies and rights of redress available via the Courts.

The consultation period will run for 12 weeks, and the closing date for responses is scheduled to be 31 January 2012. You can write to your MP about these proposals and respond directly to the consultation by letter, fax or email to:

Maria Isanzu, Policy Directorate, The Insolvency Service, Zone B, 3rd Floor, 21 Bloomsbury Street, London WC1B 3QW.
Tel: 020 7291 6733 | Fax: 020 7291 6746 | Email: [email protected]

Are you facing a Winding-Up or Bankruptcy Petition? Our Insolvency Experts are able to give specialist legal information and advice in this area of law. To contact one of our Solicitors or Barristers for a free consultation please click here or call 0845 8622 529.

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