Insolvency Courts

Chapter 15 focuses on the way in which the courts handle insolvency proceedings in England and Wales, and makes proposals in relation to the latter.

What are the principles of Insolvency jurisdiction?

The report identifies a number of principles of the adjudication of insolvency claims. These include

• Regard must be taken of the social and commercial complexities that insolvency creates.
• The jurisdiction must be of universal application.
• The courts must enjoy a wide jurisdiction.

Qualification requirements

The report identifies that insolvency practitioners carry out their duties in a manner which gives cause for concern. It criticises the qualification requirements for becoming a practitioner. It draws on the Blagden and Jenkins committees’ recommendations on the qualification requirements, a number of qualifications under consideration, and the case against change.The committee concludes that some form of control is necessary, since the system is too open to abuse.

The position in Canada, New Zealand and Europe is also highlighted.

The report proposes that the current system disqualifies certain classes, while requiring a certain minimum qualification such as

• Membership of a professional body with a code of ethics
• The existence of a disciplinary body
• A minimum five years experience.
• An optional insolvency exam.
• Approval by the Department of Trade
• Insurance against fraud, dishonesty and professional negligence by in both compulsory winding up, and in appointments which are not appointed by the courts.

Disqualification

The report suggests disqualifying the following categories of persons from acting as practitioners

• Anyone against whom an insolvency order is in existence
• Anyone prohibited from acting as a director of a limited company
• A body corporate
• Officers of the debtor company
• Employees or ex-employees of the debtor
• A creditor

Joint appointments with specialists should be with a qualified insolvency practitioner.

The report recommends a number of disqualifying criteria, and suggests that it also applies to liquidators in voluntary winding up procedures.

 

 

Chapter15