In its latest manifesto, R3 look to the next government to continue to improve the UK’s insolvency regime. The number of insolvencies during the coalition government has been low, but R3 foresee a change in the economic climate that could lead to a sudden increase in the number of insolvencies in 2015.

“Low interest rates are due for a rise, and the economic recovery is no longer stuttering. These shifts will put pressure on businesses’ finances and will encourage creditors – who have so far been unusually tolerant – to get tougher on debts. Even without a rise in interest rates, personal insolvencies are already climbing again. The country’s mountain of personal debt shows no sign of becoming more affordable any time soon.”

Unfortunately, many of these cases may no longer benefit from the CFA success fee and ATE insurance premium recoverability rules, which are due to expire on the 1st April 2015. At TheJudge we are working with a number of IPs and insolvency lawyers to obtain sign-off from ATE Insurers at an earlier stage than insurers would usually prefer, in a bid to ensure as many of the pipeline cases can benefit before the rules change.

The Insolvency 2020 manifesto sets out the insolvency reforms that the R3 would like to see all political parties to commit to.

A better deal for small businesses

Taking small businesses’ and taxpayers’ money back from rogue directors.

R3 say that Small businesses and HMRC will lose millions of pounds a year from April 2015 unless changes are made to the 2012 Legal Aid, Sentencing and Punishment of Offenders Act (LASPO).

“Government can stop rogue directors from keeping money that is owed to small businesses and HMRC by providing insolvency litigation with a permanent exemption from the 2012 LASPO Act.”

This comes after a recent statement from MP Shailesh Vara in response to a question from Shadow Justice Minister, Andy Slaughter, to the effect that the exemption will end in 2015 and that the government are relying on their existing impact assessment . Frances Coulson, insolvency lawyer and Managing Partner of Moon Beaver, states that the government should not rely on the impact assessment from April 2011. Coulson says “there is a glaring omission in their impact assessments in relation to insolvency litigation and no follow up impact assessment on the intention to take positive steps to remove the current insolvency exemption”. Coulson then goes on to say that the Walton Report commissioned by R3 is the only report that assesses the impact of recoverable ATE premiums and CFA success fees . As such there still seems to be some ambiguity as to whether the exemption will be revoked.

Greater engagement from government departments in creditor committees.

R3 believe this would help return more money to the taxpayer and should help other ‘unsecured creditors’ (such as small businesses) get a better outcome from an insolvency.

A better deal for the taxpayer

Resolving the conflict between employment and insolvency law in collective redundancies. R3 has proposed changes to the consultation process that would help resolve the conflict between insolvency and employment law, and urges the government to take steps to resolve the issue.

Greater engagement from government departments in insolvency cases
Personal insolvency solutions fit for 21st century personal debt

A full review of the personal insolvency regime. As part of that review, R3 would like to see specific changes including an increase to the creditors’ bankruptcy petition threshold and updated entry requirements for Debt Relief Orders and bankruptcy.

To read the full R3 Insolvency 2020 manifesto click here