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Insolvency & Business Recovery

The recent months have seen a dramatic increase in cases involving personal debt problems and financially distressed businesses. The Government has responded positively and constructively by modernising the insolvency law, which focuses on rehabilitation in preference to financial demise.

An individual with a debt problem has the chance to avoid bankruptcy and make a fresh start by utilising the individual voluntary arrangement procedure (IVA) . Even if he/she has to go into bankruptcy, there is now less stigma attached to that status and he/she would normally get his/her discharge from bankruptcy at the end one year from the date of bankruptcy.


A company in financial difficulties can avoid going into liquidation and extinction by having recourse to alternative procedures. For example, it can go into administration. This procedure would keep its creditors at bay and thus provide the company with vital breathing space within which to try to work out a plan for an orderly recovery of its business, whether by a consensual debt re-scheduling arrangement with all the creditors (Informal Rescue) or by means of a formal procedure such as company voluntary arrangement (CVA) or a scheme of arrangement (SoA) under which a specified majority of creditors can override the dissenting minority. Alternatively, the company can attempt a free-standing CVA or SoA direct without first resorting to administration, depending on the circumstance.

However, these new privileges carry with them new responsibilities for individual debtors and company directors. They are expected to conduct themselves with the requisite degree of diligence and to observe certain standards of commercial morality in the conduct of their financial affairs, with due regard to the interests of their creditors as a whole. If they fail to do so, they could face civil and criminal sanctions in the event of their formal insolvency. On the civil side, an individual could face a bankruptcy restriction order (BRO) or a bankruptcy restriction undertaking (BRU); and a company director could face a director disqualification order (DDO) or a director disqualification undertaking (DDU) in addition to a financial claim for management malpractice, such as fraudulen t trading , wrongful trading, misfeasance or negligence . It is therefore important that individual debtors and company directors seek competent independent legal advice as soon as problems loom even in the distance and do not leave it until the problems are upon them. Besides, the earlier the advice is sought the greater would be the chances of success of one of the rehabilitative procedures mentioned above.

It is not just individual debtor and corporate debtors in distress and their directors that we advise. We also advise creditors who may be concerned about the recoverability of the debts owed to them by a debtor in distress.

The voluminous law of insolvency has become quite a complex area requiring specialist skills. We at PKP French have these skills in all the areas highlighted in bold above.