It will soon be more important than ever to seek professional insolvency advice before entering corporate insolvency, as the Small Business Act has been granted royal assent.
Several of the measures in the Small Business, Enterprise and Employment Act 2015 are aimed at corporate insolvency, and they generally raise the risk associated with company liquidation.
For instance, it will be harder to transfer assets out to a connected company, as has historically been a popular component of so-called pre-pack administrations.
Insolvency practitioners’ fees will need to be fixed upfront, meaning any unexpected increases in the amount of insolvency advice you need can only be paid for if your creditors agree.
And if a director is shown to have driven their company into corporate insolvency through misconduct, they could find themselves personally liable for the costs incurred by creditors.
The new regime is very much in favour of creditors, compared with how things have been in the past, and that inevitably works to the disadvantage of firms going into company liquidation.
If you have concerns about any of the measures in the Small Business Act 2015 – and if you are about to embark on formal insolvency proceedings, you probably should be at least slightly concerned – contact our insolvency experts to help work out how you might be affected.