Second chance for honest business bankrupts

The Department of Enterprise, Trade and Investment’s Insolvency Service is set to look at overhauling local bankruptcy law.

Changes, outlined in a new consultation paper, will make it easier for businessmen and women who have become bankrupt, and have acted fairly and honestly within the law, to set up future businesses. At the same time, the consultation paper proposes a tougher regime for bankrupts whose conduct has been irresponsible, reckless or culpable.

A spokesperson for the Insolvency Service said: “Risk taking is part and parcel of business ventures and the creation of an enterprising culture. Businesses fail for all sorts of reasons, including unexpected events or even worldwide events.

“Sometimes people view individuals who have been made bankrupt as failures. This consultation paper is a step towards rethinking this outlook and removing the stigma of bankruptcy. The proposed changes will also come down harder on those who carry out irresponsible business practices."

The package of reforms to personal insolvency which are set out in the consultation paper includes a reduction in the discharge period for most bankrupts from the current three years to a maximum of 12 months and providing for a tougher regime of restrictions on bankrupts whose conduct has been irresponsible, reckless or otherwise culpable.

The consultation paper also outlines proposed reforms to corporate insolvency which aim to create a fairer system in which all creditors are able to participate and which will ensure that companies in financial difficulty do not go to the wall unnecessarily.

(MB)