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More safeguards for SMEs when customers become insolvent

Posted: 3rd April 2018   In: Debt Collection Services

The government has outlined plans to provide more protection for small and medium-sized businesses who supply companies that become insolvent.

It also wants to prevent directors from unfairly shielding themselves from the effects of insolvency.

Ministers say that in the worst cases, directors can even profit from business failures while workers and small suppliers lose out.

The government is considering a number of proposals including:

Business Secretary Greg Clark said: “Britain has a good reputation internationally for being a dependable place to do business, based on required high standards. This framework has been regularly upgraded and in the light of some recent corporate failures I believe the lessons should be learned and applied.

“These reforms will give the regulatory authorities much stronger powers to come down hard on abuse and to make irresponsible directors bear the consequences of their actions.”

The Insolvency and Corporate Governance proposals are now subject to a public consultation.

The government is also seeking views on new ways to protect payments to smaller firms in a supply chain which can be hit hardest when large companies become insolvent.

We shall keep clients informed of developments.

Please contact Neil O’Callaghan for more information about the issues raised in this article or any aspect of company law and insolvency.

 

Posted by: Neil O'Callaghan
Commercial Litigation
Luton Office