StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Does Insolvency Law Need Reform - Essay Example

Cite this document
Summary
Name: Instructor: Course: Date: Does Insolvency Law Need Reform? Introduction Time and again, companies face financial difficulties that threaten to lead such investments into closure. This should not be allowed to unnecessarily take these companies that are faced with financial difficulties to the wall…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.1% of users find it useful
Does Insolvency Law Need Reform
Read Text Preview

Extract of sample "Does Insolvency Law Need Reform"

Download file to see previous pages

This method is considered by many as outdated. Over the previous few years, laws have been enacted that are aimed at reforming insolvency laws in some of these countries such as the U.K., Germany, and France1. This essay looks at and analyzes some of those proposals, enactments, consultation reports, and reviews as regards to the insolvency law so as to ascertain whether this law is fit for the purpose as it currently is. In so doing, measures will be solidly detailed that are meant to offer struggling, but feasibly viable ventures a chance of working their way out of such difficult situations.

Discussion The promotion of company rescue customs began with the work of the Cork committee which recommended disposal and continuation of a debtor’s business as a going concern and was bolstered by the Insolvency Act, 1986 which recommended administrative take-up through procedures outlined in the Administration and Company Voluntary Arrangement (CVA). Subsequently, there have been increasing outcries from different quarters regarding the inability of this act to ensure successful administrative receivership without causing unnecessary closure of otherwise viable companies.

In addition, questions have been asked of whether administrative receivership provides for acceptable and better levels of accountability and transparency to all the stakeholders in the said business, most importantly, creditors. For these reasons, the U.K. government embarked on putting into place mechanisms that will not only ensure successful administrative receiverships, but also the balance of the insolvency law to be debtor-friendly and creditor friendly. Most of these law reviews, consultations, and proposals have aimed at exploring ways in which the government have attempted and should attempt to better develop the insolvency law and practice so that where company rescue attempts are made, all those with a stake in the company being rescue, benefit from such a process.

This ensures that economic and fiscally viable companies survive in the long-run. Creditors are also guaranteed higher and better returns. The challenge, however, is whether the balance in the insolvency regime of the U.K. should be shifted to being debtor- friendly as well rather than being only creditor-friendly. In 2002, the U.K. government enacted the Enterprise Act of 2002 which was the advent of a new corporate insolvency law regime. This was entirely bolstered by the consideration by many that the then insolvency law era was not equitable and adequately rescue-oriented.

In order to change that, the Enterprise Act of 2002 implements several modifications and changes to that era. According to the UK Secretary of State, Trade and Industry, Patricia Hewitt, the enterprise act of 2002 will empower consumers and strengthen competition through radical reforms of the law of competition, corporate rescue and bankruptcy. At the same time, new safeguards for consumers will be promoted. According to the Enterprise Act, 2002, several measures aimed at reforming and restructuring corporate insolvency were introduced.

These included an administration procedure that is streamlined in a way that it could be accessible and efficient so as to ensure successful rescue of viable ventures. Secondly, the administrative receivership is abolished to a certain extent2. Finally, the act also introduced measures that would ensure

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Does Insolvency Law Need Reform Essay Example | Topics and Well Written Essays - 1000 words”, n.d.)
Retrieved de https://studentshare.org/law/1447089-does-insolvency-law-need-reform
(Does Insolvency Law Need Reform Essay Example | Topics and Well Written Essays - 1000 Words)
https://studentshare.org/law/1447089-does-insolvency-law-need-reform.
“Does Insolvency Law Need Reform Essay Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/law/1447089-does-insolvency-law-need-reform.
  • Cited: 0 times

CHECK THESE SAMPLES OF Does Insolvency Law Need Reform

Agency Theory and Corporate Governance

Many researches suggested that apart from the prevailing concept of Agency Theory in almost all the corporations we also need to focus and investigate regarding different key corporate governance mechanism.... Critique and analysis: Insolvency is a very important aspect of law or any company and there are many case laws on this particular aspect.... It has been proved that the concept of corporate governance can help people who does the right thing but unaware about the right way ahead....
8 Pages (2000 words) Essay

Insolvency Law: Wrongful and Fraudulent Trading

insolvency law: Wrongful and Fraudulent Trading This paper analyzes the problems attending the ambiguity implicit in the duties and liabilities relative to fraudulent and wrongful trading pursuant to the Insolvency Act 1986.... However, the law mandates that they become singularly focused on the interests of creditors.... Directors' duties arising under the insolvency Act 1986 are best described as an extension of directors' ordinary duties....
8 Pages (2000 words) Essay

Caja Mediterrneo Bank Insolvency

In the paper “Caja Mediterráneo Bank insolvency” the author analyzes a savings bank located in Spain that had to be sold to Banco Sabadell for one Euro.... Caja Mediterráneo was a non-profit social institution, which had benefited more than five, 100, 000 people from its social commitments....
8 Pages (2000 words) Case Study

The Difference between Partnerships and Private Companies in Relation to Debt Liability

Since a partnership is based upon a contract (usually a formal partnership agreement), any repudiatory breach of contract could lead to dissolution as it is based on common law contractual rules.... One of the key differences is the way in which a partnership can be wound up.... Firstly the partnership must come to an end (dissolution)....
9 Pages (2250 words) Essay

Insurance regulation

Three issues are important for researching the - Broadly speaking, ‘insolvency' means inability to pay creditors.... To clarify definitional matters and to set out common terminology, it is necessary to distinguish between (1) balance sheet insolvency; (2) cash flow insolvency (or financial distress); (3) economic failure (or economic distress); (4) liquidation; (5) reorganization; and (6) insolvency proceedings or bankruptcy....
33 Pages (8250 words) Essay

Law Business Organisation

?                                                                                                 2    The section 33 (a) of insolvency Act 1986 state s that a liquidator is appointed, probably by court, to handle some issues concerning the company....
7 Pages (1750 words) Essay

The Difference between Partnerships and Private Companies

hellip; Since a partnership is based upon a contract any repudiatory breach of contract could lead to dissolution as it is based on common law contractual rules.... The paper 'The Difference between Partnerships and Private Companies' focuses on Partnerships which can be formally wound up either by the partners or under the Partnership Act 1890....
9 Pages (2250 words) Assignment

The Duty of Directors in Protecting the Interests of the Creditors

hellip; The author states that with regards to the duty of directors to protect the interests of the business creditors and its relationship to wrongful trading, the role and responsibilities of the board of directors will first be tackled followed by discussing the nature and the rationale behind the need to include the protection of the creditors.... p by 56%, as compared to the first quarter report in 2008, the insolvency Service statistics revealed that there were 4,941 compulsory liquidations and creditors' voluntary liquidation throughout England and Wales during the first quarter of 2009....
48 Pages (12000 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us