Posted by Stewart Wilkinson, Partner
On 1 September 2016 Withy King LLP merged with Royds LLP. The trading name for the merged firm is Royds Withy King. All content produced prior to this date will remain in the name of the firms pre-merger.
New insolvency rules take effect
Major changes to the insolvency process for both businesses and individuals were introduced on October 1st.
A shake-up of the rules aims to make it easier for those who have found themselves in financial difficulties to get access to Debt Relief Orders (DROs).
As part of the changes, the maximum sum that can be covered by a DRO has risen to £20,000 (previously it was just £1,000.) In addition, the amount of assets the debtor is able to have will more than treble to £1,000.
There will also be a significant increase in the minimum debt for which a creditor can ask a person to be declared bankrupt.
Under the old arrangements the minimum amount was £750, but this figure was set in the mid-1980s and the insolvency body R3 had been campaigning for many years for an increase.
Following the changes, someone will have to owe £5,000 before creditors can apply to the courts, which is expected to mean a sharp fall in the number of people who owe smaller sums being declared bankrupt.
Other changes will apply to company directors, with wide-reaching new rules concerning disqualifications and an increase in the maximum length of time between a company becoming insolvency and the Secretary of State being able to seek disqualification proceedings.
Giles Frampton, from R3, welcomed the new system, arguing that some of the changes were long overdue.
“We are really pleased the Government has listened to the concerns of the insolvency profession and others about Debt Relief Orders and bankruptcy,” he said.
At Royds our dispute resolution team has a wealth of experience representing clients in cases involving complicated insolvency laws. For more information please visit or contact Stewart Wilkinson or Ashok Patel.
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