The Insolvency Service (IS) has published a consultation paper on reforming debtor petition bankruptcy and early discharge from bankruptcy. The proposed reforms, which are aimed at speeding up the procedure and lowering costs, are to:

Where "prejudice" is suffered by a creditor or contributory, the court can order a compulsory liquidation despite a voluntary liquidation having already been entered into.

In these uncertain economic times, sellers often find themselves concerned about receiving payment for goods sold. More and more businesses are suffering cash flow problems often as a result of their own customers becoming insolvent. Demanding payment up front is simply not a commercial reality for most businesses. Businesses can find themselves living in fear of one of their larger purchasers reneging on payment due to a lack of cash flow or insolvency. The knock-on effects of such an occurrence may be devastating to the seller.

On 9 November, the PPF published proposals for the 2011/12 pension protection levy year which aim to improve the way the insolvency risk for sponsoring employers is assessed. The proposals reflect industry feedback and a review of methodology and insolvency probabilities carried out by Dun & Bradstreet (D&B).

The key changes include:

Following concerns expressed by the Insolvency Service and reports showing that corporate insolvency costs are higher in the UK than other European countries, the Office of Fair Trading (“OFT”) has announced that it will conduct a market study into the UK corporate insolvency market. The study will also look into the process for appointing insolvency practitioners. The OFT will be contacting key players in the market directly, and other interested parties are invited to make submissions.

Market studies

Independent Trustee Services Ltd (the trustee) was the sole trustee of the Ilford Pension Scheme (the Scheme), which was underfunded when the sponsoring employer went into administration in 2004. There was a proposal that the trustee should buy out certain benefits for members of the Scheme, for whom no Pension Protection Fund (PPF) compensation would be available, before the Scheme entered an assessment period.

The Court of Appeal handed down its decision on 6 November 2009 upholding the High Court decision that a scheme of arrangement is not an appropriate mechanism by which the administrators of Lehman Brothers International (Europe) (LBIE) can return assets to LBIE’s clients.

The Office of Fair Trading ("OFT") has announced that it will conduct a review of the corporate insolvency market in the UK. Its aim is to assess the level of competition in the UK market and ensure that the market itself is working well for consumers.

Following an informal consultation in late 2008, the DWP is now consulting formally about changes to the Employer Debt Regulations made under s75 Pensions Act 1995. The consultation document can be found at www.dwp.gov.uk/consultations/2009.

The main proposed changes are intended to facilitate corporate restructurings, but other changes are designed to address some technical problems with the Regulations.

Corporate restructurings

In a much anticipated judgment the Court of Appeal has clarified the position regarding the anti-deprivation rule.