New proposals aim to promote ‘financial initiative’

New proposals published by the Government could see ‘honest’ bankrupts cleared of constraining laws only one year after declaration.

The white paper, published on Tuesday 31 July, covers issues relating to both corporate and personal bankruptcy, and attempts to draw a line between those who have set out to deliberately defraud others, and those who have fallen into financial difficulties through misfortune – termed ‘honest’ bankrupts.

Current insolvency laws dictate that those found guilty of intent to defraud are barred from doing business for 15 years, while those merely declared bankrupt are financially constrained under a variety of laws for three years before receiving discharge.

New laws proposed in the white paper would see that time limit reduced to one year in an attempt to emulate the US model of the promotion of ‘financial initiative’ although it is thought that the suggestions will come under fire for the attempt to define what constitutes ‘honest’ bankruptcy.

In addition, another white paper published on the same day outlines a plan to shift decision-making powers regarding corporate takeovers and mergers to a "strong and pro-active competition authority" instead of the incumbent minister. (CL)