Insolvency and Corporate Governance - Law Society response
At the end of March the Department for Business, Enterprise and Industrial Strategy published a consultation on insolvency and corporate governance. The consultation put forward a number of measures to improve corporate governance in firms that are in or approaching insolvency. It also sought views on some other aspects of the wider corporate governance framework and whether these are working as they should.
In our response we say:
- Our members' experience supports the statement in the consultation that 'some company directors are able to avoid being held accountable for misconduct by allowing, or actively causing, their companies to be dissolved instead of putting the company into a formal insolvency process', and indeed we consider the practice to be widespread.
- We do not agree that there is any need to introduce new measures to deal with the sales of businesses in distress.
- We consider that the existing antecedent transaction provisions are adequate (in their current form) to respond to value extraction schemes appropriately.
- In order to learn lessons from company failings and controversies there needs to be a full and objective examination of the causes of the relevant events.