The UK Insolvency Acts are part of the laws that deal with corporate governance, albeit at end-of-life for the company concerned.
Insolvency laws provide the framework and the means for dealing with financial failure in the economy and with the misconduct that is often associated with it.
The Insolvency Act 1986 relates to company insolvency and winding up whilst the Insolvency Act 2000 amends the law. The Insolvency Act 2000 amends the law about insolvency and amends the Company Directors Disqualification Act 1986.
The Insolvency Act 2000 provides for:
- Small companies in financial difficulty to make voluntary arrangements with their creditors by providing the option of a moratorium to give the firm's management time to put a rescue plan to creditors and for minor modifications to be made to the provisions relating to the existing company and individual voluntary arrangement schemes and the administration order procedure;
- The Secretary of State to recognise a body which can authorise persons to act as nominees or supervisors in company or individual voluntary arrangements;
- Changes to the procedure for disqualifying persons who are unfit to be company directors by allowing the Secretary of State to accept undertakings which would have the same legal effects as disqualification orders made by a court and for various technical amendments to be made to existing legislation in relation to disqualification;
- The procedure for reporting delinquent officers and members of a company with a view to prosecution to be changed;
Insolvency Act 1986
The Insolvency Act 1986 consolidates the enactments relating to company insolvency and winding up (including the winding up of companies that are not insolvent, and of unregistered companies); enactments relating to the insolvency and bankruptcy of individuals; and other enactments bearing on those two subject matters, including the functions and qualification of insolvency practitioners, the public administration of insolvency, the penalisation and redress of malpractice and wrongdoing, and the avoidance of certain transactions at an undervalue.
The value of a deceased insolvent's interest in jointly-owned property to be recoverable for the benefit of the insolvent estate (England and Wales only);
A power to make rules or regulations concerning the investment of funds held in the Insolvency Services Account on behalf of bankruptcy estates, and the payment of interest on such funds; and
A power to make regulations to give effect with or without modifications to the model law on cross-border insolvency which was adopted by the United Nations Commission on International Trade Law (UNCITRAL) of which the UK is a member state; and for the amendment of section 426 of the Insolvency Act 1986 (co-operation between courts exercising insolvency jurisdiction).
Enterprise Act 2002
Further amendments to the insolvency acts were made under the Enterprise Act 2002
Supervision and enforcement
The regime is supervised and enforced by the Insolvency Service.