Changes to the legislation on insolvency contained in the recently enacted Small Business, Enterprise and Employment Act 2015 may affect directors of companies that become insolvent.
The changes, which will be implemented over the next year or so, include two new grounds for disqualifying a person from being a director of a UK company and broaden the range of review of the past conduct of a director and the ‘harm done’ as a result of an insolvency.
What will be particularly worrisome for directors, and which should be of particular concern to those – including non-executive directors – who do not take an active and inquiring role in the management of the company, is that the Secretary of State will have enhanced powers to make directors personally responsible for losses suffered by creditors in appropriate circumstances.
The Government has also made it known that it will consider implementing changes that will affect ‘pre-pack’ sales of insolvent companies if voluntary measures currently in place do not prove to be successful in curbing abuses.
A number of other changes to insolvency law are to be brought into effect over the next several months.
What follows below is a snapshot of some of the more important ones.