Fines for 'profiting from insolvency'
The UK government said it will move forward with plans to punish directors who fail to safeguard their workers from the effects of a company's bankruptcy.
New powers announced yesterday will be given to the UK Insolvency Service, including the ability to issue fines or even disqualifications to company bosses if they are found to have tried to avoid paying a dissolved company's debts.
"Some recent large-scale business failures have shown a minority of directors are recklessly profiting from dissolved companies," the government's minister for small business Kelly Tolhurst said in a statement. "This can't continue."
The plans, proposed in March, follow some high-profile collapses, including Carillion in January, which left ministers grappling to salvage tens of thousands of jobs and public-private contracts affecting schools, hospitals, roads and military facilities. .
Under the new rules, directors could be disqualified from managing companies for as long as 15 years if their conduct during a corporate insolvency is found to be "unfit".
Stuart Frith, president of insolvency trade body R3, welcomed the plans and said it would address the issue of directors "deliberately dissolving businesses to avoid paying their debts". (Bloomberg)