Business groups call on government to scrap legal reforms that will cost businesses and taxpayers £160m per year

There have been warnings from Business groups, including accounting and insolvency bodies, the institute of Credit Management, and the British Property Federation, that government legal reforms could cost creditors over £160 million per year from next April – with rouge directors being the big beneficiaries.

Six influential business groups have signed and sent a letter to the Prime Minister, David Cameron and Justice Secretary, Chris Grayling, outlining their concerns and calling for the government to scrap the planned change.

The letter highlights the planned changes and describes them as being “anti-business, will increase tax avoidance and evasion, and will benefit directors of insolvent companies who have committed fraud or behaved recklessly.”

From April 2015, insolvency litigation will no longer be exempt from the crackdown on ‘no-win, no-fee’ legal funding introduced by 2012 reforms. This type of funding is often the only way creditors can afford to pay for court cases to retrieve money from rouge directors that have wrongly taken money out of a failed business.

Under the current system, successful claims see both creditors’ debts returned and the rouge director charged for the cost of the court case.

Source: www.r3.org.uk

Find us on Google