Corporate Rescue and Insolvent Trading
This report published in 1996 was the second part of the Commission's review of insolvency law. It recommended the introduction of a new corporate rescue procedure known as provisional supervision with the aim of rescuing viable companies as an alternative to winding-up.
Under the scheme, a company could initiate provisional supervision by obtaining the protection of the court against any proceedings for an initial period of 30 days. During that time a qualified professional, the provisional supervisor, would attempt to put together a proposal for a voluntary arrangement to be entered into by the company and its creditors. The provisional supervisor could apply to the court for extensions to the moratorium for up to six months from the start of the provisional supervision.
The report also proposed the introduction of a new concept of insolvent trading. The liquidator could take proceedings against those directors of the company who had allowed the company to trade while it was insolvent. Directors found to have failed in their duty to prevent a company trading while insolvent could be personally liable to pay compensation to the company.
|Report (PDF) (MS Word)|