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Insolvency 2020: R3’s manifesto for the 2015 General Election

  • Insolvency reform needed for better deal for small businesses, taxpayers, and indebted individuals

The next government must commit to a series of reforms of the UK’s insolvency regime to ensure a better deal for small businesses, taxpayers, and financially struggling individuals, says insolvency trade body R3.

R3 is calling for reforms to: legal funding for insolvency cases, to help get money back from rogue directors to creditors; the treatment of small business creditors in football insolvencies; the government’s approach to being a creditor in insolvencies; and a comprehensive update of the personal insolvency regime.

Graham Rumney, chief executive of R3, says: “The UK’s insolvency regime is already the world’s 7th best, according to the World Bank, but there is still plenty of room for improvement. The challenges that face business and personal finances are constantly changing and it is important the insolvency regime is regularly reviewed and updated to keep pace with those changes.”

“The 2010 General Election saw a turning point in the insolvency landscape as insolvencies hit a post-financial crisis peak. 2015 could be another turning point.”

“The conditions that have helped put downward pressure on corporate insolvencies are changing; personal insolvencies are already on the rise, even before an interest rate hike.”

R3 would like to see the UK’s political parties commit to the following policies in the run-up to the 2015 General Election:

Insolvency litigation made permanently exempt from the 2012 Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act

Every year, £160m is returned to creditors (mainly small businesses and HMRC) as a result of legal action against directors of insolvent companies who have wrongly, negligently, or fraudulently taken creditors’ money.

This is only possible because of an exemption for insolvency litigation funding from the LASPO Act, which expires in April 2015. This exemption must be made permanent or millions of pounds will stay in rogue directors’ hands every year.

More money returned to small businesses from football insolvencies

The ‘Football Creditors Rule’ sees non-football-related unsecured creditors lose out in football insolvencies. A minimum amount of money (e.g. 35p in the pound over three years) should be repaid by insolvent clubs to unsecured creditors who fall outside of the Football Creditors Rule.

Greater engagement from government creditors in insolvencies

Creditor engagement can lead to higher returns in an insolvency for all creditors. Government departments, like HMRC, are often one of the biggest unsecured creditors in an insolvency but they rarely engage in the process, potentially missing out on reclaiming money for taxpayers and smaller creditors. The government must become a more active creditor.

A comprehensive update to the personal insolvency regime


The personal insolvency regime has not been reformed as a whole since 1986, so a comprehensive review is needed. Simple steps, like updating the entry requirements for bankruptcy and Debt Relief Orders, can be taken, but more can be done beyond the government’s current review.

Graham Rumney comments: “Insolvency is about striking the right balance between creditors’ and debtors’ needs. Sometimes, existing legislation and regulation can make this balance difficult to achieve.”



"These reforms are about getting small businesses, taxpayers, and indebted individuals a better deal from insolvency.”

Graham Rumney adds: “Failing to protect insolvency litigation funding, for example, would boost rogue directors at the expense of creditors – including the taxpayer and small businesses. Reforming the rules on collective redundancy could help save taxpayers’ from costly compensation payouts. Reform of personal insolvency will help indebted individuals better deal with their debts and provide more protection to creditors.”

“This government has paid plenty of attention to the UK’s insolvency regime since 2010, but there have not always been positive outcomes for debtors and creditors as a result. We hope the next government continues to treat the insolvency regime as a priority and commits to evidence-based policies with a better deal for small businesses, taxpayers, and debtors at their heart.” 

You can read R3's manifesto here.

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.