Does insolvency legislation support the stakeholders in the insolvency profession?

Caroline Clark, director of RMCSC and a fellow of the Insolvency Practitioners Association and R3, looks at some of the issues surrounding current insolvency legislation in the UK.

UK Insolvency Law

What is the role of an insolvency practitioner?

An insolvency practitioner, sometimes referred to as an ‘IP’, is licensed and authorised to act on behalf of insolvent companies and individuals.

Insolvency practitioners are responsible for important procedures that are necessary for the efficient functioning of a western economy in the 21st century. These procedures are subject to legislation that affects not only the insolvency practitioners but other stakeholders, including creditors, debtors, consumers, directors, employees and the government.

Which legislation regulates insolvency in the UK?

Bankruptcy Act 1914

The earliest insolvency legislation in the twentieth century was the Bankruptcy Act 1914 (BA14), which brought together a number of earlier statutes all relating to personal insolvency which, at the time, inevitably meant bankruptcy. The Companies Act 1948 applied many of the principles of BA14 to corporate insolvencies, while gaps in the legislation were filled in by case law.

Insolvency Act 1986

With BA1914 solely for individuals and limited legislation regarding corporate insolvencies, this less-than-ideal situation continued until the introduction of the Insolvency Act 1986 (IA1986).

The first insolvency legislation for more than 70 years, IA1986 combined the insolvency legislation for individuals and companies with financial problems and introduced new insolvency procedures; voluntary arrangements for people and companies together with administrations for companies. IA1986 also introduced new statute, such as that for antecedent transactions and wrongful trading that assists insolvency practitioners in their investigative work and in taking legal action against directors.

Since IA1986 there has been much new insolvency legislation. Legislation such as the Limited Liability Partnerships Act 2000 (that dealt with insolvency situations not included in existing legislation) or the Enterprise Act 2002 (that brought in a more efficient administration process) has been welcomed by all insolvency stakeholders.

Corporate Insolvency and Governance Act 2020

The Corporate Insolvency and Governance Act 2020 is another very good example of insolvency legislation brought in and then amended because of specific circumstances, namely to deal with the circumstances resulting from the COVID-19 pandemic. It gave much needed support to companies affected adversely by the lockdown and introduced new insolvency procedures; moratoriums and reconstructions.

What issues are there with insolvency legislation in the UK?

However, there are some other recent legislations that do not fit so easily into other insolvency legislations and procedures. For example:

FSMA Order 2014

The regulation of insolvency practitioners builds trust. As such, insolvency practitioners have been regulated since 1994. However, no explanation has been given as to why it was not possible to expand existing regulation to include pre-appointment advice to people with financial problems after the introduction of FSMA Order 2014.

By introducing new FCA regulation that only affected some insolvency practitioners, namely those who give advice to people with financial difficulties, FSMA Order 2014 effectively divided the insolvency profession into two groups:

  • those who deal with corporate insolvency and bankruptcy
  • those who deal with consumer debt leading to individual voluntary arrangements

Before 2014, most office holding insolvency practitioners had a variety of corporate and individual appointments. However, since 2014 insolvency practitioners increasingly specialise either in corporate insolvency and bankruptcies or in individual voluntary arrangements (IVAs). Insolvency practitioners in these two groups are regulated differently and the insolvency profession seems increasingly divided.  


More recently, ARDACR2021 has been drafted in such a way that it is difficult to assess how effective it will be. The sale of assets by an insolvency practitioner to a director or person connected to an insolvent company has always been viewed with concern by all stakeholders. No insolvency practitioner would argue with the need for high standards of professional care and competence when considering an offer for assets from a connected person.

Sales to connected persons may be made in liquidations, voluntary arrangements, bankruptcies and administrations, but ARDACR2021 only requires offers from connected persons in administrations to be reviewed by an evaluator or to be approved by creditors.


If insolvency legislation is not consistent there is a risk that insolvency practitioners and other stakeholders may start to make decisions about insolvency procedures based on the convenience or complexity of the processes involved rather than which type of insolvency is appropriate for the circumstances of the company or person involved.

It took 70 years for insolvency legislation to move away from statute applying solely to people with financial difficulties and separate legislation written for all aspects of corporate management including insolvency. The very comprehensive IA1986 combined all insolvency procedures and introduced new statute to reflect the requirements of the latter half of the twentieth century.

Since IA1986 there has been a variety of legislation, including ARDACR2021, that has resulted in different legislation for the same process in different insolvency procedures, and FSMA Order 2014, that could have contributed to a division between personal insolvency and corporate insolvency.

Much excellent insolvency legislation has been introduced since 1986 and this should not be ignored. This legislation recognises the need for comprehensive change and has taken a holistic approach to the wider impact of the legislation and introduced new procedures that recognise the requirements of all stakeholders.

Where can I see insolvency notices in The Gazette?

The Gazette is the primary source of both corporate insolvency and personal insolvency information in the UK and publishes this information in the form of insolvency notices, allowing transparency for the public, the credit industry and concerned individuals to quantify risk and inform creditors. You can view all corporate and personal insolvency notices on The Gazette website.

The Gazette also provides a data service which gives access to official intelligence on all UK businesses, corporate and personal insolvencies. Benefits of The Gazette’s data service include:

  • Bespoke reports - tailored around your specific business
  • Geo-targeted editions - available for specific geographical targeting (National, London, Belfast, Edinburgh)
  • Custom filters - specific custom attributes (company number, notice type, key terms)
  • Data at regular intervals - delivered at a rate to match your business needs (daily, weekly, monthly)

For more information on The Gazette’s data service, contact the team on 01603 985949 or email

About the author

Caroline Clark is director of RMCSC, a fellow of the Insolvency Practitioners Association and R3, and has an MBA. She established RMCSC in 2013, providing consultancy advice for insolvency practitioners about compliance with insolvency and anti-money laundering legislation.

See also

What you need to know about Corporate Insolvency and Governance Act 2020

The continuation of supplies during insolvency proceedings

How will The Administration Regulations 2021 affect the sales of assets in administrations?

Insolvency practitioners' remuneration following the introduction of the new SIP 9

Find out more

Bankruptcy Act 1914 (Legislation)

Companies Act 1948 (Legislation)

Insolvency Act 1986 (Legislation)

Limited Liability Partnerships Act 2000 (Legislation)

Enterprise Act 2002 (Legislation)

Corporate Insolvency and Governance Act 2020 (Legislation)

The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2014 (Legislation)

The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 (Legislation)

Image: Getty Images

Publication date: 16 September 2021

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.