Question to the Department for Business and Trade:

To ask the Secretary of State for Business and Trade, whether her Department has made an assessment of the potential merits of (a) introducing measures to hold company directors to account for businesses going into administration, (b) giving employees more security by way of secured creditor status in respect of redundancy payments and arrears of pay, (c) putting in place a statutory duty on insolvency practitioners to pay out outstanding wages and notice pay as the first duty when a company ceases to trade as a result of an insolvency.

Measures to hold directors to account already exist. When a company enters administration, the administrator has a legal duty to report to the Insolvency Service on the directors’ conduct. The Insolvency Service may seek the directors’ disqualification where there is evidence of their misconduct, and it is in the public interest. Potential criminal offences are referred to the appropriate authority.

To ensure fairness, the law requires that available funds in an insolvency are distributed in a certain order and Government has no current plans to change this.

As part of their statutory duties, Insolvency Practitioners must provide necessary information to the Redundancy Payments Service to facilitate the processing of employee claims when their employer enters insolvency.

The Government recently announced a strengthening of the Insolvency Practitioner regulatory framework aimed at increasing transparency and bolstering confidence in regulation.