Research and analysis

Confidence in the Regime 2022 to 2023 - creditors, legal professionals, directors and academics

Updated 14 April 2023

Applies to England, Scotland and Wales

1. Executive Summary

Background and methodology

In September 2021, The Insolvency Service (INSS) published its five-year (2021-26) strategic plan with clear aims to develop the organisation further[i]. A key plank of the strategy is having an insolvency regime that works effectively for all its stakeholders and gives confidence to those that invest and do business in the UK. To track progress against this strategic ambition, it is desirable to assess stakeholders’ confidence in both the insolvency and enforcement regimes.

In 2021/22, INSS commissioned IFF Research to undertake qualitative research to measure Insolvency Practitioner (IP) and debtors’ confidence in the insolvency and enforcement regimes[ii]. This involved semi-structured interviews with IPs and debtors who had been through a debt relief order, individual voluntary arrangement, creditors’ petition bankruptcy, or debtors’ application bankruptcy. This research builds upon the previous qualitative project and seeks to baseline confidence amongst a wider group of stakeholders.

In total, 45 semi-structured interviews were conducted with creditors, academics, legal professionals, and directors to develop a baseline assessment and determine if the two regimes are perceived to be:

• Fair;
• Efficient;
• Effective; and
• World Leading.

Stakeholders were also asked to give a high-level quantitative confidence score for both the insolvency and enforcement regimes at the end of their interviews. This reflected their overall confidence after considering all that had been discussed on the regimes fairness, efficiency, effectiveness and whether it was world leading.

The stakeholders that provide a baseline for this research are:

• Creditors: who are people generally defined as ‘one to whom another person owes money’;
• Directors: who are people (together with the other directors who form the board of directors) who are responsible for the management of a company. This group has been broken down in this report as follows:
  • Insolvent Directors: Directors whose companies have entered administration, compulsory liquidation or a Creditors’ Voluntary Liquidation (CVL);
  • Solvent Directors: Directors of solvent companies; and
  • Disqualified Directors: Directors who have been disqualified via a court order or voluntary undertaking[iii].
• Legal professionals: predominately restructuring and insolvency lawyers, who act for clients (either individuals or companies) in financial difficulties. Restructuring is usually the first stage in the process of agreeing a way forward with creditors in order to manage repayment of the debt, without the client becoming insolvent; and
• Academics: who specialise in insolvency for individual people (“natural persons”) or in corporate insolvency e.g. for businesses / companies.

In addition to measuring and setting a baseline of confidence in both the insolvency and enforcement regimes, the research had a secondary aim to capture the perceived brand presence of INSS. INSS sought to capture stakeholder opinions on four areas relating to the Authority’s brand presence, based upon guidance from Qualtrics[iv]:

• Brand awareness;
• Cognitive;
• Emotional; and
• Action-based understanding.

Overall findings

Overall Confidence in the regimes

Overall, the confidence of stakeholders in the insolvency and enforcement regimes is mixed both across and within stakeholder groups. The high-level scores across all stakeholder groups ranged from 0 to 9 (out of 10) for the insolvency regime and 0 to 9 (out of 10) for the enforcement regime. For stakeholders with wider experience of the system - academics, legal professionals and creditors - confidence was higher but this figure dropped when looking at insolvent and disqualified directors’ confidence. Solvent directors often felt unable to provide a score due to their limited experience or knowledge of the regimes.

Predominately, stakeholders reported higher confidence in the insolvency regime than the enforcement regime, which mirrors findings from previous qualitative research. However, this was in part due to a lower level of understanding of the enforcement regime, in particular by directors. In line with the findings from the previous research[v], a number of stakeholders, particularly creditors and solvent directors, did not feel able to comment on the enforcement regime because of their limited awareness of the framework that underpinned it.

Awareness and understanding

The level of awareness and understanding of the insolvency and enforcement regimes was also found to be mixed, both across and within the stakeholder groups. Further aligning with the previous research, stakeholders largely reported higher levels of understanding of the insolvency regime than the enforcement regime.

Fair

Despite probing to get a view not entirely linked to their own case, insolvent and disqualified directors’ perceptions of fairness were heavily influenced by the outcome of their case and their experiences with the regimes. This led to mixed views, dependent on the levels of satisfaction with their own case outcome; where stakeholders with low satisfaction perceived the regimes to be unfair. This was driven by insolvent and disqualified directors’ thoughts that the process was rigid in its approach and did not account for the context surrounding their case.

Academics, creditors and legal professionals, as stakeholders that all had a wider view of the regimes beyond individual cases, believed that the regimes, on balance, were fair. They acknowledged the competing interests of different stakeholders and the difficulties these presented, but they felt that the regimes overall were broadly able to balance those interests.

Stakeholders that had knowledge or experience of enforcement across all stakeholder groups largely felt that the regimes had the ability to tackle fraud and financial wrongdoing; however, there was a perception that actions that ought to have been taken forward by INSS were not, consistent with previous qualitative research. This was perceived to be down to the high cost of enforcement and the limited budget available to INSS for enforcement actions.

Perceptions of the ethics and standards of most stakeholders about the insolvency process were felt to be typically high. As a stakeholder group, insolvent and disqualified directors were again influenced by the outcome of their experiences and their reduced understanding of the regimes, which led to a slightly more varied view across these stakeholders. However, creditors and some directors held a negative view of a small group of IPs specifically and thought they did not always act with high standards.

Efficient

The view on the intuitiveness and transparency of the regimes was broadly split across stakeholder groups. This split was largely dictated by prior familiarity with the regimes, with academics, creditors and legal professionals largely concurring that the regimes were intuitive and transparent. This view was also shared by a number of directors who had prior familiarity with insolvency.

Both the regimes were viewed positively by stakeholders for their role in relation to promoting economic stability. This was due in part to the overall perception of fairness i.e. feeling that the regimes were able to balance the needs of different stakeholders and that this fairness encouraged growth.

Perceptions of timescales varied across stakeholders and within stakeholder groups, with some stakeholders believing that timescales were reasonable, whilst others did not. There was an acknowledgement across stakeholders (with the exception of solvent directors) that the overall insolvency and enforcement processes require significant investment in time, given the volume of work required and the time taken for those new to the regimes to understand the process and what they need to do.

Costs throughout the regimes were thought to be high across all stakeholder groups. As also acknowledged with timescales, there was an understanding that the process required the engagement of professional services at multiple stages which command high fees, leading to high costs.

Effective

Insolvent and disqualified directors highlighted how different classes of creditors are treated differently under the current regimes. They spoke of unsecured creditors, who many felt were particularly underserved by the regimes, especially small businesses which are usually unable to secure any recovery of funds at the end of an insolvency process. Another common theme was the belief that IPs can take such a large proportion of money extracted from a liquidated business, that it can leave little for the creditors. Other than creditors, the other main stakeholder the insolvent directors focused on, were the employees. Here, it was generally perceived that the regimes were fair to them.

Insolvent and disqualified directors, academics, legal professionals, and creditors largely expressed the view that barriers to entry into the regimes are higher for Small to Medium Enterprise (SME) directors (compared to those from large firms) in terms of knowledge and the ability to access an insolvency process at the optimum time.

In terms of enabling a smooth and timely exit, the sentiment from insolvent and disqualified directors focused on how long and drawn-out they felt their process was, with examples of insolvencies and/or disqualifications taking several years to complete.

There were mixed views from all stakeholders on whether investment decision making was positively or negatively affected by the regimes.

The impact on the individual as a director of a company going through insolvency was seen as very negative, though some directors did point out that the regimes did help them find “closure”. Most immediate were the negative mental and physical health impacts that many insolvent and disqualified directors professed to suffering from throughout the process.

Academics and legal professionals’ views were mixed on whether stigma was present for corporate insolvency and how useful it was for the regimes. Some legal professionals and academics highlighted how they believed there was less stigma nowadays because the personal and corporate insolvency regimes are “seen as less draconian.” They felt that there are a minority of directors and individuals who see insolvency as a “badge of honour” if they can successfully recover a company after becoming insolvent.

Prevention, education, and guidance were seen as key areas for the regimes to focus on. All stakeholders felt that more could be done to increase director understanding of the process, especially at the point of starting a new business.

World Leading

Many directors felt unable to comment on whether they thought the two regimes were innovative and forward thinking, however, those that did were often very negative. Additionally, there were several areas highlighted by stakeholders, such as prevention, accessibility, and technology, where it was felt more innovation was needed.

However, academics, legal professionals, and creditors were able to offer a range of opinions on the regimes world leading qualities. On the whole, many of those stakeholders agreed that the regimes are world leading and were largely very positive about the UK’s regimes when comparing them to those of other countries.

Academics thought that consultation was taking place and that all stakeholders are being listened to. However, one did highlight how there is a perception that certain parties, like unsecured creditors, are unlikely to feel that their views are being taken into consideration after consultation.

Brand presence and awareness

Directors, and particularly solvent directors, were generally unsure of what INSS was and struggled to separate it from the IPs and others they had dealt with during the insolvency process. This was less pronounced among some directors who dealt with INSS directly, due to the nature of their case i.e. directors undergoing compulsory liquidation or disqualified directors, or due to the directors handling their insolvency personally rather than through IPs or lawyers.

Expressing an overall brand perception was difficult for directors to extract, as many did not think of INSS at all, or were unsure of what it was. Cognitively, views ranged from neutral opinions that “they are just doing their job” to negative associations of inefficiency and waste. Directors also had mixed emotions when thinking of INSS, with some demonstrating more positive associations by providing closure and others having negative associations due to the insolvency process rather than their opinions of INSS itself, highlighting how their opinions are impacted by the outcome of their procedure.

Academics were much more positive with what came to mind for them first when thinking about INSS, with professionalism expressed as a key theme. They expressed how important this quality was when considering how difficult they thought the responsibilities of INSS must be to conduct. On the other hand, legal professionals and creditors were very literal with what came to mind first focusing on functions that the service carries out and the places they interact with them, with legal professionals and creditors both saying its “enforcement powers” were what they thought of first. Academics, creditors, and legal professionals were similar in not being forthcoming with emotions when asked how they feel when thinking of INSS. Responses were focused on how the INSS did not make them feel any particular emotions.

It is clear from the research that the INSS vision and values are not being clearly communicated to directors, creditors, and legal professionals as almost all were unable to even guess what these might be. Some were willing to guess, but these were varied and some not particularly positive. In contrast, academics had a greater awareness and were able to recite INSS vision and values.

Conclusions

Those stakeholders that had a wider view of the regimes beyond individual cases, particularly creditors, legal professionals, and academics, typically believed the regimes to be intuitive and transparent, that they promote economic stability and are largely fair. Similarly, these groups believed that the different stakeholders in the regimes generally operate to high professional, technical and ethical standards, with a few notable exceptions amongst directors and IPs. They acknowledged the tough role that INSS has dealing with the competing needs of those different stakeholders.

Those able to compare the regimes internationally consider the regimes in the UK to be amongst the best in the world as they introduce new regulations and/or innovative tools to address stakeholders’ needs and improve their experiences.

However, there is typically very little awareness or understanding of the insolvency and enforcement regime amongst directors, and in particular directors of solvent companies. That extends to their duties as directors, the available options and the potential benefits of the various corporate insolvency procedures, particularly in terms of helping viable companies to survive.

Enforcement and lack of enforcement action is a significant concern amongst all groups of stakeholders. Whilst all stakeholder groups largely felt that the regime had the ability to tackle fraud and financial wrongdoing, it was felt that actions were not always taken by the regimes. This concern from stakeholders over enforcement action extended to the regimes ability to detect fraud and financial wrongdoing.

Directors, like debtors in the previous research, were largely not able to see beyond the outcome of their own cases. Whilst debtors held a largely positive view of the regimes, directors typically have a lower level of confidence in the regimes, which is tied to their negative perception of the outcome of their case. This is similar to the sample of creditors petition debtors in the last survey.

Stakeholders largely agreed that the insolvency process can be expensive, time consuming and varies a lot from case to case. They believed this causes difficulty in achieving a smooth and timely exit for themselves and for businesses as a whole.

Creditors, legal professionals and academics did associate INSS itself with professionalism. Directors are largely unaware of the INSS, despite having gone through insolvency procedures, but where they are, they hold negative views which were often linked to the outcome of their case.

These findings are broadly in line with, and further reinforce, the findings from the previous qualitative research, namely the perception that the regimes are broadly fair and world leading, but that some stakeholders have very limited awareness and understanding of the regimes and that limited enforcement action is a key concern.

2. Background and methodology

Background and objectives

To ensure the delivery of its five-year (2021-26) strategic plan, the INSS developed a number of Key Performance Indicators (KPIs). One key strategic KPI is a measure to track stakeholders’ confidence in the insolvency and enforcement regimes. This confidence measure captures themes around whether the regimes are perceived to be:

• Fair;
• Efficient;
• Effective; and
• World Leading.

This research builds upon previous research[vi], into the confidence of debtors who had undertaken a variety of insolvency procedures (Debt Relief Order (DRO), debtor’s application bankruptcy, creditor petition bankruptcy and Individual Voluntary Arrangement (IVA)) and IPs.

In addition to measuring and setting a baseline of confidence in both the insolvency and enforcement regimes, the research had a secondary aim to capture the perceived brand presence of INSS. INSS sought to capture stakeholder opinions on four areas relating to the Authority’s brand presence based upon guidance from Qualtrics[vii]:

• Brand awareness;
• Cognitive - the concepts that a consumer associates with the brand;
• Emotional - the feelings that a consumer associates with the brand; and
• Action-based understanding - the experiences a consumer has with the brand.

Methodology

An overview of the methodology has been provided in the section below and is further expanded upon in the Annex.

Research design

Consistent with the previous research, a qualitative approach, utilising semi-structured interviews, was considered to be more useful in delivering useful and actionable insight to INSS. The qualitative approach enables the research to gather more detailed and nuanced views around confidence and more detailed insight into what improvements could be made.

Sampling

The target population was directors (of both solvent and insolvent companies, as well as disqualified directors that had been through corporate insolvency procedures), academics, creditors and legal professionals. The sample frame for the interviews was in part provided by INSS, in line with its personal information charter[viii]. The sample provided by INSS focussed on directors whose companies had had gone through either Administration, Voluntary or Compulsory Liquidation between September 2021 and September 2022 as well as Disqualified directors who had been disqualified over the same period. However, these sample frames were not comprehensive and therefore a bias may exist towards directors against whom unfit conduct has been reported.

INSS also provided a list of legal professionals and academics gained through contacts, consultation and desk research. Due to INSS having limited access to contact information for creditors of insolvent individuals and companies, the INSS provided contacts from trade associations to represent the views of creditors as a whole, rather than those of individual creditors. IFF Research expanded on the samples provided by INSS through further desk research, especially for those stakeholder groups that proved more challenging to recruit. The solvent directors sample frame was obtained through purchasing details from Market Location, a panel company specialising in B2B research.

Recruitment

The participant recruitment quotas (as seen in Table 1) were set to follow a purposive sampling approach to identify a variation of cases in relation to the topic of interest. For creditors, academics and legal professionals, sampling included whether their interest lay in natural persons, corporate insolvency or both. Insolvent directors were sampled based on the type of insolvency they had undergone: administration, compulsory liquidation, or CVL. Disqualified directors were sampled based on if they were disqualified via a court order or voluntary undertaking. Lastly, solvent directors were sampled according to the size of their business as determined by the number of employees. Small firms were defined as those with 1-49 employees, medium firms those with 50-249 employees and large firms as those with over 250 employees[ix].

As outlined above, due to challenges experienced in the recruitment of select stakeholder groups, namely creditors, legal professionals and solvent directors, an additional sample was generated by IFF Research and, for solvent directors, purchased from Market Location.

Solvent directors proved to the most difficult audience to engage in the research and the proportion declining to be interviewed was highest (16%). Several interviews fell through, and only 1% of those contacted took part in an interview. In response to the low response rates amongst solvent directors, a £50 incentive payment for participation was introduced and backdated to those solvent directors who had already completed their interviews. This is in line with Government Social Research guidelines on using incentives[x]. This states that offering incentives is not the default option but can be used if timescales or the lack of an appropriate sample frame means that recruiting sufficient sample within the required timeframe will be unfeasible or unlikely without incentive use.

The most common reason why solvent directors said they were not interested in participating in the research was due to their low awareness or understanding of the two regimes and the INSS. To encourage participation, a £50 incentive was introduced for this audience. Despite being able to achieve three more interviews after the introduction of the incentive, recruitment was still proving highly difficult, and fieldwork had to be called to a close. One interview was instead substituted to disqualified directors which were chosen due to the increased detail of their cases, having both their insolvency procedure and the disqualification to discuss in the interview. The difficulty recruiting solvent directors should be taken into account in any future research with this audience.

Table 1. Achieved hard and soft quotas

Quota category	Number of interviews achieved	Achieved quotas
Creditors	10	Mix in terms of focus on Natural Persons, Corporate insolvency or both; Mix in terms of the types of insolvency procedures they were familiar with.
Legal professionals	5	Mix in terms of focus on Natural Persons or Corporate insolvency
Academics	5	Mix in terms of focus on Natural Persons or Corporate insolvency
Directors whose companies have entered administration	5
directors whose companies have entered compulsory liquidation	5
Directors whose companies have entered CVL	5
Directors of solvent companies	4	Mix in terms of Business size
Disqualified directors.	6	Mix in terms of Court Order and Voluntary Undertaking
Total	45

Fieldwork

Fieldwork was carried out between Thursday 17th November 2022 and Friday 3rd February 2023. IFF Research conducted 60-minute semi-structured interviews with 45 stakeholders across the stakeholder groups. After the first eight interviews, the topic guide (found in the Appendix) was streamlined as many interviews were running up to 80 minutes. This length of time, greater than 60 minutes, was thought to be too burdensome and would risk discouraging participation across the stakeholder groups, potentially limiting participation to those with aggrievances.

Interviews were carried out via telephone or online (Zoom/Microsoft Teams) and recorded via automated recording systems or Zoom/Teams recordings. Recordings were used to manually complete an analysis framework and a selection of interviews were fully transcribed, anonymised and provided to INSS.

Analysis

Analysis was undertaken using a framework analysis approach[xi]. Framework analysis is a useful approach to research that has specific questions, a limited time frame and a pre-designed sample. The approach consisted of the following stages:

Familiarisation of the data

The team familiarised themselves with every completed interview. This involved listening to the full interview / reviewing the internal transcript and noting down any initial themes emerging.

Developing a thematic framework to analyse the data

After the first interviews had been completed and the team had reviewed the transcripts, a thematic framework, was developed using both the emerging themes and key areas of interest from the topic guide. The framework was based in Microsoft Excel, with each column representing an emerging theme or key area of insight required from the guide (for example overall confidence in the regimes).

Notes from the original interviews and recordings were used to identify the key themes coming out of discussions.

All pre-determined headings that were included in the final framework related to the initial research objectives and allowed comparisons to be made across different groups of directors and across the stakeholder groups.

Indexing and charting

Once the framework was in place, interviewers indexed data from the interviews by identifying sections of the data that corresponded to particular themes. Specific pieces of indexed data were then entered into the Excel framework, so that they could be arranged under the identified themes. Utilising the Excel framework ensured that the data could still clearly be linked to the case from which it came.

Data entered into the analysis framework was quality assured through iterative review by members of the research team, to ensure that responses were entered accurately and to follow up on any points for clarification.

An interim analysis session was conducted mid-way through fieldwork to discuss emerging findings and the themes identified by interviewers.

Interpretation and mapping: Producing a blueprint

At the end of fieldwork, following further data familiarisation, a final analysis session was conducted to compare initial themes with anything novel that had come out of the later interviews. Any inconsistencies between interviews were then discussed and a consensus of key narratives was reached to form a blueprint for the report. A schematic diagram, in the form of the Excel framework, was used to guide interpretation and analysis of the data, enabling key characteristics of the research to be pulled out into this report.

Uncertainty and Assumptions

As this is qualitative research, its purpose is to provide an in-depth understanding and reflect the variety of experiences of creditors, academics, legal professionals and directors. It is not intended to be statistically representative, and therefore findings should not be generalised to the population of creditors, academics, legal professionals and directors.

All findings are self-rapport, allowing research to be collated across a wide variety of stakeholders and building an understanding of how they perceive the world around them. Therefore, responses reflect respondents own views and beliefs. As a result, these could be influenced by certain biases, such as through social desirability, and may not reflect an objective truth. Social desirability may also have impacted the current study since stakeholders were interviewed on behalf of INSS. To mitigate this effect to a degree, interviewees were reassured that the research was being conducted by IFF Research, an independent market research company.

Due to the relatively high number of interviews to analyse, IFF chose to summarise the experiences of stakeholders through common and more prevalent themes and insights when reporting the findings. In doing so, some of the nuance observed between participants may be lost. This should be considered when interpreting the findings.

3. Confidence in the Regimes

Stakeholders were presented with a question designed to gather an indicator (on a scale of 0 to 10) of their confidence in both the insolvency and enforcement regimes, to develop a high-level response after reflecting on the components of the regimes, which had been explored in detail throughout the interview.

Overall confidence in the insolvency and enforcement regimes

Overall, the confidence of stakeholders in the both the insolvency and enforcement regimes is mixed both across and within stakeholder groups. The high-level scores across all stakeholder groups ranged from 0 to 9 (out of 10) for the insolvency regime and 0 to 9 (out of 10) for the enforcement regime. For stakeholders with wider experience of the system - academics, legal professionals, and creditors - confidence tended to be higher than for directors.

Predominately, stakeholders reported higher confidence in the insolvency regime than the enforcement regime. This was, however, due in part to a lower level of understanding of the enforcement regime, in particular by directors. In line with the findings from the previous research[xii], a number of stakeholders did not feel able to comment on the enforcement regime because of their limited awareness of the framework that underpinned it.

Table 2. Highest and lowest confidence scores for debtor stakeholder groups

Stakeholder category	Insolvency regime Lowest Score	Insolvency regime Highest score	Enforcement regime Lowest Score	Enforcement regime Highest score
Creditors	5	9	5	7
Legal Professionals	3	8	4	8
Academics	6	9	4	8
Directors whose companies have entered administration	0	8	0	7
Directors whose companies have entered compulsory liquidation	6	7	2	6
Directors whose companies have entered CVL	2	6	3	9
Directors of solvent companies	5	7	7	8
Disqualified Directors	1	5	1	8

Creditors’ confidence in the insolvency and enforcement regimes

The high-level scores for creditors ranged from 5 to 9 and those higher scores tended to be due to a belief that the regimes, whilst not perfect, had significant benefits and were largely fit for purpose. Additionally, creditors compared the regimes favourably with other regimes internationally.

“I think our system is fit for purpose and performs very, very well compared to the others that I’ve had experience of.”

Creditor, Corporations

Creditors who gave the regimes lower scores tended to do so because of specific elements of the regimes that they felt penalise or are less favourable to creditors; or because of what they believe is an enforcement regime that is not acting as a strong enough deterrent against wrongdoing.

“I’d definitely like to see more capacity and scope for actually pursuing wrongdoing… on the smaller scale, people can still get away with things, and I don’t like that.”

Creditor, Both natural persons and corporations

Directors’ confidence in the insolvency and enforcement regimes

The high-level scores for directors ranged from 0 to 9 for both regimes and their confidence was very much underpinned by their experience of them. This was linked in part to their own limited experience, understanding and interaction with the regimes beyond their insolvency procedures.

In line with the previous research, directors, like debtors, found it difficult to provide a score that did not reflect their satisfaction with the outcome of their cases, this tended to be the case across all types of directors, excluding solvent directors.

“It’s difficult to give an exact score because it’s a hard thing to go through… It’s not a good experience to go through.”

Disqualified director, Voluntary undertaking

Those insolvent and disqualified directors unsatisfied with the outcome of their case tended to feel that the regimes were more favourable to other stakeholders, predominately creditors and IPs, at their expense.

“To be honest it works for creditors and nobody else.”

Insolvent director, CVL

Solvent directors had no or minimal knowledge of the insolvency and enforcement regimes. This resulted in them being largely unable to provide high level scores or they were basing these off assumptions of the regimes, which were generally positive.

Legal professionals’ confidence in the insolvency and enforcement regimes

The high-level score for legal professionals ranged from 7 to 9 across the regimes. The scores of legal professionals were more consistently high than other stakeholder groups which reflects their belief that the regimes have substantial positive elements and are largely fit for purpose.

The lower confidence experienced by some legal professionals was, similarly to creditors, generally down to specific elements of the regimes or what they believed to be regimes that can at times disincentivise prudent financial management of companies.

“Certain parts are very good but currently I think the redundancy payment office is inconsistent in what it is doing so it is difficult to work with them.”

Legal professional, Both natural persons and corporations

“Sometimes they [INSS] give us clear direction which is great but other times they do not.”

Legal professional, Both natural persons and corporations

Academics’ confidence in the insolvency and enforcement regimes

The high-level score for academics ranged from 4 to 9 across the regimes. However, academics largely rated their confidence in the regimes a 7 and above. In line with the other stakeholders, this tended to be lower for the enforcement regime with the caveat that not every academic was able to comment on the enforcement regime.

“There is always something [to improve]. Little things that could be tweaked but it is fundamentally very sound and Insolvency people know their stuff and work really hard and it is a really difficult job.”

Academic, Both natural persons and corporations

They described a relatively sound framework, with some highlighting their desire for a review to keep the best parts of the regimes whilst improving the areas they felt the regimes were less effective.

“[We need] a review where we look at the bits that are weak and where we pull it together in a much more coherent fashion … we need to ask about debt service in a moratorium. We need to ask if tax claims should be dischargeable in a part 26a plan and where we compensate individual creditors when a business fails or creditors as a whole.”

Academic, Corporations

The perception of limited funding for the INSS and the impact that this has on its ability to pursue enforcement actions were the cause for lower confidence scores among academics.

“We have the machinery - it just needs to be used.”

Academic, Corporations

4. Awareness and understanding of the Regimes

Directors and creditors were presented with a question designed to determine how well they understood the rules and procedures that make up the insolvency and enforcement regimes. Both legal professionals and academics were not asked this question due to their substantial subject matter expertise and well-developed understanding of the regimes.

Overall awareness and understanding of the Insolvency and Enforcement Regimes

The level of awareness and understanding of the insolvency and enforcement regimes was found to be mixed, both across and within the stakeholder groups. In line with the previous qualitative research with IPs and debtors, stakeholders tended to have a higher level of understanding of the insolvency regime than the enforcement regime.

Awareness and understanding of the Insolvency Regime

All stakeholders reported having a basic understanding of what the objectives of the regime are, what purpose it serves and at times the overall legal framework. However, the awareness of directors of details of the regime beyond this high-level understanding tended to be minimal, in particular amongst solvent directors. This low level of awareness of the framework of the regime extended to their duties as directors, the available options and the potential benefits of the various corporate insolvency procedures, particularly in terms of helping viable companies to survive.

Whilst directors tended to have a lower level of awareness and understanding they, like debtors in the previous research, reported that they, after having gone through an insolvency procedure, now have a greater awareness of the regime.

“[My understanding is] reasonable, I have a very basic knowledge of the Insolvency Act and the processes that exist, as a layman.”

Disqualified director, Court order

Insolvent and disqualified directors typically became aware of the regime when their companies began insolvency proceedings; some of them subsequently undertook research themselves whilst others just handed over the dealings to IPs or legal professionals. Those directors that handed responsibility over to legal professionals or IPs still had very low awareness of the regime having gone through their procedure.

“None, none at all, that’s why we paid other people to deal with that for us.”

Disqualified director, Court order

However, there were some directors that have been through company insolvency procedures several times or have a background in accounting or other related experience, and so have a better understanding of the process and the benefits and limitations of the existing regimes. Highlighted by both a director and a creditor, it was felt that directors of small/medium sized enterprises (SMEs) typically do not have the resources or tools available to them to understand the insolvency procedures available to them. This is in contrast to the greater understanding of directors of larger companies.

“I never experienced it prior to that, so I would say not very well. It’s not something that as [an SME] business person was a consideration.”

Insolvent Director, Administration

Creditors largely had a higher level of awareness and understanding of the regime, but this was at times limited to the insolvency and rescue procedures they usually focussed upon. Mentioned by several creditors was a lower understanding of CVAs as well as the more recently introduced Restructuring Plans, through the Corporate Insolvency & Governance Act 2020[xiii].

“I understand them pretty well … more in the corporate side as I deal with that day-to-day, but I have a good, broad understanding of both pieces.”

Creditor, Both natural persons and corporations

Awareness and understanding of the Enforcement Regime

Insolvent and disqualified directors typically were unable to distinguish the framework of the enforcement regime from the insolvency regime, and where they were able to comment, outlined their understanding as the punitive response to wrongdoing during the insolvency procedure. Disqualified directors were aware that they were subject to enforcement actions but had very little awareness of the framework beyond their own specific cases.

Solvent directors had very little to no awareness or understanding of the enforcement regime.

Whilst creditors largely had a greater understanding of the enforcement regime, highlighted by one creditor’s lower level of understanding was the fact that they saw this as less relevant to their role since that occurs at the next stage of the process after their involvement.

“I’d say we would both have a good knowledge of the insolvency regime, less so of the enforcement regime mainly because it’s what happens once the Insolvency Service picks it up.”

Creditor, Corporations

5. Perceptions of Fairness

Overall views on fairness – directors

Both insolvent and disqualified director’s perceptions of fairness were heavily influenced by the outcome of their cases and their experiences with the regimes. This led to mixed views, dependent on the satisfaction with their own case outcome, with many in this group, as a result, perceiving the regimes to be unfair. This was driven by director’s thoughts that the process was rigid in its approach and did not account for the context surrounding their case.

“Not great – it treated us as if we had done something wrong. That seemed to be the attitude across the board.”

Disqualified director, Voluntary undertaking

“There is no fairness to the insolvency process, they went after us and not the accountant who had all our money.”

Disqualified director, Court order

“I believe it’s grossly unfair to be honest. The level where we’re expecting people to run a business and then after the event, you judge that business, taking things out of context…”

Insolvent director, Administration

Directors who found the regimes to be fair typically highlighted the necessity of the regimes and their role for other stakeholders beyond themselves.

“I didn’t have any strong issues or gripes with anything. It is understandable that you need to have that [regime] in place so everybody understands where they have to go with things.”

Insolvent director, Administration

“I think they are very fair because they are doing a job that is extremely difficult, dealing with people that find themselves in extremely difficult positions.”

Insolvent director, Compulsory liquidation

Overall views on fairness – academics, creditors, and legal professionals

Academics, creditors, and legal professionals, as stakeholders that all had a wider view of the regimes beyond individual cases, believed that the regimes, on balance, were fair. They acknowledged the competing interests of different stakeholders and the difficulties these presented but they felt, however, that the regimes overall were broadly able to balance these.

“I think it’s very fair. I mean to my mind the most important thing about any regime is that it’s clear and transparent…I think the legislation is clear. I think one of the reasons that investors like doing business in the UK is that they know exactly what is going to happen in an insolvency scenario.”

Creditor, Corporations

A perceived area for improvement that was cited amongst this group was an unfairness to creditors, particularly unsecured creditors, and that further protections for creditors to receive some or all debts owed during the insolvency process would improve the fairness for this group and therefore the wider regimes.

“Unfair on creditors, because directors can use the systems in ways which are nefarious, such as the bounce back loans.”

Academic, Both natural persons and corporations

There was also a belief amongst these stakeholders that whilst the regimes were on balance fair, a need for frequent reviews of the regimes to continuously adapt the process was required to maintain and increase this fairness. Stakeholders’ views were mixed on whether the regimes achieved this or if increased adaptability was necessary.

“Very fair and the regime itself is very much fit for purpose but as with anything it is always a moving target and practice tends to move and find interesting ways of interpreting the regime in ways that doesn’t get the balance right and policy makers have to adjust that balance… the Insolvency Service is alive to that and reacts in a measured way.”

Academic, Both natural persons and corporations

Enforcement

Stakeholders that had knowledge or experience of enforcement across all stakeholder groups largely felt that the regimes had the ability to tackle fraud and financial wrongdoing; however, actions were not always taken by the regimes. This was perceived to be down to the high cost of enforcement and the limited budget available to the INSS for enforcement actions.

“It seems to me that the Insolvency Service does a pretty good job at pursuing really egregious examples.”

Academic, Corporations

“The tools are there, the routes are there, the legislation is there. I’m not sure the funding is there, or if the will is there.”

Creditor, Both natural persons and corporations

This concern from stakeholders over enforcement action extended to the ability of the regimes to detect fraud and financial wrongdoing, with a group of stakeholders highlighting their belief that the regimes were unable to detect this in all cases. Those stakeholders suggested that auditing at earlier stages would allow for increased detection of fraud or financial wrongdoing. A perceived high burden of proof and costs associated to obtain proof, linking to the overall cost of enforcement, was also felt to prevent action being taken once misconduct was identified in some cases.

“They can’t [Detect fraud/misconduct], If our VAT had been paid, they’d have never looked into us.”

Disqualified director, Court order

“My understanding is that it is a very high bar to prove fraud which makes it very expensive to bring those kinds of claims.”

Creditor, Corporations

Standards

Perceptions of standards by most stakeholders of the insolvency process were that they were typically high. As a stakeholder group, disqualified and insolvent directors were again influenced by the outcome of their experiences and their reduced understanding of the regimes, which led to a slightly more varied view across these stakeholders. However, creditors held a negative view of a small group of IPs specifically and thought they did not always act with high standards.

“They do act ethically … it’s very highly regulated.”

Academic, Both natural persons and corporations

“I think they are very professional. Everybody is trying to do a job and do a job thoroughly. I think they are very fair.”

Insolvent director, Compulsory liquidation

Creditors thought IPs sometimes engage in bad practice. It was believed by these stakeholders that some IPs sought methods to maximise their own fees by pursuing options that were not always aligned with the interests of directors and their companies; an example of the principal-agent problem[xiv].

“They do push the boundaries somewhat. I have been to creditors meetings where we have questioned what they are doing and questioned their conduct. It is all down to the fees because they know the CVA will probably fail, and they will pick it up as an administration or liquidation because they are the sitting supervisor – is that ethical?”

Creditor, Corporations

“There is a general concern when a business goes into liquidation the fees that are taken by the IPs seem inflated and obviously, they go right to the top of the list in terms of making sure that they get paid.”

Creditor, Both natural persons and corporations

Whilst creditors did cite this, they also acknowledged there will always be “bad apples” and that the instances of this bad practice were typically low in occurrence amongst IPs.

“The vast majority of the time, I deal with very capable professionals who very much hold themselves to standards … there will always be a handful of firms and individuals who don’t adhere to the regime as they should or hold themselves to the standards I as a creditor would expect them to.”

Creditor, Both natural persons and corporations

Areas for improvement

Creditors felt they were lower priority when distributing debts and that unsecured creditors especially were unlikely to receive an equitable share of monies owed. Improvements suggested by creditors could include improving how distributions are made or further clarity on the rationale behind the existing methods and the order of distributions. This is in line with World Bank recommendations for effective insolvency and creditor/debtor regimes: “The rights of creditors and the priorities of claims established prior to insolvency proceedings under commercial or other applicable laws should be upheld in an insolvency proceeding to preserve the legitimate expectations of creditors and encourage greater predictability in commercial relationships”[xv]. Increasing creditors understanding of the regimes could improve clarity, and in turn their ability to manage expectations, alleviating creditor dissatisfaction.

6. Efficiency

Predictability

Intuitive and transparent Insolvency regime

The view on the intuitiveness and transparency of the regimes was split across stakeholder groups. This split was largely dictated by prior familiarity with the regimes resulting in academics, creditors and legal professionals largely concurring that the regimes were intuitive and transparent. This view was also shared by a number of insolvent and disqualified directors who had prior familiarity with insolvency.

“It’s fairly intuitive, it’s all heavily legally based and there is good structure to it, there is a lot of precedent as well.”

Creditor, Corporations

“[The introduction of the 2016 Rules] was a real positive step forward; the way that the rules are now grouped together makes the understanding of each of the insolvency processes a lot easier.”

Legal Professional, Both natural persons and corporations

Directors from all groups, mostly had little to no prior experience of the regimes, thus they found the regimes to be less intuitive and predictable, due largely to a lack of familiarity. This was echoed by other stakeholders who also dealt with directors who had limited understanding of the processes.

“I don’t think it is clear at all, I think if you work in that industry and understand all the jargon, it’s probably great. I don’t think there are many people experienced with Insolvency unless they are a practitioner and deal with it daily.”

Disqualified director, Court order

“My users [directors] have no clue what’s available… The general public have a complete lack of understanding.”

Legal professional, Both natural persons and corporations

“I think for most micro and small businesses who are approaching insolvency for the first time it’s just not understood.”

Creditor, Both natural persons and corporations

Solvent directors were aware they had legal duties as a director but were largely unable to recall each of the 7 duties under the Companies Act 2006[xvi] until prompted of them. The 7 duties are:

1. to follow the company’s constitution
2. to promote the success of the company
3. to exercise independent judgement
4. to exercise reasonable care, skill and diligence
5. avoid conflicts of interest
6. to not accept third party benefits offered because of the directorial position and
7. to disclose directorial interests in a transaction.

They did understand their overarching responsibility to act in the company’s best interests. There was also an acknowledgement by some that they aren’t knowledgeable in all areas, as such they relied on others to assist them in fulfilling these duties.

“I wouldn’t say I am an expert in all areas, so I discuss things with people who are, like my accountant etc.”

Solvent Director, 1 – 10 Employees

Economic Stability and Growth

The regimes were largely viewed positively by stakeholders for their role in relation to promoting economic stability. This was due in part to the overall perception of fairness, because of a feeling that the regimes were able to balance the needs of different stakeholders and that this fairness encouraged growth.

On the other hand, insolvent and disqualified directors, where they were able to comment, had varying and contrasting views with no consensus. Those negative views were felt to be due to their experiences and outcomes.

Solvent directors limited awareness of the regimes resulted in them being unable to comment on the regimes’ role in promoting economic stability or growth.

“It seems almost counterintuitive, but people trust our regime and courts… [They] bring their businesses because they know they will get a fair shake [fair treatment]… [They] will come to London to restructure or enter some insolvency proceedings because they know that is their best option so, a sign there is confidence.”

Academic, Both natural persons and corporations

“It’s a fundamentally good process - businesses don’t always last forever - it’s good to have a system that kills off bad businesses and enables new ones to start afresh.”

Insolvent director, Compulsory liquidation

Those with an understanding of other international regimes also compared the UK system favourably and expressed that the UK ranked highly against other countries’ regimes. The regimes were therefore seen as encouraging domestic and foreign investment into the UK over other markets.

“Stands up [against other countries] really well… It is highly efficient.”

Creditor, Corporations

“It is better explained than in many other jurisdictions where I have been in touch with… Here the written rules and guidance cover more and cover a fair amount.”

Insolvent director, Compulsory liquidation

Guidance and resources

Solvent directors were largely unaware of company health check guidance[xvii]. Those who were aware of the company health check guidance became aware through word of mouth from other businesses but did not themselves use it.

Solvent directors mostly were not seeking guidance on insolvency as they perceived their business to be a heathy position away from needing insolvency. As a result, this was not an area they actively researched or investigated.

1. “Not everyone who starts a company looks at insolvency, when covid came I had some downturn in business, I looked at fixing this instead of insolvency.”

Solvent director, 1 – 10 employees

Digital Resources

Creditors and legal professionals discussed widely using digital resources in support of INSS remit but these were not frequently mentioned by academics or directors. The resources used varied from fillings and digital bundles for courts to web-based database services such as:

• Companies House, Company information service,
• Land Registry, Property information service, and
• DVLA, Vehicle enquiry service.

There were mixed views from creditors and legal professionals on their effectiveness, those with positive views citing how they did reduce costs and time, whilst others suggested they added an administrative burden to the process.

“I use them all the time.”

Legal Professional, Both natural persons and corporations

“Most courts require digital bundles these days.”

Legal Professional, Both natural persons and corporations

Timescales and Costs

Perceptions of timescales varied across stakeholders and within stakeholder groups, with some stakeholders believing that timescales were reasonable whilst others did not. There was a general acknowledgement across stakeholders that the overall process requires significant time investment given the volume of work required and its difficulty. The speed of the process also varied by type of process undertaken. Creditors, legal professionals, and academics thought SME liquidations were a reasonably short process, whereas restructuring was felt to be an unreasonably long process. It was also acknowledged that a certain level of time invested into the process was required. An area of concern in the restructuring process was around statutory reporting and the time it adds to the process, and it was thought this could be streamlined to improve speed and timescales.

“Restructuring just takes a long time because it is very hard to do and I’m not sure there is anything you can do about that.”

Academic, Corporations

“There are some processes that can stretch out into a number of years. Sometimes they can be very quick and efficient, sometimes they can take longer than they should.”

Creditor, Corporations

“There is so much to do, it cannot be done overnight. From a creditors point of view, it is probably extremely frustrating. They have to wait a long time before they know if they’ll get any insolvency dividend.”

Academic, Both natural persons and corporations

Creditors also thought some deadlines within proceedings can be too short and that these short deadlines can increase costs. This was noted specifically when reviewing a CVA proposal. This is stated to be because the engagement of professional services, such as lawyers, needed at short notice to meet timelines, incurs higher costs.

“You only get fourteen days to look at the document [proposed CVA] and you need to get a lawyer to look at it, then you have to form a view. Twenty-one days [would be more reasonable].”

Creditor, Corporations

“It’s often not just two weeks to respond [to a CVA proposal], it’s two weeks to get a coalition of the willing together of other creditors and get them all together and agree a position and to employ representatives to challenge the proposal.”

Creditor, Corporations

Notably, for those able to comment, COVID-19 was not seen as a prominent factor in timescales, and it was perceived to be “Business as usual” across the process, with few delays attributed to the pandemic.

Costs throughout the regimes were thought to be high amongst all stakeholders. As with timescales there was a view that the process required professionals who command high fees at multiple stages. These, in some cases, were thought to be disproportionately high, especially for SMEs, and there was concern that these fees will continue to increase. Creditors especially noted how fees and other costs of insolvency reduce the amount they get, which can imbalance the fairness of the processes if too large.

“Insolvency is not cheap which is slightly ironic.”

Academic, Both natural persons and corporations

“It’s an expensive business … I’m not sure how the INSS could reduce costs … you need so much professional oversight.”

Creditor, Both natural persons and corporations

“Where is the justice where one side has unlimited resources [the Insolvency Service] and the other has to pay for every word on every letter?”

Disqualified director, Court order

Court Procedures

Stakeholders with experience or knowledge of the court procedure were highly positive about the system at all levels and praised its robustness.

“Formidably good and the best in the world. The ace in our pack.”

Academic, Corporations

“The Judge was the most reasonable part of the process.”

Disqualified director, Court order

In terms of timescales specifically with court procedures, it was noted there were some delays in obtaining court dates, with some speculating this is due to congestion in the courts.

“There is a lot of delay [In court procedures], particularly if you’re looking for a trial date.”

Legal professional, Both natural persons and corporations

Areas for improvement

Costs were noted by many as a concern with speculation amongst stakeholders that these are likely to increase in the short term. This is an important area of consideration given costs are one of the three quantitative core indicators under IMF guidelines on measuring efficiency[xviii]. To further improve the efficiency of the regimes, stakeholders highlighted a desire to see insolvency costs maintained or streamlined where possible to allow the process to remain accessible to organisations of all sizes. This is especially prevalent for SMEs and forms one of the eight United Nations Commission on International Trade Law (UNCITRAL) key objectives in improving efficiency and simplifying insolvency regimes for SMEs[xix]. Furthermore, financial support through the process to SMEs, which may be disproportionately affected by insolvency, was noted by a mix of stakeholders. It was suggested this could be achieved through reduced or waived legal and process costs, to potentially make the process more accessible for these organisations.

7. Effectiveness

Balancing the needs of stakeholders – Directors

All director groups highlighted how different classes of creditor are seen to be treated unequally under the current regimes. They focussed on unsecured creditors, which many felt were particularly underserved by the regimes, particularly small businesses who are usually unable to secure any monies owed at the end of the process. Each of the director groups (disqualified, insolvent, and solvent) had at least one respondent who had been to creditors meetings as unsecured creditors themselves where their suppliers had become insolvent, and they were told there was little chance of getting anything. The overall sentiment from all director groups was that on both sides of the insolvency process, without the bargaining power of large firms or resources for lawyers, there is little point in pursuing money as an unsecured creditor. This was felt to be the case for SME businesses in particular, where engaging in the process was seen as “futile” or a “waste of time”.

“The intent was there but I don’t see that it has [served the needs of stakeholders], particularly speaking as [someone was once a] a creditor, it hasn’t achieved anything for me.”

Insolvent director, Administration

Despite this, a theme expressed by other stakeholders was that the secured debtholders, similar to unsecured creditors, also do not typically get what they are owed and are often left wanting.

“The secured debtholders rarely gets 100% pay out, usually a lot less.”

Insolvent director, Administration
For solvent and disqualified directors, this was seen to be down to the impact of IPs fees, who were perceived to have no risk to themselves and no liabilities but that they will get paid regardless. This was perceived by those stakeholders to lead IPs to sell the insolvent business’s assets off for far less than they are worth.

“They do not care whether they sell things for fifty pence or a pound.”

Insolvent director, Administration

One insolvent director who had gone through administration claimed their company assets were being sold at auctions at far below their market value. This director states that he went to the auctions and purchased some of the equipment back at below market rate and reselling at considerably higher prices. They felt that if the IPs had tried to sell the assets in a longer timeframe, they could have received market rate and increased the funds available for the creditors.

Another common theme was the feeling that IPs can take such a large proportion of money extracted from a liquidated business, that it leaves little for the creditors. One insolvent director of an SME felt that there should be a separate, simplified and more inexpensive process for very low value businesses that just want to wind up and have very few debts. This director felt that this would ensure more money went to the creditors in this situation.

However, there were also insolvent directors who thought the regimes were working well for creditors as they were getting exactly what they could expect out of the regimes.

“They are doing that perfectly well; they are getting 100%, like they got from me.”

Insolvent director, CVL

“The creditors are very well aware of exactly what their rights are, and I think that the [regime] is structured to work for the benefit of the creditors.”

Insolvent director, CVL

Other than creditors, the other main stakeholder the insolvent directors focused on was the employees. Here, it was largely thought the regimes were fair to employees. One director was encouraged by the depth of support their employees got with one month’s wages, holiday pay, plus their redundancy. Another director recognised the difficulty that the regimes had in focusing on keeping jobs and employees happy versus maximising returns for creditors. Though ultimately, they would have preferred more of a focus on keeping jobs like they felt was the case in France and Germany.

“I think they [IPs] take that into consideration maybe not with the same weight as they would have it in for example France and Germany, but they do, and I think they should”.

Insolvent director, Compulsory liquidation

However, some insolvent and disqualified directors felt employees were not always supported or protected. One disqualified director highlighted how they joined a business with another director who acted against the companies interests by making large scale redundancies to facilitate the sale of the business to gain a pay-out for themself. They believe the individual, who was also disqualified, is continuing to do this and other misconduct by acting unofficially as a shadow director in other businesses and that the regime has not stopped this behaviour.

“The [business owner] said we will not let staff continue and if they are out of a job they are out of a job, he ignored everybody for six months and then resurfaced to say he would buy back the business and resell it… [he was disqualified] for fifteen years… he is doing what he does but not under his name, so it has not solved anything.”

Disqualified director, Court order

Balancing the needs of stakeholders – Wider stakeholders

Much like insolvent directors, academics, creditors, and legal professionals were all complimentary of the regimes balance. These groups recognised the difficult trade-offs the regimes must make in their design.

“What our system does is it accepts that there are some companies that that just can’t survive, shouldn’t survive. You know that the business model is broken, and so the system is designed for those companies they’re going to be winding up and their assets are distributed. Some people could say that’s anti employment and that you should actually try to preserve even the bad businesses for the sake of the employees, but I don’t think that’s good for the workforce.”

Creditor, Corporations

“On the whole in a difficult environment… it doesn’t do too bad a job.”

Legal professional, Both natural persons and corporations

However, there was much to be said on improving the balance from all the groups. Once again, the main sentiment was that more could be done to help creditors, especially unsecured creditors.

“It is less friendly to creditors who want to enforce their rights and want to get their money back. They have to jump through too many hoops with too much protection in place for debtors and too many ways to hide from liability by going into a moratorium or administration… it is trying to rescue companies wherever possible, which people say is debtor friendly, but I think is about right.”

Academic, Both natural persons and corporations

All these groups observed that those they felt least needed to get something from the process - larger businesses, banks, and HMRC, were the ones at the head of the queue, whereas those small businesses that they felt needed it most were most likely to get little if nothing from it. One academic gave an example of buying a sofa from a company that is then liquidated. The sofa purchaser becomes a creditor and rarely gets anything back.

“This is certainly where we feel that this thing of secured versus unsecured creditors doesn’t feel fair.”

Creditor, Both natural persons and corporations

“It’s always weighted towards those creditors with security… The whole system is weighted towards that.”

Creditor, Both natural persons and corporations

One academic complained that in their view, the problem facing creditors in how the current regimes are set up is that many of the tools available to directors can be misused by directors and IPs by deliberately undervaluing company assets, deliberately underestimating future revenue, and maintaining ownership of sold assets through subversive means. Indeed an instance of this was discussed in the previous section focused on directors.

One creditor highlighted how they thought landlords were very poorly treated by the CVA process. They felt that landlords understand the need for a process in which they forgo rent, but they feel that they are disproportionately impacted compared to other creditors due to the way in which future payments are calculated under the regimes.

“Landlords leases are less quantifiable when compared to supplier’s contracts. It’s the future rent payments that they miss out on a lot more as well… net present value is a feature used against landlords, so they can’t be compensated for the future rent income.”

Creditor, Corporations

This is an issue that has been previously covered in other INSS commissioned research[xx]. This research by RSM UK concluded that, whilst there may be individual exceptions landlords are, broadly, equitably treated compared to other classes of unsecured creditors.

One creditor was also very critical of what they called the vote swamping issue which could cause impaired creditors to lose out in an agreement, due to the process of making and accepting an agreement.
“Tenant occupier wants to cut rents, they look at all the properties they occupy and say right, this 40% of landlords we are not going to change our deal on, and this is the 60% that are. The 40% of landlords are not affected so they vote through the CVA because the result doesn’t affect them. So, you add them to the other less impaired who vote it through at the detriment of those most affected. It’s the tyranny of the unimpaired majority”.

Creditor, Corporations

Despite these challenges, one legal professional did demonstrate that although there were challenges facing creditors, they have seen improvements in the ability for creditors to get involved in the process such as with the IP complaint’s gateway portal[xxi].

”There are a lot of obstacles for a creditor to overcome before they are in a position to challenge an insolvency. The complaints portal has helped things and I know IPs take complaints seriously.”

Legal professional, Both natural persons and corporations

Concerning the needs of directors, the consensus amongst academics, creditors, and legal professionals was that the regimes are “massively fair to directors” as they are given a clear and thorough chance to explain their behaviour and it helps resolve their company’s financial distress and offers them a way out.

“There’s plenty of assistance and help for both corporate and personal insolvency there is no shortage of solutions for people who find themselves in insolvency.”

Creditor, Corporations

Like directors, academics also touched on how they thought the interests of employees as stakeholders could be improved by reducing the difficulty of consulting employees in the run up to an insolvency situation.

“It is not too bad. There are areas where you could make improvements… [employee] consultation is very problematic in terms of whether you consult them in the run up to an insolvency situation, which we did not have a choice about because it was European legislation … it is extraordinarily difficult to consult employees when a business is fragile because it will always necessarily leak … but by and large it is not bad.”

Academic, Corporations

Another academic thought more could be done to ensure that employees know how to engage in the system and represent their interests.

“The big positive development was twenty years ago when administrative receivership got abolished and a floating charge holder, such as a bank, could only call in an administrator …. a major benefit to employees… The problem isn’t what is available in law and machinery, but more people need to know and make use of it.”

Academic, Both natural persons and corporations
### Meeting the needs of SMEs

Other than the widespread sentiment shown in the previous section that SME creditor needs are not always considered in the design of the regimes, many directors, academics, legal professionals and creditors expressed that they viewed the knowledge, cost, and time barriers to entry into the insolvency regime as higher for SME directors. Many highlighted the perceived lack of knowledge SME directors have of the regimes compared to larger companies. In contrast, the perceived ability for high profile individuals from large companies who break their directorial responsibilities to escape disqualification whilst SME directors are thought to be most commonly disqualified was seen to be inherently unfair. Many of the ways that insolvent and disqualified directors proposed to overcome SME challenges are mentioned in the World Bank’s insolvency guidance as ways to meet the needs of SMEs[xxii]. A tailored insolvency regime for SMEs was seen as a potential solution to some of these perceived injustices of the regimes, much like what has been suggested in the UNCITRAL Legislative Recommendations on Insolvency of Micro- and Small Enterprises[xxiii].

“I think it [the regime] targets SMEs more than larger corporations… the big boys get fined x amount and be done with it. I don’t see the directors at big companies being disqualified as often as in SMEs … I would change the disqualification period and look at each case within an SME as a director to say what did you do wrong here and was it your fault… maybe just a penalty, fine or a shorter disqualification because it feels like a prison sentence.”

Disqualified director, Court order

“They ought to have administrators for small businesses, medium businesses and the real big corporates… to sit us down and analyse [as a small business] whether this is better for your business and if they determine voluntary administration is better then somebody who has a vague understanding can come into your business or one who is willing to listen can come in and listen to how we can benefit the businesses and the creditors… it needs people who have empathy and understanding for a business.”

Insolvent director, Administration

One director felt there should be more assistance for SMEs to understand the system to help close this knowledge gap. In their view, larger companies have the time and expertise to know how to benefit from the system, whereas SMEs face a steep learning curve. This too is a suggestion from the World Bank’s guidance where they state that regimes should “establish mechanisms of assisting SMEs to provide early signals of financial distress to SMEs and increase financial and business management literacy among SME managers and owners”[xxiv].

“If you are a larger organisation, you are better equipped to understand it and engage with it, but an SME it’s not familiar with it and it’s a big learning curve, there is no help… It may well exist, but it wasn’t very apparent.”

Insolvent director, Administration

One academic said that a key way in which the regimes can overcome this is for INSS to make short, engaging, informative video content on YouTube to explain the fundamentals of insolvency and how it can serve SMEs. This academic demonstrated how their course encourages students to make explainer videos of a variety of insolvency processes. They showed the interviewer how some of their videos had been uploaded to YouTube and had achieved 20,000 views. As this was without any promotion or professional production value, they felt this was evidence that there is appetite for more content like this and thought that INSS could provide it.

The perceived high costs of insolvency were highlighted as a key reason why the regimes do not work for SMEs. These were not just the high costs of the insolvency itself, but the costs of understanding the process and legal assistance. A number of insolvent or disqualified directors felt the process in their cases should have been much simpler and less expensive to close a small company with comparatively small debts. This is reflected in the World Bank’s guidance which states that insolvency regimes should “design and implement a streamlined regime that reduces the complexity and costs of ordinary insolvency proceedings, providing flexible mechanisms to rehabilitate viable SMEs, and to effectively liquidate nonviable ones”[xxv]. One director cited how the insolvency fees (£35,000) were more than their company’s debt (£25,000). They felt this must be a sign of how the regimes are currently not equipped to deal with SME insolvency.

“It should be as clear and quick and easy as any of the other processes around opening and shutting a company.”

Insolvent director, Administration

Academics also expressed concern at how well the regimes were working for SMEs. They touched on similar themes of perceived high costs and low means of SMEs to explore insolvency options. They did, however, feel that the tools were there for them but that making those SMEs aware of them was difficult. This reflects the UNCITRAL Legislative Recommendations on Insolvency of Micro- and Small Enterprises which states that there should be “simplified insolvency proceedings available and easily accessible to micro- and small-sized enterprises” and highlights mechanisms should be established so improvements on literacy can be made[xxvi]. One academic considered tackling this problem largely impossible due to the small margins that small businesses operate under.

“It is expensive in the main to do anything so for small micro businesses it doesn’t do anything because they haven’t got the money to do anything to turn themselves around … CVAs are significantly cheaper [compared to restructuring] and do something similar and fit for purpose for the SME market.”

Academic, Both natural persons and corporations
“There is a limit to what you can do for SMEs in this space. You will never be able to design a restructuring regime which means small family businesses can successfully restructure because the margins in these businesses are so fine and the cash position is so tight … I’m not sure there is much you can do about it … pre-packed administration is reasonably cheap and a successful tool but phenomenally unpopular with small unsecured creditors like trade suppliers … it is a pretty effective low-cost tool.”

Academic, Corporations

“There’s a problem with SMEs because I don’t think they have access to the information, and I don’t think they understand the process; they are the victims of the process rather than beneficiaries of it.”

Legal professional, Corporations

Creditors often felt only able to comment for SME creditors, but some felt able to comment on SME directors. One creditor felt that the lack of understanding some directors had of their responsibilities was a key issue that the regimes need to overcome.
“What the [INSS] is seeking to achieve is very important … directors in owner-managed SMEs businesses … who don’t have a board … or professional advisors … really need to understand what their responsibilities are.”

Creditor, Both natural persons and corporations
One legal professional felt that the regimes have been trying to tackle some of these issues faced by SMEs, but by doing so, they have created loopholes for larger companies to exploit for their own gain.

“[I am a] big fan of making things like CVAs available to SMEs, but exclusively so. The CVA was meant to be a straightforward, short, cheap process that could be used by smaller companies for smaller insolvencies, and the problem is they haven’t been used for that; they’ve been used by big companies doing massive restructurings and that’s where all the unfairness comes out.”

Legal professional, Corporations

Enabling viable company survival and smooth non-viable company exit

In terms of enabling a smooth and timely exit, the sentiment from insolvent and disqualified directors focused on how long and drawn-out they felt their process was with many saying their insolvencies and disqualifications took several years to complete. As highlighted earlier in the efficiency section, some directors complained about how they knew nothing for long periods of time and then at other times were told to do many time-consuming tasks in short timescales. Some insolvent and disqualified directors had a perception that IPs were at fault for delays and the stop start nature of their case.

“We have had no exit. Apparently, this could go on for another five years. This woman [IP] could ruin our lives for another five years … I think it is cruel at the age of seventy-three to have this woman inflict this on us and we have done nothing wrong. She has raised not a bean for the creditors and mishandled it all the way through … why does the law allow her to do that to us.”

Insolvent director, Administration

“I would say even as an ex-director none of it has been particularly smooth… It does seem to have been a bit excessive in how it has dragged out timewise.”

Insolvent director, Administration

“Hasn’t - casts a shadow on your life more than anyone would realise. It’s hell - it’s the most horrible experience… it’s months, you hear nothing… no requirement for direct lines of communication from the practitioners - just horrible.”

Insolvent director, Compulsory Liquidation

Academics and creditors focused on how the regimes would be better at ensuring viable company survival if they focused on more prevention activities. One academic suggested that the regimes should compel directors to act earlier by imposing a legal duty for them to take actions if solvency should come into question early. They gave the example of the South African system as a potential example of how to incorporate prevention activities into the director’s responsibilities.

“In theory you could impose a duty on directors to do something about their companies when they become aware solvency could come into question in the next six months – a duty to take legal action … the South African system has such a duty”.

Academic, Both natural persons and corporations

Creditors were consistent in that they felt a greater focus on director education would benefit viable company survival and the recognition of a non-viable company earlier.

“For some it can be death by a thousand cuts to get rid of those companies that are on the demise and that downward trajectory can go on forever and that comes down to the IPs messing around … Businesses need to identify quicker that they are in trouble because a lot will put their head in the sand and not admit the business is failing and that is more of an education piece to directors and that comes down to investigation of those directors [as well] and when that business was failing and enforcement – are you flogging a dead horse?”

Creditor, Corporations

“The introduction of the debtor-in-control processes are positive … but I haven’t seen a lot of them in practice … the tools were always available I think … but again in comes down to the point of when somebody engages with the process.”

Creditor, Both natural persons and corporations

Whilst both these solutions seem to be beneficial, some directors pointed out that creating more processes for people who wish to create companies may well dissuade them from setting them up at all, thus negatively impacting society and economic growth.

Lastly, creditors, academics, and legal professionals all felt that the regimes do not regulate the practice of IPs enough. They felt there was inconsistency across IPs who would be either good at identifying opportunities for company survival and others that were not. They felt this inconsistency was bad for the regimes as a whole.

“To be honest, on the whole here you’re relying on the insolvency professional that’s being brought in to provide the right advice and guidance.”

Creditor, Both natural persons and corporations

Investment decision making

There were mixed views from all stakeholders on whether investment decision making was positively or negatively affected by the regimes.

Many insolvent and disqualified directors felt only able to comment on their own situation and how the insolvency process made obtaining credit very difficult for their business. One director complained of how they thought expensive IP fees were the main factor that discouraged investment in a company going through administration, rather than the insolvency process itself. However, there was a director who stated that due to the regimes focus on company survival, investment was not as negatively impacted as in other countries. Solvent directors assumed that insolvency would hamper any attempts to receive investment.

Academics and creditors acknowledged how the reputation of the UK’s regimes as stable and sophisticated is a key factor that encourages investment in the country, especially of large companies and investors. They stated how maintaining this reputation was crucial to this position.

“For larger businesses, and more sophisticated investors, the volume of lending made to larger UK businesses is dependent on the perception of it being a good regime.”

Academic, Both natural persons and corporations

However, some creditors doubted that this has much of an impact on investment as many would be unsecured creditors and were unlikely to get any money back if the business they invested in was required to take insolvency proceedings.

“Investors are aware they often get last dibs if anything goes wrong … when there’s any sense of financial distress, knowing what the outcome is going to be for equity, means it [borrowing] becomes very expensive, if it’s available at all.”

Creditor, Both natural persons and corporations

Two of the creditors that participated in the research were involved in the retail property market. They highlighted how the impact of what they saw as misuse of CVAs has caused a reduction of investment in the industry. They expressed the view that lack of returns to investors for this specific insolvency procedure has led to investors seeing the entire sector as a much riskier proposition. Now more due diligence was being required, which also increases costs.

“It has contributed to the lack of confidence in the retail property market.”

Creditor, Both natural persons and corporations

“We are no longer comfortable with providing significant capital at the beginning of the lease. So, we will no longer increase the lease term in return for a capital inducement for a fitout, for example, because of the proclivity of tenants and specifically the IPs selling the CVAs to them, and the impact CVAs have had on the business.”

Creditor, Corporations

Legal professionals also felt that investment decision making was negatively affected by the CVA process in particular. One legal professional recounted first-hand accounts of overseas investors being put off investing in the UK due to the CVA process.

“It is a discouragement and we have heard first-hand from overseas investors who have said “How can I possibly invest in UK real estate when the rental income can be just torn up overnight?”’ He can’t think of a ‘softer process than the CVA; something that enables you to rewrite all your debts, all your obligations… You get 28 days to challenge it in the courts through a very expensive process and if you don’t then that’s it, you’re stuck with it.”

Legal professional, Corporations

Incentivising stakeholder participation
Academics and creditors felt that the regimes do well to incentivise participation with most groups with the exception of unsecured creditors. They viewed their participation was unlikely due to the lack of belief that they will not recover any money from the process.

“Sense of futility on their part.”

Academic, Both natural persons and corporations

“If there is nothing in it for them it’s quite clear from the start they not going to get much or anything back I suspect there is very little engagement.”

Creditor, Corporations

One creditor also highlighted how they view the creditor proposal process in a CVA as a barrier due to the short timescales to come to an agreement and respond.

“The short timescales between the publication of a CVA proposal and the time you have to respond to it acts as a barrier for cost and time purposes.”

Creditor, Both natural persons and corporations

Impact on the individual

The impact on the director of going through insolvency was seen as very negative, though some directors did point out that the regimes did help them find “closure”.

Stigma and health impacts of insolvency of natural persons has been documented by the World Bank for some time [xxvii].. Discussion of similar impacts in the corporate space is less frequent, but has started to be picked up in the latest principles for effective insolvency and creditor/debtor regimes[xxviii]. The principles highlight how SMEs are commonly financed with a mixture of business debt and personal debt taken on by the entrepreneur (potentially including personal guarantees too), which, if insolvency ensues, may result in severe consequences including social stigma for entrepreneurs and their families. It is for this reason that the World Bank recommends reducing stigma associated with corporate insolvency. Many of the mental and physical health impacts, highlighted in the INSS’s most recent report on debtor and IP confidence in the regimes were also found in this research. Most immediate were the negative mental and physical health impacts that many directors professed to suffering from throughout the process. In terms of mental health, anxiety, depression and suicidal thoughts were commonly attributed to the process by directors. Physical health impacts of going through insolvency concerned things like high blood pressure and high cholesterol.

“Professional indemnity caused them grief where one partner was in tears … it is a horrible process … I acquired high blood pressure, cholesterol, depression, motivation gone … some clients said, no disrespect but we are going to move.”

Disqualified director, Court order

“My health has been affected mentally I could just give up … we have done our best and worked twenty-six years night and day [for this firm] and nobody seems to understand the mental effects of administration on you, and it is vast.”

Insolvent director, Administration

Insolvent and disqualified directors also faced negative impacts on their personal and professional relationships. Of professional relationships, many directors recounted how they view the system as destroying the relationship between company directors by setting them against each other.

Other impacts on the director’s feelings were also discussed as present, which contributed to stress and anxiety. Directors with many employees felt guilt and remorse about their inability to save the jobs of their employees and for larger businesses, the impact their company’s insolvency had on society as a whole.

“It affects everyone in society, it affects everyone I employed and everyone I was going to employ, and it affects society as it is less tax paying money.”

Disqualified director, Court order

One director described how the dishonesty they saw in the process was personally difficult for them to manage. They felt they needed to lie or obfuscate when addressing the concerns of shareholders and creditors in the lead up to the process.

“It’s a pretty brutal process - you have to produce an awful amount of information for the IP in the run-up to the insolvency … you can’t let any of the creditors or your shareholders know that is where you’re headed … so either lie or obfuscate.”

Insolvent director, Administration

As well as dishonesty and guilt being viewed as a cause of these negative health impacts, uncertainty was cited by almost every director as being the main source of these issues. Not knowing your own fate, and those of your employees, over a long period of time was seen as a key contributor to the stress. Many focused on worst case scenarios during that time.

“For two years I was not myself; I don’t know what’s going to happen, am I going to end up in prison, are people going to knock on my door at 2 in the morning to take things, so it’s a very bad experience.”

Insolvent director, Administration

A number of directors suggested that many of these negative impacts could be minimised by IPs dealing with directors in a manner that was more “proportionate, reasonable and consistent”. They felt that the process they went through was none of these things, which compounded the negative impacts expressed above. By improving timescales and transparency of the process, they felt it would better manage expectations and reduce long term anxiety and stress. More tightly enforcing rules and standards for IPs was seen as one way in which this could be improved.

Academics, creditors, and legal professionals acknowledged these issues but ultimately thought the regimes offered a variety of ways out of financial difficulty for both directors and natural persons.

Stigma

The research asked all stakeholders to what extent they considered insolvency to hold stigma. Starting firstly with academics and legal professionals, views were mixed on whether stigma was present and how useful it was. Some legal professionals and academics highlighted how there was less stigma nowadays because the personal and corporate insolvency regimes are seen as “less draconian”. They felt that there are a minority of directors and individuals who see insolvency as a “badge of honour”.

This type of thinking was certainly present in some of the solvent and disqualified directors we spoke to who had been through corporate insolvency more than once. However, solvent, insolvent and disqualified directors did all make clear that while some instances of repeat insolvency were bad, viewing all directors who had been through the corporate insolvency process in the manner some academics and legal professionals stated above was an unfair stigma in itself. They pointed out how companies can fall on hard times for many factors outside of their control and gave COVID-19, leaving the European union and the state of the economy in recent times as examples of how this could happen. They felt that many people understand these difficulties which has reduced stigma in this area.

“No… not a stigma … a business [could be] struggling because of a genuine reason … it might not be the fault of the directors or shareholders.”

Disqualified director, Court order

Despite this, there was felt to be differing levels of stigma for personal insolvency and corporate insolvency. One academic highlighted how they felt personal insolvency had more stigma as you had to live with the consequences whereas directors could just start afresh very easily.

“There is said to be so I guess there must be … people who are made bankrupt or entering into an IVA which is harsh on them in a way whereas you can run a load of companies into the ground and start another one the next day with no obvious liability for the debts of your previous company.”

Academic, Both natural persons and corporations

Academics also demonstrated how differing insolvency procedures held similar levels of stigma which was not always helpful. Academics criticised the UK’s culture when viewing administration. They provided examples of how negatively administration and restructuring is viewed in the UK news media and then demonstrated how this is not always negative and should be seen as a positive step in many circumstances. One academic contrasted the UK media’s depictions of administration with that of the USA equivalent (Chapter 11) and stated how they thought the USA had a lot less stigma around Chapter 11 which was positive. Despite this, one academic admitted that many administrations do fail and lead to liquidation but felt that this was in part due to the stigma attached to the process meaning that directors enter the process later than they should have.

“Administration should be seen as a positive but because so many administrations fail and lead to liquidation, it is perceived negatively.”

Academic, Corporations

Disappointment with the UK society’s view of different insolvency procedures was also expressed by many directors. They felt that the ignorance of the general population on the different insolvency processes and their different uses was not helpful. They felt that all insolvency was indistinctly associated with “failure” across UK society. They felt this prevented directors contributing to UK society and closed opportunities in future in the way in which they felt they were capable of doing so.

“I did not want my kids to go to school thinking ‘dad’s business has failed, and he’s bankrupt. There’s definitely a stigma around that because people don’t understand those processes.”

Insolvent director, Administration

“All [insolvency procedures are] marred with the same thing - you’re incompetent, dangerous, not to be trusted.”

Insolvent director, Compulsory liquidation

“Either that’s because it’s a British thing that it is related to failure… And the way society views it. You feel as though you are always on the defensive.”

Insolvent director, CVL

One director highlighted how they thought they did the responsible thing for society by voluntarily liquidating their company and going into insolvency with very little debts and liabilities and that the associated stigma stops others taking these responsibilities seriously.

Similarly, creditors felt that the stigma of insolvency in UK society served as a barrier to directors engaging in the insolvency process at the appropriate time. They did view this slightly differently though, remarking that they felt it was the personal barrier of having to admit your own shortcomings as a director that prevented entering the system at the right time.

Prevention and rehabilitation

The discussion around rehabilitation was not seen as relevant to many directors as the experience of insolvency had put them off running a business again, and in the case of the disqualified directors, barred them from doing do with the court’s permission for a period of several years.

“I would not want to run a business again.”
Disqualified director, Voluntary undertaking

“It’s not going to do anything to rehabilitate me; I’m never going to get back my professional standing.”

Disqualified director, Voluntary undertaking

One director was more nuanced on this though and observed they had witnessed two approaches after having been through the insolvency process. They felt both were natural ways to react and depended on the individual and their life circumstances.

“I’ve got no appetite for getting back into directorships, it’s soured it for me” or…

“To dust yourself down and see it as part of the process and start over again and try and make your money back”.

Insolvent director, Administration

In terms of prevention, there was also discussion with academics, and insolvent and disqualified directors on whether the regimes were dissuading the right people. As one academic termed it, “miscreants” know what they are doing and will exploit the system regardless of rehabilitation measures. Insolvent and disqualified directors and academics felt those who made honest mistakes are often put off running a company all together and look for other things.

“I’m not entirely sure it’s dissuading the right people. There are people who thrive on that kind of confrontation - playing the game.”
Disqualified director, Voluntary undertaking

As mentioned earlier in the helping viable companies survive section, education and guidance were seen as key areas for the regimes to focus on. All stakeholders felt that more could be done to increase director understanding of the process, especially at the point of starting a new business.

“Becoming a director is too easy, I think at that point if you want to become a director you should be at least made to understand a lot more… like passing your driving test.”

Insolvent director, Administration

The specifics of exactly what education was needed, where it was needed, and what topics it should cover were sparse in the interviews. However, one creditor and one insolvent director did highlight how there is no review of the director’s actions that lead to the insolvency and on how it could be avoided in future if the director acted differently. They highlighted how they thought an in-built process to review directorial mistakes could benefit rehabilitation of insolvent directors.

“There’s no lessons learned process… nobody sits down with you and goes through… there’s no need for you to demonstrate you’ve learned from your mistakes.”

Creditor, Corporations

This creditor also highlighted how they felt many basics of running a business were often poorly understood by directors going through insolvency and that these needed to be addressed upfront. They felt that addressing these issues would go a long way to rehabilitating directors and preventing future insolvency.

“A basic understanding of profitability, cash flow and basic company law would go a long way to helping.”

Creditor, Corporations

When asked about prevention, solvent directors touched on how business health is dependent on the advice and tools that a business owner has at their disposal. This was mentioned before the solvent directors were asked to what extent they would find a company health check tool, that would flag early indicators of insolvency, useful. Solvent directors were positive about the tool’s potential benefits to directors, though one did highlight how they felt their tax software already has ways of doing this.

“I think that would be very useful to every business in this country and I’d like to think the tool would be used by directors and accountants.”

Solvent Director, 10-49 employees

There was another theme present with creditors, many of whom felt that they have dealt with many directors who have liquidated multiple companies and they feel the regimes need to step in earlier and disqualify people faster to prevent further insolvency.

“I really think the regime needs to disqualify people faster, where they’re clearly not capable of running a company professionally.”

Creditor, Both natural persons and corporations

Academics and legal professionals also highlighted how the regimes do not effectively contribute to rehabilitation and how one business may use multiple insolvency procedures prior to liquidation. They explained how, in their view, many companies are often found descending through the insolvency process by doing multiple CVAs, then going into administration before finally going into liquidation. It was felt that the proportion of businesses doing this demonstrated that the regimes have much more to do before they meets their goals in preventing future insolvency.

“Just look at the number of serial CVAs we’ve had, companies doing two, three, four CVAs year after year.”

Legal professional, Corporations

Areas for improvement

Overall stakeholder groups wanted the regimes to focus on improving how they served unsecured creditors to ensure that participation in the process was worthwhile. There was also widespread concern on how well SMEs are served by the regimes currently and suggestions that separate processes could be made for SME insolvency. Lastly, it was felt improvements could be made in ensuring that solvent directors and those considering insolvency have a better understanding of the regimes overall. This could potentially involve the INSS increasing its online educational content by providing videos, as well as potentially making sure some basics of the regimes are understood at the point of opening a company.

8. World-leading

Innovative and forward thinking

The research asked all the stakeholder groups whether they thought the regimes were innovative and forward thinking. Many directors, particularly solvent directors, felt unable to comment on this, however, those that did were often very negative.

Some insolvent and disqualified directors felt that the focus of the regimes was unfairly on the “little guy” rather than on what they perceived to be high-profile individuals who game the system for their own financial gain. They felt that to be truly innovative and forward thinking, these perceived big high-profile manipulators in the system need to be brought to justice.

“If you upset the authorities, you are a far worse person and deserve to be punished far more severely than someone who is simply screwing over the general public; and that’s not a forward-thinking attitude.”

Disqualified director, Voluntary undertaking

Additionally, there were several areas highlighted by stakeholders as areas where more innovation was needed. One director felt that for the regimes to be innovating, it would need to focus more on prevention.

“If they were forward thinking they would be doing regular updates to business … they should send out email newsletters explaining any new changes and anything they are doing – proactive or warning you of this, that and the other to educate people.”

Disqualified director, Court order

Another director felt that to be innovative, the regimes would need to focus on accessibility. They complained of the technical jargon which did more to confuse them than help them through the insolvency process.

“Absolutely not at all! It is full of people who quote statutory number 26 and paper 43.”

Insolvent director, Administration

The use of technology was also seen as an opportunity for the regimes to be innovative in their transparency. One insolvent director thought that having real-time information reporting would help all stakeholders. They thought stakeholders could all view the incomings and outgoings of the insolvent company to help increase transparency, reduce opportunities for IPs or directors to act “nefariously” and potentially improve the timescales of the process.

Lastly, another suggestion raised by a group of directors was that the regimes should encourage a type of progressive fee structure, whereby a grading of debt could reflect simpler fees for smaller companies going through insolvency. They felt their debts were comparatively small and their insolvency simpler than others and so it should have required a reduced fee. They felt this would be innovative as it would better service the creditors in these circumstances as well as improve the timescales for directors.

Academics, legal professionals, and creditors were able to offer a range of opinions on the regimes’ world leading qualities. On the whole, many of those stakeholders agreed that the regimes were world leading, again citing the restructuring agreements as a recent example of innovation.

“I’m very proud that we were the first European country to adopt our restructuring plan and now you have other European jurisdictions copying our processes… I think the Insolvency Service needs to be constantly alive to changes in market practice. So it can continue to update the legislation to take that into account”.

Creditor, Corporations

“I suppose the shakeup of the insolvency act was quite [innovative and forward thinking].”

Legal professional, Both natural persons and corporations

“In respect of Restructuring and Arrangements between debtors and creditors, I do think we have an innovative regime, and the Insolvency courts are good.”

Academic, Both natural persons and corporations

Whilst some felt the regimes had innovative tools, they were only innovative if they were being used. Similar to directors, academics largely felt that more effort needed to be placed on increasing understanding of the system to ensure directors are aware of the array of insolvency tools available to them and not just liquidation.

“UK insolvency system provides a lot of very innovative pre-liquidation procedures but the…… vast majority of insolvency cases are not making use of this.”

Academic, Both natural persons and corporations

However, there was one creditor who believed that the innovations of recent times were focused on making a more debtor friendly regime which has caused creditors to lose out. They also felt that there could be more digitisation, online platforms, and videoconferencing to help the regimes deliver for their stakeholders by doing things more efficiently.

Comparison to other regimes internationally

Academics, legal professionals, and creditors were largely very positive about the UK’s regimes when comparing them to those of other countries. All three groups highlighted how the UK is a world leader in the insolvency space and that other countries often follow our lead. Many considered the UK to be at the forefront of global standards and practices, because of the regimes’ stability, experience, and established jurisprudence. It was also mentioned how the UK’s insolvency judges are seen as commercial and fair, contributing to a feeling that the UK is highly respected among the other leading insolvency jurisdictions. One stakeholder highlighted how they thought many oversees businesses will make use of UK insolvency processes over their own due to its perceived fairness and stability.

“The British regime is seen as stable, predictable environment and that’s why you get jurisdiction shopping.”

Legal professional, Both natural persons and corporations

However, one academic did highlight how they thought leaving the European Union was impacting our international standing as it is going to encourage more jurisdictional differences which will make our regimes more difficult to copy from.

Comparisons to specific countries were made, with the USA system being discussed as having merits and drawbacks compared to the UK system.
“There are aspects of our regime which are vastly superior to Chapter 11 but in some ways we are worse – better earlier and worse late which is a nuanced response … other areas need a good look, the moratorium being one of them.”

Academic, corporations

One director was also able to make an international comparison and they were keen to see the introduction of a “pre-step” in line with Chapter 11 in the USA.

“Something closer to the Chapter 11 arrangements in the USA … an environment where you are able to pause everything to do with the secured creditors which gives you time to … restructure the business.”

Insolvent director, Administration

One creditor was more critical of the inefficiencies of the USA system compared to the UK system.

“I was the only non-USA creditor. To say it was hard work was an understatement … I would never want to get involved in that again. You sit in committee arguing the same question over and over again… in the UK it is a lot simpler.”

Creditors, corporations

One academic made a distinction between the personal and corporate regimes and highlighted how they thought our personal insolvency regime was “streaks ahead” and gave an example of how places like Spain and China do not have as sophisticated personal insolvency regime and are looking to our regime for guidance.

When comparing the UK regimes to Europe, those with experience of insolvency in Europe criticised the cumbersome process and higher barriers of entry into insolvency there. However, one legal professional saw the high barrier to liquidation as a merit as it ensured all options were exhausted before deciding to close a company.

Cross-border insolvency

Stakeholders were largely unable to comment on cross border insolvency as they did not feel they had enough experience to comment.

“I don’t think I’ve got enough experience of that to give a fully informed view.”

Legal professional, corporations

There were two academics who felt able to comment on some specific issues though. One academic highlighted how restructuring is currently not recognised in Europe, so this process is not available for businesses that operate in both markets.
“There is no point in restructuring in London if you have a company with assets in Europe where the rest of Europe will not recognize your restructuring and Brexit was a pain in the neck for that.”

Academic, Both natural persons and corporations

Another academic highlighted how there is a jurisdiction question which they thought is not adequately tackled in the current regimes.

“The legislature does not want to take it on… the central question is whether you have a regime in which you defer to the overseas jurisdiction if that is where the debtor and assets is located even if you do not have choice of law rules that dictate what happens … a huge question not adequately tackled.”

Academic, Corporations

Consultation

Academics thought that consultation was taking place and that all stakeholders are being listened to. However, one did highlight how there is a perception that certain parties, like unsecured creditors are unlikely to feel that their views are being taken into consideration after consultation. It was a common theme across all stakeholders that the regimes currently do not serve the interests of unsecured creditors.

When speaking to creditors, this was reflected in some of our discussions where they acknowledged that there was consultation, but they did not participate in the process as they felt their views would not be considered or be given the “credence” they deserve. There were however some creditors who were very positive about the consultation with them. Some highlighted how they were especially impressed with the rent moratorium process during the pandemic and the following engagement on the bounce back loans.

“If you’d asked me at the back end of the recession in 2009, I’d have said ‘no’ but now I feel there is some consultation… we’re part of meetings about bounce-back loans now for example… a lot more active engagement… more credence taken from stakeholders than previously.”

Creditors, Both natural persons and corporations

For legal professionals, there were similar themes present where they felt that larger companies had more opportunity and ability to put time into the consultation process which resulted in the regimes listening to their views more. There was also similar scepticism that their views would be considered should they participate in the consultation process.

“Yes, I would say we are consulted. Sometimes however they consult us then don’t act on it though.”

Legal professional, Both natural persons and corporations

Areas for improvement

Overall, stakeholders who felt able to comment largely considered the regimes to be world leading. However, there were areas highlighted that would enable the regimes to stay at the forefront of global practice. It was felt that improvements in the use of technology could provide IPs, creditors, and directors with the same knowledge of income and expenditure of a company going through insolvency, allowing for a more transparent process. Increasing the publicity provided to the disqualification of directors from larger businesses was suggested help to tackle the perception that the regimes only punish SME directors.

9. Brand presence and awareness

Brand perception

As outlined above, in order to assess the stakeholder’s perception of the INSS brand, the topic guide sought to capture stakeholder opinions on four areas relating to INSS’ brand presence:

• Brand awareness;
• Cognitive - the concepts that a consumer associates with the brand;
• Emotional - the feelings that a consumer associates with the brand; and
• Action-based understanding - the experiences a consumer has with the brand.

Overall brand perception of directors was hard to extract as many did not think of INSS at all or were unsure of who they were. Of those that did, a few themes emerged.

Awareness

All director stakeholder groups were generally unsure of what INSS was. Insolvent and disqualified directors often struggled to separate it from IPs and others they had dealt with during the insolvency process.

“Going through this process, it was never clear what decisions were being made by the Insolvency Service and what by the practitioners.”

Disqualified director, Voluntary undertaking

Unsurprisingly, academics, legal professionals and creditors were all familiar with INSS with many having spoken with INSS staff as a part of their role.

Cognitive

All research participants were asked what comes to mind when thinking of INSS. Directors were largely not aware of what INSS was and felt unable to provide any initial thoughts of what comes to mind.

“Not a lot to be honest.”

Disqualified director, Voluntary undertaking

“Nothing”

Solvent Director, 1-10 employees

Of those who felt they could answer, what came to mind were statements like “they are just doing their job” to negative associations of inefficiency and waste. One director did see INSS as an “enforcer” in a negative sense that they just help the creditors get what they want.

“Nothing negative. They are just a governing body that is there to make sure the public is protected, and I fully understand that.”

Director disqualification, Disqualification order

“A government department that doesn’t really operate terribly well or efficiently.”

Director disqualification, Voluntary undertaking

“Archaic… out of touch… we are in 2022 and there are probably a few people who defraud companies – I am not naïve in that respect… they need to be more proactive and police the regime because these people [practitioners] are working for them.”

Insolvent director, Administration

Academics were much more positive with what came to mind for them first. Professionalism was a key theme. They expressed how important this quality was when considering how difficult they thought the responsibilities of INSS must be to conduct, with lots of trade-offs in a difficult subject.

“I think they really are great because this stuff is so hard in the modern world. They hold the line really well between listening to the market and trying not to be sucked into every lobbying effort and grasp the regime on their own terms which is hard, and I think they do really, really, well… they do really well in an impossibly difficult area of law … they are very professional and take it very seriously. “

Academic, Corporations

“Model civil servants… efficient, hardworking, trying to do the best they can with a small budget”.

Academic, Both natural persons and corporations

Many legal professionals and creditors were very literal with what came to mind first focusing on functions that the service carries out and the places they interact with them, with legal professionals and creditors both saying its “enforcement powers” were what they thought of first.

“The arbiters of the insolvency processes,”

Creditor, Corporations

“Its enforcement powers and its operation of the Official Receiver’s offices because that’s my more regular point of interaction.”

Legal professional, Corporations

Emotional

When looking at the emotional associations directors made with the INSS brand, of those who felt they could answer, mixed emotions were present. Directors of all types, many of whom were unsure on what the INSS was, used words like “indifferent” and “ambivalent” when describing how they felt. There were also negative associations which mostly focused on them having to go through the insolvency process themselves rather than their opinions of INSS despite probing. One disqualified director stated that the INSS made them feel angry as they felt their case had a lack of resolution and that the INSS showed a lack of compassion when making decisions on their disqualification. Words like “closure” were the more positive emotive words used to describe how directors felt about INSS.

“Closure I would say… when the Insolvency Service gets involved it offers you protection, they are there to act for the creditors, but they are there to act for you.”

Insolvent director, Compulsory liquidation

When asked how they feel about INSS, academics, creditors, and legal professionals were similarly not forthcoming with emotions. Responses were again focused on how the INSS did not make them feel any particular emotions. When asked why this was, the response focused on how they were a government department and not designed to make them feel in a particular way.

There was however one creditor who used the word “disappointed” to describe INSS. When asked why this was the case, they explained how they thought that INSS needs more power to generate better outcomes for creditors such as themselves.

“I would want them to have some more teeth and to bare them more.”

Creditor, Corporations

Additionally, one legal professional stated that INSS made them feel “good” and then was very complimentary about the member of staff they worked with most and how good they felt they were at their job and how pleasant they were to work with.

Action

Insolvent and disqualified directors were also asked how they felt about the last experience with INSS. This was difficult to disentangle from those who had confused INSS with their IP. However, some directors directly contrasted how they felt INSS operated well, as opposed to the IPs they dealt with.

“Very professional, very thorough and very business-like.”

Insolvent director, Compulsory liquidation

This concern about the relationship between IPs was mentioned several times and many felt that INSS should be doing more to regulate them and their behaviour.

“They should be checking up on the people they send out as administrators, they have no policing of their own marshals that go out there … they did say make a complaint because they felt the administrators were not working under the rules of insolvency but [my partners] lawyer said don’t do it because it is poking the bear so where do you stand.”

Insolvent director, Administration

Professionalism was another theme that came through when discussing their experience with the INSS from insolvent directors. This is despite some being negative about their experience overall, they were still able to see these qualities.

Disqualified directors had a slightly different experience than the other groups and were consistent in that they all felt they should have been listened to more and they felt the system was too rigid to deal with their specific circumstances.

“Last chance saloon… how pleasant is that going to be? It was very professionally run… Because of my circumstances I am quite bitter that they didn’t give me an opportunity [to discuss it with them] … they could have taken a step to speak to me and understand the situation.”

Director disqualification, Court order

Some creditors were very similar to the legal professionals in identifying the difficult job INSS has and thinking it did rather well. Once again, the actions of some IPs were considered to be difficult, or in this case below, anger inducing.

“I quite like them, and they do a good job in the circumstances they find themselves in and try to please everyone and they don’t make me feel angry – that’s the IPs.”

Creditor, Corporations

Lastly, the experience of creditors, academics and legal professionals was much like directors with views that varied from neutral to positive on that experience. All these groups focused on how capable and hard working INSS staff were.

“I’ve got a good relationship with them, and I’m really impressed with the way that they have consulted on staff and are willing to listen to concerns.”

Creditor, Corporations

“They have a hard job to do and theirs is harder than most because they are trying to keep everyone happy. They are actually always good fun, and we have a good laugh together. We get down to business but leave on good terms.”

Creditor, Corporations

“It was a very positive experience he gave us a really clear outline of their priorities and what they were working on.”

Legal professional, Corporations

“They stay across the literature as well as the market … approachable professional and with high levels of integrity.”

Academic, Corporations

Vision and values

The INSS strategic plan outlines its vision for the Insolvency Service to be at the centre of a fair, efficient and effective insolvency system that is a global leader in insolvency solutions for citizens and for businesses, underpinned and supported by a profession that is recognised for the highest professional, technical and ethical standards when carrying out its work. Alongside the vision the strategy notes that the core purpose of INSS is delivering economic confidence that underlines our commitment to supporting those in financial distress, tackling financial wrongdoing and maximising returns to creditors, through a highly skilled and dedicated team.

It is clear that the INSS vision and values are not getting across to directors, creditors and legal professionals as almost all were unable to even guess what these might be. Some were willing to guess, but these were varied and some not particularly positive.

“No idea at all.”

Disqualified director, Voluntary undertaking

“No idea but I’d like to think as a government body that’s working on my behalf…. I’d like to think that their visions and values are fairness and honesty….and across the whole piece.”

Insolvent director, Administration

“I think the value should be to maximise the money that creditors get.”

Insolvent director, CVL

Those directors who felt their insolvency was flawed and could have been avoided, were surprised to hear that INSS had a vision or values as they felt no consistency in how they were dealt with throughout their insolvency. For one disqualified director, the perceived lack of vision and values has led them to conclude that the service is politicised. Again, the perceived issue of a small number of rogue IPs was brought up as a failure of the INSS to enforce its values on the regimes. Indeed some insolvent and disqualified directors incorrectly thought that their IP worked for INSS.

“I don’t understand what they want to achieve and for who… their actions don’t make sense to me… which is why I think it has been politicised.”

Disqualified director, Court order

“An institution that was probably put in years ago and intentions were probably to protect people, but the bad part is there are practitioners out there who are rogue, and it seems to me they do not understand that.”

Insolvent director, Administration

Creditors and legal professionals were also unable to guess at what the vision and values of INSS might be.

“I haven’t a clue what their vision is … I’d like to think their values are similar to mine, similar to any good IP, in terms of what they want to achieve, and the balance of outcomes.”

Creditor, Both corporations and natural persons

Academics were the only group able to recite INSS vision and values as some had read through them before. Balancing trust and fairness in the regimes were key themes present in these discussions.

“I should know because I have read their vision… I think they want restructuring and insolvency to deliver the best results for the country… trying to balance an insolvency and restructuring system that saves as much as it can and saves jobs and businesses and at the same time a system that people would regard as a decent system.”

Academic, Corporations

“To uphold faith and trust in the system from the standpoint of debtors and creditors… To ensure rogue traders are deterred and improper trading deterred.”

Academic, Corporations

Associated qualities

Insolvent directors who felt able to comment expressed mainly positive qualities with INSS, but disqualified directors were clearly largely negative. In terms of the positive associated qualities, professionalism and integrity were the most common.

In terms of negative views, disqualified directors were consistent in their negative qualities they associated with INSS. The key theme was lack of transparency in the process they were going through which led them to this conclusion.

“Lack of transparency, disingenuity, lack of competence, lack of efficiency.”

Disqualified director, Voluntary undertaking

“Sorry but none. I am being blunt. They have not made my experience easy, and I wouldn’t want someone else to go through this either.”

Disqualified director, Court order

As mentioned before, academics, creditors and legal professionals were very complimentary of the way INSS staff had worked with them, considering them to be approachable, professional, and having high levels of integrity.

“Approachable – very. I am quite sure if I were to email tomorrow and say I have some knock out piece of research [they] would be interested.”

Academic, Corporations

“Efficiency, hardworking, careful deployment of resource, dedicated employees.”

Academic, Both natural persons and corporations

“They try to be as open as possible, and we get open conversation with them, and they are good at listening.”

Creditor, Corporations

Only one legal professional was somewhat critical of INSS using the term “aloof” to describe the less frequent communication they now receive from them compared to what they had experienced before.

10. Conclusion

The core strengths of the insolvency and enforcement regimes uncovered in the research, which underpin the confidence creditors, legal professionals, academics, and directors had in the regimes were that:

• Those stakeholders that had a wider view of the regimes beyond individual cases, particularly creditors, legal professionals and academics typically believed the regimes to be intuitive and transparent, promoted economic stability and largely fair.
• Similarly, these groups believed that the different stakeholders in the regimes operate to high standards and ethics, with the notable exception of a small group of IPs perceived to be acting unethically.
• They acknowledged the tough role that INSS has dealing with the competing needs of those different stakeholders and were largely complimentary of the regimes balance and difficult trade-offs the regimes must make.
• Those stakeholders associated INSS itself with professionalism.
• Those able to compare the regimes internationally consider the regimes to be amongst the best in the world and one that introduces new regulations and/or innovative tools to address stakeholders needs and improve their experiences. Those stakeholders also feel consulted about any changes to the regimes and believed their views are considered.

These findings are broadly in line with the findings from the previous qualitative research[xxix], which outlined the belief of stakeholders that the regimes were broadly fair, were composed of those involved in the regime acting ethically and to high standards, with similar exceptions, and were also seen as world leading regimes.

Some of the limitations around the confidence creditors, legal professionals, academics, and directors had in the regimes were:

• There is typically very little awareness or understanding of the insolvency and enforcement regimes amongst directors. That extends to their duties as directors, the available options and the potential benefits of the various corporate insolvency procedures, particularly in terms of helping viable companies to survive. This was felt to be particularly relevant amongst directors of SMEs due to the limited resources of SMEs. It was also felt that an increased level of understanding and awareness of the regimes amongst directors could help prevent certain instances of insolvency.
• Across many components of the regimes, creditors, legal professionals and academics largely felt that there was a bias against SMEs, as both solvent and insolvent businesses. With regard to SMEs as creditors, this was perceived to be due to the order of priority for creditors, resulting in lower returns for SME creditors who are left with very little at the end of an insolvency.
• The perceived high costs of insolvency were highlighted as a key issue for SMEs. These were not just the high costs of the insolvency itself, but the costs of understanding the process and legal assistance, which they believed causes issues with enabling a smooth and timely exit for insolvent directors and for businesses as a whole.
• Enforcement and lack of enforcement action was seen as significant concern amongst all groups of stakeholders. This focussed on the high costs of enforcement and the perception of limited resources available to INSS to pursue enforcement action, which stakeholders felt has led to a situation whereby misconduct goes unpunished.
• Findings have highlighted the difficult mental and physical health issues directors can face through the insolvency process. While this is recognised in personal insolvency, it has only recently drawn more attention on the corporate side in the latest World Bank principles[xxx], which has the aim to reduce the stigma associated with insolvency.. The impact materialised in the stigma directors felt as well as more practically, such as directors who were disqualified and therefore were forced to determine how they would avoid personal bankruptcy.
• Directors, like debtors in the previous research, were largely not able to see beyond the outcome of their own cases and therefore typically have a lower level of confidence in the regimes which is tied to the outcome of their case, particularly for disqualified directors or those undergoing compulsory liquidation.
• In terms of brand presence, directors are largely unaware of the INSS, despite having gone through insolvency procedures. Those who are aware hold negative views which are also often linked to the outcome of their case.

These findings are broadly in line with the findings from the previous qualitative research, where stakeholders highlighted the high cost of enforcement and the INSS’ limited resources to pursue enforcement action, the limited funds that can be recovered by SME creditors and debtors’ limited understanding and awareness of the regimes.

11. Annex

Methodology

Sampling

The sample frame for the interviews was provided in part by INSS. The sample frame from the INSS included:

• 3,545 Directors whose companies have entered administration;
• 2,335 Directors whose companies have entered compulsory liquidation;
• 30,565 Directors whose companies have entered CVL; and
• 1,251 Disqualified directors.

The sample frame generated by IFF Research included a sample of:

• 28 Creditors;
• 21 Academics; and
• 42 Legal professionals.

Finally, the sample frame generated by the third-party data supplier included a sample of:

• 699 Directors of solvent companies;

This resulted in a total sub sample of 38,488 individuals across the four stakeholder groups. Table 3 shows the distribution of the sample drawn as well as the response rates based on the number contacted.

Table 3. Distribution of the drawn sample, contacted, and interviewed.

Stakeholder group	Sample drawn	Contacted	Total call attempts	Recruited (% contacted)	Declined (% contacted)	Unusable (%drawn sample)	Interviewed (% contacted)
Directors – Administration	3545	111	117	5	5%	1	1%	0	0%	5	5%
Directors – Compulsory liquidation	2335	83	88	7	8%	6	7%	12	1%	5	6%
Directors - CVL	30565	436	446	6	1%	13	3%	0	0%	5	1%
Directors - Disqualified	1251	347	349	8	2%	47	14%	29	2%	6	2%
Creditors	30	30	85	10	33%	3	10%	0	0%	10	33%
Academics	21	21	40	5	24%	2	10%	0	0%	5	24%
Legal professionals	42	42	164	5	12%	5	12%	0	0%	5	12%
Directors - Solvent	699	348	656	7	2%	55	16%	9	1%	4	1%
Grand Total	38488	1418	1945	53	4%	132	9%	50	0%	45	3%

Recruitment

Creditors, legal professionals, academics and insolvent directors (Administration, Compulsory liquidation, CVL and Disqualified) were initially invited to participate through an invitation email from INSS, sent by IFF. Those individuals were called and asked if they wished to participate, and if so, to indicate their preferred time(s) to be called for an interview. Solvent directors were contacted directly via telephone.

A total of c. 1418 people were contacted and screened to meet quotas based on stakeholder type as well as having a mix in terms of focus Natural Persons, Corporate insolvency or both for creditors, academics and legal professionals.

Fieldwork

The semi-structed interviews followed a topic guide, provided in the Appendix, and were conducted by a team of experienced IFF interviewers. Interviewers were briefed on the overall objectives of the research, core elements for consideration and taken through the topic guide in advance of launching the fieldwork, to ensure consistency in the approach. Interviewers had the flexibility to tailor the sequence of questions and freedom to either not ask questions they deemed not relevant to the respondent or ask new questions not in the topic guide if serendipitous findings arose. The topic guide allowed for the flexibility of responses gathered in line with the specific awareness and understanding of each stakeholder. Following an initial pilot, fieldwork stage amendments were made to the topic guide to better prioritise the questions of most importance to each stakeholder type to ensure all areas of the guide were covered in the limited time available.

Reflexivity

Analysis of the data was conducted by the IFF Research team and may have been interpreted through our own organisational or individual ideological perspectives/values/philosophies. This may have impacted the overall evaluation of the subject matter.

Ethics

IFF Research is an independent market research company, operating under the strict guidelines of the Market Research Society’s Code of Conduct, which is available to view on the MRS website (www.mrs.org.uk). This research has complied with GSR ethical guidance[xxxi] and participation by all stakeholders was entirely voluntary and participants were able to change their data and withdraw from the research at any point, in line with data protection law.

Appendix

Topic Guide

Confidence in the Regime

Introduction (5 mins)

Introduction

Good morning / afternoon. My name is [NAME] and I work for IFF Research, an independent research company. As was outlined in the call you had with us previously, we’ve been commissioned by The Insolvency Service to explore the confidence that stakeholders such as yourself, have in the insolvency and enforcement regime. At the end of the interview we will also ask some separate questions specific to The Insolvency Service itself. Thank you for taking the time to speak to us today.

Purpose of the research

This project will inform The Insolvency Service’s development based upon its five-year strategic plan.

The interview should last up to 60 minutes.

IFF Research is an independent market research company, operating under the strict guidelines of the Market Research Society’s Code of Conduct. We will not pass any of your details on to The Insolvency Service or any other companies. It will not be possible to identify any individual or individual company in the results that we report to The Insolvency Service and the answers you give will not be traced back to you.

Just to remind you, participation is entirely voluntary and will have no impact on any current or future dealings with The Insolvency Service in any way. We’ll be keeping your personal data for up to 8 months after the interview just for the purpose of ensuring we accurately captured your responses. It will be destroyed by June 2023.

Additionally, under data protection law (GDPR), you have the right to have a copy of your data, to change your data, or withdraw from the research at any point. Further information about this can be found on our website at: www.iffresearch.com/gdpr/

Check permission to record – just so I don’t have to rely solely on taking notes.

ADD IF NECESSARY: The recording will be stored on an encrypted area of our server at IFF and only the IFF researchers and IFF’s in-house quality assurers will have access to it.

Do you have any questions before we begin?

A Respondent background (3 mins)

INSOLVENT DIRECTORS ONLY

• A1 First of all, please could you tell me a little about you, the business made insolvent, and the insolvency proceedings you have been through?

refer to screener info to guide this

• Business size
• Role in the business
• Industry
• Background to their insolvency proceedings?
• Type of insolvency proceedings?
• Level of Debt (if willing)
• Were you supported through the insolvency process by a third party organisation?
  • Could you tell us who that third party organisation is?
  • Why did you use them?

DISQUALIFIED DIRECTORS ONLY

• First of all, please could you tell me a little about you, the business made insolvent, and the background to your disqualification?

refer to screener info to guide this

• Business size
• Role in the business
• Industry
• Background to the disqualification
• Were you supported through the disqualification process by a third party organisation?

SOLVENT DIRECTORS ONLY

• First of all, please could you tell me a little about you and your business?

refer to screener info to guide this

• Business size
• Role in the business
• Industry

CREDITORS ONLY

• Could you tell me a bit about your organisation and your role within it?
• Size of the business?
• How long have you worked there?
• IF TRADE ASSOCIATION: How does your organisation support creditors?
• Do you mainly deal with personal insolvencies, corporate insolvencies or both?

ACADEMICS ONLY

• Could you tell me a bit about the topics your research covers in the insolvency space and who you produce it for?
• Do you mainly research personal insolvencies, corporate insolvencies or both?
• And could you briefly describe some of your research in this area?
• Any information about the research benefactors

LEGAL PROFESSIONALS ONLY

• Could you tell me a bit about your organisation and your role within it?
• What is your role within your organisation?
• Size of the business?
• How long have you worked there?
• Do you mainly deal with personal insolvencies, corporate insolvencies or both?

B Understanding and awareness (5 mins)

NB: Section asked of directors and creditors only to ‘warm’ them up /ensure they are thinking about the regime itself

ALL DIRECTORS AND CREDITORS ONLY

B1. How well do you understand the rules and procedures around insolvency and enforcement, known as the insolvency and enforcement regime?

• Where did you first find out about the regime (rules and procedures) around insolvency and enforcement?
• What do you understand the insolvency and enforcement regime to mean?
• Are there any areas which you are confused by?

REFER TO text to outline insolvency and enforcement:

The insolvency regime refers to the overall insolvency legal framework (for which The Insolvency Service has policy responsibility) as well as the operational work The Insolvency Service delivers.

The enforcement regime incorporates the Authority’s work in respect of misconduct arising from insolvency and during the life of a company.

C Deleted section

D Perceptions of fairness (10 mins)

ALL

Now I’m going to focus on your views on the insolvency and enforcement regimes [IF CREDITOR, LEGAL PROFESSIONAL, OR ACADEMIC, this includes both corporate and natural person insolvency].

As we outlined before, by regime I mean the rules set out in law and procedures, overseen by The Insolvency Service, which aim to give confidence to people who have experience with insolvency such as you

ALL

D1 Overall, how fair do you consider the regime to be?

• Why? Why not?
• Do you agree/disagree that it treats all stakeholders (such as individuals, creditors or debtor businesses) fairly?
• Can you provide me with examples?

INSOLVENT DIRECTORS AND DISQUALIFIED DIRECTORS ONLY

D2 At the time of your [IF INSOLVENT: insolvency; IF DISQUALIFIED: disqualification], did you understand why it was necessary for you to go through [IF INSOLVENT: insolvency; IF DISQUALIFIED: disqualification] procedures?

• EXCLUDING COMPULSORY LIQUIDATION: How well explained was this? Who by?
• FOR COMPULSORY LIQUIDATION: Were you made aware of the process before procedures were formally undertaken?
• FOR COMPULSORY LIQUIDATION: Was the process explained to you following your receipt of the compulsory liquidation? Who by?
• Did you understand the consequences of the [IF INSOLVENT: insolvency; IF DISQUALIFIED: disqualification] procedure?

SOLVENT DIRECTORS ONLY

D3 How well do you understand the need for the insolvency and enforcement regime?

LEGAL PROFESSIONALS, ACADEMICS AND CREDIT ASSOCIATIONS ONLY

D4 How well do people or businesses understand what insolvency procedures are available and why they are sometimes necessary?

• How well do they understand the consequences of the insolvency procedure?

ALL

We are going to ask a few questions around the rules around enforcement, including financial wrongdoing, risky behaviour and fraud.

[ADD IF INSOLVENT OR DISQUALIFIED DIRECTOR] Just to highlight, we are not referring to your personal experience and the reasons behind that, but instead want to understand whether you feel that the current rules enable that situation to arise.

ALL

D5 Thinking about prevention, how well do you consider the regime to discourage risky behaviour [IF CREDITOR, LEGAL PROFESSIONAL, OR ACADEMIC: either on the corporate or natural person side]?

• To what extent is the regime able to mitigate against risky behaviour from debtors?
• To what extent do you think the regime helps prevent people getting into debt and reduced risky borrowing?
• What improvements could be made to reduce this risk?

D6 Deleted question

ASK ALL

D7 Thinking now about enforcement, to what extent do you think the regime is able to tackle financial wrongdoing? [If CREDITOR, LEGAL PROFESSIONAL, OR ACADEMIC; in relation to corporate or natural persons]

• [IF DIRECTOR] Do you understand why enforcement action sometimes needs to be taken?
• [If DIRECTOR] Do you understand the consequences of enforcement action being taken?

ASK ALL LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS.

ASK IF DIRECTOR FEELS AWARE AND ABLE TO COMMENT ON THE RULES AROUND FINANCIAL WRONGDOING - IF NOT, RECORD A “DON’T KNOW” RESPONSE

D8 How well do you think the regime is able to: 1) detect; and then 2) tackle fraud and other financial misconduct? [IF LEGAL PROFESSIONAL, ACADEMIC, OR CREDITOR; in relation to corporate or natural persons]

• Does the regime prevent the concealment of assets and or income?
• How well do you think the regime is able to deter fraud?
  • How could this be improved?
• Does this vary by different stakeholders in the process?

D9 Deleted question

ASK ALL LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS.

ASK IF DIRECTOR FEELS AWARE AND ABLE TO COMMENT ON THE RULES AROUND FINANCIAL WRONGDOING - IF NOT, RECORD A “DON’T KNOW” RESPONSE

D10 To what extent would you consider that those who break rules of the regime are identified quickly, and face proportionate and meaningful sanctions? [IF LEGAL PROFESSIONAL, ACADEMIC, OR CREDITOR; in relation to corporate or natural persons]

• Why do you say this?
• How do you think this could be improved?

LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS ONLY

D11 How well does the regime provide for the independent review of actions undertaken by the debtor (and in the case of a company, its management) in the period immediately prior to an insolvency procedure? Lower Priority

• To what extent does this occur? How often and in what circumstances?
• Why do you say this?

ALL

D12 To what extent do you think that those involved within the insolvency system act with high ethical, technical and professional standards? [IF LEGAL PROFESSIONAL, ACADEMIC, OR CREDITOR; in relation to corporate or natural persons]

• Do those involved in the system share/provide enough information?
• Can you think of any good examples / bad examples?

E Perceptions of efficiency (10 mins)

EXCEPT SOLVENT DIRECTORS

E1 To what extent would you say the Insolvency regime is predictable and intuitive for people who have experience with insolvency? [If CREDITOR, ACADEMIC OR LEGAL PROFESSIONAL; this applies to both corporate or natural person procedures]

• PROMPTS FOR ALL:
  • How clear and accessible is the advice/guidance available on the insolvency process?
• PROMPTS FOR INSOLVENT AND DISQUALIFIED DIRECTORS
  • At the time of your insolvency, did you know what Insolvency procedures were available?
  • Were the options clear?
  • Did you know how to access them?
  • How did you decide which the best option was?
• PROMPTS FOR LEGAL PROFESSIONAL, ACADEMIC, OR CREDITOR
  • How well do your users know what insolvency procedures are available?
  • How clear are their options?
  • Do they know how to access them?
  • Do they know when to use one approach over another?

ALL

E2 To what extent do you feel the regime is transparent? [IF LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS; this applies to both corporate or natural person insolvency]

• INSOLVENT DIRECTORS AND DISQUALIFIED DIRECTORS ONLY: Did you understand what was happening at the time of your proceedings?
• COMPULSORY LIQUIDATION ONLY: Did you understand why your creditors lodged a petition with the court against you? Did you understand the implications of this?
• Do you feel this could be improved? How?
• Do you feel levels of transparency vary for different interested parties?

SOLVENT DIRECTORS

E2 How clear are you on your legal duties as a director?

• FOR REFERENCE IF NEEDED AS A PROMPT: As a director, you must perform a set of 7 duties. These are:
  • Following the company’s constitution
  • Promote the success of the company
  • Using your own independent judgement
  • Exercise reasonable care, skill and diligence
  • Avoid conflicts of interest
  • Not accepting third party benefits offered to you because you are a director
  • Disclose interests if you would personally benefit from transactions
• How aware are you of how these responsibilities change if a company becomes insolvent?

SOLVENT DIRECTORS

E3 How well do people or businesses understand what insolvency procedures are available and why they are sometimes necessary?

• How well do people or businesses understand what insolvency procedures are available and why they are sometimes necessary?

SOLVENT DIRECTORS

E4 How well do you understand the tell-tale signs of insolvency?

• How aware are you of the tests for insolvency?
  • Cash flow test
  • Balance sheet test
  • IF UNAWARE: What benefits could these tests offer you?
  • IF UNAWARE: What circumstances might one use them?

SOLVENT DIRECTORS

E5 Are you aware of Insolvency Service guidance on Company health check?

• IF YES: Why did you look at it?
• IF YES: How clear and accessible did you find this guidance?
• IF YES: How useful did you find the guidance?
• IF YES: How could the guidance be improved?

ALL

E6 In your view, (INSOLVENT AND DISQUALIFIED DIRECTORS: were; SOLVENT DIRECTOR, LEGAL PROFESSIONAL, ACADEMIC, OR CREDITOR: are) procedures completed within a reasonable timeframe? [If CREDITOR, LEGAL PROFESSIONAL, OR ACADEMIC; this applies to both corporate or natural person procedures, If DISQUALIFIED DIRECTOR; We are interested in hearing your views on your insolvency procedure, disqualification, or both]

• Were/are there any aspects of the process that were/are particularly burdensome in terms of time?
  • What were/are they?
  • Were the timeframes of the insolvency procedures impacted by COVID-19? How were they affected by Covid-19? How significantly?
  • How could they be improved?
• To what extent do you think the regime enables early treatment of financial distress?
  • How well does it do this?
  • How could this be improved?

ALL EXCEPT SOLVENT DIRECTORS

E7 To what extent do you consider that the regime minimises and reduces costs [IF DIRECTOR: for your insolvency procedure]? [If CREDITOR, LEGAL PROFESSIONAL, OR ACADEMIC; this applies to both corporate and natural person procedures If DISQUALIFIED DIRECTOR; or disqualification]

• In terms of
  • exit costs? (Costs to exit the system, i.e. by becoming insolvent)
  • court costs? (through the availability of out of court procedures)
  • (CREDITOR, LEGAL PROFESSIONAL, OR ACADEMIC ONLY) restructure costs?
  • fees? (Including court fees, INSS fees, and other fees)
  • (CREDITOR, LEGAL PROFESSIONAL, OR ACADEMIC ONLY) reducing wasteful collection costs for creditors?

IF ADMINISTRATION, COMPULSORY LIQUIDATION, DISQUALIFIED DIRECTOR, CREDITOR, ACADEMIC OR LEGAL PROFESSIONAL

E8 [IF ADMINISTRATION: Did your insolvency procedure go through the courts? IF YES:] How well do you feel the court process is conducted? Lower Priority

• Are the courts congested?
• To what extent do you feel that the Judges hold the required expertise?

ALL EXCEPT SOLVENT DIRECTORS

E9 How easy or difficult is it to pursue out of court procedures?

E10 Deleted question

ALL

E11 To what extent (DIRECTORS: did you; CREDITOR, ACADEMIC OR LEGAL PROFESSIONAL: do you) use digital tools and resources in the insolvency procedure(s) available? [CREDITOR, ACADEMIC OR LEGAL PROFESSIONAL; this applies to both corporate or natural person procedures]`

[IF YES]

• Can you tell me more about these tools and how they were/are used?
• Do/did they reduce cost?
• Do/did they reduce time?
• Any room for improvements?

E12 Deleted question

ASK ALL

E13 To what extent would you say the Insolvency regime helps promote economic stability and growth across the UK? [CREDITOR, ACADEMIC OR LEGAL PROFESSIONAL; this applies to both corporate or natural person procedures]

• Do you think it helps encourage and facilitate entrepreneurialism?
• Do you think it helps increase the productivity of firms?

F Perceptions of effectiveness (10 mins)

ASK ALL

F1 In your view, to what extent does the regime achieve its aim of balancing the needs of all stakeholders? [CREDITOR, ACADEMIC OR LEGAL PROFESSIONAL; this applies to both corporate or natural person procedures]

PROMPTS FOR LEGAL PROFESSIONALS, ACADEMICS AND CREDITORS ONLY

IN RELATION TO NATURAL PERSON PROCEDURES

• How, if at all, does the regime support those individuals in financial distress whilst balancing the interests of creditors?

IN RELATION TO CORPORATE PROCEDURES

• How, if at all, does the regime respect the interest of employees?
• How, if at all, does the regime support the objective of keeping more employees in their jobs?
• How, if at all, does the regime achieve its aim of balancing the need for business rescue with the need to maximise returns for creditors?

ALL

F2 Does the regime meet the needs of SMEs? [this applies to both corporate or natural person (e.g. where an SME may be a creditor) procedures]

• Does the regime minimise burden on business?
• How can the burden for SMEs be further minimised?
  • Are there simplified insolvency processes with fewer formalities, shorter deadlines and lower costs that may be beneficial for smaller businesses?
  • What is the availability of practical online documentation templates and checklists?

ALL

F3 How well do you feel the regime supports the interests of creditors, including making sure that the maximum value is obtained for assets and estates? [CREDITOR, ACADEMIC OR LEGAL PROFESSIONAL; this applies to both corporate or natural person insolvency]

LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS ONLY

F4 How well do you feel the regime enables the equitable treatment of creditors? [this applies to both corporate or natural person insolvency] Lower Priority

• Does the regime protect the rights of minority creditors?

Does it properly balance the needs of different groups (e.g. employees, trade creditors, landlords)?

LEGAL PROFESSIONALS, ACADEMICS, CREDITORS AND SOLVENT DIRECTORS ONLY

F5 How well does the regime help viable companies to survive and non-viable companies to a smooth and timely exit? [this applies to corporate insolvency only]

• How can this be improved?
• [if LEGAL PROFESSIONALS, ACADEMICS, or CREDITORS] Does the regime facilitate the continuation of the debtor’s day-to-day operations during a reorganisation procedure?

F6 Deleted question

INSOLVENT AND DISQUALIFIED DIRECTORS ONLY

F7 To what extent do you feel the regime enabled you to have a smooth and timely exit?

• What could have improved this?

ASK ALL

F8 How does the current insolvency system affect investment decision making? [this applies to both corporate or natural person insolvency]

IF NOT ALREADY COVERED - LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS ONLY

F9 How well does the process incentivise stakeholder participation in proceedings? [this applies to both corporate or natural person insolvency]

• How well does the regime prevent stakeholders from undermining the insolvency process?

LEGAL PROFESSIONALS, ACADEMICS AND CREDITORS WHO WORK WITH NATURAL PERSONS

F10 How well does the regime ensure that those who can pay, will pay? [this applies to natural person insolvency]

LEGAL PROFESSIONALS, ACADEMICS AND CREDITORS WITH EXPERIENCE OF NATURAL PERSONS INSOLVENCY ONLY

F11 In your view, how well does the regime help people in financial distress?

ALL

F12 Do you feel there is stigma around certain insolvency procedures?

• Does this differ depending on the insolvency procedure in question?
• How does the regime help to reduce stigma around insolvency if at all?
• How well is the regime and system set-up to help people in financial distress/unfortunate positions to seek help?

INSOLVENT DIRECTORS AND DISQUALIFIED DIRECTORS ONLY

F13 Has the experience of the regime had any impact on people around you?

• How did the insolvency process affect your overall wellbeing?
  • IF NEGATIVE IMPACT: Could anything have been done differently to minimise the impact on your wellbeing?
  • IF POSITIVE IMPACT: What part of the process benefitted your wellbeing most?
• Have you experienced any wider health impacts as a result of the insolvency process?
  • IF NEGATIVE IMPACT: How could these be avoided in future?
• How well has the process enabled you to move forward?
  • Why do you say that?

ALL

F14 To what extent do you think that the regime effectively contributes to rehabilitation and preventing future insolvency? [IF LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS; this applies to both corporate or natural person insolvency and rehabilitation]

• Why do you say that?
• Do you feel there can be improvements to existing education and guidance to ensure that relevant stakeholders can avoid insolvency in future?
• What else could be done to prevent future insolvency?
• [FOR LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS] How could the rehabilitation of corporate and natural persons be improved?
• [FOR INSOLVENT DIRECTORS AND DISQUALIFIED DIRECTORS] Thinking about your own experiences, what do you think would help you to avoid future insolvency procedures?
• [FOR INSOLVENT DIRECTORS AND DISQUALIFIED DIRECTORS] To what extent do you think you would value receiving training materials that support directors to learn from their insolvency experience and hopefully avoid insolvency in the future?
  • How would this be helpful?
  • What do you think this training should include?

SOLVENT DIRECTORS ONLY

F15 To what extent do you think you would find a company health check tool, that flags the early indicators of possible insolvency, useful?

• Who would use this tool in the business?

G World Leading (5 mins)

G1 Deleted question

ASK ALL

G2 To what extent would you consider the insolvency regime to be innovative or forward thinking? [CREDITOR, ACADEMIC OR LEGAL PROFESSIONAL; this applies to both corporate and natural person insolvency]

• Why?
• Are there any opportunities for innovation which you believe could help The Insolvency Service deliver for its stakeholders?

LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS ONLY

G3 When regulations are drafted /the regime is changed, to what extent are all stakeholders / parties consulted? [this applies to both corporate and natural person insolvency]

LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS ONLY

G4 And thinking now about international comparisons, how do you think the UK insolvency regime compares to other regimes? [this applies to both corporate and natural person insolvency]

IF ABLE TO TALK ABOUT OTHER INTERNATIONAL REGIMES - LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS ONLY

G5 Would you consider the UK to be at the forefront of global standards and practices? Lower Priority

IF ABLE TO TALK ABOUT OTHER INTERNATIONAL REGIMES - LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS ONLY

G6 What insolvency or enforcement regimes, if any, stand out as exemplary? [this applies to both corporate and natural person insolvency] Lower Priority

• Why?
• What, or how, could The Insolvency Service learn from this example?

LEGAL PROFESSIONALS, ACADEMICS, AND CREDITORS ONLY

G7 How does the regime perform on cross-border insolvency? [this applies to corporate insolvency]

• Why do you say that?
• How could this be improved?

H Confidence in regime (5 mins)

ALL

H1 Having now discussed in depth different aspects of the insolvency and enforcement regime, how confident are you in the insolvency regime?

REMINDER IF NECESSARY: The insolvency regime refers to the overall insolvency legal framework (for which The Insolvency Service has policy responsibility) as well as the operational work The Insolvency Service delivers.

• On a scale of 1-10 with 10 being very confident and 1 being not at all confident how confident would you say you are in the insolvency regime? PROBE FOR ONE WHOLE NUMBER TO PUT IN THE IN FRAMEWORK
• Why do you say this?
• What underpins your view?
  • Fairness?
  • Efficiency?
  • Effectiveness?
  • World beating?

ALL

H2 Having now discussed in depth different aspects of the insolvency and enforcement regime, how confident are you in the enforcement regime?

REMINDER IF NECESSARY: The enforcement regime incorporates the Authority’s work in respect of misconduct arising from insolvency and during the life of a company.

• On a scale of 1-10 with 10 being very confident and 1 being not at all confident how confident would you say you are in the enforcement regime? PROBE FOR ONE WHOLE NUMBER TO PUT IN THE IN FRAMEWORK
• Why do you say this?

• What underpins your view?

  • Fairness?
  • Efficiency?
  • Effectiveness?
  • World beating?

ALL

H3 In a couple of sentences, how, if at all, could the insolvency and enforcement regime be improved? [IF CREDITOR, LEGAL PROFESSIONAL, ACADEMIC; this applies to both corporate and natural person insolvency]

• What would you change about the regime if you could?

I Brand Presence and awareness (10 mins)

Now we want to move on from discussing your confidence in the regime to discuss your wider views of The Insolvency Service itself, separate from the insolvency and enforcement regimes.

IF NOT ALREADY COVERED - ALL

I1 How familiar are you with The Insolvency Service as an organisation?

SOLVENT DIRECTORS ONLY

I2 Have you ever interacted with The Insolvency Service directly?

ALL

I3 When you think of The Insolvency Service, what comes to mind first?

• Why does this come to your mind first?

ALL

I4 When you think of The Insolvency Service, how do you feel?

• Why do they make you feel that way?

IF NOT ALREADY COVERED - ALL EXCEPT SOLVENT DIRECTORS

I5 How would you describe your last experience with The Insolvency Service?

• Positive or negative?

• IF NEGATIVE: What could they have done to have made the experience more positive for you?
• IF POSITIVE: What made the experience more positive for you?

IF NOT ALREADY COVERED - ALL EXCEPT SOLVENT DIRECTORS

I6 How frequently have you interacted with The Insolvency Service in your current or previous roles?

ALL

I7 What do you think the vision and values of The Insolvency Service are?

• How well do you think it is achieving them?
• Are they aligned with the brand and what you know about The Insolvency Service?

ALL

I8 What qualities do you associate with The Insolvency Service?

J Conclusion and thanks (2 mins)

ALL

J1 Thank you for your time so far. Before we finish, do you have any other comments that you would like to add about what we’ve discussed today?

ALL

J2 Would you be willing for us to call you back if we need to clarify any of the information you have provided today…?

ASK CREDITOR ASSOCIATIONS, ACADEMICS AND LEGAL PROFESSIONALS

J3 Would you be willing to put us in touch with any [IF ACADEMIC: academics / IF CREDITOR: creditors / IF LEGAL PROFESSIONAL: legal professionals] who may be willing to hear from us?

ALL

J4 Would you be willing for us to use quotations from this discussion? These would be included in any reporting on an anonymised basis, so you won’t be identifiable to The Insolvency Service from what you say.

ALL

J5 Just to confirm, we’ll be keeping your confidential responses to the interview for analysis purposes and if you’d like a copy of your data, to change your data or for your data to be deleted then please get in contact with IFF Research on [email protected] or on 020 7250 3035

I declare that this survey has been carried out under IFF instructions and within the rules of the MRS Code of Conduct.

Interviewer signature:

Date:

Finish time:

Interview Length (Mins)

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The Insolvency Service. Confidence in the Regime (2022). Available at: Confidence in the Regime - GOV.UK (www.gov.uk)

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Qualtrics](https://www.qualtrics.com/uk/experience-management/brand/perception-surveys/?rid=ip&prevsite=en&newsite=uk&geo=GB&geomatch=uk)

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Srivastava, A. & Thomson, S. B. (2009).Framework Analysis: A Qualitative Methodology for Applied Research Note Policy Research. JOAAG, Vol. 4. No. 2

The Insolvency Service. Confidence in the Regime (2022). Available at: Confidence in the Regime - GOV.UK (www.gov.uk)

Corporate Insolvency and Governance Act 2020. Available at : Corporate Insolvency and Governance Act 2020 (legislation.gov.uk)

Shah, Sunit. The Principal – Agent Problem in Finance (2015). Available at: The Principal - Agent Problem in Finance by Sunit Shah :: SSRN

World Bank. Principles for Effective Insolvency and Creditor/Debtor Regimes (2021). Available at: http://hdl.handle.net/10986/35506

The Insolvency Service. Being a company director (2022). Available at: Being a company director - GOV.UK (www.gov.uk)

The Insolvency Service. Company health check: keeping your business on track (2022). Available at: Company health check: keeping your business on track - GOV.UK (www.gov.uk)

IMF. Working Paper: The Use of Data in Assessing and Designing Insolvency Systems (2018). Available at: https://www.imf.org/-/media/Files/Publications/WP/2019/wp1927.ashx

[xix] United Nations Commission on International Trade Law. Legislative Recommendations on Insolvency of

Micro- and Small Enterprises(2017). Available at: part_5_en.pdf (un.org)

The Insolvency Service. Company voluntary arrangement research report for the Insolvency Service (2022). Available at: Company voluntary arrangement research report for the Insolvency Service - GOV.UK (www.gov.uk)

Annual Review of Insolvency Practitioner Regulation (2021). Available at: https://www.gov.uk/government/publications/insolvency-practitioner-regulation-process-review-2021/annual-review-of-insolvency-practitioner-regulation-2021

[xxii] World Bank. Principles for Effective Insolvency and Creditor/Debtor Regimes (2021). Available at: http://hdl.handle.net/10986/35506

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Micro- and Small Enterprises(2017). Available at: part_5_en.pdf (un.org)

World Bank. Principles for Effective Insolvency and Creditor/Debtor Regimes (2021). Available at: http://hdl.handle.net/10986/35506

World Bank. Principles for Effective Insolvency and Creditor/Debtor Regimes (2021). Available at: http://hdl.handle.net/10986/35506

[xxvi] United Nations Commission on International Trade Law. Legislative Recommendations on Insolvency of

Micro- and Small Enterprises(2017). Available at: part_5_en.pdf (un.org)

World Bank. Working Group for the Treatment of the Insolvency of

Natural Persons. Available at: http://hdl.handle.net/10986/35506 https://openknowledge.worldbank.org/bitstream/handle/10986/17606/ACS68180WP0P120Box0382094B00PUBLIC0.pdf?sequence=1&isAllowed=y

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