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It is expected that 500 firms a year could have breathing space to put in place a rescue plan as a result of this Bill.
The proposals included in the Insolvency Bill will:
Publishing the Bill, Mr Byers said:
"Promoting entrepreneurship and responsible risk-taking in the UK is a key element in fostering a more competitive nation. The new regime proposed in the Insolvency Bill would help to achieve that.
"This Bill strikes the right balance of protecting the rights of consumers and creditors, improving the insolvency system and allowing financially troubled firms some breathing space in an increasingly competitive business world.
"To help stop fundamentally viable businesses going to the wall, this Bill introduces a moratorium for firms in financial trouble using Company Voluntary Arrangements (CVAs). This means that managers of around 500 small firms a year could have the breathing space needed to put a rescue plan to creditors without fear of legal action.
"This will benefit the management, workers, creditors, suppliers and the wider economy."
The Bill also proposes changes to the way directors are disqualified.
"At present there can be lengthy delays while the courts disqualify someone from being a director. This Bill will introduce a fast-track system where, if the director agrees, disqualification can be done administratively rather than through the courts.
"Some 1,500 unfit directors were disqualified last year after a company failure and, with only 10 per cent of cases contested and going to a full court hearing, there is obviously a great deal of scope to reduce the burden on the courts, free up more of their time to deal with other issues and to save costs.
"Our commitment to disqualifying unfit directors and protecting the public is unequivocal - our improvements to the disqualification system prove that."
Mr Byers also announced that the Government has decided not to proceed with an initial proposal to require floating chargeholders to give a period of notice before the appointment of an administrative receiver.
Mr Byers said:
"Following consultation on the proposed changes, and listening to the views of the Trade and Industry Select Committee, that proposal is not included in the Bill.
"There was concern that company rescues might be thwarted where, for example, a bank acted over-hastily and appointed administrative receivers before a voluntary agreement could be agreed. Views suggested that in practice, receivers are only appointed following discussions with the company and attempts to rescue it, or where there is a well-founded fear of fraud or malpractice. However, I will be looking to banks and other financial institutions to make sure that any such problems do not occur in future."
Go to www.parliament.the-stationery-office.co.uk/pa/ld199900/ldbills/028/2000028.htm to find what the Bill proposes in detail.
Mr Byers commented:
"This Government appreciates that among the very many businesses that do succeed and thrive in an enterprising economy, some businesses will fail, for various reasons. The new insolvency regime will aid small firms overcome short term financial difficulties by giving them sufficient time to put together a suitable rescue plan.
"The last few years have seen a record number of business start-ups - around a million in the last two years alone. I am confident that this new insolvency regime will make a big difference if firms do encounter short term financial worries."
Company Voluntary Arrangements were introduced by the Insolvency Act 1986 Part I and provide a means for financially troubled companies to reach a legally binding agreement with their creditors in satisfaction of their debts or a scheme or arrangement of their affairs.
There were: 475 CVA's approved in 1999
470 in 1998;
629 in 1997; and
Under Section 6 of the Company Directors Act 1986 a person can be disqualified by the courts, by way of a disqualification order, from being an insolvency practitioner or director, or from being involved in the promotion, formation and management of a company, for between two and fifteen years, if his conduct in an insolvent company (or partnership in England and Wales) makes him unfit and if other specified condition are satisfied.
The amount of Disqualification Orders made by the court under Section 6 of the Company Directors Disqualification Act 1986 were:
1,489 in 1999;
1,359 in 1998; and
1,219 in 1997.
The Insolvency Bill was announced in the Queen's Speech on 17 November 1999.
Copies of the Bill can be purchased from the Stationery Office.