The Department for BEIS has recently published a consultation to the UK's insolvency and corporate governance landscape including significant proposals to extend the liability of directors of holding companies that sell insolvent subsidiaries.
In the paper, the BEIS committee submitted the proposal to increase the personal liability of directors of holding companies who sell an insolvent subsidiary which later enters into liquidation or administration. With a suggested "look-back period" of 2 years from the date of sale, the suggested reform could place considerable obligations on directors when considering their long term restructuring plans.
Despite attracting significant opposition to its proposal, the government showed no intention to reverse its suggested reforms. In an attempt to provide support to the concerning respondents, the BEIS committee released a statement reassuring that additional measures would be in place to safeguard directors who had a “reasonable belief at the time of the sale, that it would likely deliver a no worse outcome than bringing formal insolvency proceedings", but left no comment as to exactly how.
The paper however did comment on the necessity for additional guidance for directors. Proposing to introduce supplementary initiatives, greater access to training and mandatory training for directors of "large companies", the BEIS committee appeared to be echoing the importance of the fiduciary responsibility of the director in the current climate.