Insolvency Bonds: Practice and Reform

Abstract

This is the second article in a series of articles examining insolvency bonds. In the first we examined the historical and policy background to the bonding scheme. Insolvency practitioner (IP) misconduct and the compulsory requirement for bonding has continued since that first contribution. Despite being a small and often overlooked area of the insolvency legislation bonding continues to yield much uncertainty, conflict and misunderstanding. In this article we examine current practice and potential reform ideas with a view to alleviating some of that uncertainty. Part A of the article examines current bonding legislation and its problems and the current bond claim process. Part B examines reform ideas and potential movements forward. All parts consider the obstacles for a successor practitioner in recovering the losses.