The Enterprise Act, which comes into effect on April 1, 2004, has a loophole that enables false bankruptcy offenders to get off without punishment, legal experts have said. According to Department of Trade and Industry estimates, between seven to 12 per cent bankruptcies are false.
The Act replaces criminal punishments for false bankruptcy declarations with Bankruptcy Restriction Orders (BRO), which restrict people from availing credit without disclosing their financial status, operating under a different name or holding a company’s senior management for between a period of two to 15 years.
The loophole is in the fact that offenders who were booked on April 1, 2004 can be prosecuted neither under the old law nor the new one because the new BRO laws are not backdated.
An Insolvency Service spokesperson, while accepting that some offenders would escape through this loophole, said the number wasn’t a large one.
Mark Sands, senior manager, personal insolvency, KPMG said, “This was an unintended consequence of the new legislation and potentially means thousands have got off scot-free in the last year. It is bound to mean that some will set up businesses after one or two years, when they should have been kept off the streets for up to 15 years.”
In 2004, only 12 BROs were issued as against the thousands that were predicted annually. The Enterprise Act also cuts imprisonment for false bankruptcy to one year from the previous three years. Due to this, over 40,000 offenders would be released today.
Posted
on : Mon, 04 Apr 2005 00:00 GMT | Debt News
By : Mark Richardson
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