Insolvency – consultation on civil enforcement

The government has published a consultation paper setting out proposals to change the civil enforcement regime to add new tools for dealing with misconduct by companies and directors.

The government says that the existing tools, of director disqualification and winding up companies in the public interest, no longer provide enough flexibility to take enforcement action in the modern business world.

The changes being proposed include:

• Disqualification decisions to be made by the Secretary of State – Director disqualification decisions would be made by the Secretary of State, rather than the courts, with appeals to an independent tribunal.
• New director ‘restrictions’ regime for lower‑level misconduct – The government is proposing to allow directors who have acted negligently or incompetently (rather than wilfully committed wrongdoing) to continue to run a company subject to safeguards, for example having to have a joint bank signatory, that would be in place for three years.
• Unfair transactions – The government is proposing reforms to insolvency law to make it easier to challenge unfair transactions, for example by reversing the burden of proof where there is an undervalue transaction between an insolvent company and a person connected to it (meaning that the connected party would have to prove the transaction was fair).

The consultation closes on 17 June 2026.