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The Cork Committee pointed out that the aim of a good insolvency law was to
diagnose and treat imminent insolvency at an early stage, and to provide mechanisms
to preserve the company as a going concern if possible. 195 The law must also
recognise that there are other parties affected by insolvency apart from the insolvent
debtor and its creditors, and that they should also be protected. 196 The aims of
insolvency law pointed out by the Cork Committee were consistent with the rescue
culture being advocated in the 1990s.
The recommendations of the Cork Committee were implemented in the UK
Insolvency Act 1986. The Insolvency Act 1986 contained detailed provisions on
corporate insolvency. It was later amended by the Insolvency Act 1994 on issues
relating to personal liability of administrators and administrative receivers and was
further amended by Insolvency (No 2) Act 1994. 197 In 2000, the Insolvency Act 1986
was again amended to allow the company to obtain an initial moratorium when a
voluntary arrangement has been proposed.
The Act also amended the provisions on directors‟ disqualification in the Company
Directors Disqualification Act 1986. Further amendments were made in the
Enterprise Act 2002, such as permitting companies to have voluntary arrangements
without the court‟s order, introducing prohibition on the appointment of
administrative receivers and abolishing the crown preferences. 198 Prior to the
introduction of voluntary arrangement in the Insolvency Act 1986, there was no
mechanism to put the company under the management of a third party for the benefit
of the company and the unsecured creditor. 199 The only available mechanism was the
195 Cork Report above n74 [198(a),(b) and (j)].
196 Ibid.
197 Goode above n79 at [1-06].
198 Ibid at [1-21].
199 Ibid at [1-22].
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