The British government is considering smoothing the way for creditors to get a winding up order issued to debtors, it has been reported.
According to out-law.com, Westminster is preparing to allow banks and other lenders to have insolvent debtors wound up without needing to go to court.
It claimed that the move would be part of a number of changes to help streamline the bankruptcy system.
Such an ability would only be extended to cases where there is no dispute, but it is thought that the changes could save the Treasury millions of pounds per year.
"These reforms should help to deliver better outcomes, reduce unnecessary burdens on creditors and debtors and bring substantial savings for the taxpayer," said business minister Ed Davey.
He added that courts would still play a vital role in resolving disputes, but a smoother path needs to be created for cases where no disagreement has taken place.
Law firm Pinset Masons, which operates out-law.com, claimed that insolvency practitioners could soon see a very different system for the winding up of companies.
Restructuring specialist Alastair Lomax explained: "These changes are procedural but have wider effects, most obviously in terms of enforcement and termination triggers in legal documents – credit teams, lenders, contract teams and restructuring professionals need to take note."
The government consultation into the issue found that just five per cent of debtors choose to defend the bankruptcy petitions brought against them, meaning that the majority of cases could be settled without the need for court action.
Instead, an adjudicator from the Insolvency Service could be used to make decisions, negating the need for the courts to become involved.
In other news, the Insolvency Service recently successfully wound up two firms it discovered to be involved in the illegal practice of landbanking.