On 6 April 2014 the Industrial and Provident Societies and Credit Unions (Arrangements, Reconstructions and Administration) Order 2014 will come into force.
The effect of this new legislation is that organisations registered under the Industrial & Provident Societies Act 1965 can now enter into Administration, Company Voluntary Arrangement or Companies Act arrangement or reconstruction.
The Industrial and Provident Society is a legal vehicle which can be used by a variety of 'not for profit' organisations and is often utilised by working mens' clubs, agricultural co-operatives, mutual investment societies and other social enterprise organisations. They are registered with and regulated by the Financial Conduct Authority.
Although the possibility of the rescue procedures identified above being made available to Industrial & Provident Societies has existed since the Enterprise Act 2002 came into force, this appears to have been overlooked by successive governments. Until now, the only option available to the directors of an insolvent Industrial & Provident Society has been liquidation (either voluntary or compulsory) even though a rescue of the business might have been possible had an alternative procedure been available.
The forthcoming change is a welcome addition to the tools available to an Insolvency Practitioner when dealing with an Industrial & Provident Society and corrects what appeared to be a strange omission from the attempts to promote the rescue culture.