Insolvency Law Essay Example | Topics and Well Written Essays - 3000 words

Insolvency Law - Essay Example Contextually, in order to improve their image in front of the investors companies at times tend to adopt approaches which though considered negative in business but still they ensure better business performances. This aspect along with various other reasons like conflicts amid the management, a lack of proper communication in business, crisis in the business sector as well as improper controlling of the business activities further result in impacting the ability of business units to pay back the debt of their creditors and shareholders thereby affecting the performance and existence of the business up to a considerable extent2. This aspect in legal terms is considered as insolvency. In this particular context, the insolvency law regulates the companies who are not been able to pay their debt to the shareholders or creditors. It is directly implied to companies which are being formed under the Companies Act of 2006 in the UK. However, with the passage of time, the issue of insolvency has become more and more severe which further calls for the need of stern laws and principles3. Contextually, the Cork report will be vital to consider which has recommended certain principles to be implemented in the operations of companies that would be helpful in dealing with the issue of insolvency. This particular report will mainly highlight one of the recommended aims in paragraph 198 of the Cork report and depict its importance and need through critical analysis. As described above, the Cork report was formed with the intention to recommend certain principles that could be implemented in the operations of business units to assure a more profitable business operation further reducing the probability of insolvency of the business. The report came up with certain aims for improvement in the modern day insolvency law which in turn led to the formation of the Insolvency Act of 19864. In the report formed by Kenneth Cork, there were certain