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New Businesses (Credit-Raising And Bankruptcy)

Volume 886: debated on Friday 21 February 1975

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asked the Secretary of State for Trade whether he is aware of the practice of people setting up businesses with the sole purpose of obtaining credit and then going bankrupt and establishing new businesses, and whether he will take action to prevent this by suitable amending legislation.

I have no evidence that this is a common practice; it is an offence for an undischarged bankrupt to obtain credit without disclosing his status, to engage in business under any other name without disclosing his original name, or to act as a director or to take part in the management of any company without the leave of the court. Further, if in a winding-up it appears that there has been an intent to defraud creditors the court may make the responsible persons liable for the debts, and there may be criminal consequences as well. I shall be ready to consider possible improvements in these provisions when time is available for new legislation in this field.