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Government to draw up new insolvency regime for colleges

'It is not realistic' to assume that a consequence of area reviews will be no college becoming financially insolvent, consultation suggests

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'It is not realistic' to assume that a consequence of area reviews will be no college becoming financially insolvent, consultation suggests

A consultation into how colleges can deal with insolvency following area reviews has been launched.

The consultation, by the Department for Business, Innovation and Skills, is scheduled to run until 5 August. Its main objective is to establish a "special administration regime" for further education and sixth-form colleges that become insolvent following the government's reforms of post-16 education and training institutions.

The consultation will also examine ways in which to help the rehabilitation of an insolvent college, the primary objective of which should be “to protect the needs of the learners”. The document states that it is "not realistic" to assume that area reviews would not result in any colleges becoming financially insolvent.

'A comprehensive insolvency programme'

In the consultation's foreword, skills minister Nick Boles writes: “The college sector is undergoing change with area reviews seeking to meet each area’s educational and economic needs and to put the sector on a sustainable footing and to build financial resilience supported by a restructuring facility.

“We plan to establish a comprehensive insolvency regime for the sector with a clear remit to provide flexibility where colleges can be rescued and clarity of process where they cannot. This proposal reflects our mission to create resilient, responsive and independent further education and sixth-form corporations and to protect our learners.”

Julian Gravatt, assistant chief executive of the Association of Colleges, said greater legal certainty for colleges facing insolvency would be "helpful".

"The special administration regime proposed will help to protect college students by safeguarding the continuity of services run by organisations that are independent of the government," he added.

“These plans won’t be realised for at least two years and reassurances will need to be sought through the consultation over the extent of protection for students and other potential technical issues."

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