Online insolvency register could save time and money

The high cost of running a company insolvency can put pressure on the practitioners in charge of the struggling business, but what if there was a way to speed up the process, enabling them to be more transparent and give information to creditors instantaneously?

It has been suggested that this could be achieved with the help of an online register. Proposals were made in a recent company rescue consultation undertaken by the Insolvency Service that moving administration registrations online would help insolvency practitioners (IPs).

This came in the light of a scheme introduced in November by the government that allowed bankruptcy applications to be filed online and through the post.

A petition is made at court for a company to enter insolvency and an IP is subsequently appointed, but it can take days for this data to be made publicly available. On appointment, the IP also has to register the details at Companies House by filling in a form and posting it, which can take upwards of a week.

A process to speed this up would “make sense”, according to John Alexander, partner at CBW and head of corporate recovery and insolvency.
If the Companies House register was up-to-date it could help reduce calls from creditors to IPs asking for information, Alexander explains, and give them an immediate answer fundamentally saving the IP time. “A real-time online register for applications is a help to practitioners,” said Peter Cranston, council member at the Insolvency Lawyers Association, one of the organisations that recommended the move.

The City of London Law Society and the Confederation of British Industry also backed the plan in the consultation.

However, not all IPs agree with such a change. “It could be more trouble than it’s worth,” said John Hall, head of corporate recovery at Invocas.
“Currently, the law says we have to register the insolvency in a particular way. I can’t think of a single benefit,” he added.

A spokesman at the Insolvency Service said the responsibility of implementing an online register would fall on the Ministry of Justice or HM Court Service, and it will not be looking into the matter.

IN OUR VIEW

Corporate insolvencies have come under the spotlight recently with the ongoing investigation by the OFT. Although this is a small change to how the process works, it could bring greater transparency and real time information to creditors, suppliers and employees, effectively taking at least some pressure off the IP and potentially reducing fees charged to the insolvent company.