'Insolvency bill too late for business'.
With two years to go before the new insolvency bill becomes law, fears grow for businesses already showing signs of trouble
Insolvency legislation proposed in the enterprise bill will come too late for many troubled businesses suffering in the current economic downturn, according to leading business recovery professionals.
Concern has mounted since it became clear the new bill would not become law until at least April 2003, long after many businesses would have failed as a result of the current economic climate.
According to Keith Goodman, president of the Insolvency Practitioners Association, the new bill has found favour because of its ‘proactive’ nature in dealing with business failures.
However, with almost two years until it becomes law, fears have surfaced about the fate of business struggling to cope as the economy contracts.
John Alexander, head of corporate recovery at PKF, said the legislation would not help businesses in trouble now.
‘If we do go into recession, it may be too late,’ he said.
He added the legislation ‘might help some of the businesses who can struggle on for two years and then hit the wall but it’s not going to make a difference to many companies in difficulty now.’
Recent insolvency figures for the third quarter of this year showed business failures had been cut by 20% but experts believe this will be short lived.
The new insolvency bill grew out of the last recession and includes measures that would reduce the number of liquidations forced by the Inland Revenue and Customs & Excise.