No mercy shown for failed directors
Unforgiving creditors would prefer to get 'revenge' on debtors than push for potentially greater returns, a sentiment which flies in the face of the government's more forgiving approach.
Creditors believe the current disqualification regime for company directors is too lenient, with nearly three-quarters demanding stricter punishment for disqualified directors, a survey by the Insolvency Practitioners Association found.
Seventy-eight percent of creditors said disqualified directors should be banned from buying back into their failed companies, with the majority saying they would be happy to receive less money to prevent directors and their associates buying the assets of a failed company.
IPA president Keith Goodman said: ‘I am concerned that creditors should feel so strongly against a move towards a more forgiving rescue culture.’
‘Historically it has been the rescue-orientated procedures that have provided the best returns to creditors but these survey results indicate that creditors are less concerned about getting their money back and more intent on exacting revenge on failed directors.’
Goodman added the government should do more to promote the merits of its legislation among creditors, especially given the current economic climate.
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‘Insolvency bill too late for business’