Online insolvency register could save time and money
Registering administrations online could enable creditors to access information instantaneously and speed up the process
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.