Last week, insolvency experts told Accountancy Age the number of people becoming bankrupt would continue to snowball as credit card debt rises and the new ‘soft touch’ personal insolvency legislation made it easier to get out of bankruptcy unscathed.
But experts say that, because most of the new bankruptcies are not assets-based, the official receiver will have to deal with them instead of farming them out to insolvency firms, which it does with assets-based bankruptcies.
R3 president David Buchler said: ‘If this upswing in consumer debt is accompanied by an economic downturn, the Insolvency Service could be swamped with bankrupts.’
Top bankruptcy expert Louise Brittain, a partner at Baker Tilly, said that with scarcely 50 bankruptcy experts in the country, the insolvency profession will have a difficult time coping with the large amount of personal financial failures on the horizon.
She said: ‘Bankruptcy is not seen as sexy. It is the poor relation of the insolvency profession.
‘If you are a chartered accountant it was always seen that the big money was in corporate work. Although this has changed, the majority of people still believe that.’
The Department of Trade denied the claims, saying that with the new legislation coming into force in 2004, ‘a period of time for adjustment’ for the insolvency profession was needed.
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies
Smith & Williamson has been appointed administrators of charity 4Children