The Bill, read for the second time last week, imposes a three-month limit to complete the administration process, after which administrators have to reapply to the courts. Currently, the administration period varies and is agreed when the administration order is granted by the court. When the set period runs out, administrators have to go back to court and persuade the judge to grant them an extension.
But outgoing R3 president Roger Oldfield told Accountancy Age: ‘As it is set up at the moment with the timetables imposed, I fear there will be greater demands of the court as opposed to going into court once at the beginning of the administration.’
He explained that, because of the ordinary process of buying and selling when trading a business, the three-month timetable was ‘physically impossible’.
‘Concluding an administration in six months is doing extremely well.
On the basis (of a three-month timetable) everyone will be seeking an extension.’
Oldfield said he understood the logic behind the proposal, the concern that administrators dragged out the process unnecessarily. But he added: ‘We’re not dragging it out, that is just business life.’
The costs for the ailing companies will also increase because of this process, as it takes time and money for administrators apply for an extension and the costs of the process are borne by the insolvent company.
Conflict would also be caused by administrators rescuing a company by asking creditors to take a hit, when the creditors might get more if they went through a complete administration process.
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
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