Insolvency – Trigger happy ‘myth’

Divisions emerged in the banking industry this week as it entered the row over claims that ‘trigger-happy’ accountants are forcing troubled companies into receivership.

British Bankers Association director John Thirlwell described as a ‘myth’ the allegations that investigating accountants – tempted by the prospect of large receivership fees – were ‘trigger happy’ in their willingness to recommend that a company go into receivership.

Thirlwell cited a BBA survey carried out over the last fortnight which found that in seven out of ten cases, investigating accountants did not recommend the appointment of receivers.

His comments follow calls made by Tory MP Richard Page last month for a ban on firms who have acted as investigating accountants acting as receivers to the same company.

Thirlwell said there was no need for such a ban, and has forwarded the BBA survey results both to Page and trade minister Kim Howells.

The Royal Bank of Scotland – a BBA member – disagrees, however. Angus Mair, the bank’s head of specialised lending services, said the bank had a long-held policy of appointing different accountancy firms as investigators and receivers, and that the number of receiverships had dropped dramatically as a result.

He said: ‘I think there should be a clear policy that an investigating accountant should not act as a receiver.’

The English ICA is this month considering whether to take disciplinary action against Grant Thornton over alleged conflicts of interest in its involvement with collapsed housewares distributor Heritage plc, for which the firm acted as both investigating accountant and receiver.

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