Business Recovery - Keeping an eye on insolvency.
Now that Labour is in government again, business recovery professionals are hoping it will live up to its promises and expectations to support the rescue culture.
But Roger Oldfield, president of R3, the Association of Business Recovery Professionals, is rather cynical about New Labour.
‘Let’s hope that, now they have been in government for four years and can’t blame their predecessors, they can do what they said they would do,’ he says.
R3 is calling for the setting up of up a standing advisory committee on insolvency, to react to issues as they arise and ‘enable legislation to be put in place and review changes to legislation’.
Oldfield believes that at the moment, insolvency is being considered in an ad-hoc manner instead of being constantly reviewed as he believes it should be. ‘We’ll be going to the Department of Trade and Industry and making the suggestion,’ he said.
He also believes research needs to be done into rescue funding, ‘to think of a way forward that will enable funding to be provided for rescue. Then they will show that they are really supporting the rescue culture.’
Another issue that urgently needs looking into is the transfer of undertakings, whereby the buyer of an insolvent company becomes liable for redundancy payments if job cuts are made.
The law is designed to save jobs, but in effect, can work adversely.
According to Oldfield, this impedes the rescue culture because potential buyers are put off by the prospect of being liable for redundancies so instead of saving some jobs, no jobs are saved when the company closes.
Crown preferential treatment is a contentious issue between the government and insolvency practitioners. Here, government creditors, such as Customs & Excise, are favoured when a company becomes insolvent.
‘There is no commercial sense for them to have preferential status,’ said Oldfield, ‘And if they didn’t they may work more efficiently, as other creditors do.’
Another gripe is the issue of cowboy debt collectors. Presently, the Office of Fair Trading issues debt advisers’ licences, which are very easily obtained.
Although cases have been highlighted recently, not much has been done about it because ‘It’s not high on the agenda,’ according to Oldfield.
I really want the OFT to get that sorted. I have got examples galore of the licence being misused. These licences are not worth the paper they’re written on,’ he argued.
For more information on R3 go to: www.r3.org.uk
For more on bankruptcy, see www.accountancyage.com/Practice/1121975.