IPs draw line in the battle for bankruptcies
Official Receiver assuming bankruptcy work it was not intended to take, according to insolvency practitioners
A turf war has broken out after insolvency practitioners claimed that
government bankruptcy specialists with the Official Receiver (OR) were beginning
to assume work they were never intended to take.
Private sector IPs have claimed the OR should be taking on bankruptcies where
there are only cash assets, but has expanded its remit to work involving other
forms of asset territory belonging to insolvency practitioners.
The row revolves around regional OR centres, established a decade ago, which
IPs say were created to deal with bankruptcies that involve only cash assets.
Neil Hickling, director of restructuring at Smith & Williamson, said:
“When the regional centres were set up they were only going for the easy cash
assets work then they started looking at the other cases with equity.”
He said his firm has had to shift focus onto corporate administrations which
he believes is not an isolated case.
The Insolvency Service, head office for the OR, hit back at the claims. A
spokeswoman said: “It is wrong to say that the regional centres were created
solely to take on bankruptcy cases where no assets are involved.”
She added: “Where assets are straightforward, there is no obligation for the
cases to be passed on, and our research has shown that, when cases
particularly bankruptcies remain with the OR, they often achieve a much better
result for creditors than similar cases which are passed to IPs.
“Complaints on this matter are rarely received, suggesting that this is a
very minor issue.”
The OR has been accused of lacking the expertise of the private sector and
not being regulated to the same degree. A source close to the issue said: “The
OR does not have the resources or the qualifications to investigate assets
properly.”
Tenon estimated there are 70,000 bankruptcies a year with just 5,000 having
assets.
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