Reporting accountants row resurfaces

Corporate and consumer affairs minister Kim Howells told MPs: ‘I have sympathy with the approach and I am giving it serious consideration’.

He made the announcement as MPs neared the conclusion of detailed committee debates on the Insolvency Bill, which provides for supervised moratoriums while attempts are made to organise rescues.

Earlier, Greater Grimsby Labour MP Austin Mitchell demanded tougher regulation of the insolvency profession to stop practitioners opting for solutions designed to boost their fees rather than promote successful rescues.

He received some support from Tory MP Richard Page, who said the case for a single regulator needed detailed examination. Page has proposed a ban on reporters acting for banks later acting as liquidators in his own back bench legislation.

Mitchell wanted supervisors banned from liquidation in order to prevent a vested interest in closing the company down. He insisted: ‘Firms that act as supervisors should not be involved in subsequent liquidation work because that creates a vested interest in rigging the situation towards insolvency.’

Howells rejected that case because in might be appropriate for the supervisor of a failed voluntary arrangement to act in a subsequent liquidation because ‘in general, swapping one individual for another would probably not save fees.’

But he appeared to change his ground in the face of a later amendment from Mitchell designed top prevent ‘the vested interests involved in banks using an accountancy firm to do a report on a company and subsequently using the same firm to carry out the liquidation’.

The Bill was amended to end the threat preventing a surviving partner in the estate of an insolvent deceased from selling assets. Instead of acquiring a potential interest in the property, making it impossible to dispose of, creditors will be able to apply to a court for a monetary order against the survivor.

Insolvency protection move delayed

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