A survey of 300 insolvency practitioners by law firm Manches found 77% thought the reforms would fail in their declared aim of achieving greater corporate rescue. Almost two thirds believed the changes would contribute to increasing levels of insolvency in the coming year.
Commenting on the findings, Vernon Dennis, a partner at Manches, said: ‘The survey was pretty categorical in its conclusions. Insolvency practitioners who are at the coal face would say there’s a great deal of scepticism bordering on cynicism as to whether it will have the desired effect.
The DTI issued a seven-page response accusing the research of being ‘enormously off the mark’. It said that, since the changes, the use of administration – which aims to rescue companies as going concerns – was up 63% year on year.
The research also underlined fears – highlighted in Accountancy Age last week – over a scam in which companies are put into liquidation without the traditional creditors’ meeting.
The DTI described the possibility of such ‘liquidation administrations’ as a regulatory issue and not a legislative one.