Land Rover calls for legal shake-up
Insolvency practitioners have hit back at Land Rover saying the company's demands for a change in UK legislation to mimic US bankruptcy law are unrealistic and redundant.
Land Rover chairman Bob Dover called for a shake-up in insolvency laws after his company won an injunction against receiver KPMG and UPF-Thompson, who make chassis for the car manufacturer. But insolvency practitioners say the demands are useless, as there are already new insolvency laws modelled on US Chapter 11 in the pipeline.
Keith Goodman, president of the Insolvency Practitioners Association, added: ‘No insolvency laws can dictate the commercial reality of the situation.
‘It’s a situation in which you couldn’t legislate at all, it’s a contractual agreement and the legislative process shouldn’t interfere.’
John Verrill, deputy vice-president of R3, the Association of Business Recovery Professionals adopted a similar tone saying: ‘It’s disingenuous to say that Chapter 11-style proceedings would make a difference.
‘The point about running any company is that someone has to pay for the stock and the wages. If you’re only able to continue selling – in this case chassis to Land Rover at a loss – then that position wouldn’t be answered by Chapter 11-style proceedings.’
‘Chapter 11 doesn’t turn troubled businesses into profitable ones without forcing the stakeholders, usually the creditors, in the insolvency or bankruptcy process to take some pain.’
Land Rover said that, although new laws would not change things for this case, it would save them and other companies from having similar problems in the future.