Bankrupts shunned by finance directors

UK finance directors are highly unlikely to do business with discharged bankrupts even though the government is pressing to rehabilitate ‘honest’ disqualified directors.

In this week’s Accountancy Age/Reed Accountancy Personnel Big Question 65% of the polled FDs said they would not do business with a discharged bankrupt despite proposals to relax bankruptcy rules in the Enterprise Bill.

One of the key elements of the bill is to reduce the minimum disqualification period for so called ‘honest bankrupts’ from three years to one.

Contisteel Holdings FD Nick Watkins said: ‘Unfortunately most bankrupts appear to make a habit of it! A reduction in the disqualification period will lead to further abuse.’

One FD thought if an individual is unable to look after their own money, he would consider this to be ‘irreversible whether they were crooked or honest’.

Another FD pointed out that ‘it is statistically proven that 75% of all bankrupts are fraudsters.’ He said: ‘They go bankrupt for their own benefit.

They see it as an easy way out. They open and close companies to escape bad debt.’

Of the 212 respondents, only 17% were more forgiving. ‘As long as I get the story behind it, I would give the person the benefit of the doubt.

In this business you must speculate to accumulate.’ said one FD.

Another was not quite so sure. While he would consider doing business with a known bankrupt, he said: ‘How do you define an honest bankrupt?’ he said.

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