Ban on accountants’ liquidation work rejected

Link: Enterprise Bill does not please all

Trade minister Melanie Johnson said that nonetheless under existing guidelines for liquidators ‘where there has been a prior material professional relationship no principal or employee of the firm acting as reporting accountants should accept appointment as liquidator of an insolvent company’.

She said that even where a company was solvent, the insolvency practitioner ‘should nevertheless give careful consideration to all the implications of his accepting appointment as liquidator’.

Johnson was replying to a call from Labour MP Austin Mitchell for a change in the law to forbid accountants from acting as reporting accountants for a bank and then becoming liquidators and receivers on the bank’s behalf.

Johnson said that under existing guidelines for receivers, ‘any insolvency practitioner proposed to be appointed administrative receiver of a company after acting as reporting accountant should take steps to satisfy himself either that the company does not object to his acceptance of the appointment or that the circumstances are such that, in accepting the appointment, he will be able to act, and be seen to act, independently and effectively’.

She said the Enterprise Act will significantly reduce the circumstances in which the holder of a floating charge appoints an administrative receiver.

Related reading