Most insolvency professionals polled in a recent survey at the annual Lawrence Graham Conference for insolvency practitioners said proposals to widen the scope of the service’s work could force smaller insolvency practices out of business.
The changes to the Insolvency Service include the ability of the official receivers to put together voluntary arrangements, as proposed by the government in the recent insolvency white paper, set to become law when the new Enterprise Bill comes into force in 2003.
But Keith Goodman, president of the Insolvency Practitioners Association and senior partner at Leonard Curtis, a small firm specialising in insolvency, believes smaller practitioners are over reacting.
He said: ‘What this will do is create a more open marketplace and healthy competition.’
Although the government service will probably be able to do the work more cheaply than small practitionerss as they will not have to do as much research into the bankrupt’s affairs, Goodman said bankrupts could still choose to use a small practitioner.
The survey also found that 90% of delegates thought the government insolvency service would not have the resources to cope with the increased work.
More than half said they believed attempts to rehabilitate bankrupts would be a ‘waste of time’, as creditors would still be wary of them and they would be automatically banned by some professions.
Only 22% of practitioners believed European bankruptcy regulation would have an effect on the way they run their corporate recovery business, but none thought it would have a great impact on the work they do.
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
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