BusinessBusiness RecoveryMore scrutiny for IPs should be welcomed

More scrutiny for IPs should be welcomed

It was always inevitable that insolvency practitioners would come under intense scrutiny

The horrifying number of companies that have collapsed and entered
administration or liquidation has lifted the profile of IPs and their income.

It was pre-pack administrations that originally caused controversy but now
it’s the fees that IPs charge. So much so that MPs and the department for
business are wrestling with a proposal for a third party arbitrator to sign off
on fees and force IPs to be more transparent with their fee structures.

More transparency cannot be a bad thing, especially when it comes to the cost
of saving a company, a cost that is bourn by the creditors. If those fees
structures are even slightly opaque they shouldn’t be and that needs to be
remedied. Creditors should be fully aware of the costs they face and they should
be able to seek greater detail. There’s simply is no harm in greater scrutiny of
this area.

How to do it is another matter and will require some careful handling. At the
moment there is a proposal on the table to provide enhanced rights to challenge
fees through the courts. No problem in that unless the challenges actually get
in the way of doing what’s best for the stricken company.

No one would want to see a system which allowed vexatious creditors to
repeatedly hold up an administration.

It’s worth bearing in mind that administrators like to hit the ground
running. Timing is very often a critical factor in making sure a company has a
future. That is not to say the insolvency practitioner should have an absolute
priority. There needs to be a balance.

But a company’s future should not be sacrificed because a creditor with a
grudge decides to consistently challenge fees. That would not be a happy state
of affairs at all, especially for creditors.

comment@accountancyage.com

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