(Re: Bankruptcy reforms are ‘cosmetic’, says R3, Insolvency plan sparks lending fears, Chancellor scraps Crown preference)As president of R3, Roger Oldfield has made comments which I and hundreds of other practitioners do not agree with. A straw poll taken at an R3 Conference attended by over 170 Practitioners yesterday (20 June) unanimously confirmed that Administrative Receivership is not liked or accepted by company directors.
It is not accepted that small businesses will go to the wall quickly unless owner managers hone their cash-flow management skills.
It is also not accepted that the abolition of administrative receivership would starve businesses of funds. Look at all the other countries in the World that don’t have this procedure. The UK and a number of old Commonwealth countries are the sole bastions of administrative receiverships. Bankers and other financiers have never found any problems in funding businesses in non-administrative receivership regimes.
The government is not suggesting changing any security rights, financiers will still have their security BUT will not be able to appoint administrative receivers. They will have the same rights as other stakeholders (such as unsecured creditors) to sit down and work out a solution acceptable to all in the interests of trying to save or preserve the undertaking.
With the abolition of crown preference this will be of considerable help.
R3 should be applauding the chancellor in such a bold and ground-breaking move not making negative comments and suggesting proposals which the government has not even mentioned.
David E M MondHodgsons
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