John Verrill, president of R3, the association of business recovery specialists, emerged from a Westminster debt summit last week demanding a ‘dignified’ bankruptcy alternative.
‘As the already regulated debt advisory profession, we should be given the chance to help the needy,’ he said.
Verrill attacked ‘unduly burdensome’ schemes run by elements of the unregulated profession, which he said never actually cleared debts.
As bankruptcies are at an 11-year high, you might have thought the profession had been presented with a golden opportunity to show what it can do.
But instead it is losing out to the glitzy TV debt consolidators. Mark Allen, a partner with Grant Thornton, says of the problem: ‘Everyone has heard of debt management because they have very aggressive advertising campaigns, but very few have heard of IVAs. Yet the majority of debt management only puts off the evil day.’
Second, it has been frustrated by the limited toolkit granted to it by legislation. IVAs (the regulated profession’s main alternative to bankruptcy) are generally effective only on debts over £15,000. Consequently IPs can do little for the worst-off debtors, because they have no assets and no income.
The good news is that, despite its recent bankruptcy overhaul, the insolvency service is planning a consultation as soon as this autumn. That will please many IPs, but any move enabling the regulated profession to take a bigger slice of the debtor pie will provoke the debt consolidators.
And with an estimated 55,000 unregulated debt management arrangements for 7,500 IVAs, it could be an uphill struggle for IPs.
Michael Howard’s attack on Gordon Brown as the ‘credit card chancellor’ has highlighted the emotive power of the debt issue. The profession can only keep its fingers crossed that the government will hand it the tools to save the casualties of the credit card nation.
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies
Smith & Williamson has been appointed administrators of charity 4Children