The dust is beginning to settle on last month's government announcement of the biggest shake-up to the insolvency profession since its formal creation in 1986. The DTI and Treasury launched their joint review of company rescue in January as a cornerstone of government attempts to create a future dominated by entrepreneurs. The end result has been a paper covering everything from directors' responsibility to finance and the surprise release of a Bill to introduce the moratorium during company voluntary arrangements to give corporates breathing space in which to put together a rescue plan for creditors. More controversially, the Bill also implies that in the future, banks may have to give notice regarding the appointment of a receiver to a borrower. This would address the perception of the 'trigger happy' bank that is prepared to push a company into liquidation in order to retrieve its investment when it would be more appropriate to use other methods. The paper also seeks to persuade directors - who have shied away from taking advice earlier in order to prevent their company going into receivership - to be more willing to turn to insolvency practitioners. In many cases insolvency practitioners are still viewed as 'financial undertakers' who have come to bury businesses. For the profession this highlights the gap between the image of insolvency and the reality. It is over a decade since there has been such an emphasis on reform, but practitioners are gearing up for the challenge, even if it means changing the face of the profession itself. 'There is considerable work to be done by the profession in presenting us in a more positive light,' says Begbies Traynor partner Brendan Guilfoyle. Much has also been made of the 'moral hazard' of investigating accountants being allowed to take up lucrative liquidation appointments of the companies they have been monitoring, but there is little support for any change among practitioners. Lloyds TSB business support senior manager Steven Murphy says: 'I really just don't see any issue here whatsoever. I see government barking up a tree that isn't there. If we do have customers facing receivership and they really don't want an investigating accountant, we will offer them a selection from our panel and give them a beauty parade.' The same could be said for the role of the banks. They could be hit from all sides if the Bill's recommendations, and responses to the paper, seem to be against them. They would lose their current status, giving them preferential rights to take money out before general creditors get a look in. Banks are often accused of jumping too soon to secure investments but many practitioners disagree. Some support a move to cut the power of Customs & Excise and the Inland Revenue in order to release more money to creditors. Chairman of the Society for Practitioners of Insolvency technical committee Ron Robinson says: 'It would help to enhance the banks' position, therefore enabling them to look more kindly on funding the recovery of the business and promoting a more positive attitude from those funders.' As SPI president Alan Bloom concludes, it will now be up to the profession to hold a responsible debate and consider the recommendations in their entirety. Although the debate has only just begun, cracks could easily appear between what the government sees as its mission and what practitioners really need to help them create a climate of rescue. Responses to the paper have to be submitted to the DTI by 12 November and a Bill will be pushed through when parliamentary time allows. That leaves plenty of time for those cracks to widen. KEY QUESTIONS IN THE INSOLVENCY REVIEW The government wants the insolvency profession to consider the following points: - Have the strengths and weaknesses of the current insolvency system been identified? - To what extent might the complexity of the system result in fewer rescues and more liquidations? - To what extent does a lack of finance prevent the rescue of companies that would otherwise be viable in the long term? - What steps should the profession take to ensure that the skills required to assist rescue are readily available? - Would increases in proposed rates of payment to unsecured creditors in company voluntary arrangements (CVAs) encourage more to be proposed and accepted? If so what would need to be done to ensure creditors benefit from cutting back the Crown's preferential status? - Could improvements be made to the policies and practice of the Customs & Excise and Inland Revenue? - Are there other arguments for or against current practice that should be considered? - Would any procedural innovations assist the development of the rescue culture?
Wikileaks Vault 7 suspect Joshua Schulte fingered by FBI after re-using smartphone passwords on his PCs
Joshua Schulte indicted on 13 counts relating to Vault 7 leaks and trading in images of child abuse
Alexa for Hospitality will link with existing systems so guests can order room service and control the air con
Massive volcanic eruptions could have warmed Mars' surface sufficiently for oceans to form
Examination of fruit flies' brains generated more than one billion data points for scientists to analyse