Budget 2012, more needs to be done to promote business rescue
Frances Coulson, R3 President:
“Strong and stable economic growth are the principles that should underpin the budget. However, as unemployment remains high and consumer confidence is low, recovery is yet to materialise. R3, the insolvency trade body, believes the Government can do more to support economic growth through business rescue.
“The economy will only recover if we have strong businesses to support it. There are a number of ways that the Government can continue to improve the UK’s business rescue regime, therefore helping viable businesses to survive and provide a much needed boost to the economy. For example, we would like the Government to address the harm caused by suppliers demanding ‘ransom payments’ in an insolvency situation. We believe a small change to the Insolvency Act, preventing suppliers from ceasing supply or changing contractual terms, could save up to 2,000 businesses a year, a 14% reduction in liquidations and increased returns to creditors, including HMRC.
“In 2011, there were 23,728 corporate insolvencies across the UK. Evidence from previous recessions suggests that insolvency numbers will begin to rise as the economy starts to recover. Given the unstable economic climate and the number of businesses on a knife edge, it is vital that the business rescue culture is fit for purpose and Insolvency Practitioners can rescue viable businesses wherever possible.”