Response to BIS Committee Report on the Insolvency Service
“R3 welcomes this report as we strongly believe that disqualification rates should increase; 10 years ago 45% of ‘D1 reports’ sent to the Insolvency Service by Insolvency Practitioners (IPs) led to a disqualification of a director, today this has dropped to just 21%. An increase in resource, and efficiencies such as electronic reporting would see more ‘delinquent’ directors prosecuted, thereby protecting well-run UK businesses.
“We are pleased that the Committee has recommended the Government, as matter of urgency, issue a consultation on the continuation of supply to businesses in insolvency. R3 has been campaigning on this issue for over two years and our research reveals that 14% of liquidations – which equates to more than 2,000 businesses a year – could be avoided if suppliers continued to supply at the pre-insolvency terms.
“On pre-packs, R3 strongly supports the suggestion of providing feedback to Insolvency Practitioners where the SIP 16 report (explaining the pre-pack to creditors)has been judged non-compliant to prevent repeated mistakes. IPs should be informed of what precisely the IS expects to be included in the SIP 16 report. We believe these changes will produce better SIP 16 compliance and will go some way to improving confidence. R3 believes there are further measures which should be introduced in order to boost transparency and confidence in the pre-pack process, such as giving creditors the option to appoint an independent liquidator to examine a connected party sale.
“Pre-packs are a vital rescue tool which fare considerably better than alternatives in terms of the retention of jobs and returns to secured creditors; this is crucial during the current sluggish recovery.
“The committee recommends increasing the £525 upfront bankruptcy feehowever we do not see how this will make it any easier for individuals to enter bankruptcy, with the numbers of individuals entering this formal insolvency procedure decreasing 24% over the last 12 months. R3 supports the recommendation for the fee to be paid in instalments which would remove this financial barrier to bankruptcy.
“R3 supports the creation of common regulatory standards and a single gateway for complaints, providing this is done with further education of the public and creditors on the fee-setting regime for Insolvency Practitioners.”
Lee Manning, R3 President
For further information please contact:
Will Black, R3 Communications Manager
t: 020 7566 4215 m: 07917 422 485 e: email@example.com
Charlotte Towerton, R3 External Communications Officer
t: 020 7566 4203 m: 07918161 291 e: firstname.lastname@example.org
Notes to editors:
– R3 is the trade body for Insolvency Professionals, and is made up of 97% of the UK’s Insolvency Practitioners.
– R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by one of nine recognised professional bodies.
– R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals. Website www.r3.org.uk
R3 Press Office