R3 comments on the Insolvency Service’s response to the Select Committee report
“R3 welcomes this report and looks forward to seeing further detail in coming weeks of how The Service plans to achieve the goal we all share: to boost the effectiveness of and confidence in the UK insolvency regime.
“We do not, however, believe that Government has gone far enough in addressing low disqualification rates; 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%. We note that the Insolvency Service intends to look again at how it assesses and prioritises cases. More can be done and we would urge the Government to consider an increase in resource, and efficiencies such as electronic reporting, which would see more ‘delinquent’ directors prosecuted, thereby protecting well-run UK businesses. We will continue to work with the Insolvency Service on this issue and are confident that progress can be made.
“Regarding the pre-packs review, we recognise concerns with the process and we are keen to increase confidence and transparency to ensure that this valuable rescue tool remains a viable option for Insolvency Practitioners when trying to save a business.
“R3 has some concerns over the Government's response regarding the SIP 16 reporting process. The Committee recommended that the Insolvency Service should provide feedback to all Insolvency Practitioners who commit what the Insolvency Service acknowledges are ‘minor or technical breaches’, which do not impact on creditors. We think Government should follow this recommendation, which could significantly boost compliance rates. For serious breaches, it is encouraging that the Insolvency Service are conducting targeted investigations on those Practitioners who consistently fall below the required standard, thereby removing 'bad apples' from the system - a goal we all share.
“We are pleased that the Government has pursued the committee’s recommendation to look at the merits of continuation of supply to businesses in insolvency. R3 has been campaigning on this issue for over two years so we are delighted that our calls for change have been acted upon. 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 term
Liz Bingham, R3 President
For further information please contact:
Laura Harvey, R3 Policy Manager
t: 020 7566 4214 m: 0792 1672018 e: email@example.com
Notes to editors:
– The Government’s response announced today is here
– 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.