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11/12/2014

'Small companies face being locked out of the insolvency process' - R3 President writes to Editor of the FT

Sir,

The report Nearly half of UKs small businesses lack superfast broadband(9th December) raises questions about the Governments plans to scrap physical creditorsmeetings in insolvencies in favour of ‘virtualmeetings.

Given participation in ‘virtualmeetings depends on reliable high speed internet access, many small businesses face being locked out of the insolvency process.

Creditorsmeetings are an important opportunity for creditors to engage in insolvencies. At meetings, creditors can help insolvency practitioners investigate bad behaviour by directors and trace previously unknown assets of an insolvent company or individual. This can help creditors get more of their money back.

The technology is simply not in place for a comprehensive switch to virtual meetings. Doing away with physical creditors' meetings will damage smaller businesses' participation in the insolvency process.

The proposals are contained in the Small Business, Enterprise, and Employment Bill, currently in the Lords. The Bills aim of creating a better business environment for small businesses is laudable but regrettably, it appears that it is those the Bill is seeking to help in the first place that would suffer most if the proposals regarding physical creditorsmeetings were to be enacted.

Yours faithfully

Giles Frampton

President of R3, the insolvency trade body

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.