'Small companies face being locked out of the insolvency process' - R3 President writes to Editor of the FT
The report ‘Nearly half of UK’s small businesses lack superfast broadband’ (9th December) raises questions about the Government’s plans to scrap physical creditors’ meetings in insolvencies in favour of ‘virtual’ meetings.
Given participation in ‘virtual’ meetings depends on reliable high speed internet access, many small businesses face being locked out of the insolvency process.
Creditors’ meetings 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 Bill’s 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 creditors’ meetings were to be enacted.
President of R3, the insolvency trade body