Thursday, August 14, 2008
12,571 companies where the administration or liquidation process began more than 15 years ago are not finalised.
David Cameron wants to reform insolvency procedures. Insolvency is a licence to print money. Practitioners are paid before any creditor and can charge more than £600 for an hour's work. They do not owe a "duty of care" to all stakeholders affected by their practices, and that provides plenty of incentives to prolong insolvencies. Both Maxwell Communication Corporation plc (looted by Robert Maxwell) and the Bank of Credit and Commerce International (BCCI) began liquidation proceedings in 1991. Neither has been finalised, but MCC plc has generated £88m in fees for the insolvency practitioners and BCCI's liquidators have collected over £400m. Nor are these cases unusual. Is the Tory leader willing to take on big accounting firms and open a new chapter in saving jobs?