BPF welcomes Insolvency Service reform
The British Property Federation has welcomed the reform of the Insolvency Service that was announced last week.
Business Minister Jo Swinson said the move, which would lead to a single “Complaints Gateway” for all complaints against insolvency practitioners, rather than the eight authorising bodies previously involved, would make the process easier and more transparent.
The government also said it had cut red tape for businesses relating to the Insolvency Service, for example reducing the number of meetings that must be held during insolvency procedures, which can drive up the costs of the process. The measures will require legislation.
Ian Fletcher, director of policy at the BPF, said a single complaints portal would help creditors to “get an improved service and speed of outcome from the large number of regulators”.
“We hope this announcement will also provide fresh impetus to the question of expenses in administration,” he added. “Currently, rent owed to a landlord prior to the appointment of administrators is not treated as a cost of the administration. This has led to many tenants being put into administration just after quarter day, enabling them to use the premises for the remainder of the quarter without having to pay rent whilst the landlord recovers nothing as an unsecured creditor,” he noted.
The BPF noted that the property industry has repeatedly made the case for reform of the insolvency system, particularly in relation to pre-pack administrations and payment of rent during insolvency, which it feels is too far tipped towards company rescue, regardless of the consequences for creditors.
Philip King, chief executive of the Institute of Credit Management, said: “We believe that making insolvency processes more efficient and harnessing new technology to streamline the process still further will ultimately enhance the creditors’ position, reduce the overall cost of administrations, and further improve the relationship between creditors and IPs.”
