Creditors must step up during the insolvency process
TRADE CREDITORS are an apathetic bunch!
When a company goes bust usually as a result of HMRC or bank pressure
- and this will only increase when the government takes their foot off the
brakes - trade suppliers and professional advisers are the next biggest losers.
Yet they rarely do anything about it.
The insolvency legislation is designed to give unsecured creditors (i.e. everyone other than employees and the financiers) control over their own destiny when dealing with an insolvent debtor. They have control over the appointment of the officeholder, e.g. Liquidator or Trustee in Bankruptcy, and their fees. They are sent notices of meetings at which these things are decided and invited to vote - one vote for every £1 claimed. Yet, anecdotal evidence is that less than 3% of creditors entitled to vote actually bother to do so.
If unsecured creditors acted together they would have a stronger voice. In the past there were active "credit circles". They were informal meetings of credit controllers of suppliers in various but specific sectors. They commonly had customers in common and compared credit histories and payment histories with each other. They clearly could not "black ball" proceedings nor collectively refuse to give credit but their collective experience and their sharing of best practice, e.g. of what to do when the company went to the wall and how to influence the appointment of insolvency practitioners or the insolvency committee, often meant that they maximised their recovery from an insolvency or even better reduced their exposure to a failing company before the inevitable happened....... Read more
Source: Accountancy Age - Finance, business and accountancy news, features and resources| http://www.accountancyage.com
The insolvency legislation is designed to give unsecured creditors (i.e. everyone other than employees and the financiers) control over their own destiny when dealing with an insolvent debtor. They have control over the appointment of the officeholder, e.g. Liquidator or Trustee in Bankruptcy, and their fees. They are sent notices of meetings at which these things are decided and invited to vote - one vote for every £1 claimed. Yet, anecdotal evidence is that less than 3% of creditors entitled to vote actually bother to do so.
If unsecured creditors acted together they would have a stronger voice. In the past there were active "credit circles". They were informal meetings of credit controllers of suppliers in various but specific sectors. They commonly had customers in common and compared credit histories and payment histories with each other. They clearly could not "black ball" proceedings nor collectively refuse to give credit but their collective experience and their sharing of best practice, e.g. of what to do when the company went to the wall and how to influence the appointment of insolvency practitioners or the insolvency committee, often meant that they maximised their recovery from an insolvency or even better reduced their exposure to a failing company before the inevitable happened....... Read more
Source: Accountancy Age - Finance, business and accountancy news, features and resources| http://www.accountancyage.com
Clinton Cards to go into Administration
