JOHN D TRAVERS & COMPANY : INNOVATIVE INSOLVENCY SOLUTIONS FOR BUSINESS

Insolvency Bul let inNet tightens on corporate rule-breakers

CRACKDOWN ON ROGUE DIRECTORS PLANNED

The Government is set to bring forward proposals aimed at imposing further restrictions and punishments for those directors dubbed ‘dodgy’.

Under the plans, directors convicted of a commercial offence overseas would be banned from running British

companies, business secretary Vince Cable recently announced.

It is expected that the measures

will be brought forward as part of the Government's legislative programme for the next Parliamentary session, to be outlined in the Queen's Speech

on 4 June.

John Travers comments: “I welcome any move to strengthen the regulatory regime for corporate governance.

“However, it will be the Courts

that will ultimately be responsible for enforcing the legislation.”

✦ The number of company director disqualifications in 2010/11 stood at 1,437 and fell to 1,151 in

2011/12 and 1,031 in 2012/13 before an increase to 1,053 in the first three quarters of 2013/14, figures from the Government show.

INSOLVENCY BULLETIN FROM JOHN D TRAVERS & COMPANY SPRING 2014

Ending the exemption for insolvency litigation from court reforms preventing the recovery of after-the-event (ATE) legal insurance premiums and conditional fee arrangement (CFA) success fees from the unsuccessful party could cost creditors more than £150 million per year, according to a recent report from industry body R3.

The current insolvency litigation exemption from the so-called 'Jackson reforms' which came into force on 1 April 2013 is due to end in April 2015.

John Travers comments: “This latest in-depth review of how our profession

works has shown definitively that the implementation of the Jackson reforms in insolvency cases is a non-starter.

“It is worrying that, at this stage, the Government has not put forward an

alternative proposal of how these matters can be dealt with, or outlined plans to continue with the exemption,” he says.

Call for clarity on Jackson rules

CREDITORS TO SUFFER IF EXEMPTION ENDS

Ongoing reviews missing the pointINSOLVENCY INDUSTRY STILL UNDER FIRE

While insolvency practitioners across the UK await the Government’s analysis of the feedback to its latest consultation on the regulation and fee structure of the profession, it is becoming clear that ever-tightening regulation will never deter the most determined rogue elements.

John Travers believes that there is a fundamental issue with the current regime that the new rules are unlikely to address.

He says: “ Currently, there is, in practice, a potential conflict if an IP is appointed to represent the interests of a company’s creditors having already been involved in providing it with prolonged strategic advice.

“In situations where a business is expected to survive, it could be possible that one adviser be appointed to advise the directors, while the IP’s job could be to act on behalf of creditors.”

“Jackson’s intention was to deal with the issues around insurance-based PI claims and I believe that, if applied to insolvency cases, the system would work to the detriment of all concerned.”

JOHN D TRAVERS & COMPANY : INNOVATIVE INSOLVENCY SOLUTIONS FOR BUSINESS

Creditors hit with higher costsHIKE IN INSOLVENCY FEES

From 6 April 2014, fees and deposits paid by creditors in bankruptcy and winding up petitions in England and Wales have increased, while deposits

for people petitioning for their own bankruptcy are staying fixed.

A statement from the Insolvency

Service said the fee increase takes into account ‘inflation since the last time fees and deposits were put up in 2010 and

2011 respectively’.

Rules to tightenNEW STANCE ON VAT

HM Revenue & Customs (HMRC) has changed the VAT rules and will no longer allow ‘early’ deregistration of a

business which is going through a formal insolvency procedure such as liquidation or administration.

It will now keep insolvency VAT registrations open on any business making taxable supplies above the

current threshold of £81k per annum until all trading has ceased and all assets are realised.

The aim is to ensure that VAT

registered buyers of assets from an insolvent business can make claims for input tax.

From now on, it is the insolvency practitioner who is required

to make the returns and render payment for all business trading over the VAT threshold.

U-turn on fee structurePROPOSAL UNDER FIRE

Plans to prohibit insolvency

practitioners from charging fees on an hourly basis in cases with no engaged creditors or creditor committees are

making waves within the profession.Instead of using ‘time-costs’,

currently the industry standard,

practitioners would only be permitted to charge fixed-fees, agreed up-front, or a percentage of the assets realised.

John Travers says the proposal

would have a detrimental effect on the UK’s insolvency profession, currently ranked as No. 7 in the world, ahead of

the US, Germany and France by the World Bank, as well as by UK creditors.

Moreover, he claims, the fees

proposal will not meet the government’s own aims of increasing unsecured creditor engagement, nor necessarily reduce the ‘noise’ around insolvency

fees. He adds: “It is ironic that it is not

long since we were prohibited by law

from charging fixed fees. At that time, practitioners could only charge based on time costs or a percentage of realisations

and distributions. Ho hum...”

Recovery to be the main focusNEW EU FRAMEWORK FOR INSOLVENCIES

UPDATE FROM JOHN D TRAVERS & COMPANY SPRING 2014

OUR SERVICES

• Corporate Recovery• Members' Voluntary

Liquidations• Creditors' Voluntary

Liquidations• Compulsory Liquidations• Administrations• Company Voluntary

Arrangements• Administrative

Receiverships• Law of Property Act

Receiverships• Partnership Voluntary

Arrangements• Business Advice• Advice to directors• Bankruptcy

For further information:John D Travers & Company, First Floor, 58 Hagley Road, Stourbridge DY8 1QD

T 01384 374 000 F 01384 375 300 W johndtravers.co.uk E john@johndtravers.co.uk

The European Commission has formally

approved a recommendation that there should

be a series of common principles throughout the EU for national insolvency processes, with the

main objective being to shift the balance towards early restructuring efforts.