DMT delves into the world of insolvency ~ Debt Managements and Consolidation

Last week a Debt Management Today reporter was invited to the ICM Insolvency Conference 2011.

James McDonald gives us an insight into the world of Insolvency...

Debt management advisors, insolvency professionals and credit/debt managers from around the country got together last Thursday to discuss insolvency matters and to learn a little more about all the latest developments in best practice and development.

The day began with an introduction by Claire Sandbrook, ICM Essex Branch Chairman, and Chief Registrar Stephen Baister. After this there was a series of expert speeches by professionals, who were keen to inform the audience about pressing issues.

The Quartz speech – The role of an Insolvency Practioner

The Quartz Partnership was set up to provide receivables management services to the crisis client base to a developing network of corporate, banks and business advisors.

During the talks by Quartz, speaker Jenny Oldfield voiced the opinion that credit management within insolvency was “getting more difficult”.

She remarked upon the difficult times that the industry had been through, adding that the difficulties had been “particularly tough in the UK”.

“Often this stark reality is down to time constraints, as we don’t often have the luxury of time to be able to get involved,” she said.

After the speech, guests were invited to go along to question insolvency practitioners on how to maximise their position as creditors in cases of both corporate and personal insolvency.

Speaking yesterday to Jenny, founder of The Quartz Partnership, she commented on the ‘good feedback’ she had received.

The organisers won plaudits due to the ‘useful, topical content’ that was on offer, praising the level of good information that can help ‘protect their positions’.

Dealing with small businesses

A notable theme of the day was guest speakers predicting an increase in company failures, with evidence emerging that HMRC is adopting a harder stance on outstanding debts and voluntary agreements.

Melanie Giles, of Philip Gill & Co, was one of them. She is a founding member of the APSDI. “The SME sector is my bread and butter territory,” she said. “This is the third recession I’ve worked through professionally and I’ve never known it to be this bad on small businesses.”

Of the various facts and figures that were quoted throughout the day, one of the most alarming was that there has recently been an 11 per cent reduction in liquidations, which equates to just one in every 138 companies going into liquidation.

Ms Giles said: “It doesn’t sound an awful lot but taking a look at those in serious financial difficulty tells a different story.”

On the controversial issue of pre-pack administration, otherwise known as “phoenixing”, Melanie said: “Phoenixism, if done incorrectly, is not good. She did say, however, that if executed correctly, she had absolutely “no problem supporting restart businesses”.

Other issues touched upon include the practical side of insolvency processes and how creditors can protect their position, as well best practice and how IPs get paid.

In addition to this, David Hudson of Baker Tilly had another titillating fact: “There are fewer insolvencies now than before the recession,” he said. A partner in the company, Mr Hudson heads up their formal insolvency team in London.

He did however warn that indicators point towards more businesses being at risk, and the number of firms seeking CVAs would undoubtedly increase in the coming months, likening them to legal “time to pay” arrangements, designed to give struggling companies “breathing space”.

Mr Hudson was also keen to raise awareness as to the inconsistencies within HMRC, saying it’s unfair on businesses that they can be as aggressive or as patient as they choose with failing businesses depending on specific cases.

Kevin Still, a director of the Association of Professional Debt Solution Intermediaries (APSDI), Pentagon Ltd and senior vice president of Credit Professionals Ltd (CPL) believes that “business has probably never been harder”, with volatile markets and scaremongering within the media playing a major role in having a detrimental effect upon the SME sector.

“Most of these people don’t want to provide debt advice; they want to refer people to specialists, people in this room,” he said.

Still room for charity

As the day began to draw to a close, Master Robert Turner, Chairman of the Sherbet Foundation, was presented with a cheque for £1,000. The money, presented by Mr Hudson on behalf of Baker Tilly, is enough to pay for beds and bed linen for seven children who have been affected by debt enforcement.

Founded by Shergroup Ltd, Sherbet is a debt charity which helps families affected by enforcement action which addresses the need for officers to do something positive when visiting a family in debt.

Claire Sandbrook, Chief Executive, and her team at Sherbet, wanted to be able to do more than just walk away from a family affected by any enforcement action.

The foundation supplies white goods such as vacuum cleaners and washing machines to families because they cannot be taken away by bailiffs.