Insolvencies set to hit historic highs

Thrugelmir

vivatifosi wrote: »

I've put in a weblink to a document about phoenix companies that you may find interesting. In charging directors as unfit, the government has a problem in getting evidence of foul play. Perhaps there should be a mechanism put in place where more people can whistleblow in order that more directors who should be declared unfit can be.

See section on this country at:
http://www.insolvencyreg.org/sub_publications/docs/Report%20on%20Phoenix%20Companies%20Final41029.doc

Its also scary how few countries are able to keep tabs on people behind serial phoenixes.

Equifax searches now reveal Company Directors who have had companies put into administration or liquidation.

Most companies need their major suppliers. So often a deal is struck to repay trade creditors through inflated prices over a period of say 2/3 years. Though this of course make the new business less profitable and chances of success reduced accordingly.

kennyboy66_2

vivatifosi wrote: »

I've put in a weblink to a document about phoenix companies that you may find interesting. In charging directors as unfit, the government has a problem in getting evidence of foul play. Perhaps there should be a mechanism put in place where more people can whistleblow in order that more directors who should be declared unfit can be.

.

It's probably almost impossible to solve apart from the really serious cases.
Typically the insolvency practioner is racking up chargeable hours @ £320 per associate partner (and more). Who is going to pay for them to do an in depth investigation.
Trying to get substantial evidence is really hard and expensive.
Even then people will start another company by getting a friend to stand as a director.

The net effect is that we all pay higher bank charges one way or another, then when these companies start up again, they can be agressive on pricing as they have often bought assets at below real replacement cost.

Thrugelmir

kennyboy66 wrote: »

It's probably almost impossible to solve apart from the really serious cases.
Typically the insolvency practioner is racking up chargeable hours @ £320 per associate partner (and more). Who is going to pay for them to do an in depth investigation.
Trying to get substantial evidence is really hard and expensive.
Even then people will start another company by getting a friend to stand as a director.

The net effect is that we all pay higher bank charges one way or another, then when these companies start up again, they can be agressive on pricing as they have often bought assets at below real replacement cost.

Assets have to valued independently and at arms length to both the Company Directors and Administrator.

Really2

Interesting one on radio 5 today the debt matters guy said 80% of personal insolvancys have little no assets eg houses to reclaim against.

Sort of blows open the theory that only home owners have been irresponsible.

The_Eye_Of_Sauron

If you don't own a house, petitioning for your own bankruptcy is one of the best things you can do, if you can't meet your liabilities.

OK- you won't easily be able to get credit in the future. But, as it is an excess of credit which has brought you to this state, your credit rating is f*cked already, and do you really want any more?

No.

And, as a bonus, you can give the finger to the likes of MBNA, who tortured you into taking on that £19k credit limit at 26.83 APR.

Alan_M_2

The_Eye_Of_Sauron wrote: »

OK- you won't easily be able to get credit in the future. But, as it is an excess of credit which has brought you to this state, your credit rating is f*cked already, and do you really want any more?

Well possibly.....take me as an example...

I was running a decent business that provided it's customers with credit lines.

Before I provided those credit lines I had to check with my bank (or using my bank) how sound the customers were that I was about to provide credit to.

My bank said yes/no/maybe (low credit line).

Sadly one of my customers went bang owing me a very large sum of money, they had a great credit rating (according to my bank), but one of the contractors for whom they were working managed to do a construction company version of a pre pack bankruptcy therefore shafting all it's creditors and starting up again the next day.....

End result, my customer bankrupt, me bankrupt.......ok 5hit happens, I'm in business, I take the risk. I won't allow it to happen again.

However, my bank (the one who said these guys were a good credit risk) won't even allow me to open a bank account never mind organise lending.....

The question of why I'm a discharged bankrupt is never asked, no background information matters...theres a big black mark on your record that blights everything for the next six years.

It is a stigma, it is unpleasant having to explain myself every time the question crops up. I can't see this ever changing to be honest.

Thrugelmir

Really2 wrote: »

Interesting one on radio 5 today the debt matters guy said 80% of personal insolvancys have little no assets eg houses to reclaim against.

Sort of blows open the theory that only home owners have been irresponsible.

Is that because their house equity is already charged against secure loans? Not just main mortgage but second/third loans .