Insolvency system favours investors

Graham_Devon

I agree wholeheartidy with this report, and it's refreshing to see it prominent in the news.

"The current insolvency system fails to offer sufficient protection to workers, suppliers and contractors alike," said Adrian Bailey, chairman of the Business Committee.

"Investors and directors are cushioned from the impact of failure while workers, suppliers, and contractors pay the highest price. The balance needs to be shifted so that our insolvency system is no longer skewed in favour of investors and directors," he added.

The report says that under the current rules it is in the financial interest of a company to break the law and ignore the statutory redundancy consultation process, if the fine for doing so is less than the cost of continuing to trade.

The fine will end up being paid by the taxpayer, it pointed out.

"There is no doubt that contractors were deliberately deceived as to the true state of the business. City Link and [owner] Better Capital are morally, if not legally, responsible for the difficulties that many of these individuals and small business now find themselves in," he added.

http://www.bbc.co.uk/news/business-32014025

Risk needs to be bought back to investing. Infact, the whole system needs a shake up as I believe the system protects the most wealthy above everyone else.

Loughton_Monkey

This is typical leftist nonsense from a typical anti-business leftist MP.

Read it. Forget it. Move on.

Graham_Devon

Loughton_Monkey wrote: »

This is typical leftist nonsense from a typical anti-business leftist MP.

Read it. Forget it. Move on.

Seems you didn't even carry out the first stage in your recommendations.

It's a joint report from two parliamentary committees.

The BIS committee and the House of Commons Scottish Affairs committee. The BIS committee is made up of 11 Mps. 5 Cons, 5 Lab & 1 Lib Dem.

Seems you are suffering from an acute case of Confirmation Bias. Again.

stator

I agree there needs to be some change, particularly regarding the redundency pay issue with CityLink. CityLink may even have been saved, but many of the assets had been transferred out of the company.

jjlandlord

How is it skewed in favour of investors?
They only get whatever is left after everyone else has been paid.

I don't know the subject well, but why would there be a redundancy consultation? If the company is bust then it's gone.
A consultation would be like prescribing medicine to a dead guy...

Loughton_Monkey

Graham_Devon wrote: »

.....The BIS committee is made up of 11 Mps. 5 Cons, 5 Lab & 1 Lib Dem.

Chaired by a Leftie.

Graham_Devon wrote: »

Seems you are suffering from an acute case of Confirmation Bias. Again.

There is nothing wrong with interpreting information that confirms one's preconceptions, when one's preconceptions are correct.

My preconceptions are always correct.

wotsthat

Graham_Devon wrote: »

I agree wholeheartidy with this report, and it's refreshing to see it prominent in the news.

Did you read it?

Graham_Devon wrote: »

Seems you are suffering from an acute case of Confirmation Bias. Again.

Quite.

Graham_Devon

jjlandlord wrote: »

How is it skewed in favour of investors?
They only get whatever is left after everyone else has been paid.
..

Theres a lot to this story. But, Better Capital appeared to know that they were trading while insolvent. They even state so in their statement to the committee.

So they were basically allowing suppliers to supply them with goods knowing full well the suppliers would not get paid. Same for staff working over that period. The actual employees of city link got paid, but most delivery drivers were self employed contractors, and therefore not employees.

It goes back to the asset stripping Better Capital and other companies like them carry out to cover themselves.

Graham_Devon

wotsthat wrote: »

Did you read it?



Quite.

Crikey - that's a show a desperation if ever there was one.

Claiming confirmation bias because I agree with a committees findings?!

Do you need the definition of confirmation bias?

wotsthat

Graham_Devon wrote: »

Risk needs to be bought back to investing. Infact, the whole system needs a shake up as I believe the system protects the most wealthy above everyone else.

If a company goes bust the employees are first in line when the assets get shared out.

It's not the case, as you know, that investing is risk free. One of the contractors is moaning about having bought 5 new vans on the strength of their City Link business - tough - he invested, it was a risk, it didn't work out.

wotsthat

Graham_Devon wrote: »

Crikey - that's a show a desperation if ever there was one.

Claiming confirmation bias because I agree with a committees findings?!

Do you need the definition of confirmation bias?

You agreed with the MP's quote on the BBC website. I assume the answer to the question 'have you read it?' in terms of the report, however, is no.

Here you go..

http://www.publications.parliament.uk/pa/cm201415/cmselect/cmbis/928/92802.htm