Most employment practitioners will have dealt with redundancies and TUPE issues following a company going into administration. This week’s File on 4 was an interesting look at whether the current insolvency regime might not be counter-productive in the current downturn.
The 2003 Enterprise Act was designed to make going into administration easier, quicker and cheaper with the aim to help companies and save jobs. But BBC File On 4 has heard claims that it is now easier for failing companies to dump their debts leaving thousands of creditors and suppliers owed millions of pounds they may never recoup. Julian O’Halloran asks if UK insolvency law could deepen the economic downturn instead of bringing about a recovery.
The programme is available through iPlayer and as an mp3 podcast download for the next week.
From experience (current and historical) working with a large number of vulnerable SME’s its a very tempting thought to simply dump the business, the debt and the obligation towards the staff – for once morally sound employers, when faced with a choice between protecting their own personal assets (their home, lifestyle and family welfare) they are becoming tempted to use current insolvency practices as a get out clause from their legal obligations to provide workers with statutory payments. As a practitioner you have to seriously question what incentives are in place to encourage employers to do the right thing – rather than cut and run.
In business you pay your bills , not cut and run.
My firm in Hong Kong will no longer trade with companies in the UK , two of our former customers complain they will have to close if we do not continue to grant credit terms .
The debentures in place g’tee we would be left with nothing if they suddenly decided they were insolvent. ( As now seems to be the fashion in the UK )
I think not , we will place our business elsewhere