Insolvency Service aims to increase returns for creditors
The Government has focused on returning greater funds to creditors when dealing with the winding up of struggling firms.
The Insolvency Service is often asked to step in such instances, and returned £46 million to creditors following completed administration processes in 2016-2017.
That’s according to figures from the Department for Business, Energy and Industrial Strategy, who have set the Insolvency Service the target of returning £55 million to creditors in 2017-2018.
Business Minister Margot James said that the Insolvency Service should provide confidence for investors, creditors and lenders that are impacted by a firm’s administration.
Maintaining a high level of customer service will be key for that process, although the targets will need to be met as the service undergoes a set of wide-ranging reforms.
The Insolvency Service has the power to take a company into administration should it be deemed in the public interest to do so.
These include the high profile case of Kids Company, the charity that folded in 2015, and the investigation into the collapse of BHS and its former directors, including Sir Philip Green.
Despite not being involved in the administration process of the latter, the Insolvency Service has fast-tracked the investigation given its magnitude.
The administration process can provide some much-needed breathing space for any business facing difficulties.
A corporate insolvency specialist will then assess the options available, with the principle aim of rescuing the company as a going concern.
Should that not be possible, the aim is to get the best possible result for creditors that could not be achieved should a company be wound up.
If that approach is not possible either, the administrator will begin realising property in order to distribute it to any secured or preferred creditors.
When a company is in administration, the administrator deals with the management of the firm, with the most common result being that a company returns to solvency following a company voluntary arrangement or that it is sold as a going concern with its assets attached.
By Phil Smith