Friday, 23 July 2010

High Cost of Official Bankruptcy (Financial Times, 27 August 1980)



Gareth Griffiths


More than 55p was spent on administration in every £1 of net assets realised in bankruptcy cases handled by the Official Receiver compared with 42p in the pound by non-official trustees.

The Official Receiver handled 3,707 cases in 1979 and the non-official trustees 1,352 cases.

Preferential creditors received 16.7p and unsecured creditors 27.8p in official cases. The Insolvency Service makes a profit for the Government, which last year doubled from £343,000 to £672,000, mainly because of high interest rates on fee money.

In non-official cases preferential creditors received 12.4p and unsecured creditors 45.5p.

The number of bankruptcies in Britain last year fell by 11 per cent and estimated liabilities were two-thirds less than in 1978, according to a Department of Trade report published yesterday.

The sharp decline in the estimated liability figures from £202m to about £74 indicates that the collapses caused by the property market slump of the mid-1970s, have worked their way out of the system. Changes in the bankruptcy law in 1976 have also reduced the number of cases.

There were 3,170 bankruptcy cases in 1979 compared with 3,540 in 1978. The greatest number of failures occurred in the construction industry with 832 cases.

Picture credit: http://www.ft.com/home/uk

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