Presenter:
Bankruptcies and compulsory liquidations are running at record levels. Not all that surprising when you think of the severity of the present recession. Numbers are growing so fast though that the Department of Trade may even have to take on extra staff to cope, and they have already got over twelve hundred people working in this particular department. At the present moment you can be put into bankruptcy for as little as two hundred pounds, and that figure has been unchanged since 1976, despite all the inflation that we’ve been suffering since then.
Well, Sir Kenneth Cork, the country’s leading liquidator has been looking at the whole subject for the Department of Trade, and the first half of his report has gone in. The rest is due next month.
Bankruptcies and compulsory liquidations are running at record levels. Not all that surprising when you think of the severity of the present recession. Numbers are growing so fast though that the Department of Trade may even have to take on extra staff to cope, and they have already got over twelve hundred people working in this particular department. At the present moment you can be put into bankruptcy for as little as two hundred pounds, and that figure has been unchanged since 1976, despite all the inflation that we’ve been suffering since then.
Well, Sir Kenneth Cork, the country’s leading liquidator has been looking at the whole subject for the Department of Trade, and the first half of his report has gone in. The rest is due next month.
Sir Kenneth, is two hundred pounds not a rather small sum; should it be increased before legal proceedings start?
Sir Kenneth Cork:
Well, you must remember that it’s one creditor two hundred pounds, and to him it may mean a lot of money, so I don’t think it is, but I think the system wants changing so we keep the little people out of bankruptcy, unless they have made a habit of it.
Presenter:
What sort of changes are you thinking of?
Sir Kenneth Cork:
Well, we’re thinking of having a thing called a debt arrangement order, whereby simple cases, a consumer debtor and all these small people, can declare themselves insolvent, and not to be dealt with by the Official Receiver, but dealt with by a Court Official, who just arranges his debts, arranges for him to pay something out of his future earnings and gives him freedom, very quickly, without the whole panoply of bankruptcy and private examination, for a simple little fellow who has got in a muddle. We reckon it would cut out about eighty percent of bankruptcies.
Presenter:
But if you make it easier, doesn’t it make it easier for him to evade his responsibilities?
Sir Kenneth Cork:
No, because if when he goes for this, he’s a persistent offender or his case shows that it’s really very much bigger than that, then he’ll be referred through the normal bankruptcy procedures, and we’re going to make the bankruptcy procedures very much stiffer.
So we are going to be tough with the people who are really a menace to the community, and simple for the poor little chap or lady, I suppose I should say too, who gets herself into a muddle.
Presenter:
How do you protect the public though, against people who exploit the present laws on insolvency or bankruptcy?
Sir Kenneth Cork:
Well, it isn’t the bankruptcy side that generally the public is being exploited in, it is company liquidation
And one of the things we are going to recommend is that every director, who was twice the director of an insolvent company, should lose his licence, and he will have to go to the courts before he can direct another company.
Presenter:
If the Government chooses to ignore all your recommendations, what do you see as the main dangers in the present system if it continues?
Sir Kenneth Cork:
One of the main dangers at the moment is that where there is a company that somebody like a bank doesn’t have a debenture on it which gives them the right to appoint a receiver and manager, in which case the receiver and manager can carry on the business.
If there is no such change then it has to go into liquidation and it is very difficult to continue the business, and sell it as a going concern, keeping the country’s asset and the employment. That is why we are putting, for the first time, into the insolvency requirements, that the interests of the employees should also be taken into consideration by the liquidator, because after all they have invested not money but their life experiences, and when the business has gone that life experience is wasted for them and the community.
Sir Kenneth Cork:
Well, you must remember that it’s one creditor two hundred pounds, and to him it may mean a lot of money, so I don’t think it is, but I think the system wants changing so we keep the little people out of bankruptcy, unless they have made a habit of it.
Presenter:
What sort of changes are you thinking of?
Sir Kenneth Cork:
Well, we’re thinking of having a thing called a debt arrangement order, whereby simple cases, a consumer debtor and all these small people, can declare themselves insolvent, and not to be dealt with by the Official Receiver, but dealt with by a Court Official, who just arranges his debts, arranges for him to pay something out of his future earnings and gives him freedom, very quickly, without the whole panoply of bankruptcy and private examination, for a simple little fellow who has got in a muddle. We reckon it would cut out about eighty percent of bankruptcies.
Presenter:
But if you make it easier, doesn’t it make it easier for him to evade his responsibilities?
Sir Kenneth Cork:
No, because if when he goes for this, he’s a persistent offender or his case shows that it’s really very much bigger than that, then he’ll be referred through the normal bankruptcy procedures, and we’re going to make the bankruptcy procedures very much stiffer.
So we are going to be tough with the people who are really a menace to the community, and simple for the poor little chap or lady, I suppose I should say too, who gets herself into a muddle.
Presenter:
How do you protect the public though, against people who exploit the present laws on insolvency or bankruptcy?
Sir Kenneth Cork:
Well, it isn’t the bankruptcy side that generally the public is being exploited in, it is company liquidation
And one of the things we are going to recommend is that every director, who was twice the director of an insolvent company, should lose his licence, and he will have to go to the courts before he can direct another company.
Presenter:
If the Government chooses to ignore all your recommendations, what do you see as the main dangers in the present system if it continues?
Sir Kenneth Cork:
One of the main dangers at the moment is that where there is a company that somebody like a bank doesn’t have a debenture on it which gives them the right to appoint a receiver and manager, in which case the receiver and manager can carry on the business.
If there is no such change then it has to go into liquidation and it is very difficult to continue the business, and sell it as a going concern, keeping the country’s asset and the employment. That is why we are putting, for the first time, into the insolvency requirements, that the interests of the employees should also be taken into consideration by the liquidator, because after all they have invested not money but their life experiences, and when the business has gone that life experience is wasted for them and the community.
Picture Credit: http://images.npg.org.uk/120_120/2/9/mw08129.jpg
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