Weekly Blog by Philip King, CEO of the ICM - 'Shooting the phoenix'

I sat on a panel at an Insolvency for Creditors event last week and there was, not surprisingly, some vigorous discussion about Pre-Pack Administrations.  There were equally strong feelings expressed at the ICM Think Tank this week when the subject came up again, and I expect to hear similarly robust views when I attend a Round Table chaired by Norman Lamb, the Minister responsible for the Insolvency Service (IS), this week.

Pre-Packs are an emotive subject but what seems to raise temperatures even higher is the issue of phoenix companies where the same directors seem to be able to acquire their previous business for a very low valuation and continue running it – often with only a slightly varied name – but without the burden of previous debts.  Often they leave unsecured creditors with a legacy of unpaid debt and the emotional reaction can hardly be a surprise.

Two sentiments were expressed at last week's event.  Firstly, Insolvency Practitioners need more power to be able to take action against directors who have clearly abused the privilege of limited liability and, secondly, the Insolvency Service should disqualify more directors.  Some in the audience were probably surprised to hear that 1,200 directors were disqualified last year and, of these, 125 were banned from holding a directorship for 10 years or more.  I accept it could be argued that these numbers should be higher but I am more concerned that there was little awareness of them.  If the credit professionals attending were surprised then so would current company directors be and the disqualification activity cannot be acting sufficiently as a deterrent.

Details of recent Insolvency Service press releases can be found here http://insolvency.presscentre.com/ and I would urge the IS do more to promote their disqualification activity.  Plenty more could and should be done, but getting this message out would be a good start.