6th June 2014

Insolvency and the art of communication

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6th June 2014

Insolvency and the art of communication


The fact that I wasn’t able to get a blog last month reflects two things: (1) I was busy; and (2) like so many of the people I was busy helping, I lost sight of the importance of effective and regular online communication. Many apologies to my loyal (note I did not say vast) following. I shall do better over the coming months.

The theme for this post first occurred to me as a result of my apathy about voting in the European Parliamentary elections. So far as I was concerned, no party or candidate had made the slightest effort to earn my vote ie they had put nothing through the door, there was nothing in the locality and nothing to pique my interest through any online forum. At another level, whatever we may think about the outcome, the low turnouts and apparent expression from those who did bother to vote is that they do not value what the EC brings them in their daily lives. This represents a failure of communication on the part of all those who could convey a more positive message. History teaches us that when we fail to communicate and to be aware of the existence of more than one channel of communication some very costly mistakes can be made. It is no different for the practice of insolvency, perennially undervalued but more recently described by Nick Hood as facing “a revolution in working practices”.

Like it or not, the retrenched (or tried and tested, depending on your perspective) ways of doing things – of banging the drum of statutory duty and sending formulaic letters and chasers accompanied by sections of the insolvency legislation and just expecting cooperation and/or realisations to fall into your lap are ending. They are in fact ripe to be consigned to history in favour of a new, more multi-channel and technologically aware approach based on efficiency and meeting creditors’ expectations in terms of fixed fees and results.

This does not just mean embracing other, more effective, means of communication than basic letter writing (however well crafted those letters might be), it means adopting an altogether more holistic, results-based approach. Part of this is in recognising that in today’s world to engage with busy, working people who rarely look up from their phones and tablets, whether you’re a trustee in bankruptcy who can’t raise a meaningful response from a debtor or their family with a view to avoiding litigation or an administrator facing what you may feel is unfair criticism for the level of a pre-appointment fee, knowing how to adapt your style of communication to fit the situation and your audience is an ever increasing challenge.

Creditors also bear some responsibility in this. All too often the failure to engage with the debtor pre-dates the IP’s appointment. An unfortunate example I encountered recently involved a debtor who was a busy tradesman who thought he was fully up to date with all debts, but was completely unaware of his bankruptcy for a number of years because he was not the sort of person to seek credit and his life and business partner who ‘took care of the personal accounts’ had a mental health condition which caused her to hoard and conceal post. An extreme example perhaps but one where if the creditor and/or the IP/their advisors had recognised that letters to someone’s home address were not in fact the only known method of communication, and that business people tend to have places of business, online presence and/or mobile phones, a vast amount of cost and court proceedings might have been avoided.

The courts themselves are littered with examples of poor communication. How often do we hear judges reciting “there is no evidence to support the argument that…” Why not? If it’s a question which has occurred to the judge, why did not one of the parties or their legal teams ask it sooner, pick up the phone, send a one line email and come to court with the answer neatly sewn into the witness statements, duly paginated and cross referenced in their skeleton arguments? Failure to communicate the benefit of a particular course of action, especially on an emergency application such as for a validation or an administration order (see for example the difficulties faced on the application in the case of Brown Bear Foods Ltd in April of this year), can often be the difference between achieving the parties’ commercial goals in a timely manner, and having to pick up the pieces of avoidable failure ie through an appeal process or liquidation.

The lesson for us all: let’s not get so caught up in what we’re doing day to day and forget why we’re doing it and who we’re doing it for!