You will be pleased, I hope, to hear that in this blog I shall largely be steering the referendum itself a wide berth; this is not because the prospect of Brexit would not impact greatly on insolvency law and practice (it undoubtedly would) but because I have already blogged on that topic in March and issued press releases on it in so far as it affects business decision making under the R3 banner, but mainly because the debate on both sides has been so unedifying.
The only thing I will say about the referendum here is that if you have informed yourself as best you can and would rather ‘Bremain’, I suggest you get out and vote rather than ‘Bremoan’ it later. The latest YouGov reports I have seen suggest that confirmed Brexit voters distrust almost every source of information available to them. As Goethe once wrote, “es ist nichts schrecklicher als eine tätige Unwissenheit” (nothing is worse than ignorance in action), and I for one would not want to have voted on something so vital without good reasons. This is the single most important vote of our age and our grandchildren will be asking us how and exactly why we voted, just as my young children have recently interrogated my parents on how and why they voted in 1975!
Before I go any further, I should apologise that I have not blogged very much on the Paris Smith website since March. I have not, however, been idle in the writing stakes. To coincide with the unwelcome arrival of LASPO for insolvency litigation on 6 April, I made a somewhat rash decision to team up with LexisNexis with the intention of their publishing a template Conditional Fee Agreement for use between IPs and solicitors, taking due account of controversial recent caselaw in this area. I knew from the start that a ‘one size fits all’ solution would not be practicable, which possibly explains why even now, in June, LexisNexis have yet to publish it. If and when they do, however, I shall let you know.
On top of this, I have already this month had my long-running struggle with IPs and creditor engagement picked up in RECOVERY magazine and my piece on directors duties highlighted by the failure of BHS and associated companies picked up in Business Magazine.
My thoughts now, however, turn to current challenges for the insolvency profession, with half an eye to the fact that in December I shall be taking up the role of Chairman of the Southern Region Committee of R3 (the Association of Business Recovery Professionals). With this in mind, I note that R3’s President, Andrew Tate, has (on his page immediately preceding my article in RECOVERY Summer 2016) helpfully summarised for us what the UK’s insolvency regime is supposed to be doing:
Any change of law or procedure which interferes with the attainment of those goals is a challenge, to be adapted to and/or overcome. And, my word, hasn’t the government been doing its utmost to feed us opportunities to face such challenges?! Chief among these have been recent or (im)pending changes to the fees regime, pre-pack regulation, creditors’ meetings, investigations work, new FCA regulation requirements and, of course, the costs regime for recoveries via legal intervention. To these I would also add – although relatively few column inches have been reserved for this to date – the issues surrounding the raised creditor bankruptcy petition threshold and the out of court bankruptcy adjudication procedure, both of which are vulnerable to abuse, but that is a matter for another blog when more evidence is available. The profession is slowly getting to grips with these, but it will take time to work through before we can get back to focusing on the business of delivering value cost efficiently.
The problem is, though, it never ends. The government appears to be absolutely addicted to tinkering with insolvency, providing endless distractions, particularly after insolvency hits the headlines with a high profile retail failure. Take the latest idea, for example, just announced in the past week or so, that we should institute a debtor in possession style moratorium so that debtors (well, struggling companies anyway) have time to put together a business rescue proposal or discuss their situation with creditors, whilst essential supplies are preserved. Great idea, right? Not original, of course – not only have successive governments been toying with similar notions for decades, but R3 actually proposed a new moratorium concept in April and has been pushing the rescue to ransom agenda for fully 5 years – but certainly something which should be discussed carefully and seriously. So, how long have they given us to respond to their consultation? Until 6 July, less than 2 weeks after the referendum vote!
Thankfully, R3’s Technical Section are grappling with these issues for us, but if they and others are not able to persuade government to row back from some of the more extreme ideas in these proposals, there is real concern that they may affect creditor confidence adversely and threaten the availability of restructuring funding, which would be counterproductive to the government’s stated aim of improving Britain’s relevant rankings on the world stage.
I know I have made similar points through my blogs before, and I understand why insolvency is seen as a soft target to tinker with in the pretence that successive governments are genuinely trying to improve our systems, but if the specifics and/or weight and pace of proposed changes adversely impact on our ability to deliver Andrew Tate’s 3 stated objectives (above), particularly with the new Insolvency Rules to get to grips with soon as well, then government intervention is unwelcome and we need to speak, so far as possible, with one voice against it.
As ever, time will tell how we ride the latest wave of regulatory and/or legal changes. In the meantime, let us get this referendum out of the way and get on with the job of doing what we do best – picking up the pieces and recycling the value! It is lucky we are so adaptable.
If you would like to discuss any of the issues raised in this blog, please email me.