As per World Bank rankings for resolving Insolvency, UK stays at the 14th place. However, in the recent ages, things are not going on well because many of insolvency practitioners have let the profession down. There are nearly 500 insolvency cases have been registered against the accused. It is a real terrible scenario.
The overall responsibility of insolvency policy in UK are totally reliant on the Secretary of State for Business, Innovation and Skills. It is the utmost responsibility of the insolvent service with the help of insolvency practitioners to oversee the insolvency regime. The insolvency practitioners should meet acceptable requirements with regard to education, experience and physical training. In addition, the law requires them an insurance or a bond against claims and dishonesty. This is usually verified with regular monitoring visits say about once in six years from their respective managements whether they adhere to Insolvency code of ethics and other relevant rules.
When a company loses so much money or it is forced to close down, it is the job of the insolvency practitioners to try to rescue the business or collect the money from the creditors that they owe to the company. Although the situation is intimidating yet the insolvency practitioners appointed by the company sort out difficult situations.
Nevertheless, the latest report says that there are plethora of malpractices and allegations against negligent insolvency practitioners. Experts suggest that UK insolvency practitioners are under-regulated. Mr. Stephen hunt having 15+ years of experience in the industry of insolvency made investigation of fraudulent insolvency practitioners and brought out the darker side of insolvency, so it is vital that there are honest and trusted insolvency services on offer to UK clients.
During one of his investigation, he identified a corrupt insolvency practitioner who created a spreadsheet called randomized time generator. The information on the spreadsheet was completely fake, the fraudster keyed in random time he wanted and created fake entries. Based on his entry, he charged the company approximately £500,000.
Yet in another case, he exposed three insolvency practitioners who were hired by the same firm tapped money in an illegal manner. The partner, the manager and the junior were drawing off cash without the knowledge of each other. However, when investigations were carried out because of the raised suspicion, the conflicting paperwork offered by the three made Mr. Hunt realize that the fraud was not one rather all the three.
Mr. Hunt feels that though there are laws designed and implemented by the authorized bodies, yet the regulations are not up to the mark and quite ineffective. He further adds that reform and restructuring of UK corporate insolvency is desperately needed.
The accountants and industry insiders in the UK suggest that restructuring should be done immediately to improve the World Bank insolvency rankings. The country remains in the same place for years together, however other countries like Netherlands have tried hard to improve their insolvency ranking and raised themselves from 16th to 7th position. The saddest part is UK still lags behind small nations like Puerto Rico, Slovenia and Iceland.
With reaction to these claims, the Britain Government announced policies on 26th August 2018 to update restructuring and insolvency systems. On the other hand, insolvency and restructuring trade body president, Mr. Stuart Frith said in a statement, that though this framework is well-regarded, it can still be made more responsive to rescue jobs and business.