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Annual Report 2010

Other Recommendations

Complaints about poor communications
Recent IPC annual reports have suggested that a standard for timely response to communications by IPs should be set. This has not so far found favour with the profession or the RPBs. We understand that complaints received against IPs by the RPBs include a significant number about poor communication. At least one RPB (ICAS) has said that it will be urging its members to reply to correspondence more promptly to cut these complaints out. This can only be in everyone’s interest. We think it is high time for RPBs to consider what regulatory action they can take to induce IPs to reply to correspondence quickly. We would be happy to discuss with the RPBs and the JIC how best this (hitherto) intractable problem can be tackled.

A report template for IPs’ CDDA reports
The IPC continues to urge that adequate resources are made available to enable investigation of reports from insolvency office holders about possible illegal actions by company directors in accordance with the Company Directors Disqualification Act 1986 (CDDA). It supports the proposal made by R3 that following criticism by the Insolvency Service of IPs for late reporting and for providing insufficient detailed evidence to enable cases to be investigated, a standard electronic report template should be developed by the IS and R3 to encourage timely reporting with the necessary level of detail.

Utility supplier contracts with insolvent companies
The IPC notes concerns expressed by IPs about utility companies drastically raising prices for continuing provision of services to companies in administration with potential negative effects for selling the company or the business concerned. We understand that these price rises are an option available to utility companies when they are acting as “provider of last resort” to companies they may not want as customers, because of their doubtful creditworthiness. This is therefore an area where there may be conflicts of different aspects of the public interest in this case for example, between the interests of the other creditors of the company in administration and the interests of the utility companies and of their other customers. We suggest that the IS should explore with BIS and the utilities’ regulators concerned whether there is any scope for devising a compromise which would help IP administrators in this situation, eg, delaying any price increases for a few weeks to enable the administrator to explore the prospects for a sale of the business.

Pre-packaged administrations
The IPC stands by the recommendations we made in our Tenth Annual Report (for 2009, in which we said that the RPBs should give specific guidance that IPs who had already negotiated a “pre-pack” sale should refuse to accept appointment as the administrator to execute it as they would no longer be seen as having the necessary objectivity to do so. We also recommended that the IS should commission continuing research on the performance of “pre-pack” sales to previous directors and, if there is evidence of abuse, consider how best to deal with it.

The IPC supports the suggestion by R3 that the Insolvency Service and R3 should work together to provide a standard electronic format for SIP 16 reports which would remind IPs at the appropriate points about the issues that they are expected to cover in answering each question. This should help reduce the numbers of unsatisfactory SIP 16 reports.

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