The Chartered Institute of Credit Management (CICM) has welcomed the announcement by the Business Minister Jo Swinson that will oblige Insolvency practitioners (IPs) to provide upfront estimates of the cost of working on insolvency cases, thus ending the uncertainty of unlimited hourly charges.
Philip King, Chief Executive of the CICM, said that the news was a victory for common sense: “The CICM has been vocal in wanting to see up-front estimates for work undertaken so the element of surprise is removed further down the road in the insolvency procedure,” he says.
“The introduction of new rules is therefore to be strongly welcomed as are any well-considered actions that help to bring greater confidence to creditors and transparency in the fees that are charged.”
In a busy time for the insolvency profession, Philip also welcomed an initiative by R3, the insolvency trade body, to launch a website designed to guide creditors through the insolvency process. The site, www.creditorinsolvencyguide.co.uk, explains in simple terms how creditors can engage with the insolvency process to increase their chances of seeing money returned to them, approve insolvency fees, and see action taken against fraudulent or negligent directors or bankrupts.
Built with the support of the CICM, Philip presented at the formal launch of the site on March 3rd: “Insolvency can be seemingly complex and difficult to understand,” he says, “but a vital part of the process is in encouraging creditors to engage with insolvency practitioners to help maximise recoveries.
“Understanding how insolvency procedures work, and the terminology used, is key to successful engagement, and the CICM has been pleased to support this initiative by R3. It is a major step forward in demystifying insolvency and provides practical, pragmatic advice that will be welcomed by our members and the wider business community.”
Giles Frampton, R3 president, agrees that creditor engagement is integral to the smooth running of insolvency processes: “It is a core part of a strong, fair, and trusted insolvency regime,” he says. “The more creditors get involved, the more effective the insolvency process is.
“The insolvency profession, government, and creditor groups have been determined to make it easier for creditors, particularly small businesses, to engage in insolvencies. This website is an important part of that effort.”
Creditors are invited to provide key information about directors’ and individuals’ behaviour, help locate hidden assets, and help oversee the work of insolvency practitioners: “The UK has a world class insolvency regime, but it is always open to improvement," Giles adds.
The new website contains a step-by-step guide on how different insolvency processes work, a guide to insolvency terminology, and tips on how to help oversee the running of the insolvency process.