Accountants 'keen to save ailing firms'
Monday 24 October 1994
This conclusion from a survey of 333 insolvent businesses in the year to June 1994 contradicts criticisms of the insolvency profession by many bankrupt businessmen and banks, that accountants face a conflict of interest if they are subsequently appointed receivers.
The laws governing how insolvent companies are treated are under review by the Government. The survey by the Society of Practitioners of Insolvency (SPI) is seen by the profession as a key weapon in its lobbying effort to avoid being forced to separate the roles of investigating accountants and receivers.
For every investigating accountant who recommends to the bank that he be appointed receiver, two other investigators help save the company and avoid any formal insolvency procedure.
And investigators who do become receivers are far more likely to succeed in rescuing the company, either as a going concern or as part of a trade sale, than if a totally fresh accountant is brought in as receiver, the survey found.
When investigating accountants are appointed only a fifth of businesses are broken up and 47 per cent are either completely rescued or sold on.
Insolvency specialists are keen to show that the great bulk of their work is now concerned with rescuing companies 'behind the scenes' and that only a minority of cases become public in the form of a receivership or liquidation.
The SPI estimated that 7,000 companies in the year to June 1994 were of such concern to their banks that investigating accountants were appointed and that a significant majority were saved behind the scenes.
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