Insolvency Service hit by staffing crisis: Agency misses disqualification targets

THE Government's Insolvency Service has admitted that it fell short of achieving its targets in disqualifying unfit directors last year, again throwing the spotlight on the Government's funding of the agency.

In its 1992-93 report the service admitted that it had been forced to borrow staff from Customs and Excise, Inland Revenue and other government departments as it struggled to deal with record numbers of company collapses and complaints against directors.

Liquidators have complained consistently over the past five years that reports sent to the Department of Trade and Industry on the conduct of directors whose companies have failed have not been dealt with satisfactorily because the Insolvency Service is understaffed.

Over 9,500 businesses went into liquidation in 1992-93, many of them resulting in damning liquidators' reports. Yet the Insolvency Service only brought proceedings for disqualification in 564 cases and disqualified only 446 directors.

Peter Joyce, inspector-general and agency chief executive, said: 'Given that there were 18 per cent more cases than were forecast for the year, on which targets had been based, it was not surprising the service fell short of its targets.

'Nevertheless, it was still able to increase the number of disqualification orders obtained by 36 per cent, although with more proceedings being defended there are resource implications for both the service and the Treasury solicitor, to whom more cases are having to be referred.'

This comes against a background of concern by commercial insolvency practitioners that the agency simply needs more staff if it is to combat unfit directors. They are happy with the quality of staff and expertise in the agency but think it is undermanned.

In 1992-93, the official receivers submitted only 33.9 per cent of disqualification reports to the agency within 15 months. That compared with 49 per cent achieved in the previous year and the agency's target of 80 per cent.

The agency had also set a target of 80 per cent of prosecution reports to be submitted to it within 10 months. It received only 57.1 per cent of company reports within the deadline and 74.1 per cent relating to sole practitioner bankruptcies.

Mr Joyce said: 'Additions in manpower allocation during the second half of 1992-93 and for 1993- 94, totalling 10 per cent and including staff on loan from Customs and Excise, Inland Revenue and other departments, reflect a commitment to maintaining an effective investigative presence.'