Company chiefs spared administration backlash in 2008

Figures from the Insolvency Service obtained by The Independent on Sunday show that it received 4,037 complaints about company directors going through the insolvency process in 2008 – only marginally up on 2007.

The service, whose chief, Stephen Speed, faces a grilling from a committee of MPs next week, said it had received 4,037 D1 notifications, which allege that directors are unfit to run a company.

Despite the thousands of notifications, only a small percentage result in directors being disqualified.

A spokesman for the service said: "Each notification has to be thoroughly investigated to see whether there is sufficient evidence of misconduct to justify disqualification proceedings. The service also has to consider whether disqualifications are in the public interest on a case-by-case basis."

One leading City administrator, who declined to be named, said: "The number of directors being reported for sharp practices linked to insolvency proceedings is, in my opinion, set to jump dramatically in 2009. I've seen this from my own work. I had a director the other day who sought to replace me as administrator after I advised that a pre-pack administration process wasn't the right course of action for his business. He decided to go to a rather less scrupulous administrator instead. I shall be reporting him."

Meanwhile, a spokesman for the Insolvency Service said it hadn't received a single complaint about the conduct of controversial pre-packs – where a buyer is lined up before administration – following amendments made to the process at the start of the year.

Last week Alan Duncan, shadow Business Secretary, criticised pre-packs, describing some as "morally and commercially unacceptable".