This interview was carried out by and therefore first published in Finance Director, the magazine dedicated to providing high-quality analysis and insight for UK FDs, CFOs and other senior business finance professionals. John Dickinson, Partner, is a Licensed Insolvency Practitioner and he leads the Corporate Recovery & Insolvency team at CBW.
- What is your reaction to the government’s position remaining that there is no conflict between insolvency law and employment law? There has always been a conflict between insolvency law and employment law going back as far as the Paramount Airways case in 1994. While the interests of employers can never be disregarded, the current position effectively ‘ties the hands’ of a prospective administrator and could lead to an increase in the number of businesses going through liquidation rather than a potential rescue via administration because there is simply neither the time nor the money to do anything else.The purpose of the Enterprise Act 2002 was to encourage a ‘rescue culture’ with a more flexible and easier access to the procedures that allow for businesses to be protected while a rescue plan, if possible, is formulated. It seems that while the good intentions behind this approach still remain, much has happened over the last ten years to erode the power of insolvency practitioners to turn those intentions into reality.
- What would constitute a ‘workable solution’ to the conflict that exists between employment and insolvency law? Much time and effort has been spent over recent months revamping the protocols and procedures for pre-pack administrations. Perhaps it would be helpful if some thought could be given during this process to the subject of employees and their jobs. As things currently stand, it strikes me that there is clear potential for the baby to be thrown out with the bathwater and the incumbent IP is under a real risk of suffering significant liabilities for a failure to consult.Perhaps it would be possible to replicate the processes that take place with the prepack pool in an effort to alleviate this situation. By this, I am wondering if it would be possible to create a ‘knowledge pool’ that an IP could consult and get some form of approval from if he feels redundancies have to be made in a timescale that does not afford the opportunity for large-scale consultation.
- What are the biggest constraints to ‘meaningful consultation’ with employees you have encountered? This can be answered in one word: time.
- Should insolvency be granted an exemption as a ‘special circumstance’? It’s difficult to say if this would be either practical or helpful. In practice, it may be unworkable for insolvencies to be given a carte blanche exemption since there is always the potential for this to be abused – whether in reality or otherwise.On the other hand, the lack of an exemption could result in an increase in litigation funding or even lead to a lack of prosecution of what are in essence good claims – which would have an obvious impact on the potential recoveries made on behalf of creditors.
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