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Insolvency Service under fire on targets 23 October 2012

The new chief executive of The Insolvency Service insisted that increasing confidence in its enforcement regime was “challenging” after the organisation failed to meet its target.

Dr Richard Judge and deputy inspector general of the government agency Graham Horne faced the Business, Innovation and Skills Select Committee in parliament today (23 October) to answer questions about developments, since the committee took evidence earlier in the year.

Judge and Horne were asked why stakeholder confidence in its enforcement regime had remained at 65% in 2011/12, missing its 68% target as reported in its most recent annual report.

Conservative MP Rebecca Harris said that she considered the 68% target as neither “ambitious” or “challenging” and asked Judge why it had not been met.

He told the committee that the target was ambitious enough and claimed that this was why confidence levels had remained at 64% to 65% for the past few years.

The government agency, which administers the insolvency regime in England and Wales, also faced questions about the use of pre-pack administrations, where a restructuring plan is agreed in advance of a business declaring insolvency.

Pre-packs have come under fire for allowing “phoenix” companies to emerge out of a collapsed firm and continue trading under the same name.

The government decided in January 2012 that an overhaul of the process, which would have seen insolvency practitioners give three days notice to creditors, would be scrapped.

Judge said that in some cases pre-pack administrations could be a “useful tool” and that they can save jobs. But he added that phoenix companies were a cause for concern.

According to Horne, the Insolvency Service receives around 20 complaints a year about pre-packs, with just 22 complaints lodged since January this year. He acknowledged that this could be due to a lack of clarity about how to issue a complaint with the organisation.

Judge joined as chief executive on 30 July 2012, taking over from Stephen Speed.



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