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Neville & Co Licensed Insolvency Practitioners, available to businesses throughout the South West. Helping businesses needing support with business rescue, liquidation and more.

What A No-Deal Brexit Would Mean For Insolvency.

With uncertainty still surrounding Brexit, it is increasingly difficult to escape at least one related headline a day. A crucial sector that Brexit could have a significant impact upon is insolvency, with a no-deal situation meaning that it would become much more difficult to resolve cross-border cases from the UK.

The importance of insolvency has been kept in the mind of our Government throughout Brexit negotiations by trade body: R3. The current framework that the UK has in place allows businesses, lenders and investors the confidence that in the event of an insolvency, they will see some of their money returned to them. This has meant that the World Bank lists the UK as 14th for resolving insolvency, which is said to attract further investment to the UK.

With London being regarded internationally as a centre of excellence in restructuring, many multinational companies choose the capital as the place to reorganise themselves; thanks, largely in part to the strong mix of expertise, access to funding and robust court judgments it offers.

Current Insolvency Processes:

As previously alluded to we, the UK, currently have a good cross-border insolvency and restructuring system within the UK. This is due to two factors, that come together to reduce the costs and time taken to resolve insolvency situations. The first of these being the European Insolvency Regulation, which ensures that the appointment of an administrator, liquidator or trustee in bankruptcy in one EU member state is automatically recognised in other EU jurisdictions. Whilst the second factor, the Recast Brussels Regulation, allows for court judgements made in one EU country to be automatically recognised and therefore enforceable, in other parts of the European Union.

The outlined framework factors above currently allow for cross-border insolvencies to be dealt with as if they were taking place within one jurisdiction. A UK insolvency practitioner can take control of assets spread across the EU in one go, or they can sell business units in one piece, while this set-up stops insolvency procedures in different countries competing for the same assets on behalf of local creditors.

The same benefits apply to somebody from the UK with a holiday home in an EU country, if they become bankrupt, the property which forms part of their estate can be realised by a UK-based trustee in bankruptcy. This also means that it is harder for fraudsters to try and hide assets in other countries.

Potential Post-Brexit Insolvency Processes:

Leaving the EU without a deal will mean that the above processes will no longer apply. A UK based insolvency practitioner who is appointed as the administrator of a company with cross-border operations will have to initiate insolvency proceedings in all of the other countries where the company has staff, subsidiaries or other assets. Meaning that a lot of extra time and expense will be added to the process. Leading to a reduction in returns available to creditors and make it more difficult to investigate suspected wrongdoing or fraud.

The Government’s Actions:

The R3 have been working hard to ensure that post-Brexit insolvency processes are still viable and effective. With the Government stating that they now have a policy to seek an agreement within Brexit which closely reflects the existing framework of mutual recognition and cooperation on civil judicial matters, including insolvency. However, what remains to be seen is the success of this policy and if in fact any form of deal is reached at all.

We are a licensed insolvency practitioner based in Plymouth, St. Austell, Truro and Penzance. If you need any advice regarding insolvency or related issues please get in contact with us.


Experts Warn Of Recession Due To Increase In Insolvency Levels.

The number of corporate insolvencies in England and Wales rose to 16,090 in 2018, the highest level since 2014, while personal insolvencies jumped to a seven-year high of 115,229, according to the Insolvency Service.

On top of the above figures, it was found that 1,211 retailers collapsed last year and with consumer spending not predicted to change the future isn’t looking overly promising.

Further to this, we are reminded to remember that the figures did not take into the account the worst Christmas for shops in a decade. As this data was not released until early January. Lack of money and flatlining of wages is said to be leading to this stall in consumer spending and consequent increase in insolvency cases.

Brexit uncertainty is once again explained as being a leading factor around businesses holding off on investment decisions. Which is having a knock-on effect upon consumers and suppliers.

We are a licensed insolvency practitioner based in Plymouth, St. Austell, Truro and Penzance. If you need any advice regarding insolvency or related issues please get in contact with us.

 

 


Neville & Co Licensed Insolvency Practitioners, based in Plymouth, St Austell, Truro and Penzance. Helping businesses needing support with business rescue, liquidation and more.

Business Insolvencies Up 14% In A Year.

A KPMG analysis has found that administrations fell by around 25% in 2018, whilst liquidations rose by 18%. When looking specifically at Scotland, insolvencies rose by 14% throughout the year. Further statistics show how insolvency appointments rose from 832 in 2017 to 945 in 2018.

Despite the bleak outlook, analysts have advised that the figures are disappointing but not alarming, with reference to the falling number of insolvencies within the final three months of 2018.

The figures do, however, represent how larger businesses struggled within 2018. With administration generally affecting larger companies, this rate rose. Whilst, those entering liquidation, which tends to be smaller businesses, saw a decrease in frequency.

What has been said to explain all of these insolvency figures, is the nervousness evident around Brexit. With many detailing the uncertainty for 2019 due to the uncertainty currently still remaining around Brexit.

We are a licensed insolvency practitioner based in Plymouth, St. Austell, Truro and Penzance. If you need any advice regarding insolvency or related issues please get in contact with us.