Apr 13 2004
The Insolvency Creditors Association greets the implementation of the latest aspects of the Enterprise Act 2002 with fears of a hidden trap for creditors.

These Personal Insolvency provisions, which come into force on 1st April 2004, may be a step too far.

Stephen Hunt, President of the Association said, “”It seems that the Treasury has given with one hand and taken away with the other. The fact that the crown was to lose its preferential status in all insolvencies in favour of the general body of creditors has been widely publicised. Whilst this has benefited mostly corporate insolvencies, the fact that the crown will now charge £1,600 per bankruptcy and a further 17% of assets realised has been kept quiet. Over £18,000 out of the first £100,000 realised will go to the crown, before any other fees and costs are taken into account. It will now be less likely that creditors of personal insolvencies will ever see a penny.”

Tim Bramston, a spokesman for the Association said, “The increase in charges came as something of a surprise. The charging of these fees is akin to the victims of a crime paying for the police to investigate. This seems to be a stealth tax of the worst kind, taxing those creditors who have already suffered a great loss. I fail to see how that can promote enterprise.”

There are some aspects of the Act that creditors should support.

Nick Gordon, a spokesman for the Association said, “The creation of the Bankruptcy Restriction Order is to be welcomed as a new measure to protect the public and the commercial community. It does create some flexibility in the system, and creditors will encourage its use where bankrupts do not co-operate with the bankruptcy process or have been culpable in their own insolvency.”

The Association seeks to speak for creditors interests on insolvency issues. Its members are drawn from a wide base of those who find themselves victims of insolvency. This year’s creditor may be next year’s insolvent unless proper controls exist and are applied by insolvency professionals.