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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

10 JUL 2012

BBC Radio Kent on the Chatham OR office closure

I have just finished a (very brief) interview on BBC Radio Kent with the presenters and Tracey Crouch MP. I thought I would recyle my pre-prepared thoughts onto the blog as there was not time to develop the points in the allotted slot on the radio. Here are my thoughts on the proposed closure: 

"Dr John Tribe’s Statement for BBC Radio Kent on the proposed closure of the Medway (Chatham) ORs office

“I acknowledge that the Insolvency Service (aka the Official Receiver) have to make cuts in line with the Coalition Government’s general cost cutting activity.

The Insolvency Service also recently had a £11 million deficit that needs to be addressed which came to light last year (see here).

And they are also making a large number of people redundant as, inter alia, the consultation document makes clear.

They need to cut costs


However: 

Are Creditors and Debtors best served by these cost cutting measures? 

Most members of society (your listeners for example) fall into one of those two categories (or both probably both!) 

Are these stakeholders in the Medway region best served by the closure/merger of their local Official Receivers’ office? 

Perhaps they will not actually be affected with a greater move towards digitisation of processes and other rationalisation techniques.


This reform is however symptomatic of a wider cost cutting problem


I will make three points on this:

(1) The recent collapse of the Farepak trial stemmed largely from internal problems within the IS according to the judge Mr Justice Peter Smith (see here).

Dr Cable’s recent announcement that HBOS are going to stump up money for creditors is good news, but should we be dependant on the guilty conscious of one bank to satisfy other creditors? (see here)

The Insolvency Service perceive no negative impact on investigation and enforcement activity in closing Chatham – really?

Farepak demonstrates they currently have problems.


(2) The recent Bankruptcy Court jurisdiction changes at the High Court (see here) - this is another example of coalition cost cutting on the insolvency jurisdiction – this time caused by Court Service cost cutting. 


(3) the Insolvency Service moves to reform bankruptcy and winding up petitions to make them administrative led (and therefore supposedly cheaper) taking the process out of the hands of the courts (see here). 

These reforms have been very ill received, indeed, lampooned by some. 

Themes around them are used to justify the closure of the Chatham Official Receivers at he very time when the Insolvency Service are seeking to extend their own workloads – who is going to do this petition work? 

Cost cutting does not bode well for our insolvency system. There are tensions between: 

The proper administration of a well functioning and respected insolvency system

v.

the need to reduce costs due to general budgetary constraints


We need a proper functioning well-resourced insolvency system. 

If cost cutting goes too far the insolvency system itself will become bankrupt!” 

 

Dr John Tribe

Kingston Law School

Kingston University

8th July 2012


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