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AHH! Companies cannot go bankrupt in English law. That legal state is reserved in England and Wales to natural persons. That mini-rant aside, the More4 News story on Insolvency Practitioners (IPs) allegedly profiteering from insolvent estates is now live on their website. It makes interesting viewing (and reading). See "Reaping profit from insolvency."
The news item does not however make for balanced journalism. This is because the authors/presenters do not seem to take account of the concept of value for money. They have taken a simplistic approach to both the overall figure of IP earnings over the last two years (some £2 billion allegedly - where is this figure from?) and also to the hourly rate point. A partner, let's call him Dave (a tax partner advising on complex tax issues), may well charge £750.00 per hour, but that work might actually represent good work which represents value for money. The journalist seems to have failed to examine what the charges actually related to. What has Dave done in that hour? If Dave has saved the insolvent estate £2,500,000 due to his unravelling of a tricky tax point, then that is not a bad use of £750.00 in anybody's book.
The second major point relates to compliance. Insolvency is a heavily regulated sector. Compliance costs the creditors money. It is incumbent on MPs to explain to creditors why the laws that they legislated for are so costly to administer. The IPs did not create the legislative environment. MPs and Peers did. The Insolvency Rules 2011 herald yet another change and further cost for IPs. This will eventually be borne by creditors, but the catalyst for change does not sit with IPs. One could argue that IPs are not to blame for any current dissatisfaction, but that legislators are for promulgating the environment in which IPs are forced to operate. That is of course if you accept that there is in fact anything afoot with the status quo in terms of charge out rates.
"This is the ultimate statement of where the law on IVAs is to be found in our great common law...