Business secretary Vince Cable, along with the insolvency service, referred three Deloitte partners to ICAEW after deciding there had been a conflict of interest over the handling of the Comet administration.
EACTP president Tyrone Courtman said that important judgements were required in stakeholder management, and that consensual restructuring could be used to save more jobs, and preserve value.
Courtman said, “Administration is a more predictable legal process, and whilst the merits of licensing of formal insolvency appointments are recognised, the process often results in significant job losses, higher professional costs, reduced recoveries and destruction of enterprise value.
“Using independent turnaround advisors, who are not licensed to undertake or seek appointment to any required insolvency process, whilst exploring consensual restructuring options, eliminates possible conflicts of interest.”
Talking to economia, he questioned whether it was appropriate for floating charge holders to maintain their current level of power, and added that the administration process could be more inclusive and should reflect the interests of all stakeholders.
He also argued that where most practitioners would prefer to take a company into administration, it was important that there were no conflicts of interest in the administration process.
He said, “It seems to me that nine out of 10 other insolvency practitioners would take a company into administration.
“If they have any involvement with that company, that practitioner should not be the administrator.”
Alan Tilly, EACTP director and education committee chairman, said there was an ever-increasing need for the UK to embrace consensual restructurings, especially if it wants to keep up with European competitors.
Tilly said, “There is a growing need for change in the UK to facilitate consensual restructurings. The UK has fallen behind France, Italy and Germany in the flexibility of its legislation.
“The recent EU Regulation revision recommends all member countries introduce regulatory flexibility to encourage consensual restructuring as a preferred alternative to insolvency. Perhaps the issues raised by Comet will hasten this change.”
An insolvency service spokesperson said, "The UK’s insolvency regime is ranked 7th out of 181 countries by the World Bank. The administration process was substantially revised in 2002 to make it easier for companies to enter and to allow for a period to develop a rescue plan, during which time creditors cannot take action.
“In the UK many rescues are undertaken before companies enter a formal insolvency procedure. This is increasingly the case as the lending community becomes more proactive and supportive in assisting companies in financial distress. This ultimately benefits all stakeholders by preserving economic value where possible.”