Insolvent companies face trading uncertainty

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) February 19, 2012 -- Almost one in three administrations that companies could have been traded through instead result in an unnecessary "pre-pack" administration or a liquidation because of uncertainty over what qualifies as an "administration expense", according to insolvency trade body R3.

While administrators are typically liable for certain trading costs as a priority, including staff wages, recent court rulings have also included a much broader set of liabilities, including pensions.

R3 said insolvency practitioners are responding to the uncertainty by closing companies "meaning creditors lose out and jobs are at risk".

The body is calling for legislation to clarify administrators' responsibilities.

R3 president Frances Coulson said: "Paying out an undetermined range of costs as a priority makes deciding to risk trading a business significantly more expensive and in many cases impossible.

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Article sourced from:
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9091995/Insolvent-companies-face-trading-uncertainty.html

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