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Updated: 9th May 2020

Julie Palmer Takes to The Radio 4 Airwaves

RBR Advisory partner, Julie Palmer, featured on Radio 4’s current business affairs programme, The Bottom Line, hosted by former Newsnight presenter and economist, Evan Davies, to talk all things insolvency, Thomas Cook and tackling rogue company directors.

Julie Palmer analysed the effectiveness of the Insolvency Act 1986, the demise of the British High Street and the collapse of Britain’s leading travel agent, Thomas Cook, and construction giant, Carillion. Looking deeper into the case of Carillion, Julie provides insight into the role of the insolvency practitioner throughout the liquidation process.

“In Carillion, there was about 80 million cash in the company pre-liquidation, when it went into compulsory liquidation.

“That sounds like a huge amount of money, but actually in terms of funding a business of that size, one of the key risks that we look at is, can we actually afford to trade this business if we go into administration with it as a going concern because we don’t have a bottomless pit of cash as we are responsible for any commitments that we incur.”

Reputational risk of insolvency for company directors

Julie speaks about the reputational risks of liquidation and the emotional damage this can have on the lives of business owners and their sense of self-worth and pride. Humanising company directors in distress, Julie sheds light on the impact this has on community relationships and the next generation of family members expecting to step into the role of the proprietor.

“We see that aspect much more with owner-managed businesses, it’s very much personal that when the business fails, the persons reputation and sense of pride can really be affected and there are certain aspects, particularly in agriculture, where the effects of an insolvency can really be profound on the owner of the business because of community ties that exist around the business.

“It’s important to remember that the owner of the business is an individual with a family and relations in the local neighbourhood.”

“I think where the legislation could be more robust is that we’re not really robust in the director disqualification regime.”

40% jump in businesses in distress since EU referendum

Following the EU referendum which took place in 2016, there has been a 40 per cent increase in the number of UK businesses experiencing significant financial distress.

The latest Red Flag Alert report, as produced by Begbies Traynor Group, highlights the Brexit as a contributing factor towards High Street store closures.

Balancing the Insolvency Act 1986

Julie shared her thoughts on enforcing a robust regime and toughening legislation governing insolvencies, such as director disqualification as a result of irresponsible dividends and misleading creditors.   

Julie Palmer told Radio 4, “One of the big things we’ve seen in the last few years is that more companies have taken this type of risk and we are extremely active, whether it’s improper dividends, paying your wages not through paying tax but putting this through your directors loan account - we will actively pursue all these avenues to get money back in for the company. 

“I think where the legislation could be more robust is that we’re not really robust in the director disqualification regime.”

“The other side is that how can we put an impediment or deterrent for people who think they can carry on doing that, and to do this, there must be a much more robust disqualification regime”, she added.

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