Gordon Banks

 16 November 2009

Ochil & South Perthshire MP Gordon Banks has this week urged the Government to review legislation on insolvency to ensure that unsecured creditors are given a fairer crack of the whip when attempting to claim money from a liquidated company.

Mr Banks, has tabled Early Day Motion 2065 which has cross party support from thirty MPs calling on the Government to carry out a review of insolvency law to explore opportunities that would see a greater return for unsecured creditors.

Currently when a company is liquidated the law ensures that the liquidators receive their fees for winding up the business and then secured creditors , perhaps the banks,  are paid and whatever assets are left are shared amongst unsecured creditors.  However it is often the case that there is no money left in the pot and unsecured creditors are left with no financial recompense.

Mr Banks said – “At a time when the economy is weak it is an inevitable outcome that many companies will be faced with insolvency.  But with every company in that position there are always several others who are owed money.”

“We need to quickly reach a position in law that sees a greater degree of equity for unsecured creditors in such situations.”

“Unsecured creditors are in a very difficult position and are often exposed almost to breaking point when one of their customers go bust.”

“To resolve this situation we need to look at reducing the often significant fees charged by receivers, administrators and liquidators to allow for a larger proportion of the estate to be made available for creditors of all nature.  In this recession it must be a major priority to ensure that as much of a company’s assets as possible are paid to creditors.”

“We can also look at other ways in which there is a guaranteed slice of the cake which is reserved for unsecured creditors.  I would urge the Government to instigate a review in this area as soon as possible.”