Vol 9 (2012) - Issue 4

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Failure Isn’t Working

The current economic climate in the UK has thrown up some contradictory indicators. Not least, the numbers of businesses entering into administration flatlining despite the unprecedented economic woes being faced by corporates.
The UK has long been recognised as having a strong insolvency regime but such a contradiction raises important questions – are we experiencing the death of corporate failure altogether or is it simply becoming too difficult to fail?

– UK risks losing pre-eminent position in World Bank insolvency procedure league table
– Administration numbers flatline despite growing corporate woe
– Lack of clarity on priority of payments clouding decisions on whether to file for insolvency
– Court rulings on rent, employment and pensions seen as adding to the view that failure is becoming too difficult
– Failure vital for successful and efficient markets as propped up companies divert financial resources from growing businesses
– Rehabilitative purpose of administration being eroded