Creditors’ reaction to receiving news of a failing customer and the possibility of another bad debt varies from apoplectic rage to an apathetic shrug of the shoulders.
At least those who wanted to get involved and demand answers from the directors and their advisors had the opportunity to do so through the mechanism of a creditors meeting.
This opportunity is soon to go with changes to the Insolvency Rules due to come into force on the 6th April. Physical meetings will be replaced by deemed consent, and virtual meetings with electronic or postal voting.
Only if sufficient creditors demand a meeting will one be called, and even then it is likely to be well after the immediate events and the opportunity for creditors to influence the outcome is likely to have been lost.
So why the changes to the rules? It is supposed to be about more creditor engagement, but what better form is there than the ability to eyeball the director at a creditors meeting and ask some very pointed questions. It is also about bringing systems up-to-date to use modern forms of communication, which in its self is no bad thing.
So will things really change? Creditors who were angry over a prepack administration or liquidation sale which handed the assets back to the directors who failed the business in the first place will still be angry, but now have less opportunity to vent that anger unless they can get the support of sufficient other creditors or the required percentage (10 in number or %).