Nine things we learnt at the Insolvency and Restructuring Conference 2016
Judith Howson, trainer for Insolvency for the ICAS and BPP partnership and Senior Manager at French Duncan, rounds up nine useful points to take away from this year’s Insolvency and Restructuring (I&R) Conference 2016 in association with Close Brothers Asset Finance, held in Gleneagles on 22-23 November 2016.
What a difference a year makes. Since the last I&R Conference there have been a number of political and economic changes that have had a significant impact on the status quo – from the Brexit vote and a change in leadership, to a new President Elect for the US.
Close to our own hearts as accountants, we have seen the introduction of a new online Director Conduct Reporting Service (DCRS) and the drafting of the Bankruptcy (Scotland) 2016 legislation, together with associated regulation, which will commence on 30 November 2016.
As well as looking back over the year gone past, this year’s conference gave us an opportunity to look to the future.
1. How the economy may look after Article 50 is triggered
The conference’s keynote speaker, Professor Trevor Williams, Chief Economist at Lloyds Bank, provided some fascinating insight into how the Scottish and UK economy may look once the Government has triggered Article 50. He made it very clear that while change is inevitable, it is positive in that it brings with it new opportunities, and it is crucial that we embrace these new opportunities with open arms. Professor Williams also outlined that in 2017 we are likely to see the pound continue to weaken, resulting in higher inflation and increased interest rates. This will inevitably have a real impact on household incomes and the end result may be a rise in personal insolvencies.
2. Personal insolvencies could rise
Personal insolvencies could also increase, as Accelerated Payment Notices (APNs) pierce the corporate veil by holding directors personally liable for suspected tax avoidance schemes. Both Philip McNeill, Head of Taxation at ICAS and Paul Winterton, Senior Insolvency Consultant at HMRC supported Professor Williams suggestion. They said that, as APNs can result in an immediate demand for payment which cannot be appealed, more insolvencies may arise.
3. The positives in a crisis
Marjorie Calder of Ocean Blue Consulting Limited explained how to look for the positives in situations which at first appear to be crises. Marjorie left us with a key message as day one drew to close that not reacting to a crisis may sometimes be the best strategy.
4. The new DCRS
Day two of the conference saw Claire Entwistle of the Insolvency Service provide a useful update on the new online DCRS. She said there will be further improvements to the service, including allowing other IPs and not just the lead IP to submit the report. In addition, there will be new capability to add and amend questions and allow for the importing of data from Companies House.
5. New sections of the Company Director Disqualification Act
In her presentation, Claire also outlined the new sections 5A-C of the Company Director Disqualification Act 1986 – this introduces the Compensation Order against directors’ conduct after October 2015. In practice, this means the Secretary of State could ask the Court to make such an order against a person subject to a disqualification order or undertaking if his or her conduct has caused loss to one or more creditors of an insolvent company of which they are a director. However, she stressed that these provisions are unlikely to be used if the IP is already taking some form of recovery action against the director for the benefit of creditors of the insolvent company.
6. Modernisation of corporate rules
Dr Richard Dennis, the Accountant in Bankruptcy and Chief Executive provided a useful update on the forthcoming corporate rules modernisation. He reiterated that Scotland would have two new pieces of legislation and that these will come into force in October 2017.
7. Corporate legal challenges
One of the panel sessions hosted by HBJ Gately highlighted three significant corporate legal developments which have taken place during 2016. These include court reforms (which make changes to the Summary Cause Rules from 28 November 2016), a number of English cases where the Courts have adopted a more commercial approach to their judgments which may be followed by the Scottish Courts too, and the Review of the Corporate Insolvency Framework.
8. Fraud awareness
Lesley Marjoribanks, Customer Security Manager at RBS gave a very topical and practical presentation on Fraud Awareness. In an ever increasingly technological environment, she outlined that we are all vulnerable to attack by sophisticated cyber criminals. In particular, she highlighted how vigilant we all need to be around vishing, where contact is made by telephone and the caller encourages you to disclose confidential information.
9. Digital changes ahead
As the I&R conference drew to a close, Richard Sergeant, Director of Principle Point encouraged us to look at the future, and how we might achieve success in the ever evolving digital arena. Richard talked of the challenges the profession faced and how we should take inspiration from competitors already embracing new technologies.
In summary, this year’s I&R Conference provided both an opportunity for reflection and contemplation on the past, while staying present and looking to the future. A theme emerging from the two days was that the profession was in a time of significant and continuous change and so too was the world. While we may not know what lies ahead, we must approach the future with faith, confidence and vigour and embrace everything that comes our way.