Printers have reacted angrily to insolvency service trade body R3's report into the value of the insolvency industry.
The report, commissioned by R3, featured headline figures stating that around 2m jobs and 5,851 businesses had been ‘saved' by the industry during 2009. It also stated that UK insolvency practitioners were able to recover 84 cents in the dollar for creditors in 2009, according to World Bank figures.
However, the print industry has criticised the report, questioning the validity of its findings and the state of the insolvency profession.
Colin Roberts, managing director at Business Forms Express, said: "When I read the report, I had to check that it wasn't dated 1 April. Anybody running a business knows very well that you won't ever get 84% of your money back as a creditor. The usual return is zero. The report is total garbage and cannot be taken seriously."
According to a spokesman for R3, the figure takes into account whether the business emerges from the proceedings as a going concern and how long it was insolvent.
One printer, who did not wish to be named, said: "The system that R3 defends is being widely abused by their own members, some of whom have publicly attacked R3. If that doesn't illustrate the urgent need for change, what does? There is no effective check on the fees of insolvency practitioners, so the inevitable consequence has been charges that would make some bankers blush."
According to Response Envelopes managing director Greg Nicholls, the print industry will continue to suffer with the rules as they are.He said: "We should be creating a platform for good businesses to grow, and not be hindered by a system where competitors consolidate assets and write off debt.
"There's very little to gain from recycling bad businesses, as there is growing opposition to supplying or extending credit to the new entity."
Nicholls added that a ‘Limited 2' system should be introduced, whereby a company coming out of administration is essentially labelled as such.
He said: "I believe many decision makers would rather show a level of understanding than be left completely out of pocket.
"By introducing a ‘Limited 2' system, companies may be able to turn a corner."
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