Channel calls for unity over insolvency plan

Proposed government overhaul a cause for channel concern

Speak out: Industry is calling out to channel players to voice

Channel firms are being urged to speak up on the UK government’s proposed insolvency procedure overhaul before it is too late.

The government is hoping to establish a more nurturing system that favours company rescues while curbing the number of firms opting for pre-packaged administration deals that leave creditors constantly out of pocket.

It aims to promote the use of company voluntary arrangements as a restructuring tool by giving all companies the option of the protection of a moratorium against creditor action for up to three months.

As such the government has launched a consultancy procedure which runs out on 7 September.

But some industry players are concerned that a clause in the initial proposal means
struggling resellers will not be supported by their distributors because it allows credit insurers to offset the proceeds of any sales made post insolvency against their final payout to creditors.

Nitin Joshi, founder of ChannelMoney, said: “It is good to see the government thinking of rescue, but there needs to be a serious review of the role that credit
insurers play in the process.

“Suppliers are often happy to support an ailing business, even where it has formally entered into an insolvency procedure, but these intentions are often hampered by
salvage clauses,” he said.

ChrisHarlowe, partner at law firm Speechly Bircham, which is gathering comments on behalf of the channel, said: “Everybody in the industry should make their opinions known, otherwise the end result will not necessarily be good for the channel.

“This is only the opening salvo so the more viewpoints the better.”

Jon Bunyard, general manager of distributor CCD, said: “As this is only a consultation stage, I would like to see the channel’s credit managers engage through their professional bodies to promote the changes that they wish to see.”

Nick Tiltman, credit manager at Tech Data Europe, said: “We need to lobby as a professional body to ensure that what is put in place will assist the channel in the long run.”