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Tuesday, 12 August 2008

UK Government's Desire for a company rescue culture!

Quote from local Government Minister in Rochdale papers.

"We are committed to the promotion of a rescue culture which provides opportunities for insolvent companies that have viable underlying businesses to be rescued wherever possible".

That's good then? Why do so very few business people know what the company rescue options are?

Do the government ministers responsible know the difference between administration, company voluntary arrangement (or company voluntary agreement according to "The Times" today), pre-pack administration or liquidation? Suspect not.

One day back in April 2005 when MG Rover was having a torrid time, the then DTI secretary of State Patricia Hewitt announced on the Ten o Clock News that MG Rover had "called in the Receivers".

Now given she had overall responsibility in Government for business and The Insolvency Service you might have thought she would get her facts right? First she would have checked the state of play before going live on TV and making that statement? Right?

Not at all. You can imagine some mandarin or spin meister saying "Just say what you think is right".

Fact: MG Rover was in discussions with trade insurers, suppliers, bankers and unions to try and set out a survival plan that evening. Ms Hewitt effectively pulled the plug on that and the future of the company with her unilateral INCORRECT announcement.

Truth was an Administrator was also being consulted and within hours was appointed. The board felt it had no option after the Government effectively kyboshed the company.

So if the then Secretary of State could not tell the difference between administration and administrative receivership, I suppose I can forgive the Times journalist today getting CVA meaning wrong!

PS remember "Railtrack plc", ah yes another Government initiative to kill off an unwanted business and nationalise it. Will we see more of this favourite Labour party ploy in the time it has left?

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