Many interior designers will know the feeling: you receive a notice informing you that the company holding your deposit has gone into administration with your deposit; you won't receive the goods either, so now you have to source the items from somewhere else in time for your contracted clients deadline. It's annoying to say the least.
Interior Designers have regularly been regarded as untrained, lacking in business acumen. Sometimes this is justified, but often the situation described above is due to third party suppliers taking designers' deposits and then filing for bankruptcy, leaving the designer without the product and having already spent the client's money.
To help matters, Edward Davey the minister for employment relations, has launched a consultation about bankruptcy and company winding up. The consultation document sets out detailed proposals to reform the application process for bankruptcy and compulsory winding up by replacing the current court route with a new administrative process.
Under Davey's plans, uncontested applications would be determined by an adjudicator and the court would be involved only at the application stage to the extent that there is a dispute that can be resolved only by judicial intervention. The minister proposes to allow electronic applications to be made to an adjudicator, who will be a person appointed for that purpose by the secretary of state and whose office would be within the Insolvency Service. Debtors who want to apply for bankruptcy for themselves would have the choice of submitting electronic or paper applications, and the option of making the requisite payment to enter the process by installments. Where creditors are looking to instigate proceedings, a new mandatory pre-action process would provide an incentive for debtors and creditors to communicate with each other and thereby reach a mutually satisfactory solution to the debt problem without recourse to a bankruptcy or a winding up application.
This reflects the Government's position that people are empowered to make the right decisions for themselves about their finances.
Litigation can be costly and time consuming, it doesn't guarantee results and, at worst, it can lock you into an expensive process where you cannot (unless you also pay your counterparts fees) just drop your claim mid course without penalties. This new process should therefore deliver a more efficient service as well as saving valuable public and private resources. In order to ensure that the interests of both debtors and creditors are protected, the court would still have an important role and the route through the courts will, of course, remain as an independent solution of resolve. Not only would it decide the outcome of disputes, but also certain petitions for the winding up of companies, such as those based on public interest grounds, would continue to be determined by the courts.
Kitchen and furniture manufacturers are some of the most regularly hit when companies go bankrupt, and the loss of a high street brand feeds further unease and insecurities among consumers, which in turn stymies sector growth. We should be promoting and protecting the needs of the consumer - that will lead to sales which kick-start more sales.
Vanessa Brady is an interior designer and head of the Society of British Interior Designers (SBID)
