John Verrill, Vice President of insolvency professionals’ association R3 has slammed the UK’s high street banks for failing to apply a Privy Council ruling that says they should pay out millions to key creditors of insolvent companies, including former employees.
Speaking at the Future of Corporate Rescue Culture conference last week, Verril said, “Banks are in denial about preferential creditors’ claims to funds and they’re causing a stalemate. We currently have liquidators holding the cash to which both banks and preferential creditors are laying claim. While the banks are putting pressure on insolvency practitioners to pay them money owed, the Inland Revenue and Customs and Excise have said if the money is paid to the banks, they will hold insolvency practitioners personally accountable.”
He continued, “Insolvency practitioners are caught between a rock and hard place. There is an atmosphere of menace, a refusal by the banks to confront reality, and a refusal by the preferential creditors to surrender the cash to the banks – up to £200 million may be at stake.”
Verrill estimates around £200m is being wrongly withheld by the banks following the Privy Council’s judgment in the Brumark case.