Creditor Portals do not equal Creditor Engagement
So-called “Creditor Portals”, and other similarly titled electronic platforms by which insolvency practitioners typically circulate any meaningful information to creditors about insolvent estates, have been a bugbear of mine ever since they were first used a little while ago. Don’t get me wrong; I absolutely applaud the attempt which they represent to minimise the amount of unnecessary paperwork circulating around the country and the savings of cost which they bring to the administration of insolvent estates where the cost of copying and posting alone would be absolutely frightening today. I don’t even object to the quality of the software per se, although some are much better than others. No, what I object to is the seemingly (and yes I know there will often be good reasons for this) ‘lazy’ way in which a significant cross-section of the insolvency profession make use of them, such that the Holy Grail of genuine creditor engagement (which the insolvency profession always claims it wants more of) gets further and further out of reach.
Take this week as an example: as lead corporate restructuring and insolvency partner at a busy firm of solicitors, I will typically receive on my desk perhaps half a dozen to a dozen hard copy letters from insolvency practitioners with sticky labels on them proudly announcing that they have been sent “TO ALL KNOWN CREDITORS” of XYZ Limited or Mr John Jones (in bankruptcy), etc. What these labels almost always omit to say, however, is whether we are receiving them because we (as a lawfirm) are a creditor, or because one of our clients is a creditor, or (heaven forbid) who our client actually is (who is or may be a creditor). The idea of there being a client or matter reference anywhere on the address label is positively risible. Alright, so perhaps that is too much to expect. It takes a bit of time, but we can generally work out who the alleged creditor is, and if we are lucky we will also be able to see how the creditor’s claim arises. So far, so OK.
Then we look at the substance of the letter. This varies, with some IPs deigning to tell us why they are writing to us in the letter itself (tick, tick), others alerting us to the fact that we have to do something by a certain date (half a tick), and still others simply putting the name of the debtor in the header alongside the words “in Administration” or “Proposed Corporate Voluntary Arrangement” and expecting us to work out the rest (big cross).
So then what? Ah, to read on we need to log on to a web address. This will normally be an http address carrying at least 30 characters, various slashes and dots, etc which we have to magically transcribe into our browsers, making no doubt several missteps of our fat fingers on our tiny laptops along the way. Having done so we are then invited to do the same with a ‘Case Code’ (typically long numbers – yuck, we are wordsmiths not mathematicians) and (horror) a password. Given that the vast majority of reports to creditors enter the public domain at some point, I have to query why we really need to be issued with ridiculously complex passwords as if we were trying to access an MI6 database. Remember, this is a hard copy letter; we cannot (without scanning the letter and using some clever tool at any rate) just copy and paste these passwords as we would do with emails from online providers.
And then, finally, we are in. Oh wait, no we are not. We cannot get in at all. The http address on the letter was wrong. It should have been ‘Blahblahblahcorporateportalthingamy/reports/morereports/highsecurity.com’ instead of ‘Blahblahblahdebtorportalthingamy/reports/theonethatonlyworksforbankruptcyreports.net’. The case code or password were mistyped and have disappeared accordingly. Perhaps there was a dash on the letter when it should have been a hyphen. So we wind up ringing up the nominated case administrator and/or emailing them (perhaps there is more than one, because the letter and the attached notice do not agree). And what do they do? Of course, very naturally and helpfully they offer to e-mail you the report. Then you either have to hope they make an accurate note of your email or make sure you have sent them an email to reply to.
OK, let’s say after all this effort we finally then do get sight of the report we’ve been so anxious to read. What is it? Oh. It’s a progress report on a Creditors’ Voluntary Liquidation which commenced 4 years ago, only there have never been any assets in the liquidation for distribution to anyone let alone unsecured creditors, because, you see, there was a prior Company Voluntary Arrangement, and all of the company’s assets were pledged in trust to the CVA creditors, and the only reason we’re keeping the CVL open and sending you this pointless report is because we have to until the CVA Supervisors have finally lost the will to live.
Well, thank you insolvency profession. You have just wasted a good chunk of my day. Thank you very, very much. And am I then going to move on to the next such letter, knowing full well that this one might be offering me a chance to vote on proposals within a short timescale, which vote if cast could be to everyone’s advantage if only you had the requisite majority? No, I am not. I am going to throw the second letter away, or place it out of reach for a (very) rainy day and get on with something more profitable.
I cannot be alone in this frustration. Corporate creditors with massive post rooms must absolutely despair at the amount of such mail which they receive, particularly those who are not used to it and have not appointed some poor, underpaid soul to the made up role of “Orphan Post Management Operative” or similar. This surely cannot be what the insolvency profession hopes to achieve? Disengagement? Resentment even? An impression that you’re just there to generate information you don’t want anyone to read so you can be paid for it? No, I am convinced that is not what you are about. I am not just saying that as Vice-Chairman of R3 in the South, but as one who frequently advises creditors who I genuinely want to play an active part in helping you to deliver returns and to maximise the value which we all look to bring to the British economy by turning these matters around as quickly as possible.
So, please, please, insolvency practitioners everywhere, take a moment before you send your report notifications. Give some thought as to whether they need urgent attention, why they might genuinely be of interest to the recipient, and put at least a flavour of this in your covering letter, starting with when you were appointed so we at least know if it’s current and urgent or old and potentially stale. Consider also whether, on this occasion, you might be better off actually sending the whole thing out, perhaps with the appendices and other bulky documents on the portal for those who want or need to see the full detail. Oh, and don’t ever send me a portal link to a CVA proposal without actually telling me that’s what you’ve sent me a link to! Period. Save us all a lot of time in the long run, and a lot of anguish, and you might just achieve the creditor engagement you always say you desire!
Oh, and one last word to the wise. If you know my firm acts for a creditor whose vote is important to you for whatever reason, don’t throw yourself on the lottery of a chance of my having the time and inclination to access and read your report before it’s too late: give me a call!
Mike Pavitt is a Solicitor and Partner in Paris Smith LLP (Southampton, Winchester) and an expert in insolvency law. Recognised as a leader in his field in both of the leading journals, Chambers and Legal 500, he enjoys a national reputation for his personal insolvency work and is known for tackling complex bankruptcies, often with cross-border issues. He is also Vice-Chairman of R3 in the Southern Region.