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Turnaround Management Association

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The European Association of Certified Turnaround Professionals contributes to the CIGA Interim Repor

This week, the UK Government published the results of a study that reviewed the operation of the Corporate Insolvency and Governance Act (CIGA) 2020’s three permanent measures.

Read the full report here: Corporate Insolvency and Governance Act 2020 – Interim Report March 2022

The EACTP contributed to the report, making the case for CTPs (Certified Turnaround Professionals) to be recognised as moratorium monitors. It is pleasing to see this input was considered, albeit with a qualified acceptance that accredited turnaround professionals could have a positive role in the moratorium.

The report by Professor Peter Walton and Dr Lézelle Jacobs of the University of Wolverhampton makes interesting reading but on the role of the monitor there is still uncertainty as to the nature of the role and who can perform it aside from Insolvency Practitioners (IPs), save that it will make it cheaper if the role is extended to non-IPs.

As expected, opposition comes from secured creditors who wish to appoint IPs although the report does allude to the conflict of interest that this creates. It also notes that not all IPs are equipped with the skills nor enthusiasm for operational recovery.

The report also comments on the cost of Court involvement in recovery plans being a deterrent to their use. It notes that the use of accredited turnaround professionals could be more cost-effective, thus saving more value for stakeholders.

What the report doesn’t say is that using accredited turnaround professionals will also encourage consensual solutions either before or in a moratorium, thus obviating the need for Court intervention: a point made by EACTP in discussions with Professor Walton.

Overall, while the report doesn’t recommend acknowledgement of accredited turnaround professionals’ involvement as monitors, it does leave the door open for further consideration and we view this report as a positive step towards the EACTP’s aim of having CTPs recognised as moratorium monitors.

Fundamental to our case and what we will continue to press is that CTPs have the skills, professionalism, balance of responsibilities and ethics to act in a moratorium to save going concern value and enhance stakeholder recovery, including secured and unsecured creditors according to absolute priority, all at a more efficient cost.

The second phase of the research will be published next year following further interviews with Insolvency Practitioners.

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