Chairman's column

Credit Management,  Jun 2008  by Hopewell, Stuart

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Welcome to summer at last! It must be summer as exam season is here and the sun is beating down just as those studying at school and universities - not forgetting our own ICM candidates - tackle those all important papers. My very best wishes to everyone sitting, and those who have already taken, their exams this term. I look forward to seeing your names on the 'pass lists'.

Summer may be with us, but the gloomy conditions carried forward from the latter part of spring still surround us in the credit world. I recently sat as a panelist on an IVA discussion forum and the majority of those present were pessimistic about how long the current 'crisis' will last. Insolvency figures released at the time did show a levelling off in personal filings, but company insolvency was beginning to creep up again. Indeed the reduced personal filings are considered to be only a blip as the recent spat over IVAs has served to reduce the number of applications being made. Now that the process has been 'simplified' by the new protocol, stand by for a new surge. It was noticeable also that bankruptcy petitions by the bankrupts themselves constituted over 80% of the total, and that only 11% were as a result of 'trader debts'.

These figures prompted the National Institute for Economic and Social Research to declare that the Enterprise Act "had had a disastrous impact on people's attitude to excessive risk taking". Effectively the lax rules had helped make the credit crunch worse. Well, well, I do recall our own Institute predicting as much even before the Act was brought to Parliament, although we were then regarded as pessimists! No doubt someone, somewhere in the Ministry of Justice is already planning the rebuttal of any criticism regarding the latest 'get out of jail free' cards envisaged in the results of the implementation of the Enforcements and Tribunals Act (Debt Relief Orders) ...

On a brighter note there are those who see positives in the current situation. It has been reported that consumers continue to spend against all the predictions of retail meltdown), although this spending is encouragingly on debit cards, not credit cards.

My old bete noir Eurotunnel has seen its restructuring succeed, with increased revenues across its services and a profit returned for the first time in its 22 year history. They even promise a dividend in 2009! This is proof positive that there is life after Chapter 11, particularly when creditors are part of the solution. Congratulations Monsieur Gounon, as I, for one, didn't think you could pull it off.

Even good old Leeds United are making a go of things post insolvency! Mr Bates may not have his 15 points back, but at least (as I predicted) Leeds are in the play offs and in with a chance of promotion (I'm sorry Leeds fans, that last statement has probably spoilt things for you ...).

Still on a sporting theme, our Welsh readers are never satisfied are they? Cardiff City, Joe Calzaghe, Ospreys, and the list goes on! Scotland's roll of honour so far includes Rangers (UEFA finalists) and its cricket team who recently beat Lancashire. Well at least England is certain of one sporting success this summer in the Champions League: It's a good North v South battle, this one. Of course, being from the North but living in't South, I couldn't possibly show favour either way ... so good luck to all - but more importantly, good luck to our hard working ICM learners!

Stuart Hopewell

Copyright Institute of Credit Management Ltd. Jun 2008
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