Bill Midgley column

Aug 24 2005 By Bill Midgley, The Journal

It is not all that long ago I was writing that bankruptcy was often seen as a bar on young entrepreneurs who when having made a single mistake often found that they had lost their businesses and indeed were "blacked" so far as developing their future skills were concerned.

This was often of great detriment to our economy and discouraged such entrepreneurs to try again with new business start-ups and make the best of their skills. Bankruptcy laws changed, and the result has been that we have seen the highest number ever of such orders being made; unfortunately, however, not with young entrepreneurs but rather the less responsible members of our society who seem to seek such a path as a way of avoiding their responsibilities.

When a presenter on national radio goes so far as to encourage those whose debts are too high that they are causing problems to seek bankruptcy as an easy way out, it is perhaps time to again review why the penalties now seem far too lenient.

Such encouragement to spend, albeit that it has a positive impact in the short term on our economy, has to be tempered with the realism that debts must be paid. A society which encourages a culture whereby manipulation of a less restrictive regime in bankruptcy is promoted has to be called into question, and the frivolous approach made by some of those who have a wider accountability needs to be attacked.

Whilst the vast majority of us never get anywhere near such a situation where we even consider filing for bankruptcy, the cost is nevertheless borne by all of us. If debts are not paid then ultimately the price of goods increases, which hits all of our pockets whether we are individuals or business.

The situation regarding bankruptcies sits alongside the growing practice of those businesses who set out not to settle their bills, or deliberately to enter into contracts knowing that they can put pressure on small businesses in particular to negotiate a low payment following delivery of goods for quick settlement, often no more than 75% or 80% of the original agreed amount.

A concession which was introduced as a means of removing a stigma has now become a badge of pride, and a review as to how we can differentiate between corporate and individual insolvency is something that should be taken on board as a matter of priority.