The Law needs Changing

Thursday 17th January

How can it be possible for a company like HMV to be selling Gift Cards on Monday, to go into administration on Monday evening and refuse to honour the Cards on Tuesday?  Because unfortunately the Law says it can.  Those unfortunate recipients of Gift Cards and Vouchers are automatically considered as Creditors of the company and as such will not be paid (or have their cards redeemed) until the Administrator has either found a buyer for all or part of the company or closed it down, and in that case they will be bottom of the pile.

But Commonsense tells us that this is simply theft by another name.  As is most of what happens when a company goes into Administration.  People who are owed money, including staff and suppliers and landlords and banks and lastly you and me, in the form of the taxman (because the first bill companies in trouble hold back on is their PAYE even though they were quite happy to deduct this amount from workers pay packets but not so keen on paying it to the Government and in turn to us) get screwed.

Worse than this the Directors of the stricken company often remain in situ, still being paid (especially if the company goes into CVA – Company Voluntary Administration) while the company struggles on and in some cases once debts are ‘parked’ or ‘frozen’ do eventually recover and make a profit once more.  Or they ‘buy themselves’ out of Administration by coming to an agreement with their Creditors who reluctantly might accept a smaller percentage of their original debt in return for allowing the company to continue trading.

And the Company Directors who got the company into such a fine mess sail on with no punishment at all, despite many workers losing their jobs and small suppliers being screwed over and all of us not receiving the taxes the company should have paid, oh, and not forgetting the Gift Card holders.

The law should be changed so that Company Directors are either personally responsible for the debts of the company or are criminally responsible for mismanaging a company.  Maybe the thought of a spell in jail or being declared bankrupt would stop their reckless borrowing and paying themselves higher and higher salaries while the company hurtles into trouble.

Ah but you can’t do that – that would harm the very basis that Capitalism is built on – screwing people.