The Law Commission’s recommendation that consumers be pushed up the priority list when retailers go bust has come under fire from insolvency and restructuring trade body R3.
In a report published last week, Consumer Prepayments on Retailer Insolvency, the Commission said consumers paying a deposit of £250 or more should be moved up the priority list of creditors.
Stephen Lewis, Law Commissioner for commercial and common law, said the demise of big-name retailers such as Comet, HMV, World of Leather, MFI and Habitat showed “the problem was not going away” and consumers should have better protection.
However, R3 president Andrew Tate says: “Improving the position of one set of creditors could make it more difficult to rescue businesses.
“This would be the first major change to the order of priority of payments in insolvency proceedings in over a decade and may discourage lending to retailers, particularly those in distress.”
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