Lords Bankruptcy Ruling Will Have Implications For Ireland
Speaking this week with regard to the ruling delivered by the UK's House of
Lords in the Natwest v. Spectrum case, president of ACCA Ireland, Gerard Loughnane
suggested that the decision is likely to have implications for small businesses
across the Irish Sea as well. Following the Lords decision that banks should lose their place at the head
of the repayment list when a business collapses, the Irish accounting industry
body has suggested that they are likely to compensate for this by asking for
additional security from small businesses seeking loans. It also fears that
such policies will spread to the Republic. "Banks are...likely to react by imposing tighter restrictions on the use of
the proceeds of charged debts," the ACCA Ireland was quoted by the Irish
Independent as observing on Tuesday. He continued: "Accordingly, these cash flows will no longer be able to act as a potential
source of working capital for small companies, which could worsen financial
problems and conceivably tip some small firms over the edge." "Those firms that have no option but to borrow from banks will just have to
accept these new stricter conditions. Bank borrowing may become more problematic
for small businesses and so small and medium-sized enterprises may turn to other
alternative forms of finance to support their business." He concluded by suggesting that: "It could be that we will see greater recourse for small companies to factoring
and leasing, and other alternative sources of finance." .
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