Investigating personal insolvency : a progression of studies into individual voluntary arrangements

This doctoral submission represents over ten years of focused research that has resulted in a unique collection of academic and professional articles. The epithet "unique" is adopted to reflect that over those years this area of study has been relatively untouched by other academic researchers. This submission presents a total of eight academic and seven professional journal publications that chronicle the major output of numerous research projects undertaken between 1992 and 2002. The publications adhere to a central aim - to investigate the practical use and complex interactions between stakeholders of the individual insolvency rescue vehicle the Individual Voluntary Arrangement (IVA). The research projects employed a variety of relevant methodologies to populate an emerging conceptual model of the prime factors affecting the incidence, usage and outcomes of IVA cases. The first five articles report and develop the data collected during the various projects. The articles build on each other, analysing results and comparing these with previous studies to underline reliability in the data. The final three articles draw threads from the research data and develop the conceptual model further. As a research progression this submission contains all of the necessary ingredients of a doctoral thesis. It focuses on a discrete body of knowledge, builds on a conceptual model, gathers valuable data and tests it, draws strong conclusions and, finally, establishes and contributes new theory in this area of study

Putting a cork in it : an appreciation of the May 2007 IVA consultation document

The May 2007 consultation on Individual Voluntary Arrangements (IVAs) proposes six reforms to current legislation to be enacted via Legislative Reform Order (LRO). This brief article outlines the six reform areas and discusses the key reforms against a background of the changes that have been seen in the insolvency “market” in recent years. The reforms combine Cork’s practical approach to dealing with smaller debtors with current budgetary and administrative drivers and 20 years of experience of the IVA regime. The “market” driven logic for these reforms is clear. Few commentators forecast the huge growth in IVA numbers following the Enterprise Act 2002 changes to bankruptcy law. Indeed, the death of the IVA was widely predicted, yet the underlying growth in consumer credit and its attendant problems is clearly linked to both bankruptcy and IVA growth

The value of the banker-customer relationship: experience of individual voluntary arrangements

Over the last ten to fifteen years, and in response to the huge growth in demand for unsecured consumer credit, UK banks have reviewed, automated, de-skilled and streamlined traditional credit assessment techniques. In pursuit of margin and market share, today’s due diligence relies increasingly on centralised data and statistical “certainty”. During this same period the nature of the banks’ “safety net”, the sanction of bankruptcy and court action, has changed too. The effect of this is not only to increase the potential for recovery, in respect of bad debts, but also to increase the moral hazard problem. However, increased risk is masked by creditor power in recovery situations. This paper draws on theoretical and empirical research from legal, ethical and economic viewpoints and suggests that a reappraisal of this aspect of the banker-customer relationship is essential to restore trust, prudence and long-term profitabilit

Administration of recoveries in individual insolvency - case studies of two UK banks

Against a background of greater competition, market saturation and falling margins over the past decade UK banks have sought greater efficiencies in credit and risk assessment procedures, especially with personal lending products. In the same way they have attempted to reduce costs associated with the monitoring and collection of bad debts. Failure to monitor debt recoveries adequately, however, can lead to further pressure on profits. This paper uses a case study approach to outline key strategies adopted by two major banks in respect of formal insolvency, the “tip” of a considerable debt recovery “iceberg”. The paper illustrates the reactions and changing administrative practices of banks, as unsecured creditors, and draws on empirical research that has charted the effect of the Insolvency Act 1986 as regards individual debtors. The collection of bad debts presents banks with risks, heightened by adverse selection and moral hazard problems greater than those applicable to credit risk assessment. However, whilst the “downside risk” equates with the debt write-off plus transaction costs the “upside potential” has elements of both tangible and intangible benefit. The paper goes on to review specific centralisation and outsourcing policies against the critical risks in insolvency. It also suggests that the bargaining power of major creditors, including banks, is increased through these activities, to the possible detriment of smaller creditors and of debtors

Explaining the choice between alternative insolvency regimes for troubled companies in the UK and Sweden

Over the past 20 years UK and Swedish insolvency law has moved in the direction of company rescue rather than enforcing secured creditor priority. However, both countries show a low take up rate of rescue procedures. This paper uses a cost-benefit approach to examine the choices faced by key stakeholders using the now conventional transaction cost paradigm. The paper argues that it is predominantly the ex post indirect and time costs which explain the poor take up of customised rescue procedures. In both countries the ex ante cost of delay in filing also presents a tough challenge not fully addressed by policymakers

Multi-disciplinary peer-mark moderation of group work

Self and peer assessment offers benefits for enhancing student learning. Peer moderation provides a convenient solution for awarding individual marks in group assignments. This paper provides a significant review of peer-mark moderation, and describes an award winning, web-based tool that was developed in the UK and is now spreading across the world as an open-source web application. It is available for use in any discipline. Qualitative research, at the home institution over several years, reinforces the evaluation of quantitative data extracted from the system and from an extensive user survey to confirm, update and strengthen the previous literature. The research also describes new insights into the thoughts of students, who appear to recognise the transparency that automated moderation offers. The statistics suggest few incidences of team-collusion when entering data, but indicate that peer-marking behaviour is influenced by group size, selection method and year of study. Students comment positively on the recognition of their levels of achievement within a team

Stakeholder perceptions of online peer mark moderation in university teamwork

Peer assessment can provide a convenient solution to the problem of marking individual students fairly in group assignments. The developing methodology has numerous benefits for enhanced student learning and transferable skill development. Peer Assessment is not, however, universally embraced: critics cite potential drawbacks including collusion and vindictive marking and this paper briefly reviews the state of the art; it goes on to describe a new web-based peer mark moderation tool and outline the results of a quantitative research project based upon its use. Whilst much of the received data confirms and updates previous literature, important new insights are gained into the thoughts of students, who appear to recognise and value the fairness they believe peer mark moderation can offer. Statistical analysis verifies the lack of collusion associated with the web-based system and students comment positively on the system’s anonymity and its ability to recognise different levels of achievement within teams

What is success? Reflections on assisting BTEC students’ transitions into higher education

Presently, one in four students entering higher education (HE) hold a Business and Technology Education Council (BTEC) qualification. These vocational qualifications have played an important role in developing an additional educational pathway into universities for students often associated with under-represented groups and low participation regions, while widening participation initiatives have contributed to the increased number of BTEC students entering HE institutions (HEIs). Following on, potential approaches to support BTEC students during their first year at university were devised. One intervention has involved the development of an online module aimed to assist BTEC students’ transition from college to higher education. This article reflects upon the development of an online module implemented at a ‘selective’ university and examines what we actually define as 'success' within this context. The case study draws upon a variety of sources and provides not just an understanding of the project outcomes, but also an in-depth understanding about the more complex issues surrounding working with students to produce a successful project. Recommendations are provided for further work within this important field

The survival potential of companies placed into administrative receivership

The paper focuses on a sample of companies, which have been placed into administrative receivership, and attempts to assess whether financial ratios used by lending banks can be identified and used to discriminate between companies which can be rescued and those which will fail. The distinctiveness of the paper lies in the fact that it applies conventional bank lending ratios, rather than prediction of failure ratios, to a sample of companies and is primarily concerned with the prediction of corporate survival rather than the prediction of corporate failure. The research compares two statistical classification techniques - Linear Discriminant Analysis and Logistic Regression - to ascertain which is the best at predicting eventual outcomes. A number of further issues, relating to which financial ratios are the most important in predicting future outcomes and the additional insight these financial ratios provide in helping to explain why companies move into crisis and why some companies are rescued and others fail, are also discussed in the paper

Banks and insolvent corporate customers: experience of the rescue culture

Over the last twenty years UK banks have reviewed and streamlined traditional credit assessment techniques for Small and Medium Sized Enterprises. In pursuit of margin and market share, today’s due diligence relies increasingly on centralised data and statistical “certainty” than on the more qualitative approach of the local bank manager. During this same period the nature of the banks’ “safety net”, the sanction of insolvency proceedings has changed too. The effect of this is not only to increase the potential for recovery, in respect of bad debts, but also to increase the moral hazard problem. However, increased risk is masked by creditor power in recovery situations. This paper draws on theoretical and empirical research from legal, ethical and economic viewpoints and suggests that a reappraisal of this aspect of the banker-customer relationship is essential to restore trust, prudence and long-term profitability