Business Secretary Vince Cable today announced that the Insolvency Service has referred the administrators of failed high street retailer Comet to their regulatory body for consideration of whether disciplinary action is appropriate on two grounds following an 18 month-investigation.
Christopher Farrington, Nicholas Edwards and Neville Kahn, insolvency practitioners (IPs) at Deloitte, were referred to the Institute of Chartered Accountants in England and Wales (ICAEW).
The referral relates to a potential conflict of interest when the three IPs, who had previously advised the company and connected parties, accepted their appointment as administrators of Comet following its collapse in 2012.
In addition, an Employment Tribunal found that employees had not been consulted on the potential for redundancies as legally required, leading to a potential compensation package of up to £26 million which will be borne by the taxpayer.
Business Secretary Vince Cable said:
“The taxpayer now faces a multi-million pound compensation bill as result of the failure to consult employees. There can be no excuse for failing to comply with the law which is very clear in this area. It is vital that the regulator establishes why this happened and whether disciplinary action against the administrators is appropriate.
“There are also important issues of possible conflicts of interest which need to be fully considered.
“Cases such as these reinforce the need for a stronger insolvency regulation regime which will give us new powers to ensure regulators take firm action where abuse is found. The Bill I am currently taking through Parliament will ensure these changes to current law are made.”
The ICAEW has a number of sanctions at its disposal where it finds sufficient misconduct, ranging from a warning, reprimand or fine to licence withdrawal.