The UK Government has launched a consultation over proposed changes to the UK insolvency regime.
The consultation looks at four broad areas for reform to improve the efficiency of the rescue and restructuring tools available to companies in the UK, which are:
- introducing a moratorium for distressed businesses to benefit from protection against legal action while considering their options for rescue,
- widening the definition of essential supplies, with appropriate safeguards for suppliers, to assist distressed businesses,
- developing a new restructuring plan to increase the options available to rescue businesses, and
- increasing the availability of rescue finance.
Insolvency trade body R3 has welcomed the proposed three-month moratorium from creditor action for insolvent or near-insolvent companies.
“A moratorium could give company directors more time to turn a business around and negotiate with their creditors,” commented Andrew Tate, president of R3. “R3 has already published its own proposal for a business rescue moratorium and is pleased to see the Government is following suit.”
“It’s very important that any moratorium is practical. It should be short, to make it easier to fund and to limit the burden on creditors, and there should be a licensed insolvency practitioner in place to look after creditors’ interests,” he added.
Contains public sector information licensed under the Open Government Licence v3.0.
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Sources:
https://www.gov.uk/government/consultations/a-review-of-the-corporate-insolvency-framework
https://www.r3.org.uk/index.cfm?page=1114&element=26991&refpage=1008