Calls for Corporate Insolvency Reforms

The UK’s insolvency framework has apparently fallen from 13th to 14th place in the latest rankings from the World Bank, prompting calls for the UK Government to kick-start its stalled corporate insolvency reforms.
 
Insolvency and restructuring trade body R3 has warned that with other countries’ insolvency and restructuring frameworks improving, and with Brexit potentially creating barriers to resolving cross-border insolvencies from the UK, the UK is at risk of seeing its current competitive advantage in international insolvency and restructuring diminish unless reform efforts are renewed.
 
It says that a less competitive insolvency framework would have a detrimental impact on the wider economy.
 
The Government announced insolvency reforms in May 2016, but R3 claims limited progress has been made since. It has so far failed to respond to its own ‘call for evidence’ on the reforms, which closed in July 2016, while plans for reform were absent from the Queen’s Speech earlier this year.
 
“Corporate insolvency reform should be a priority for the UK,” explained Adrian Hyde, R3 president. “We currently have a world-class insolvency and restructuring framework, but we can’t stand still. Others are catching up to us and over-taking.”
 
“EU member states and places like Singapore have embarked on ambitious insolvency reform projects in a bid to tempt investment and businesses to their countries,” he said. “Meanwhile, the UK Government has gone cold on its own reforms, and Brexit risks making it harder to resolve the insolvencies and restructurings of large, multi-national companies from the UK.”
 
“Insolvency reform would be a welcome step to making sure the UK economy is prepared for Brexit,” he added. “It’s not something we can leave until after we have left. That might be too late.”
 

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