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Consultation Over Proposed Reforms of UK Insolvency Regime

The UK Government has identified four broad areas of possible reform of the country’s insolvency regime, and has launched a consultation exercise to seek views on its proposals.

The Government says that an efficient and effective insolvency regime helps to create a business environment that supports growth and employment by ensuring that viable businesses in distress can be rescued. Where businesses cannot be rescued, the insolvency regime should provide a low cost Procedure for liquidating businesses and returning funds to creditors quickly.

The UK regime delivers these objectives through a range of formal insolvency options (administration, company voluntary arrangements and liquidation) and pre-insolvency rescue options such as schemes of arrangement or informal creditor workouts.

However, the Government is now seeking views through its consultation on whether the UK’s regime needs updating in light of international principles developed by the World Bank and the United Nations Commission on International Trade Law, recent large corporate failures and an increasing European focus on providing businesses with the tools to facilitate company rescue.

The four broad areas for reform identified by the Government 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.

Contains public sector information licensed under the Open Government Licence v3.0.

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