Tories abandon insolvency reform plans

The Conservatives have ‘quietly dropped’ their plans for business insolvency reform after opposition from business leaders, according to the FT.

Prime minister David Cameron had originally called for the introduction of US-style Chapter 11 bankruptcy protection rules, saying the UK’s insolvency process did not offer enough protection to distressed companies, a move that was met with little enthusiasm in the corporate world.

The newspaper says this will put pressure on the coalition to protect struggling firms from banks hoping to use an economic recovery to sell their assets and call in loans.

With the plans seemingly abandoned, Conservative MP George Eustace has tabled a private members’ bill aiming to “reduce litigation and encourage banks to work with their customers to find solutions” and, he says, bring in “much needed responsibility in the banking sector.”

A spokesperson from the government’s business department told the paper that it kept “insolvency policies under review, making sure they are effective and relevant”.

Further reading:

Insolvency profession responds to OFT report

OFT investigation into corporate insolvency ducked issues