The European High Yield Association (EHYA), which represents banks and investors involved in high risk bond and loan markets, has written to the Treasury suggesting three key areas to reform insolvency legislation to improve the ‘efficiency and fairness’ of corporate restructurings.

The Association suggests changes to help prevent value destruction caused by suppliers and customers terminating contractual relations, speed up resolution of disputes and restrict the influence of creditors and shareholders with no economic interest in the revalued business.

It claims the reforms would have benefited the restructurings of British Energy, Eurotunnel, Marconi, Jarvis and Polestar.

Gilbey Strub, Executive Director of EHYA claims such reform would be timely, 'This next round of corporate rescues is going to be vastly more complex given the explosive growth in leveraged lending in Europe since 2001 and in the sheer number, variation and complexity of debt instruments that have emerged since then.'

According to the FT, the Treasury said it welcomed submissions but there were other interested parties whose views would have to be taken into account.