The conservative party would like to implement a US chapter 11 style corporate insolvency reform to the UK market.

David Cameron has said that he would like to establish 'breathing space' for businesses in order to create new funds, restructure the business and save more jobs.

Cameron said on the BBC Radio 4 Today Programme: 'Instead of companies going straight into liquidation and having to lay off staff, they get a stay of execution and they can be restructured to try to save the business, to try to save the jobs.'

The reforms will mean companies are protected from creditors which will help towards curbing job losses and will allow it time to implement restructures.

Gilbey Strub managing director of the European High Yield Association, which represents banks, investors and insolvency experts, said: 'It will allow fundamentally sound businesses to quickly regroup and restructure themselves as sustainable, profitable enterprises that contribute to the British economy.'

The Tories are currently looking into which aspects they would incorporate into the UK. Advisers seem to have focused on three areas: an automatic stay of enforcement of debt by creditors; priority funding for distressed companies; and a binding agreement set by the court and the majority of creditors to stop creditors vetoing desirable restructurings.

Strub said: 'Modernising the insolvency laws is the most concrete step the government can take at this time to counter the downturn and to stimulate the provision of debt capital for high growth companies.'

Further reading:

Time for change in insolvency law

Insolvencies on steep rise