Tories abandon insolvency reform plans
Coalition faces pressure to protect distressed firms from banks
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