Insolvency specialists plan reforms to save struggling businesses

Companies in financial difficulty may be being forced out of business unnecessarily, according to insolvency experts who are planning to overhaul the way they try to rescue companies, the Guardian reported.

Insolvency experts are considering using the Bank of England or other City bodies to help oversee a voluntary code for helping to prevent struggling companies from collapsing because of rows between creditors, the newspaper said.

The solution, which was known as the 'London Approach', was widely used in the 1990s.

Alan Bloom, global head of corporate restructuring at accountants Ernst & Young, who was hired by the government to handle Railtrack seven years ago, said leading players were now considering whether to devise a similar but revamped system for the latest and potentially more damaging downturn.

While the London Approach would not suit the current situation, Bloom Told the Guardian that it 'could have a role to play'. He added that 'a guiding hand by some sort of third party that is non-political and doesn't have a commercial interest' could help improve the current way of tackling troubled companies.

Bloom has held informal discussions that could lead to such an approach being adopted again in a new guise, The Guardian added. It could be overseen by City bodies such as the Bank of England –even though it has been stripped of its responsibilities to regulate banks, the Financial Services Authority, or
the Takeover Panel.