Insolvency experts may take London Approach
Leading insolvency specialists are discussing acting as the middle man between banks and businesses in an effort to stave off the threat of banks calling time on clients and forcing them into receivership
The strategy, known as the London Approach, was used in the early 1990s to
encourage banks to be supportive of businesses.
Alan Bloom,
Ernst
& Young’s global head of restructuring, said a new version of the
strategy could be useful in the current financial crisis.
‘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.’
The number of company failures has rocketed over recent months as companies
struggle to get credit from their banks. In a survey by
Roland Berger Strategy
Consultants, 33% of companies said unused credit lines had been withdrawn by
banks.
‘The tightening of credit to UK firms is well documented, but these findings
reveal the severity of the shortage at the highest levels of British industry,’
the survey said.
The survey questioned finance managers at 137 of the UK’s biggest companies
by turnover.