The criticisms come as Chapter 11 applications – which provide protection from creditors and allows troubled businesses to raise untouchable bank loans – reach record numbers, but also prompt deep-seated worries.
Critics say companies are using chapter 11 to renege on contracts as well as eliminate borrowings.
Among the dissenters are Ivan Seidenberg, CEO of US telco Verizon, who has claimed that Chapter 11 has been used by some big names to ‘cleanse their sins, but then drive prices down’.
British Airways CEO Rod Eddington has also levelled accusations at the insolvency procedure by saying that an airline that recently entered Chapter 11 could now compete more aggressively on price.
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies
Smith & Williamson has been appointed administrators of charity 4Children