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.
Just Racing Services, operating company of the Manor Racing Formula One team has entered administration
Last year 16 oil and gas companies became insolvent, finds Top Ten firm Moore Stephens
Team Rock the publication of classic rock is in administration with FRP Advisory
Lifestyle Living UK is being marketed for sale by FRP Advisory administrators