Corporate and consumer affairs minister Dr Kim Howells admitted during the second reading that the Bill’s proposals to offer 28-day moratoriums on creditors’ rights endangered special purpose vehicles (SPVs) used for big City financing operations.
Insolvency experts only spotted the technical hitch at the last minute, and their representations alerted the DTI to the howling error.
Howells said: ‘In the past few days, we have received several representations about possible difficulties that the introduction of the option of a moratorium might pose for what are known as special purpose vehicles.’
Howells told parliament that the ‘sums of money involved are large,’ and said there was a risk that the ‘UK will become a less attractive place within which to base such arrangements’.
Ron Robinson, chairman of the technical committee of R3, the Association of Business Recovery Professionals and insolvency partner at Begbies Traynor, said: ‘It seems that with a week to go, someone twigged at the last minute that the Bill also covered SPVs, which are a major part of international finance strategy. This could have the frightening effect of shifting deals from London to Frankfurt.’
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