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.