Government to give creditors more defence against banks
The government is to change the Insolvency Bill to prevent banks pulling the rug out from under attempts to rescue failing businesses.
Lord McIntosh of Haringey, Chief whip in the Lords, announced further amendments out of fears that the moratorium on creditors rights’ designed to provide a breathing space to draw up a rescue package, may not be fully effective against the holder of a floating charge – a form of security often taken by banks to secure lending.
‘We shall bring forward amendments to ensure that the provisions that might be included in charge documents – perhaps to crystallise the charge into a fixed charge or to impose restrictions on the company’s ability to deal with assets covered by a floating charge – cannot be triggered during a moratorium or because of a moratorium,’ he said.
Lord McIntosh rejected Tory calls to delay the legislation until the conclusion of consultations on its Review of Company Rescue and Business Reconstruction Mechanisms. He said ministers would also examine ways of ensuring their is no ‘spiriting away of assets’ during a moratorium.
For the Liberal Democrats, Lord Sharman, who declared an interest as an adviser to a firm with an insolvency division, said he shared concerns about the qualification of nominees.
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