On 25 May, the Insolvency Service published a consultation paper on options for reform of the UK's corporate insolvency regime. Their impetus is for the UK to remain at the forefront of insolvency best practice to ensure businesses, investors and creditors remain confident that best outcomes can be achieved when things go wrong, and to give a company the best possible chance to restructure its debts and return to profitability while protecting employees and creditors.
Their suggestions include new provisions, very similar to Chapter 11 in the US, for all entities who currently have access to the administration and company voluntary arrangement regimes to:
- create a new (single gateway) three-month moratorium;
- ensure preservation of contracts to enable businesses to continue trading in a restructuring;
- make restructuring plans bind both secured and unsecured creditors and introduce a "cram-down" mechanism; and
- develop the rescue financing market.
Interested parties are invited to complete responses using the link.