A Review of the Corporate Insolvency Framework

An efficient and effective insolvency regime is central to the promotion of enterprise and helps to create a business environment that supports growth and employment by ensuring that distressed, yet viable, businesses can be rescued quickly and efficiently. Where businesses cannot be rescued the insolvency regime should provide procedures for liquidating businesses and returning funds to creditors.

The consultation seeks views on whether the UK’s regime needs updating in light of international principles developed by the World Bank and the United Nations Commission on International Trade Law (UNCITRAL), recent large corporate failures and an increasing European focus on providing businesses with the tools to facilitate company rescue.

The consultation looks at four broad areas for reform to improve the efficiency of the rescue and restructuring tools available to companies in the UK, which are:

• introducing a moratorium for distressed businesses to benefit from protection against legal action while considering their options for rescue
• widening the definition of essential supplies, with appropriate safeguards for suppliers, to assist distressed businesses
• developing a new restructuring plan to increase the options available to rescue businesses
• increasing the availability of rescue finance