Proposals for changes to the UK’s corporate insolvency procedures are being considered following this year’s budget.
The proposals, detailed in the consultation paper ‘Encouraging Company are aimed at facilitating company rescues in order that the maximum economic value is rescued from companies that get into difficulties, and that the knock-on effects of company insolvencies on their creditors are minimised in terms of saving jobs and providing a better return to creditors.
They seek to:
Extend the existing CVA (company voluntary arrangement) moratorium to larger companies
Creating a new court-sanctioned moratorium for companies in financial difficulties
Give ‘super priority’ to the funding costs of an administration ahead of all other expenses of a company’s administration
Allow a company in a CVA or administration to create fixed charges to secure rescue finance
The consultation period ends on 7 September 2009. Decisions taken in light of the consultation will be published along with a summary of the responses.
