Download the full outcome
Detail of outcome
A combined government response to this consultation and the Insolvency and Corporate Governance consultation which ran from 20 March 2018 to 11 June 2018 has been published.
In addition to the measures in the 2018 consultation (that take steps to strengthen the insolvency framework in cases of major corporate failure), we will introduce alternative procedures to support business rescue by creating:
- a period of ‘breathing space’ – a moratorium – to allow viable companies more time to consider the options to rescue their business free from creditor action
- a new restructuring plan procedure that will provide an alternative option for financially-distressed companies to restructure their debts
- measures to support companies through a rescue process by the introduction of new rules to prevent suppliers terminating contracts solely by virtue of a company entering an insolvency process
We will not proceed with measures included in the 2016 consultation that referred to rescue finance.
Detail of feedback received
Summary of responses
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