UK Insolvency: views from RBS and Lloyds
SMEs have not yet got through to the economic upturn seen by the UK economy as a whole and when they do there will an increase in insolvency rates. Despite interest rates being expected to remain low for at least the next couple of years, bank deleveraging (disposing of weaker assets to meet capital adequacy requirements) will drive distressed businesses into deeper waters.
This is an amalgam of a recovery banker's (Derek Sach, Head of Global Restructuring Group, RBS) and an economist's (Trevor Williams, Chief Economist, Lloyds Commercial Banking) observations at Euromoney's Distressed Debt Forum.
This will be a slow recovery and stakeholders will want to avoid the value hit of a precipitate insolvency process. Conversely, distressed businesses need to address their problems and this may require a constructive insolvency process. Examples of the Mercer & Hole approach are at http://www.mercerhole.co.uk/images/uploads/general/Insolvency_Issues_final.pdf
Date: 12th November, 2013
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