Mercer & Hole’s Corporate Advisory Services team welcome options for reform to insolvency framework

Today’s news that the Government is reviewing the corporate insolvency framework has been welcomed by Mercer & Hole’s corporate advisory specialists.

A consultation process has been launched which aims to keep the UK at the forefront of insolvency best practice, detailing options for reform.

In the foreword of the consultation document, which has been issued by The Insolvency Service, The Rt Hon Sajid Javid, Secretary of State has commented: “To remain at the forefront of insolvency best practice we also need to ask what a “good” regime looks like in 2016. An increasing international focus on company rescue has helped to shift the perceptions of what constitutes best practice; the UK needs to reflect this if our businesses, investors and creditors are to remain confident that the best outcomes can be achieved when things go wrong.”

The Government is consulting on four proposals:

• 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

Mercer & Hole’s Corporate Advisory team seeks to protect, maintain and create value and we support the principles of these proposals.

Corporate Advisory Partner, Chris Laughton views the reforms as progressive, commenting that the proposals should result in a turnaround regime which enables SMEs to undertake substantive restructuring rather than simply a short term debt reduction.

The full consultation document can be found on the Government’s website here.