ABSTRACT

The Insolvency Service said32 that in thinking about possible reform, it had been guided by the need to be, and to be seen to be, fair to all parties; to be able to respond quickly to business needs; to be transparent in its operation; accessible to all who need to use it without cost barriers; that returns to creditors are maximised and businesses that are viable in the long term are not liquidated and that timely action by management is encouraged. It identified a number of possible reasons why UK insolvency law might not be achieving the efficient allocation of resources by providing for rescue where that would maximise the assets: the veto exercised by secured creditors over rescue procedures; the difficulty of obtaining new financing for rescues; the proliferation of devices such as lease financing and retention of title which can place difficulties in the way of rescue; the reluctance of management to take advice and alert creditors at an early stage of distress.