Well we have never needed any encouragement but this is actually a serious Blog!
The Insolvency Service has issued a consultation paper as per the link above with regards to beefing up of the legislative framework for Company Rescues and Company Voluntary Arrangements (CVA's) in particular.
The fact that Government wants to encourage more CVA's is very encouraging for CVA practitioners like KSA. We have often been a lonely champion of the CVA tool. Now many larger insolvency practitioners are looking again at CVA as a great rescue approach in appropriate circumstances. Pre-pack and "plain vanilla" administrations have their place, as does administration followed by CVA.
With the news From The Times July 21, 2009 - Pre-pack bankruptcy accountants 'mocking rules' that 35% of pre-pack administrations don't comply with the rules and guidelines (SIP 16)and that the Insolvency Service is taking aggressive action against dozens of insolvency practitioners, I strongly believe CVA is the best insolvency method available for viable businesses. It is also less risky for practitioners, whilst maximising creditors interests.
Perhaps the insolvency profession will have to work harder WITH MANAGEMENT, SECURED AND UNSECURED CREDITORS and new funders(?) to ensure CVA's are used to protect and preserve companies.
So, what does the Government want to consult about? In particular, the proposals consider:
extending to medium and large-sized companies the option of a
moratorium against creditor action - currently only available to
small companies - so they too can benefit from a “breathing
space” in which they can seek to agree with their creditors a
means of securing a company rescue by means of a Company
the introduction of a new court-sanctioned moratorium available
to all companies; and
providing greater security to repayment of monies loaned post CVA or administration, to allow firms in difficulties to access the
funding they need to get back on track.
We will publish our response to this in due course, meantime I would welcome
any comments from our clients, past clients, advisors, colleagues and advisors.
See here for the PDF on Company Rescue published by the Insolvency Service and here for the report on SIP16 by Insolvency Service.
Any questions or views please Blog/email or call me - 07974 086779