Encouraging Company Rescue

23 July 2009

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 (CVAs) 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 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 CVAs are used to protect and preserve companies.

So, what does the Government want to consult about? In particular, the proposals consider: