Downing Street Says » Insolvency Arrangements

» Tuesday, July 15, 2008

Insolvency Arrangements

Asked if the Government was happy with the insolvency arrangements in this country, the PMS said that people would have seen the party political quote that John Hutton had put out. It was not for him to comment on proposals from the opposition but in general terms, the Government had already made changes to the bankruptcy laws, incorporating some of the better principles underlying Chapter 11 legislation for example in the US.

This was incorporated in the 2003 Enterprise Act, which made administration easier to enter and gave a company one year to come up with a plan for the company or the business to be rescued. During that one-year period, when the company was in administration, creditors could not take action against the company. At the end of that period, the company was either liquidated or exited the administration in a rescued form. The reforms we made in 2003 already allowed for some breathing space for companies to turn themselves around when they were in administration.

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