Insolvency Reform

Ways and Means – in the House of Commons at 3:31 pm on 29th November 1994.

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During the recent recession businesses, particularly small businesses, were too often being closed down by their creditors and jobs lost before rescue options had been properly explored. Following consultation, my right hon. Friend the President of the Board of Trade will shortly issue a paper setting out the Government's main conclusions on company rescue procedures in future.
To give management more time to reorder their affairs, we will introduce a 28-day moratorium binding upon all parties. This will give companies a breathing space to assess rescue prospects and come to an arrangement with creditors. We are also consulting further on a mechanism to help substitute equity for debt of firms in administration or receivership. I hope that those measures will contribute further to the creation of a rescue culture, discouraging the needless and wasteful liquidation of businesses that could become sound.