The Government’s concern that the practice and procedures adopted when a company enters into financial difficulty do not best serve the social and economic interests of the country has led to recent fundamental reforms to corporate insolvency law.
The current UK insolvency law regime is seen as being too secured creditor-friendly, with administrative receivership being a ‘self-interested’ proprietorial remedy exercised too readily by floating chargeholders, which fails to take account of other legitimate interests arising from a company’s insolvency. As a result, unsecured creditors are disenfranchised from the insolvency process and valuable businesses are lost when they could have been saved. It was also felt that the corporate rescue procedures introduced in the 1986 Act – namely company voluntary arrangements and administrations – had been under used.
