The Future of UK Debt Restructuring

Abstract

The importance of regimes containing an effective mechanism to enable the rescue of distressed but viable businesses is increasingly recognised. In the UK the importance of developing a rescue culture has been appreciated for some time and a number of different mechanisms exist which can be used to restructure the debt of distressed companies. The purpose of this paper is to assess the debt restructuring mechanisms currently available to companies in English law and to consider whether reform is needed. There have been a number of calls for the reform of English debt restructuring mechanisms in recent years, most recently by the UK Insolvency Service in 2016, and these reform proposals are analysed and assessed. It is suggested that reform is needed, but that these reforms will need to be introduced with skill and care in order to ensure that the UK’s regime remains fit for purpose for the future.

Keywords: debt restructuring, cramdown, moratorium, schemes of arrangement, reform

JEL Classification: K22