Corporate Rescue in the United Kingdom: Past, Present and Future Reforms
(2016) 24 Australian Insolvency Law Journal 40
28 Pages Posted: 20 May 2021
Date Written: May 18, 2016
The modern law relating to both personal and corporate insolvency is currently contained in the Insolvency Act 1986.3 Although of some vintage now, the IA 1986 was the governmental response to the report and recommendations of a multi-disciplinary committee tasked with reviewing insolvency law and practice in the late 1970s.4 The Cork Report influenced the implementation of the IA 1986, which brought together in one statute both personal bankruptcy and corporate insolvency and at the same time effected a radical reconstruction of the law relating to all forms of insolvency, including the introduction of the concept of corporate rescue through the use of two new procedures: the corporate voluntary arrangement5 and administration. During the early years following the passage of the IA 1986, a number of issues were observed relating to the underutilisation of the new procedures in comparison to receivership, which was often preferred by principal creditors. This led to reforms at the turn of the millennium with the aim of making the rescue procedures more efficient and beneficial to all manner of debtors and providing greater benefits to unsecured creditors.
The reforms, though enacted through the Insolvency Act 2000 and Enterprise Act 2002,6 were brought into force at the same time over 2003-2004, constituting a radical change to almost every part of the insolvency framework. The two texts have not been the end of reforms, however, nor should they be. As the effects of globalisation and recession have affected business practices and regulation over the period since the promulgation of the reforms, so too must insolvency systems evolve to meet the changing paradigm of economic recovery. In so doing, modern insolvency systems with effective forms of corporate rescue can play their part in recovering from the financial crisis by helping to create an environment where business failure and associated unemployment can be mitigated. This article seeks to chart the direction of reforms in the post-2003 era and to offer, in light of the analysis of the success (or otherwise) of these reforms, a prediction of the future direction of the law.
Keywords: insolvency law, corporate rescue, United Kingdom, France, legal reform, legal history, corporate insolvency, administration, corporate voluntary arrangement
JEL Classification: G3
Suggested Citation: Suggested Citation