Bankruptcy

U.S.-Style Bankruptcy System Proposed for U.K. Business

By J. Michael McBride

David Cameron, leader of Britain's opposition Conservative Party, pledged that he wants to introduce bankruptcy laws modeled after the U.S. system to give struggling businesses time to recover during the economic downturn.

“We will consult on taking the best aspects of the American Chapter 11 system and give good companies breathing space to allow them to rescue or restructure the business in the face of the credit crunch,'' Cameron said.

The Conservative Party claims that “current insolvency rules in the U.K. focus on closing down failing companies and paying off creditors.” Instead, Cameron wants “businesses to be able to freeze debt payments and to offer priority status to backers who are willing to extend more loans.”

In his speech on Tuesday, Cameron said, "We want to make sure sound companies don't go into liquidation unnecessarily. We all know what liquidation normally means - closure. That isn't good for the companies, many of which are actually fundamentally sound. This isn't good for the banks, who lend them money. And it's not good for employees, who face being laid off."

Here is a link to the article:
http://uk.news.yahoo.com/rtrs/20080715/tpl-uk-britain-bankruptcy-conservatives-20b2d2f.html

Additional link:
http://www.bloomberg.com/apps/news?pid=20601102&sid=a33A8nChNNZE

Yameena

Full post as published by Texas Lawyer Blog on July 18, 2008 (boomark / email).