When it was introduced, the process of administration was proclaimed as an alternative to receivership and a move towards the US Chapter 11 bankruptcy process, but in practice, it has proved inaccessible to all but the largest companies in trouble. Now the UK Department of Trade & Industry is proposing to promote a rescue culture for ailing companies that could be saved but are presently wound up. It suggests amendments to the Company Voluntary Arrangement process that would enable a company in trouble to approach an insolvency practitioner as nominee: if he or she thinks there a reasonable prospect of the company emerging successfully from a voluntary arrangement, court permission would be sought for the 28-day moratorium giving protection from creditors. A creditors meeting would have to be held within that period, and if the creditors decided to terminate the arrangement, that would be curtains. Managers would remain in office during the period but would be be supervised by the nominee. Interested parties have until July to comment.
