Essential supplies guaranteed during business rescue
Under proposals laid in Parliament today, essential suppliers of IT, water, gas, electricity and communications services will be prevented from cutting off supply or charging premium rates while insolvency practitioners seek a viable solution to rescue a business.
However, suppliers will be guaranteed payment ahead of others owed money for services supplied during the rescue period and can ask for guarantees of payment from the insolvency practitioner.
Commenting on the news, Giles Frampton, R3 president, says: “The changes are a good example of the adaptability of the UK insolvency regime. Some have called for the wholesale introduction of a US Chapter 11-style regime, but the truth is we can incorporate the best parts of Chapter 11, like these proposals, into existing legislation.
“Over time, we would like to see more types of suppliers added to the list of those prevented from trying to steal a march on other creditors and take advantage of their importance to struggling businesses.”
The changes will be subject to Parliamentary scrutiny before coming into force in October 2015.