The government risks harming regional businesses’ ability to compete if it neglects its long-mooted business rescue reform plans during Brexit preparations.
That’s the view of Andy Haslam, North East vice chair of insolvency and restructuring trade body R3, after plans to introduce the government’s year-old reform proposals – or any other corporate governance reforms – were left out of the Queen’s Speech.
R3 has long argued that action to update the UK’s restructuring framework is needed to ensure it remains an international insolvency and restructuring hub after its departure from the European Union.
But with no mention being made of them in this year’s slimmed down Queen’s Speech, a question mark has been placed over whether they will be brought forward within the two-year period that it covers.
Andy Haslam, who is also a partner with Tait Walker, says: “We have one of the world’s best insolvency and restructuring frameworks, and it helps to attract both businesses and investment to the UK by ensuring companies’ financial difficulties can be resolved quickly and effectively.
“Unfortunately, Brexit risks creating barriers to cross-border insolvency and restructuring work if it doesn’t get due care and attention, while other countries, including EU members and places like Singapore, are improving their restructuring frameworks.
“Reform is clearly required to stay ahead of the competition, especially with so much emphasis being placed on British businesses tackling new export markets, but there’s now a clear risk that it’s been pushed back down the political agenda.”
Originally put forward in May last year, the government’s plans included proposals to give business directors a ‘last chance’ protection from creditors in order to turn their business around before a formal insolvency procedure became necessary.
Reforms to ensure struggling businesses receive vital supplies from utility companies, and the introduction of a new court-based restructuring procedure, similar to the US’s Chapter 11 bankruptcy proceedings, were also included.
Andy Haslam continues: “We welcomed the government’s reforms when they were first proposed, and with some alterations, they could make an incredibly valuable addition to the UK’s business landscape by making business rescues more viable and being attractive to international companies and investors.
“The challenges of minority government and the pressure that Brexit will put on the legislative timetable threaten to delay these much-needed changes. Both the government and opposition parties should back the reforms and get them onto the statute books so the UK can show it is still open for business.”