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Professor David Burdette Nottingham Law School Nottingham Trent University

THE INSOLVENCY SERVICE EVENING SEMINAR – 12 FEBRUARY 2008 EVALUATION REPORT ON THE EA – SOME THOUGHTS ON THE FUTURE OF CORPORATE INSOLVENCY. Professor David Burdette Nottingham Law School Nottingham Trent University. GENERAL COMMENTS ON THE EA EVALUATION REPORT.

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Professor David Burdette Nottingham Law School Nottingham Trent University

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  1. THE INSOLVENCY SERVICEEVENING SEMINAR – 12 FEBRUARY 2008EVALUATION REPORT ON THE EA – SOME THOUGHTS ON THE FUTURE OF CORPORATE INSOLVENCY Professor David Burdette Nottingham Law School Nottingham Trent University

  2. GENERAL COMMENTS ON THE EA EVALUATION REPORT • Rescue culture as the main aim of the EA – has it failed in its objectives? • Too soon to evaluate the full impact of the EA regarding its stated aims? • Entry routes • Cost factors • Duration of Administration • Exit routes • Liquidation substitutions • ‘Pre-Packaged’ Administrations

  3. SOME THOUGHTS ON THE WAY FORWARD • Are the findings of the evaluation report symptomatic of lacunae in the insolvency legislation as a whole? • If the EA has not achieved its main objective of corporate rescue, can it be tweaked to achieve this aim? • Some thoughts in this regard: - An effective mechanism to remove companies from Administration sooner if they are to end up in liquidation anyway - A mechanism to engineer some form of plan, similar to a CVA, within the Administration procedure - Shorter time frames within which to achieve the main aim of the EA with an appropriate sanction should this not be the case

  4. SOME THOUGHTS ON THE WAY FORWARD - Distribution in Administration in all cases instead of conversion to CVL? - Tax incentives for achieving Administration’s main aim (retaining businesses as operating entities may also offset the losses suffered by scrapping the Crown’s preference)? - Find ways of improving (unsecured) creditor participation? - Structure costs differently in order to avoid the apparent abuse of Administration as a liquidation substitution? - Give administrators the same investigative powers as liquidators in all cases?

  5. SOME THOUGHTS ON ‘PRE-PACKAGED’ ADMINISTRATIONS • Pre-packaged Administrations not necessarily a bad thing – let the market place determine what is best for all stakeholders • However, participation by all creditors in some way or another should be achieved (unsecured creditors should not be forced into something where they will obtain no benefit) • Moratorium is probably why ‘pre-packaged’ deals are pushed through the Administration route • Mechanism to ensure that pre-packaged deals are for the benefit of all creditors • Make pre-packaged deals subject to achieving the main aim of Administration?

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