LMA Welcomes UK Government’s Response to Insolvency Service Consultation

The Loan Market Association (LMA) welcomes the UK government’s response to the consultation on ‘Encouraging Company Rescue’ and is pleased to see that it is not proposing a fundamental change to the existing statutory framework, which as it says “is performing well”.

The LMA notes that the proposals do not look to change the existing priority of security. As the association stated in its response to the consultation and was referred to in the summary of responses, any change in this area would create uncertainty and be likely to have an adverse effect on lending practices.

Furthermore, the responses appear to support the view that where there is a fundamentally sound business and restructuring plan, rescue finance is already generally available.

Concerning the moratoria proposals that the government is taking forward, the LMA remain cautious as to their applicability to complex large corporate restructurings, but believe in many circumstances they can add value. To that end the association looks forward to continuing its constructive dialogue with the Insolvency Service as it develops these proposals.

Clare Dawson, managing director, LMA, said: “The government has correctly understood that this is not the time to fundamentally change the insolvency regime. In the current business climate, any increased uncertainty introduced into the lending process would not help those companies already in difficulty or those struggling to raise finance.”


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