The Analysis News & Opinions
Opinion
Looking again at the future of airline insolvencies
Last month, we heard that transport secretary Chris Grayling is to look to reform the rules governing insolvent airlines; his interest is welcome. The air industry is one of a number of
parts of the economy where sector-specific rules on insolvency can make orderly wind- downs or business rescue tricky. Key licences can often be withheld from insolvent firms, for example. More structured wind downs could help improve outcomes for employees, creditors, and customers. Although the thinking behind some of the
rules in various sectors is understandable, the rules can sometimes make rescue all but impossible – leading to avoidable job losses or creditors being left out of pocket – or can significantly alter the way the insolvency is handled. Rather than commit to a new insolvency-
reform project, however, the government would be wise to consider this issue as part of its stalled 2016 business-rescue reforms. These proposals, welcomed by the insolvency and restructuring profession, have made little progress since last year and the final shape of reforms has yet to be decided by government. This seems like an opportunity to get those changes moving again. Looking beyond sector-specific rules and
regulations, the UK’s underlying insolvency and restructuring framework is effective and is ranked as one of the best in the world by the World Bank. It is flexible and encourages business rescue, which is often the best way to maximise returns to creditors while minimising job losses.
Adrian Hyde President, R3
Breathing space for government debt?
Calls have been made that the government should include its own debts in a scheme that is intended to allow indebted customers the time to arrange their finances. As CCRMagazine when to press, the
Treasury announced a call for evidence on ways to provide people in debt with up to six weeks free from further interest, charges, and enforcement action. This period would give those affected time to take action by seeking financial advice about how to manage and relieve their debt burden. However, Jane Tully, director of external
affairs at the Money Advice Trust, said: “Many banks and credit card companies already offer ‘breathing space’ by freezing interest and charges as a matter of good practice, but a statutory scheme will extend this significantly. If implemented properly, this could be a powerful incentive for people to seek debt advice. “It
is crucial, however, that
Announcing the call the
government ensures that its breathing-space scheme applies to public-sector creditors, such as local authorities and HMRC, as well as private-sector lenders. Making sure that all creditors play by the same rules is in the best interests of people in debt, who can then focus on taking the steps they need to tackle their debt problem.” Meanwhile, Mike O’Connor, chief
executive of StepChange Debt Charity added: “The government is asking the right sort of questions, including noting the importance that their own debts could be within any scheme. But we know from the experiences of our clients that continuous protection between the initial breathing space period and any statutory repayment plan is vital. Any interruption would destabilise fragile family finances and risk putting people back to square one.”
for evidence,
economic secretary to the Treasury, Stephen Barclay, said: “For many people in the UK, problem debt seems impossible to escape. Its effects can be far-reaching, impacting all aspects of a person’s life and leaving them feeling helpless. “Although many people can, and do, use
credit successfully to manage their personal finances, for the minority who get into difficulties, this government wants to offer more support. “The new scheme could include legal
protections that would shield individuals from further creditor action once a plan to repay their debts is in place. “A six weeks’ grace period, where those
suffering are safe from enforcement action and interest charges, could help give people the time and opportunity to seek debt advice. “The government is committed to getting
this right and, over the next 12 weeks. will be meeting with key industry representatives.”
10
www.CCRMagazine.co.uk
November 2017
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52