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22/11/2017

Airline insolvency review risks duplication of effort (Budget 2017)

Commenting on the Chancellor’s Budget plan to review airline insolvency arrangements (Budget document, page 50, para 4.38), Adrian Hyde, president of insolvency and restructuring trade body R3, says:

“The Chancellor must tie his new airline insolvency review into the Government’s existing corporate insolvency reform efforts. Having announced welcome reforms in May 2016, the Government has made almost no progress since. We don’t want to see an unnecessary duplication of effort.

“The Government’s stalled reforms would boost the chances of business rescue, which could mean a smoother experience for passengers and higher returns to creditors.

“The insolvency process can be inconsistent for consumers where different sector regulators apply their own rules and regulations to the UK’s insolvency laws. The loss of regulatory licences upon entering insolvency, as happened with Monarch, can prevent business rescue and increase the impact of an insolvency on consumers, employees, and other stakeholders. This sort of issue can be found elsewhere, such as in the care or financial sectors, for example.

“The Government’s existing reforms would potentially ‘fix’ this problem by safeguarding ‘essential supplies’, like operating licences, for those businesses in a rescue procedure.

“The UK does have a world class insolvency and restructuring framework but reform is needed to ensure we keep ahead of rapid insolvency and restructuring improvements being made in other countries. Reform would also help our framework cope with the challenges posed by Brexit. The insolvency and restructuring framework underpins our economy, and without reform we would all lose out.

“We look forward to working with the Government on its new review and helping to bring the existing reforms to fruition.” 

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.