Back to listing


The role of the UK’s insolvency and restructuring regime in building the government’s Industrial Strategy

During her leadership campaign and early in her premiership, Theresa May signalled a return to a more active and explicit industrial strategy. The policy forms a key part of the Prime Minister’s ambition to ensure that all UK regions share in the benefits of business, and that the UK is able to adjust effectively to a post-EU landscape.   

The government’s green paper (PDF) published in January, ‘Building our Industrial Strategy’, sets out a vision for a UK wide industrial strategy that the government believes will help make the UK “one of the most competitive places in the world to start or grow a business.” The paper sets out ten key pillars to achieve the government’s goal, from “Investing in science, research and innovation” to “Creating the right institutions to bring together sectors and places”.

R3 has written to the Secretary of State for Business, Energy and Industrial Strategy to set out how a strong, world class insolvency and restructuring framework is a vital part of delivering the government’s pillars, specifically supporting businesses to grow and succeed and encouraging trade and investment. The UK’s insolvency and restructuring framework is already vital to the wider economy because it:

  • Encourages both domestic and cross border investment by increasing the overall efficiency and attractiveness of the UK as a place ‘to do business’;
  • Encourages the timely restructuring of viable companies in financial difficulties, saving jobs and helping companies survive;
  • Encourages entrepreneurship and discourages bad behaviour; and
  • Improves access to credit.

In order for the UK’s insolvency and restructuring framework to maintain its leading status, R3 has identified three key areas that the government will need to consider as it seeks to progress its industrial strategy:

  1. The government should work closely with the profession to promote the importance of financially distressed businesses seeking advice early enough so that businesses can survive and succeed in the long term.
  2. We encourage the government to progress its review of the corporate insolvency framework.
  3. Once the UK has left the EU, the insolvency and restructuring profession must be able to continue to work effectively across EU borders, and so encourage UK trade and investment;

1. Encouraging businesses in financial distress to seek advice much earlier 

R3 would like to see more done to encourage businesses in financial distress to seek advice early. In a 2014 survey of R3 members, over a fifth (22%) of those who work on corporate insolvency said that it typically took businesses more than a year to contact them after the point at which they first showed signs of financial distress.

With the government aiming to ensure that businesses can access the finance and management skills they need to grow and succeed, we hope that the government will work closely with the insolvency and restructuring profession to ensure that companies in financial trouble seek advice from properly qualified and regulated professionals as early as possible, to give them the best possible chance of long term survival. 

2. Corporate insolvency reforms

The government’s 2016 review of the corporate insolvency framework aimed to ensure “that the insolvency framework supports business rescue where possible, maximising returns to creditors where possible.”

R3 welcomed the government’s focus on restructuring tools and business rescue, given the rise in restructuring/advisory activity over the last decade. There were however concerns from R3 and the business community around some of the finer detail of the government’s proposals. We hope the government will address these concerns appropriately and then progress its reforms to help ensure that the UK remains an attractive destination for domestic and foreign investment, supporting two of the key pillars of the government’s Industrial Strategy - business growth and investment & trade and investment.

3. Brexit and cross-border procedures

With the Brexit negotiations now underway, we are calling on the government to preserve the benefits of two EU regulations relevant to insolvency: the European Insolvency Regulation and the Recast Brussels Regulation (see R3’s Brexit briefing paper here). These regulations allow automatic recognition of UK insolvency procedures and judgments across the EU (and vice versa) and form a vital part of the UK’s strong, world class insolvency and restructuring environment.

If the benefits of these regulations are not preserved, jobs, growth, inward investment and productivity will be harmed and the cost of borrowing is likely to increase. R3 has therefore called on the government to ensure that the benefits of these regulations are preserved in negotiations via an equivalent treaty between the UK and the EU. Securing such an arrangement would assist the government to support its trade and investment pillar.

Whatever the outcome of the Industrial Strategy consultation, R3 looks forward to working with the government and the profession to ensure that the UK’s insolvency and restructuring framework continues to underpin the attractiveness of the UK as a place to do business for many years to come. 

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 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.