In the Budget, the Government announced two consultation processes aimed at breathing new life into the rescue culture.
The Insolvency Service intends to consult on the desirability of super-priority status for funding to companies that are in administration or that are subject to a company voluntary arrangement. Such a super-priority would allow lenders to participate in the restructuring and recovery of such companies to a greater degree.
The Insolvency Service will also consult on the question of whether the moratorium on creditor action that currently applies in respect of small company CVAs should be extended to medium and large companies.
The decision to consider both of these issues is undoubtedly welcome. The lack of super-priority for post-insolvency funding has often been cited as a hindrance to the recovery culture. However although the decision to consult is welcome, it is by no means certain whether this will lead to the implementation of such steps, nor indeed whether such implementation would actually help recovery.
The mere fact that the Government is at least willing to consider initiatives to assist corporate recovery is undoubtedly encouraging given the current market environment.
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