§ Mr. HawkinsTo ask the President of the Board of Trade if he intends to announce proposals for a revised company voluntary arrangements procedure following the consultation on the document "Company Voluntary Arrangements and Administration Orders" issued by the Insolvency Service in October 1993. [19212]
§ Mr. Jonathan EvansI have today issued a further consultative document outlining proposals for a new company voluntary arrangement procedure which has been developed in the light of the first consultation exercise. Copies have been placed in the Libraries of both Houses.
Our earlier consultation revealed a broad consensus that there should be a short moratorium to allow financially troubled companies a breathing space during which to put together a rescue plan. That view, however, was qualified by concerns about how to safeguard assets during that period.
The scheme set out in this consultative document would allow companies a 28–day moratorium with the minimum of formality. This would give companies in financial difficulty temporary protection from their creditors during which they could put together a rescue plan for agreement by creditors. The scheme also proposes various safeguards to protect lenders and other creditors and to discourage abuse. Comments are sought by 31 July 1995.
I am also arranging for a summary of the responses to the first consultative document to be published and copies will shortly be placed in the Libraries of both Houses.
The Government are still considering issues relating to the proposal for a debt equity mechanism and whether any other measures should be taken to facilitate administrations.