R3 calls for insolvency reform to enhance UK’s insolvency position

Corporate insolvency reform is needed to boost the UK’s position in the World Bank’s insolvency rankings, according to R3.

The insolvency and restructuring trade body has said the UK’s lowly position in the Revolving Insolvency table is a sign that change is necessary.

Published in the World Bank’s Doing Business report, the UK appears in 14th position for the second year running, having dropped from 13th in 2016.

Enhancing the insolvency framework can help to attract more international restructuring deals and now R3 is calling on the government to act quickly to implement proposals, just as other nations have done.

For instance, reform has seen the Netherlands climb four places in the rankings in the last two years, providing a huge boost to its insolvency and restructuring sector.

R3 President Stuart Frith has said the UK “cannot afford to stand still” when it comes to reform and added that while the UK framework is held in high regard, improvements are still possible.

He said the framework can be made more responsive and that steps can be taken to “make it easier to rescue jobs and businesses”.

Acting swiftly should also help to ensure that the UK remains internationally competitive in a post‐ Brexit environment.

Mr Frith has welcomed the government’s commitment to corporate insolvency framework reform and described the framework as a “key ingredient for a successful economy”.

R3 has also reiterated their desire to work with the government to develop the reforms and to ensure that the views of those within the insolvency profession are taken into account.

Japan currently tops the World Bank Resolving Insolvency ranking, followed by Finland, the USA and Germany.

Nordic countries perform particularly well, with Norway, Denmark and Iceland joining Finland to be among the top 12 nations globally.

Insolvency frameworks are scored on a range of criteria, including their overall strength, the time it takes to resolve insolvency cases, the average costs involved, the recovery rate for creditors and on whether businesses can be rescued in certain instances.

By Phil Smith

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