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Grayling to look into airline insolvency rules – R3 comment PDF Print E-mail
Thursday, 12 October 2017
Following the news that transport secretary Chris Grayling is to look to reform the rules governing insolvent airlines, Adrian Hyde, president of insolvency and restructuring trade body R3, commented: “The transport secretary’s interest in airline insolvency rules is welcome. The air industry is one of a number of parts of the economy where sector-specific rules on insolvency can make orderly wind-downs or business rescue tricky. Key licences can often be withheld from insolvent companies, for example. More structured wind downs could help improve outcomes for employees, creditors, and customers.

“Although the thinking behind some of the rules in various sectors is understandable, the rules can sometimes make rescue all but impossible – leading to avoidable job losses or creditors being left out of pocket – or can significantly alter the way the insolvency is handled. R3 would welcome the opportunity to work with the government and regulators to introduce constructive and positive reforms, as they have in other specific sectors.

“Rather than commit to a new insolvency reform project, however, the government would be wise to consider this issue as part of its stalled 2016 business rescue reforms. These proposals, welcomed by the insolvency and restructuring profession, have made little progress since last year and the final shape of reforms has yet to be decided by government. This seems like an opportunity to get those changes moving again.

“Looking beyond sector-specific rules and regulations, the UK’s underlying insolvency and restructuring framework is effective and is ranked as one of the best in the world by the World Bank. It is flexible and encourages business rescue, which is often the best way to maximise returns to creditors while minimising job losses.”
 

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