UK government looking to replicate Chapter 11 US regulations

The UK government is said to be considering a significant change in UK bankruptcy and insolvency laws could sway in favour of businesses and consumers as opposed to creditors. One of the main reasons why the government is looking into this particular area of the market is the fact that some £90 billion of leveraged buyout loans will become due for repayment by 2015. There is growing concern that a number of companies will struggle to refinance these potentially enormous buyout loans and could in many cases be pushed towards bankruptcy.

As a consequence, the highly successful Chapter 11 US regulations, which protect those in financial trouble while they reorganise their assets, could well be replicated in the UK in the short term. While trade organisations and business groups are obviously very supportive of such a move, there is a need to find a balance between future obligations, creditors and the ability for companies to keep on trading during difficult times.

In many ways the UK football arena perfectly demonstrates the potential problems of buyouts loans with clubs such as Manchester United and Liverpool adversely affected by outstanding loans taken out by their current owners.