by Steve Beasant on 2 March, 2018
Toys R Us went into administration on Wednesday, putting more than 3,000 jobs at risk. Maplin has also called in administrators. These cases follow the recent collapse of construction group Carillion, which has badly hurt the supply chain.
Ahead of today’s expected administrations, Liberal Democrat leader Vince Cable wrote to Business Secretary Greg Clark calling on the government to examine the possibility of introducing a variation on the US’ Chapter 11 bankruptcy system. This would provide companies with more time to restructure their businesses and, crucially, allow their supply chains to recoup money owed to them and find alternative customers.
In the letter, Vince Cable said:
“I now believe it is time for the government to introduce a system that is similar to the US’ Chapter 11 bankruptcy…
“Chapter 11 would allow failing companies the breathing space needed to restructure their businesses. The company continues to trade and, should it still collapse, gives suppliers the opportunity to minimise their losses…
“The benefits of a Chapter 11 system, cherry-picking the best elements, should be looked into immediately so that we no longer see suppliers struggling when large companies are forced into quick administrations.”
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