UK Eyes Bankruptcy Change to Keep Companies Afloat
September 1, 2010, Reuters

Bankruptcy laws could change in the UK to allow companies time to restructure as opposed to collapse. The recession has seen many company failures, so new plans for introducing the debt moratorium option is a way to buy indebted companies more time. One factor that may sway banks towards the new arrangement could be the emergency funding that companies would be allowed to take on. This debtor-in-possession (DIP) funding can often carry high interest rates and has only been used for small companies in the UK before. White & Case partner, Christian Pilkington, said "DIP financing has proven to be popular in the U.S. where it is an industry in itself. One key question… is whether banks and other lenders can get comfortable that their secured positions in the creditor hierarchy will potentially be diluted."