London `should be rescue capital'
Saturday 25 January 1997
The Bank introduced the London Approach, an informal set of guidelines on how to prevent multi-banker companies from going bust, in reaction to the spiralling numbers of banks involved in restructuring talks. Where companies had previously used a handful of lead banks, by the 1980s companies like Polly Peck and the Maxwell empire were borrowing from hundreds of banks from all over the world.
This made co-ordinating refinancing talks increasingly difficult. Under the London Approach a single lead bank would be appointed, usually a UK clearing bank, to liaise with all the overseas banks and work with insolvency specialists towards a rescue. The Bank of England would use its clout to bring recalcitrant banks into line.
Colin Bird, head of corporate recovery at Price Waterhouse, now wants a new London Approach that will incorporate the interests of two other groups that can potentially destabilise international rescue attempts - bond-holders and debt-traders.
Both groups often have completely different agendas from the banks. Some debt-traders in the US are called "vulture funds" because they buy up debt in troubled companies on the cheap and then attempt to make a turn by influencing the rescue talks to their own ends.
Mr Bird said: "Two opportunities exist. First, to create an approach that works for all stakeholder groups and which makes reconstruction possible. Secondly, to make London the place to undertake international rescues and restructures."
Chris Barlow, a senior insolvency partner with Coopers & Lybrand, and the man winding up Polly Peck, agrees that the emergence of aggressive American debt-traders means a new approach is needed which will involve them in the rescue process.
Mr Barlow said: "The London Approach has worked very well so far. There have been over 40 successful work-outs of companies with debts of over pounds 100m in the last six years. Companies like Stakis Hotels, Tiphook, Gateway and Queens Moat Houses were all dealt with using the approach."
Mr Bird intends to press his proposals for a new approach at a conference for international insolvency specialists in New Orleans this March.
- 1 Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
- 2 Greece debt crisis explained: A history of just how the country landed itself in such a mess
- 3 People all over the world are getting semicolon tattoos to draw attention to mental health
- 4 Greek debt crisis: Yanis Varoufakis's funniest (and most memorable) quotes
- 5 Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
Greece debt crisis explained: A history of just how the country landed itself in such a mess
German conservatives are destroying Europe with austerity, says economist Thomas Piketty
Man dies instantly after shooting firework from top of his head
Isis schoolgirl Amira Abase who fled London to join terrorists in Syria mocks victims of Tunisia massacre
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
iJobs Money & Business
£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...