Pen Kent, an executive director of the Bank, said it would be better to extend participation in a refinancing to all creditors and to shareholders.
He acknowledged this was unlikely to be attainable, but recommended a limited extension of rescue negotiations to the trustees of company bonds and large suppliers.
Mr Kent said: 'A weakness of refinancing a company just involving its banks is that they are generally protecting their own positions at the expense of other creditors and shareholders.'
Citing critics of banks who claim they milk businesses for fees, rather than nurse them back to health, and who say the banks act in their own interests without regard to other stakeholders, Mr Kent asked, 'How many of us recognise these accusations?'
In a speech to the Association of Corporate Treasurers banking relations conference, he said participation by all creditors and shareholders would be more satisfactory but was unlikely, because it was important to keep negotiators to a manageable number.
But he made clear the Bank would like to hear from the City about how negotiations could be widened beyond the banks.
Mr Kent said: 'One possible way forward is for a dialogue with other important creditors, perhaps the trustees of a major bond issue, or major suppliers.
'Such a dialogue, provided it was in good faith, might serve to nip in the bud any mistrust which might subsequently derail the terms of a workout.'
Mr Kent said he had discussed this with trustees and trade finance insurers but had not yet found a way to make a widening of negotiations systematic.
Mr Kent also responded to fears that the fast growing market in the debt of distressed companies could undermine negotiations over financial restructurings under the 'London approach', a Bank of England framework for co-ordinating rescues.
He recommended a code of practice to oblige buyers of debt in distressed companies to abide by the London approach.
A code would make clear to the buyer that the debt carried with it this responsibility.
'In other words, the new holder of the debt would undertake to work constructively alongside the company's existing bankers to find a mutually acceptable solution to the company's difficulties,' said Mr Kent.
Failure by the seller of the debt to ensure the buyer was fully aware of what was expected would be regarded as 'tantamount to misleading'.
Another possibility would be 'a kind of closed season' for selling debt while restructuring negotiations are completed. Mr Kent said he would be talking to banks about these issues in the coming weeks.
He gave qualified approval to trading in the debt of distressed companies, saying sales could reduce the number of banks involved.
In the small number of UK rescues involving traded debt where the Bank had intervened, there had been co-operation from buyers and sellers and in some cases they had proved the key to reaching an agreement. So far, buyers of distressed debt accepted the London approach, but he made clear the Bank's concern that future buyers may have less helpful motives.
Another improvement would be to encourage equity or mezzanine finance investors during a restructuring, who could play a crucial role.
Reviewing the use of the London approach over the past 12 months, Mr Kent backed moves to cut the cost of fees, including proposals by National Westminster Bank, published in the Independent, for monitoring systems to control outlays.
He said, 'Accountants, advisers and lawyers must work with the banks to ensure that workouts are managed efficiently and that expensive staff do not waste time on unnecessary work.'
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