A shake-up in the insolvency regime aimed at helping unsecured creditors will amount to little more than a token gesture, restructuring specialists have warned.
The government is scrapping "Crown preference" when companies that owe money are wound up - in essence, the right of the Inland Revenue and Customs & Excise to be paid first - in an attempt to help ordinary creditors to get more of their cash back.
However, lawyers say a scheme to ring-fence money for unsecured creditors will not take full effect for years, and even then most of the money will go to meet administrators' fees.
From September, measures in the Enterprise Act will abolish Crown preference immediately - freeing Ј400m a year, according to some estimates - and create a scheme to reserve money for unsecured creditors on new loans.
