| Adrian Doble, head of restructuring at Vantis Numerica explains how entrepreneurs can avoid the stigma of bankruptcy and keep their business alive through restructuring. Up 80% of new businesses fail, most within the first five years of operation. The grim realisation that even large, well-established, companies face the same threats makes high profile stories such as the failure of Parmalat in Italy headline grabbing news. But what of the individuals behind the headlines? For UK entrepreneurs, the most likely route once cash flow has dried up and with the creditors knocking on the door, is to declare bankruptcy. However, while bankruptcy can relieve uncertainty and stress, it also has a stigma associated with it. Directors may find it virtually impossible to raise future credit. In an increasingly complex market, directors have found themselves personally liable to the creditors of their companies. However, the alternative of business restructuring could mean that not only is bankruptcy avoided, but the business itself survives, at least in part. Administration: a poor copy of US Chapter 11? In the United States, bankruptcy is a tried and tested strategy for corporate restructuring. Some of the largest global organisations have successfully entered the protection offered by Chapter 11 and emerged intact, stronger and ready to compete. Delta Airlines is currently in Chapter 11 bankruptcy and is fully expected to survive at least partly intact. Yet the UK's attempt to offer the same restructuring tool, the 2002 Enterprise Act, is a poor imitation. While in theory designed to save a company as a going concern, more often than not, in the UK, administration is a one-way road to company break up. Indeed, given the structure of the Enterprise Act, it had little chance of success. In the America, directors retain operational control within Chapter 11, but in the UK an appointed insolvency practitioner takes control, and responsibility for trading the business moves to him, becoming his personal liability. His job is therefore more than often to recoup as much money as fast as possible. It is little surprise, therefore, that in the majority of cases the company does not remain intact but the business is sold off piecemeal to the highest bidders. The other difference in the US is that because the expectation is that the business will survive, banks offer funding to assist ongoing trading. We don't have this in the UK. Early intervention Such attitudes are completely alien to US organisations accustomed to using insolvency to provide a safe restructuring haven. So, as North American investors flood into the European market, how will European companies cope as US-style restructuring processes begin to be put forward as a credible legal framework but as yet fails to offer the same level of benefits to the company and its board as it does in the United States? If UK and European organisations are to we... | 
