The proposals, which were released in the full Budget report yesterday, would allow companies to access new funding, which would be given priority in any repayments, in order to "allow firms in difficulties to access the funding they need to get back on track".

R3, the trade association for insolvency practitioners, has welcomed the move. President Nick O’Reilly said: "Lack of available credit is the biggest barrier to rescue procedures in the current economic climate so considering ways of encouraging funding is a step in the right direction."

Any such facility would be a move towards a US model of insolvency. Under Chapter 11, companies are entitled to Debtor in Protection finance, which enables them to invest in restructuring and prolongs the administration process.

The Insolvency Service will consult on the proposals and report back.

In addition, the Insolvency Service will publish a report in June on the effects that SIP 16, the transparency code for administrations that was launched in January, is having on pre-pack administration sales.

The Budget statement said that this was "to prevent creditors from being treated unfairly through the abuse of pre-pack sales".

Any such move will be welcomed by the print and paper industry that has faced a raft of pre-pack and phoenix sales this year. Detractors claim that they distort competition and enable companies to offer unsustainable prices.

However, R3 defended the process, while welcoming the report. O'Reilly said: "R3 welcomes more reporting on the work that our members do with pre-pack administrations to give more public confidence in the procedure.

"We believe that pre-packs are a valuable rescue tool, helping to rescue companies for which the only alternative might be liquidation. We do not believe that the system is open to systematic abuse."

For more, see next week's PrintWeek.

Also see:
What does Budget 2009 mean for the print industry?