Chapter 11
Sir: Under the heading of 'Self-help' Tony Rudd writes approvingly (29 May) of the American practice of 'voluntary Chapter 11'. He sees it as a device to enable a firm that is long in hope and short in cash to keep afloat, and a good example from the land of opportunity of what we might do here. Looked at through less rose-tinted glasses it is simply a legal means of swindl- ing your creditors for the benefit of the shareholders,
employees and, of course, the lawyers. If that is the meaning of 'entrepreneurial- ly-based business' give me good old- fashioned socialist newspeak. In the cir- cumstances he describes the proper and on- ly honest course for the company is to call on its shareholders for more capital, and the choice would be theirs whether to keep it going or cut their loss. Instead of weeping crocodile tears over the plight of the management who have been over-optimistic or inefficient or for whatever other reason have simply failed, he might consider how best to apply a sharp spur rather than providing them with a means of dishonestly repudiating their
liabilities. If he believes in the efficacy of legal remedies, as he appears to do, what about a requirement that the management must have a substantial amount of their own money in the business?
It might concentrate their minds on their real job, for which no doubt they are hand- somely paid, instead of encouraging them to try to get out of difficulty by cheating others who have honestly supplied them with goods or lent them money in good faith.
C.B. Horn
Eastwards, 24 Millwood End, Long Hanborough, Ox ford
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