Corporate governance in transition: An examination of governance in financially distressed and insolvent UK companies

The thesis focuses on the influence of financial distress on corporate
governance in large public companies. It approaches the research from both legal
and business perspectives, analysing the decisions that directors typically make in
attempts to rescue the company. It explores the influence of creditors and
shareholders, within existing governance codes and legal frameworks. It also
examines governance as the company enters insolvency and is placed into a
formal rescue regime.
The thesis addresses the topic from theoretical, doctrinal and empirical
perspectives. The theoretical analysis compares two parallel literatures on
corporate governance and solvency/ insolvency. The doctrinal analysis examines
existing statutes, case law, and regulations on corporate governance in financial
distress/ rescue. The empirical study involves interpretive and comparative use of
case studies of five large UK public companies that have experienced financial
distress and insolvency between 2008 and 2012. It adopts an innovative approach
to data collection, based on an extensive analysis of archival data.
The thesis concludes that current UK governance structures have not yet
evolved sufficiently to cover situations of financial distress. Equally, the law does
not appear to have provided clear guidelines for director-creditor relationships and
director-shareholder relationships in large public companies as they enter financial
distress, becoming involved only when a company enters a formal rescue regime.
A need is also identified for greater transparency on the influence and role of
lenders and insolvency practitioners in financial distress and insolvency.