Coronavirus: City calls for new body to clear £100bn crisis debt burden
The second mechanism, called Covid Business Recovery Capital, would convert government-guaranteed loans into subordinated debt or preferred share capital agreements, but without voting rights attached to them.
The third mechanism, dubbed Covid Business Growth Shares, would consist of different instruments such as preference shares, ensuring the provision of growth capital to allow companies to replenish their cash reserves and invest in working capital. One banking source said the RCG's final report was likely to be welcomed by Mr Sunak and Andrew Bailey, the Bank of England governor, who have been kept closely informed about its progress.One source said the RCG now estimated that roughly one-third of the approximately two million businesses which have taken on a CBILS or BBLS loan during the crisis could struggle to repay their new borrowings, leaving them on the brink of collapse.
"If left unresolved, these levels of unsustainable debt could inhibit employment, research and development, investment and ultimately a smooth economic recovery back to growth," the RCG said in a letter to Mr Bailey in May.
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