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New Business Lifeline Service unveiled

Co-operatives UK has unveiled a new pilot scheme with government backing to help the staff in a business close to insolvency to take it over as co-operative owners.

The 'right to buy out' initiative, which coincides with the first global worker co-operatives day, being held on Friday 16 November, will be piloted in 2013 and was proposed in July's Nuttall Review of Employee Ownership.

The proposed pilot, which has commitment from the Department for Business, Innovation and Skills (BIS), is to give employees the opportunity to work through a viable business model for their business with a specialist advisor rather than simply let the business dissolve.

The scheme, set out in a new report, Saving Business, by international insolvency expert Anthony Jensen, builds on successful examples of employee buyouts in the UK and is an approach that has seen wider uptake across the world.

In Spain, for example, a similar right to buy out has resulted in 120,000 jobs being saved or created through the formation of 12,000 worker co-operatives. In France, over 700 businesses on the verge of closing down have been transformed into co-operative businesses between 1989 and 2010, representing over thirty enterprises a year, saving thousands of jobs.

Ed Mayo, Secretary General of Co-operatives UK, said: "This scheme, which will now move to a pilot phase, is being set up to give employees the opportunity to save their jobs and business. It won't work for all businesses, but where the insolvency is down to bad management not the lack of a market, then there is a real opportunity for the people who know the business best, the employees, to take it over."

"Business failures are endemic in the current climate, up by 7% to 17,000 in the last year. Our research has shown than co-operatives are a third less likely to fail than conventional business. Where viable businesses are struggling, our 'right to buy out' scheme offers an opportunity."

Alongside this, Co-operatives UK has produced a new guide to support worker co operatives, the worker co-operative code of governance, which provides helpful guidance on governance and management for employees running their business co operatively.

The guide has been produced by leading practitioners from worker co-operatives and will be distributed to all employee owners of co-operatives.

The guide can be downloaded at www.uk.coop/workercode.