On 12 December 2017, creditors in the long running special administration of failed stockbroking firm, MF Global UK Limited (“MF Global”), approved a company voluntary arrangement (“CVA”). This case demonstrates the flexibility of the CVA procedure and the role it can play in complex financial services cases.

What is a CVA?

Since May 2002, we have had a regime which ensures that an insolvency proceeding started in one of the EU’s member states is, without further formality, recognised in all other member states (except for Denmark) and which determines the law applicable to such proceedings. That regime is provided for in the EU Regulation on insolvency proceedings (1346/2000/EC) (the EIR).

Despite the scale of the pandemic and resulting build-up of Covid related rent arrears, currently estimated at around £4.5bn, business restructuring has been relatively muted. This is partly explained by the moratorium on forfeiture and other restrictions on landlords’ remedies, combined with unprecedented government financial support for struggling businesses.

But rent arrears cannot be pushed down the track indefinitely. As restrictions are eased and focus turns to tackling this debt, business restructuring activity will no doubt intensify.

Introduction

On 28 March 2020, the UK Government announced upcoming insolvency law reforms in response to Covid-19, intended to help companies and directors.

On 23 April 2020, the UK Government announced further measures to protect the UK high street from aggressive rent collection by prohibiting the use of statutory demands and winding up petitions to collect rent which was unpaid due to difficulties caused by Covid-19. However, at the time, it was unclear from the announcement as to whether these prohibitions would extend beyond unpaid rent to other debts.