A predicted wave of insolvencies on the horizon has been a recurring theme in the UK press since the start of the first Covid-19 lockdown. Most people would have predicted that forced closure of businesses and the restriction on consumers' ability to spend would lead to an increase in business and personal insolvency numbers. In reality, the wave didn't appear - at least not yet. In this blog we discuss the reasons why and whether the trends we are seeing might suggest a wave is coming in 2023.

What stopped the wave?

There are significant differences in the procedures available to lenders north and south of the border when it comes to enforcing fixed charges or standard securities over real/heritable property. In this blog, we will compare the process in England & Wales ("E&W") of appointing a fixed charge or "LPA" receiver with the Scottish calling-up procedure

England & Wales: LPA receivers

Once a company is facing Administration (the most common insolvency process for a trading business – although see tip 2 below), the Administrators may look to sell the business and assets. This could be a pre-pack sale, or a regular administration sale and it may only be advertised to a select group of potential buyers or more widely in the market.

At the recent R3 Scotland Forum[1], experts in the hospitality and leisure sector came together with the restructuring and insolvency profession to discuss the issues the sector is facing as the country emerges from lockdown. The panel discussion which was chaired by Judith Howson, Senior Manager at French Duncan and member of the R3 Scotland Committee was led by Steven Fyfe, head of the Scotland Hotels Divisions within Savills.

CVAs remain the restructuring tool of choice for businesses with multi-let properties. Since the start of the first UK lockdown, there has been a marked increase in the number of CVAs in the hospitality and retail sectors. Whilst vaccines are now being dispensed, the economic ramifications of the pandemic will persist for some time to come and as a result we expect to see many more CVAs being proposed, particularly in these sectors. The introduction of R3's Standard Form COVID-19 CVA Proposal could lead to an increase in the use of CVAs in the SME market too.

It has been reported that Debenhams which entered administration earlier this month for the second time will be managed as a 'light touch' administration.

In this article we look at what this actually means and whether 'light touch' administration could be a useful tool for both businesses and insolvency practitioners looking to negotiate a route through the coronavirus pandemic.

The Corporate Insolvency and Governance Act 2020 ("CIGA") came into force on 26 June 2020 with the main objective of giving businesses "breathing space" in order to continue trading in light of the COVID-19 pandemic. It was progressed quickly through parliament and includes a number of temporary measures aimed at immediately reducing the number of companies entering insolvency procedures.