IN THE NEWS
Government lifts (in part) the temporary insolvency measures
On 9 September 2021, the government announced that the temporary restrictions introduced by the Corporate Insolvency and Governance Act 2020 (CIGA 2020) which were put in place to protect companies during the pandemic are being lifted, and will be replaced from 1 October 2021 with new temporary measures, which include the introduction of a temporary revised debt limit for presenting winding up petitions.
What have we been up to?
Aside from our collective (but not wholly unexpected) disappointment that the lifting of the remaining Covid restrictions has been pushed back to 19 July, the team continue to advise on a wide range of insolvency related matters, amongst the recent highlights being:
Before we kick things off, all of the Business Support and Insolvency Team here at Boyes Turner would like to wish all of you a very Happy New Year.
The Finance Act 2020 received Royal Assent on 22 July confirming the Government’s intention to restore HM Revenue & Customs (HMRC) as a secondary preferential creditor in insolvencies. From 1 December 2020, HMRC’s claims for unpaid employer NIC, PAYE and VAT will rank ahead of floating charge holder claims and unsecured creditors, reducing the monies available for distribution to lower ranking creditors.
This judgment provides some guidance in relation to the scope and application of s283A IA86, which gives a bankrupt’s trustee in bankruptcy three years to take the necessary steps to realise or secure the bankrupt’s interest in the bankrupt’s home failing which that interest will cease to be part of the estate and will automatically revest in the bankrupt.
In this case the court was concerned with the meaning of the phrases (a) ‘an interest in’, (b) ‘a dwellinghouse’ and (c) ‘sole or principal residence’ under s283A(1).
This was an application by the administrators of Lehman Brothers International (Europe) Ltd for a direction under paragraph 63 of Schedule B1 IA86 that they be at liberty to consent to a request from the company’s directors to distribute surplus funds to the company’s sole shareholder.
The Court has granted one of the first Winding Up Orders under CIGA 2020.
The winding up petition had been issued on 1 May 2020, 8 weeks before CIGA 2020 came in to force, but after 27 April 2020, the date from which CIGA 2020 applies retrospectively. As a result, the petitioner could not have ensured that the winding up petition satisfied the requirements of CIGA 2020, as those requirements were not in existence at the time that the petition was presented.
The liquidators of a subsidiary company had submitted a proof in the CVA of the parent company. The proof was based upon a claim under section 239 of the Insolvency Act 1986 (IA86) that certain payments by the parent to the subsidiary had amounted to unlawful preferences of the company. The liquidators appealed against the decision by the supervisor of the CVA to reject that proof.
Following the Insolvency Service’s announcement that it will produce monthly (as opposed to quarterly) company and individual statistics for England and Wales, to assist the Government and the insolvency sector in monitoring the impact of COVID19, the results for July showed that:
The Department for Business, Energy & Industrial Strategy (BEIS) has recently issued a press release regarding proposed changes in the law to better protect consumers in the event that a company, and in particular a retailer, becomes insolvent.
Under existing law, if a company becomes insolvent but goods prepaid for are still in its possession, they may be considered as assets belonging to the business and can be used by administrators to pay off the company’s debts.