The UK Government published the Corporate Governance and Insolvency Bill on 20 May 2020. The legislation will be fast tracked and include both temporary and permanent changes to the UK insolvency legislation.
The temporary measures, aimed at supporting businesses struggling with cash flow and facing distress due to COVID-19, include prohibitions on presentation of winding up petitions and winding up orders, suspension of wrongful trading laws and the ability to apply for a moratorium.
Crown prerogative dates back to the Magna Carta entitling the monarch to absolute priority for revenue related debt. Come 6 April 2020 will we really be heading back to feudal times and 1215?
The proposal to reinstate Crown preference was announced as part of the Autumn Budget last year and came as a surprise to many. The expected consultation paper published by HMRC this week seeks the views of individuals, shareholders, directors, lenders, companies and insolvency practitioners on the proposal to reinstate Crown preference in part.
The recent case of Manolete Partners Plc v Hayward and Barrett Holdings Ltd [2021] EWHC 1481 (Ch) impacts both insolvency practitioners and assignees of insolvency claims, potentially making such claims more expensive to bring and a procedural burden by requiring (depending on the nature of the pleaded claims) two sets of proceedings, even though the claims arise from the same facts.
What should you do if another business (i.e. a supplier, customer or other contract counterparty) is suffering distress and may be considering filing for insolvency?
This alert provides several “do’s” and “don’ts” to consider before and after insolvency and advises taking a proactive approach to dealing with distressed customers.
There has always been a tension between protecting the interests of defined benefit pension schemes and insolvency given on the one hand The Pensions Regulator (TPR) seeks to protect the interests of pension scheme members and the Pension Protection Fund and on the other, the insolvency regime seeks to protect the interests of creditors as a whole.
The Corporate Insolvency and Governance Act 2020 introduced a number of temporary changes to UK insolvency laws last year. Those changes, together with other measures such as the moratorium on forfeiture proceedings have recently been extended, we assume, to avoid the perceived cliff edge of insolvencies that might follow if such measures are brought to an end abruptly.
It is not entirely clear how the UK Coronavirus Job Retention Scheme operates in line with current UK insolvency legislation, although it is clear that administrators can use the scheme and furlough employees.
We are yet to see the true impact of Christmas trading in the retail industry although HMV is already a victim of the tough conditions for retailers. Additionally, Boots has announced a fall in sales and the launch of a “transformational costs management program” to save more than $1 billion and Next has confirmed that profits in store have fallen and although online sales are up, the uncertainty about the UK economy after Brexit makes forecasting difficult. Only one thing is clear – consumers remain at risk in the event of a retail business entering administration.
With fairly swift measure the UK House of Commons approved the ‘pre-pack regulations’ confirming that, with effect from 30 April 2021, before a pre-pack sale can complete creditor approval or an independent written report from an evaluator will be required.
The detail about, the now mandatory referral process, can be found in our previous blogs.
Who will the evaluator be?
Our recent blog discussed the decision in Re Carluccio’s Limited (in administration) [2020] EWHC 88D (Ch) where the Court considered whether administrators would “adopt” the employment contracts of employees they furloughed after the 14 day grace period.