Secured lenders across the UK are unhappy with the government’s decision to push through a new law which could partly or fully wipe out their security in favour of HMRC debts in a liquidation or administration. In this article, Tim Symes, a partner in our Insolvency and Commercial Litigation teams, considers the return of HMRC’s Crown preference.
The government has published draft regulations designed to tighten up how administration sales to connected parties will work. The hope is that this will increase creditor confidence and improve transparency in the process.
So, what are pre-pack administrations, what is wrong with them, and what is the government going to do about it?
What are pre-pack administrations?
A pre-pack administration is simply a ‘teed up’ sale of a company’s business and assets before it enters administration, which is completed immediately after administration.
New regulations deriving from the Corporate Insolvency and Governance Act 2020 have extended the effective prohibition on statutory demands and winding up petitions until 31 December 2020. Tim Symes, a partner in our Insolvency and Commercial Litigation teams, looks at the implications of this for debtors and creditors.
The Court of Appeal has handed down judgment in a case concerning the Core VCT PLC companies (In Members Voluntary Liquidation) [2020] EWCA Civ 1207. The case concerns an order made to restore three dissolved companies after they went through a solvent liquidation process (ie no creditors still owed money), putting them back into solvent liquidation and appointing liquidators to investigate not only the affairs of the company but also the conduct of the ex-liquidators. The restoration application was made without notice to the ex-liquidators or members.
A couple of myths dispelled…..
”It’s the company’s problem, not mine.”
Wrong: It’s a surprisingly common misconception that because your business is contained in a limited company, its demise will not affect you. This is simply not correct.
“I work for the shareholders, not the creditors”