On 24 March 2021, further extensions were announced to the range of government measures aimed at protecting UK companies and directors affected by COVID-19.

Measures extended to 30 June 2021

The UK government has published new draft regulations to require mandatory scrutiny of administration sales to connected parties (such as the insolvent company’s existing directors or shareholders).

In the UK, a "pre-pack" is an arrangement under which the sale of all or part of a company’s business or assets is agreed with a purchaser prior to the appointment of administrators. The sale is carried out by the administrators immediately on, or shortly after, their appointment. Administrators must be licensed insolvency practitioners.

Facts

Snowden J heard two applications for injunctions to restrain the presentation of two winding-up petitions, against Saint Benedict's Land Trust Limited (SBLT) and Shorts Gardens LLP (SG), respectively. The respondent creditors were Camden and Preston councils in relation to unpaid liability orders in respect of NNDR (National Non Domestic Rates) and other unpaid costs orders.

Key points

• The High Court struck out a claim by a liquidator who had already brought a claim arising from the same facts against the same defendants.

• The court relied on the fact that the economic benefit of pursuing the claim would accrue only to the liquidator.

The Facts

Caveat Creditor…

Following a lengthy consultation period, the Ministry of Justice has now published the new Pre-Action Protocol for Debt Claims (‘the Protocol’). This will be of general interest to everyone, but perhaps particularly to landlords with individual tenants.

On 7 July 2022 the UK government launched a consultation on the implementation of two model laws adopted by the United Nations Commission on International Trade Law (UNICTRAL): the Model Law on Recognition and Enforcement of Insolvency-Related Judgments and the Model Law on Enterprise Group Insolvency. The government claims that the consultation signals the UK's 'ongoing commitment to mutual cooperation and international best practice' in cross-border insolvencies.

Background

UK REIT Horizon Scanner Q4 2021

UK REIT Horizon Scanner Q4 2021

Key Issues

Key issues coming up for UK Main Market REITs in corporate, financial regulatory, planning, real estate, securities law and regulation and tax1 in England (including retained EU law2).

Issue/status/timing: New developments since our March 2021 edition are shown in green text. Impact: urgency/impact rating for REITs admitted to London Stock Exchange Main Market (including the Specialist Fund Segment3)

The new Pre-Pack Regulations have been approved by the UK Parliament and are due to come into effect on 30 April 2021 for administrations commencing from then.

In a widely criticised move, the UK tax authority, HMRC, has become a second ranking preferential creditor regarding certain taxes in insolvency proceedings commenced on or after 1 December 2020.

This means that in the new insolvency waterfall, HMRC ranks behind the claims of holders of fixed charges and first ranking preferential creditors (most notably employees) but ahead of floating charge holders' claims and unsecured creditors.

The much anticipated Corporate Insolvency and Governance Bill (the Bill) was published on 20 May 2020.

The proposed legislation is split into two broad categories: temporary provisions brought about as a result of COVID-19 and permanent provisions which will result in fundamental changes to UK insolvency law. The proposals, both temporary and permanent, reflect a shift towards a more debtor-friendly regime.