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.
The Corporate Insolvency and Governance Act (“the Act”) became law on 26 June 2020. (Read our previous update on the Act here). As has been widely discussed, the Act introduces new corporate insolvency rescue procedures as well as temporary and permanent insolvency and corporate governance measures.
Almost 20 years ago the Government decided to abolish Crown Preference bringing it into step with other western jurisdictions such as Germany and Australia. It was considered at the time "inequitable" to elevate the public purse above ordinary unsecured creditors for whom the impact was potentially far greater.
Astonishingly, in the midst of a global pandemic and a looming "No Deal" Brexit, absent a dramatic last minute "U-turn" by the Government (let's face it, it wouldn’t be the first !), Crown Preference will return with effect from December 1st 2020.
It goes without saying that Insolvency Practitioners must behave honestly and with integrity in all their professional dealings. IPs must handle money and assets in a way which justifies the trust placed in them. An IP caught overcharging or misusing assets should, rightfully, expect a severe sanction after an investigation by their regulator. But the extent to which a regulator’s jurisdiction extends beyond an IP’s professional role, and into his or her private life, may come as a surprise.
With over a third of hospitality businesses currently at moderate to severe risk of insolvency (according to the most recent ONS survey), many in the sector are urgently considering the best way forward. One strategy, which we have recently seen a number of casual dining businesses like Carluccios and Gourmet Burger Kitchen deploy, is a ‘prepack’ administration. However, although the deals involving household names may grab the headlines, pre-packs are also widely used by small and micro businesses.
There has been much mention in the press in recent times about the amount of allegedly incorrect or fraudulent claims made by employers under the Government’s Coronavirus Job Retention Scheme (“CJRS”) (furlough scheme).
The current global pandemic has provided and will continue to provide plentiful opportunities for fraud and opportunism. One area which is potentially open to abuse is the protection of companies from the service of statutory demands or the presentation of winding up petitions following the enactment of the Corporate Insolvency and Governance Act 2020 (CIGA). It is important to consider alternative remedies if a debtor seeks to use this to their advantage.
This case is within the Chestnut Portfolio acquired by the Cerberus global private investment group and has been one of its most hard fought cases, involving personal debts and security of over £12m and litigation spanning back to 2016.
Summary
Where the contractor has become insolvent, what obligations can an employer enforce when stepping-in to a previously novated professional consultant’s appointment in a design and build scenario?
We reported in September that New Look's CVA had been approved by creditors, including provision for 400 of its store rents to be linked to turnover - see https://blog.charlesrussellspeechlys.com/post/102gf9i/a-new-look-for-commercial-rents
However, it seems that the controversial CVA is now going to be challenged in the courts by a number of the landlord creditors, including British Land and Land Securities. This will obviously be unwelcome news for the retailer on top of the arrival of a second lockdown, which will inevitably cause further disruption for its business.