R3, the association of business recovery professionals, has produced a Standard Form Covid 19 CVA Proposal and accompanying Covid 19 Standard Conditions.

The Standard Form proposals are intended for use by SME companies, in each of the jurisdictions across UK that have been affected by Covid 19, to save time and cost and make CVAs more accessible to them.

On 8 October the Insolvency Service published a report on pre-pack sales in administrations, together with draft regulations imposing a mandatory referral to independent scrutiny in the case of pre-packaged sales to connected parties.

This article, written by Tim Carter and Helen Martin, considers the background to the proposed regulations, their content and their potential impact.

Background

In Riverrock Securities Limited v International Bank of St Petersburg (Joint Stock Company) [2020] EWHC 2483 (Comm) the High Court granted Riverrock Securities Limited (“RSL”) an interim anti-suit injunction against bankruptcy proceedings brought against RSL by the receiver of the International Bank of St Petersburg (“IBSP”) (the Bankruptcy Proceedings).

John Doyle Construction Limited (in liquidation) v Erith Contractors Limited sees the first consideration of a claim for summary enforcement of an adjudication decision by a company in liquidation following the Supreme Court’s decision in Bresco Electrical Services Limited (in liquidation) v Michael J Lonsdale (Electrical) Limited.

Background

With two of the UK's biggest cinema chains announcing, within days of each other, significant curbs to their operations due to COVID-19's continued impact on the entertainment sector, our restructuring and insolvency team have looked at the particular challenges faced by these venues and some of the steps their operators and funders should consider to help keep the curtains open.

THE IMPORTANCE OF THE UK'S ENTERTAINMENT INDUSTRY

As part of its pandemic-driven £1.2 billion solvent recapitalisation, Virgin Atlantic recently became the first company to use the UK government's new restructuring plan introduced in June 2020.

Let's look at why the court approved Virgin's restructuring plan, and what companies intending to use the new plan need to know before moving forward.

Two directors from the UK were disqualified for 12 years each after they used funds from existing clients to payback previous clients. The directors' company entered into loan agreements with existing clients worth around £9.1 million for forex trades, in return for interest and loan repayments. The Insolvency Service later discovered that at least £8.4 million was used to make interest and loan repayments to previous clients.

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.

The Government has announced that it will introduce new measures to subject pre-pack sales in an administration to a connected person to mandatory independent scrutiny.