I have obviously been a good boy this year because my gift from the Insolvency Service has arrived - the November 2020 Insolvency statistics. And like any properly brought up child, I decided to sneak a peek at my present before Christmas Day.

What the numbers show us is a continuation of the trend that the previous figures disclosed - corporate insolvencies remain markedly lower than the equivalent period last year. In Scotland in particular this is driven by a massive reduction in the number of compulsory liquidations this year (Nov 2019 - 56; Nov 2020 - 13).

Earlier this year the UK Government introduced a number of temporary measures intended to avoid large scale insolvencies across the country. One of these measures was the suspension of wrongful trading liability.

This suspension was in place until September 30, 2020. Most of the other temporary measures were extended (e.g. the effective suspension of winding up petitions by creditors has been extended until December 31, 2020) but the suspension of wrongful trading liability was not extended.

When a business becomes insolvent, all of the creditors of the business are at risk, including its landlords. As COVID-19 continues to challenge businesses in Ireland and abroad, two recent decisions of Mr Justice McDonald in the High Court offer a timely reminder of the standards which tenants must meet when seeking to compromise their commercial lease obligations and the importance of procedural fairness for landlords affected by tenant insolvency.

The New Look case¹

The Insolvency Service has released the latest insolvency statistics (to September 2020). 

These figures are particularly interesting as they shed light on the effects of the various changes to the insolvency landscape that have occurred since Covid-19 started to affect the economy.

Since March 2020, we have seen the introduction of the Corporate Insolvency & Governance Act ("CIGA"), Government schemes and lockdowns of various sizes, shapes and geographical restrictions. 

The statutory provisions for Restructuring Plans form a new Part 26A of the Companies Act 2006. CIGA was brought into force on June 26, 2020 and at a hearing in the High Court in London on September 2, 2020, the plan proposed by Virgin Atlantic, which was the first to be brought before the courts, was sanctioned.

Landlord and tenant relationships are likely to come under strain as tenants experience financial difficulties due to the COVID-19 pandemic. For tenant companies such financial difficulties may result in a tenant being placed in examinership, or ultimately in the appointment of a liquidator or receiver. An insolvency event generally constitutes an event of default in a commercial lease.

The Government has approved the drafting of the Courts and Land and Conveyancing Law Reform Bill 2018. The Bill is intended to give additional protection to home owners with mortgage difficulties.

The origins of the new Bill lie in the Keeping People in their Homes Bill, a Private Member’s Bill from early 2017. The new Bill will amend the Land and Conveyancing Law Reform Act 2013 to deal with circumstances where an insolvency remedy is not available to a borrower pursuant to the 2013 Act.

The Court of Appeal has decided an important question affecting choices around methods of debt enforcement. In ACC Loan Management v Rickard,1 it looked at whether a receiver by way of equitable execution can be appointed to receive future sums to which the debtor may become entitled.

In a recent judgment, the High Court has held that unfair prejudice to an investment fund creditor under a proposed Personal Insolvency Arrangement should be assessed in light of likely investment returns and not the cost of its future capital needs.

In a recent judgment, the High Court has provided further guidance on the correct approach to an assessment of an application under s115A of the Personal Insolvency Acts.