As always, there has been a lot going on in insolvency.  We have highlighted below a few of the more important developments that we have seen in a very busy 2020 for insolvency lawyers. 

Re Tokenhouse VB Ltd (Formerly VAT Bridge 7 Ltd) [2020] EWHC 3171 (Ch)

The challenges facing the businesses of the United Kingdom at the start of 2021 are perhaps greater than any of us have seen in our lifetimes. In addition to the economic consequences of the restrictions on daily life imposed to counter Covid-19, we are now seeing the effects of the exit of the UK from the EU with businesses having had little time to get up to speed on the new regime.

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.

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. 

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.

Along with tightening social controls, the months ahead will be defined by various critical relationships and the rules that govern them. Of course they all interlock: material change in any of them impacts each of the others. Which causes multiple complexities in decision-making and risk assessment processes, both within a business and when looking at critical suppliers and customers:

Landlords and Tenants:

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.

In our e-updates of 20 January 2010 and 16 August 2010, we looked at decisions of the English and Scottish courts from December 2009 and August 2010 in which it was decided that, in England and Scotland respectively, the Administrators of a tenant company are bound to account to the landlord of premises for rent due in relation to the period during which those premises are being u

Our government has a longstanding commitment to cutting red tape. One of the ways of doing this it seems is to propose an Act of Parliament running to 153 pages. Thus we are presented with the Deregulation Bill.

A few of the provisions of this Bill relate to insolvency. The most significant are: