On 30 October 2020, the Insolvency Service published its quarterly insolvency statistics for July to September 2020 (Q3 20).

What do the stats say?

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

The government has extended the restriction on the enforcement of statutory demands until 31 December 2020. The extension from the initial period of 30 September 2020 was introduced by regulations amending the Corporate Insolvency and Governance Act 2020 and will be of application to those in the construction industry.

In the wake of the Supreme Court's ruling that an insolvent company can adjudicate, the TCC have confirmed that there remain high hurdles to the insolvent party enforcing any adjudication decision.

On 29 September 2020 the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 came into force. To keep this snippy, we’ll refer to these new Regulations as “CIGAR”.

Why has it been difficult to get a winding-up order?

The Corporate Insolvency and Governance Act 2020 (CIGA 2020) came into force on 26 June. Under CIGA 2020, creditors are (currently until 30 September 2020, although the period may be extended) unable to present a winding-up petition on the basis of:

The rapid onset of the COVID-19 pandemic, coupled with the drastic lockdown restrictions, has left many businesses – particularly those that rely on heavy footfall – in dire financial circumstances.

Businesses are therefore seeking tools to help them weather this storm and light-touch administration is an option that continues to rear its head.

What is it?

Yesterday (30 July), the Insolvency Service published its quarterly insolvency statistics for April to June 2020 (Q2 20).

Some may be surprised to learn that, during these uncertain times, company insolvencies in England and Wales have declined by one-third compared to the same quarter ending June 2019 (Q2 19).

By way of a breakdown, and by comparing Q2 20 with Q2 19, the numbers of:

On 26 June 2020, the eagerly anticipated Corporate Insolvency and Governance Act 2020 (“CIGA”) came into force. The result is that the changes made to insolvency law will now hinder the ability of landlords to recover unpaid rent from its tenants. We look at how the provisions of CIGA do this and the remaining options available to landlords to recover overdue rent.

What has CIGA changed?

(a) Statutory demands

The Supreme Court has provided much needed clarity on whether an insolvent company can commence its own adjudication.

In the construction industry, insolvencies are an all-too-common occurrence – as are contractual disputes. There has until now been uncertainty about how the two legal regimes operate together where an insolvent party seeks to adjudicate for the sums it believes it is owed. This uncertainty has now been resolved, with the Supreme Court confirming that an insolvent company can bring an adjudication.