The revised Insolvency Practice Direction has been published and approved with effect from 4 July. This replaces the PD published in April this year. The revisions (primarily dealing with the distribution of specialised insolvency work) widen the scope of work which can be undertaken in local courts, whilst also giving the ability to transfer insolvency cases back to the local hearing centres if there is sufficient expertise to deal with the matter.

The Insolvency Service intends to publish a new guidance notice to address the issues faced by employers in dealing with collective consultation when a company is facing insolvency, following consultation with the industry last year.

The guidance note is expected to require insolvency practitioners to notify the government in advance of collective redundancy proposals and to comply with the requirement to consult when seeking to rescue or wind up a business.

It is no great surprise that following the collapse of Carillion and with other retail businesses teetering on the edge, insolvency and corporate recovery is back in the news.

Some of the biggest casualties of entities like Carillion are the employees. Luckily, in the Carillion failure many jobs have been saved, but there is still a residual cost to employees who have to submit claims to the National Insurance Fund and the liquidator to recover payments for unpaid wages, holiday and sick pay.

Directors of a company in financial distress will often turn to their professional advisors to assist in making decisions about the company’s future; whether that be their lawyers, accountants, bank, tax advisors or insolvency professionals.

We sent to you earlier this week an Alert on "Chrysler Bankruptcy Filing and Preliminary Impact on Suppliers." As we promised, below is an update based upon our review of the case and observations at the hearings.

Essential Supplier Motion

The Court approved treatment of essential suppliers on a temporary basis. Here is a summary of the Interim Order:

Chrysler's bankruptcy filing, which occurred on April 30, has generated considerable activity already. Baker Hostetler has been monitoring closely the Chrysler activity for our supplier clients. We attended the hearing on the first day filings, which were generally ministerial in nature. The court approved joint administration, maintenance of cash management/business forms, enforcement of automatic stay, payment of wages, and honoring of all warranties.