In Short
The Situation: The Full Court of the Federal Court has changed industry practice in Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) [2021] FCAFC 64 by holding that the "peak indebtedness rule" is not available to liquidators when assessing the value of running accounts in unfair preference claims.
There is a faint light at the end of the COVID tunnel for commercial landlords regarding timings and the ability to recover unpaid rent arrears. The UK Government has announced an extension to the current prohibition on forfeiture and winding up petitions, to enable it to introduce new legislation to help manage the £6bn estimated rent arrears.
The announcement provides a clearer pathway for both landlords and tenants, many of whom have paid no, or little rent since March 2020 as a consequence of the various Government imposed lockdowns.
The recent case of Manolete Partners Plc v Hayward and Barrett Holdings Ltd [2021] EWHC 1481 (Ch) impacts both insolvency practitioners and assignees of insolvency claims, potentially making such claims more expensive to bring and a procedural burden by requiring (depending on the nature of the pleaded claims) two sets of proceedings, even though the claims arise from the same facts.
The Corporate Insolvency and Governance Act 2020 introduced a number of temporary changes to UK insolvency laws last year. Those changes, together with other measures such as the moratorium on forfeiture proceedings have recently been extended, we assume, to avoid the perceived cliff edge of insolvencies that might follow if such measures are brought to an end abruptly.
With fairly swift measure the UK House of Commons approved the 'pre-pack regulations' confirming that, with effect from 30 April 2021, before a pre-pack sale can complete creditor approval or an independent written report from an evaluator will be required.
The Corporate Insolvency and Governance Act 2020 introduced a number of temporary changes to UK insolvency laws last year. Those changes, together with other measures such as the moratorium on forfeiture proceedings have recently been extended, we assume, to avoid the perceived cliff edge of insolvencies that might follow if such measures are brought to an end abruptly.
In response to the emergence of the COVID-19 pandemic in Australia in 2020, the federal government injected an unprecedented level of stimulus into the Australian economy and introduced temporary law reforms aimed at protecting against an anticipated "tidal wave" of insolvencies. These temporary law reforms included a moratorium on civil liability for insolvent trading for directors and increased thresholds and time frames for responding to statutory demands.
With fairly swift measure the UK House of Commons approved the ‘pre-pack regulations’ confirming that, with effect from 30 April 2021, before a pre-pack sale can complete creditor approval or an independent written report from an evaluator will be required.
The detail about, the now mandatory referral process, can be found in our previous blogs.
Who will the evaluator be?
Introduction
Insolvency Laws – all change in 2020, what about 2021?
Appointing administrators
Changes to pre-packs
Practice and procedure
In the final part of our predictions for 2021 for the UK insolvency market we look at pensions, the National Security and Investment Bill and cross border matters.