The Pensions Regulator (TPR) recently issued its draft guidance on its approach to investigating and prosecuting the new criminal offences under the Pension Schemes Act 2021. In this blog post, we share our thoughts on the level of comfort that might be gleaned in relation to criminal risk if the draft guidance were finalised in its current form, focusing on the particular concerns that would remain for restructuring activity.
Background
Introduction
Insolvency Laws – all change in 2020, what about 2021?
Appointing administrators
Changes to pre-packs
Practice and procedure
The Corporate Insolvency and Governance Act 2020 (the Act) introduced significant changes to insolvency law, including permitting companies to propose a “restructuring plan”. The restructuring plan offers a flexible option for companies that sponsor defined benefit pension schemes to compromise their obligations to creditors and, potentially, to the pension scheme itself.
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.
Following on from part 1 of our predictions for 2021 for the UK restructuring market part 2 looks at CVAs, directors duties and HMRC and insolvencies.
We had hoped to cover off everything in 2 parts, but 2021 looks to be a busy year so we will publish the final part of this series next week.
Company Voluntary Arrangements – the continued evolution of the CVA
The Pension Schemes Act 2021 (‘the Act’) has received Royal Assent, with the UK government indicating that key provisions will come into force by autumn 2021.
The Act includes a number of provisions that will significantly impact restructuring activity involving financially distressed groups with a UK defined-benefit (DB) pension scheme.
What will change under the Act?
Below are some of the most significant changes being introduced by the Act.
The Pensions Schemes Act received Royal Assent yesterday (11 February).
For those involved in restructuring it is important to be aware that the Act introduces new offences, carrying hefty fines and the possibility of imprisonment that apply to “any person”. Given the wide scope of the drafting the new offences could capture directors, insolvency practitioners, lenders and other professional advisors commonly involved in a restructuring whose only defence to such a claim is that they acted with “reasonable excuse” – a term not defined in the legislation.
At the start of 2020, we considered what changes the UK restructuring and insolvency market might expect to see during the year – however no one could sensibly have predicted the significant and far reaching impact of COVID-19.
In part 1 of our blog, we look back at 2020 and look forward to what the UK restructuring market can expect in 2021 considering the new Insolvency Laws, expected Rule changes, pre-pack sales and practice and procedural points.
Insolvency Laws – all change in 2020, what about 2021?
The case of Arlington Infrastructure Ltd (In Administration) v Woolrych [2020] EWHC 3123 (Ch) is a cautionary reminder to qualifying floating charge holders (and their advisors) to review the terms of all security documents, before seeking to appoint an administrator.
The case of Arlington Infrastructure Ltd (In Administration) v Woolrych [2020] EWHC 3123 (Ch) is a cautionary reminder to qualifying floating charge holders (and their advisors) to review the terms of all security documents, before seeking to appoint an administrator.