A number of recent extensions and changes to temporary measures have been announced that impact insolvency practice and procedure, what are they?
The Finance Act 2020 received Royal Assent today (22 July), confirming the anticipated but opposed intention to restore HMRC as a secondary preferential creditor on insolvency.
From 1 December 2020 HMRC's claim will sit ahead of floating charge holders and unsecured creditors reducing the monies available for distribution to both when a corporate files for insolvency.
The Finance Act 2020 received Royal Assent today (22 July), confirming the anticipated but opposed intention to restore HMRC as a secondary preferential creditor on insolvency.
From 1 December 2020 HMRC’s claim will sit ahead of floating charge holders and unsecured creditors reducing the monies available for distribution to both when a corporate files for insolvency.
On 25 June 2020 the Corporate Insolvency and Governance Act received Royal Assent, making some of the biggest changes to UK insolvency laws in the last 30 years. We have written several blogs covering the changes and how they help support distressed businesses, impact suppliers, lenders and other third parties and have tracked the changes through the UK parliament.
Clearly there are some major economic challenges ahead. Many businesses may be able to withstand the challenges ahead but it may very well be that their trading counterparties (whether suppliers, customers or other stakeholders) will not. Whilst these times can represent an opportunity for some, such as potential acquirers (whether of businesses, assets or distressed debt), in most cases, the climate represents a threat to businesses.
As set out in the first blog in this series, the Corporate Insolvency and Governance Bill (the “Bill”) introduces a new debtor-in-possession moratorium to give companies breathing space in order to try to rescue the company as a going concern.
As set out in the first blog in this series, the Corporate Insolvency and Governance Bill (the “Bill”) introduces a new debtor-in-possession moratorium to give companies breathing space in order to try to rescue the company as a going concern.
On 20 May 2020, the UK Government introduced the Corporate Insolvency and Governance Bill (the “Bill”) to the House of Commons. The Bill introduces a new debtor-in-possession moratorium to give companies breathing space in order to try to rescue the company as a going concern. The Bill is currently only in draft form and therefore amendments may be made. It is anticipated that the legislation will come into force by the end of June 2020.
This blog (the first in a series of blogs about this new measure) outlines the key provisions of the moratorium and how it will work.
COVID-19 has impacted all businesses and economies around the globe with a precipitous decline in demand and supply as a result of quarantine orders, business closures, and social distancing. International Monetary Fund research suggests that the world economy may shrink (in the year 2020) by 3% with the trade volume falling by 11% and the oil prices by 42% (World Economic Outlook, April 2020: The Great Lockdown). In these challenging circumstances and with significant level of debt, many companies are at the onset of insolvency.
The UK Government published the Corporate Governance and Insolvency Bill on 20 May 2020. The legislation will be fast tracked and include both temporary and permanent changes to the UK insolvency legislation.
The temporary measures, aimed at supporting businesses struggling with cash flow and facing distress due to COVID-19, include prohibitions on presentation of winding up petitions and winding up orders, suspension of wrongful trading laws and the ability to apply for a moratorium.