The Government has passed an omnibus bill which introduced amendments that will assist New Zealand to respond to the wide-ranging effects of COVID-19.

In brief the changes to insolvency legislation are:

In Re A Company (injunction to restrain presentation of petition) [2020] EWHC 1406 (Ch), the Court held that it is able to take into account the likelihood of a change in the relevant law in deciding whether to restrain a winding up application from being brought.

The English Court of Appeal in Re Debenhams Retail Ltd [2020] EWCA Civ 600 recently considered the inter-relationship between the UK Government’s Coronavirus Job Retention Scheme and the ‘adoption’ of employment contacts by administrators under the Insolvency Act 1986.  The issue was whether by paying only the amounts which may be claimed under the Scheme to furloughed employees, the administrators have adopted the contracts.  Adoption means that the wages and other entitlements are payable as expenses of the administration ahead of other expenses.  

The Federal Court of Australia in Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrators Appointed) (No 2) [2020] FCA 472 has made orders to release the administrators of retailer The Colette Group (the Group) from personal liability for rent for a two-week period during the COVID-19 pandemic. 

The Federal Court of Australia in Frisken, in the matter of Avant Garde Investments Pty Ltd v Cheema [2020] FCA 98 has considered a dispute between a receiver and the director of the company as to whether the provisional liquidator, Mr Banerjee, should be appointed as the liquidator. 

The director sought the appointment of different liquidators on the basis that Mr Banerjee’s conduct as provisional liquidator was such that a reasonable person might apprehend that he might not be impartial as liquidator. 

What is it?

A new form of restructuring plan (RP) which can be entered into with all creditors. It is found within the Corporate Insolvency and Governance Bill (Bill) and assuming it is enacted in its current form, it will sit next to schemes or arrangements in the Companies Act 2006 (rather than the Insolvency Act 1986) by way of a new Part 26A, ss895-901, and as with a scheme of arrangement the RP will seek to achieve an agreed compromise / arrangement between a company, its members and/or its creditors.

The Insolvency Service has released statistics on the level of insolvencies in April 2020. This allows us to take a look at the immediate effect of insolvencies post-lockdown compared with those before.

Statistics

The Government has published the COVID-19 Response (Further Management Measures) Legislation Bill (the Bill), an omnibus bill containing amendments (both temporary and permanent) to several acts. These amendments aim to both assist organisations in effectively managing the “immediate impacts of the response to COVID-19”, as well as mitigating some of the pandemic’s “unnecessary and potentially longer-term impacts on society”.

The landscape relating to winding-up petitions has changed due to the COVID-19 pandemic. Hundreds of petitions have been adjourned already, and the new Temporary Insolvency Practice Direction has now adjourned all hearings due to take place before 21 April across the country. It also sets out new procedures and timings for the listing and re-listing of petitions, with many hearings in London and the regions moving to hearings by video-conference for the foreseeable future.

High Court provides guidance on voluntary administration and creditors’ meetings under COVID-19 Alert Level 4

A recent decision of the High Court provides helpful guidance for insolvency practitioners on how aspects of the voluntary administration regime should operate in the context of the COVID-19 pandemic.