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 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.

The COVID-19 crisis is already showing signs of pushing the UK economy into recession, has undoubtedly impacted the M&A market in the UK and increased the likelihood of businesses entering into insolvency proceedings. However, history tells us that shocks to the market do give rise to opportunities it's a question of knowing where they are and being prepared.

The Government continues to develop its response to the COVID-19 pandemic. In this Insight we examine the weekend's announcement from the Business Secretary that provides some welcome good news for directors.

As we see more businesses having to close doors or adapt to a new set of rules, we set out a summary of some of the issues we anticipate for those needing to shut down but preserve their businesses at least until the lockdown is over. We will produce a more detailed client alert as matters develop although one message is clear – employers, employees, suppliers and customers are facing unique challenges and the best way to survive is to identify the issue, understand the options, and engage with pragmatism.

Employees

Healthcare workers are on the frontline of fighting COVID-19, but directors of companies have an equally important task, that of keeping the wheels turning and helping minimise the damage to the economy and the livelihoods of their employees, and keeping otherwise viable businesses intact for when the crisis passes.

How should directors respond to the fast-moving situation and the challenges posed by assessing and dealing with the impact on the business?

Since the news of Thomas Cook’s demise a lot of focus has been on its travel customers. But beyond repatriating stranded holiday makers, the impact of large scale insolvencies such as Thomas Cook, Carillion and British Steel can be far reaching.

Those relying on the likes of Thomas Cook for business may also face financial distress as the impact of its insolvency ripples down the supply chain. Potentially impacting suppliers of goods and services, those who relied on Thomas Cook’s business outside of the UK, employees and landlords.

It was a painful outcome for the administrator of ARY Digital UK Limited (“ARY”) when he was found in breach of duty and liable to pay £743,750.

The case of Brewer and another (as joint liquidators of ARY Digital UK Ltd) vIqbal [2019] EWHC 182 (Ch) reminds office holders of the importance of understanding what assets they are selling, ensuring that correct marketing processes are employed and obtaining proper valuations.

The new housing administration regime for registered providers of social housing is now in force. Our latest Insight introduces the new legislation and highlights some of the key ways in which a housing administration will differ from a normal administration process.