R (on the application of Palmer) (Appellant) v Northern Derbyshire Magistrates’ Court and another (Respondents) [2023] UKSC 38

On appeal from: [2021] EWHC 3013

Now that HMRC has become a preferential creditor for certain debts, other creditors – such as suppliers – could lose out.

Under the Finance Act 2020, from 1 December 2020, HMRC became a preferential creditor in insolvency proceedings. This may have significant impact on what’s left for other creditors.

The Corporate Insolvency and Governance Act (CIGA) came into force on 26 June 2020, introducing significant reforms intended to provide breathing space for companies during the coronavirus pandemic.

These measures may be a welcome relief to some struggling companies. However, they could prove problematic for suppliers, who will need to tread especially carefully when dealing with distressed or insolvent companies.

What has CIGA changed?

On Wednesday 29 April the Outer House of the Court of Session in Edinburgh issued an opinion sanctioning two schemes of arrangement proposed by Premier Oil Plc and Premier Oil UK Limited (together, Premier Oil) (the Schemes). The Court addressed multiple grounds of challenge and did so without hearing live evidence, despite disputes of fact between the parties.