From 1 December 2020 onwards, HMRC will be treated as a preferential creditor of companies for certain taxes including PAYE, VAT, employee NICs and Construction Industry Scheme deductions. In the event that a company enters administration or liquidation, HMRC's claim for these taxes will rank ahead of any floating charge holder.

This reflects recent changes made to the Finance Act 2020.

The impact on floating charge holders

On 13 January 2021, the English High Court sanctioned three interconditional Part 26A restructuring plans for the subsidiaries of DeepOcean Group Holding BV.

The plans for two of the companies were approved by the required 75% majority. While the third plan received 100% approval by secured creditors, only 64.6% of unsecured creditors voted in favour.

Consequently, at the sanction hearing the court was required to consider whether the cross-class cram down mechanism in the restructuring plan should be engaged for the first time in the UK.

On 11 February 2021, the English High Court confirmed in gategroup Guarantee Limited that restructuring plans are insolvency proceedings so are not covered by the Lugano Convention.

One of the debt instruments subject to the gategroup restructuring plan contains an exclusive Swiss court jurisdiction clause. Under the Lugano Convention, proceedings relating to "civil and commercial matters" must generally be brought in the jurisdiction benefitting from the exclusive jurisdiction clause.

In Uralkali v Rowley and another [2020] EWHC 3442 (Ch) – a UK High Court case relating to the administration of a Formula 1 racing team – an unsuccessful bidder for the company's business and assets sued the administrators, arguing that the bid process had been negligently misrepresented and conducted.

The court found that the administrators did not owe a duty of care to the disappointed bidder. It rejected the claimant's criticisms of the company’s sale process and determined that the administrators had conducted it "fairly and properly" and were not, in fact, negligent.

In Uralkali v Rowley and another [2020] EWHC 3442 (Ch) – a UK High Court case relating to the administration of a Formula 1 racing team – an unsuccessful bidder for the company's business and assets sued the administrators, arguing that the bid process had been negligently misrepresented and conducted.

The court found that the administrators did not owe a duty of care to the disappointed bidder. It rejected the claimant's criticisms of the company’s sale process and determined that the administrators had conducted it "fairly and properly" and were not, in fact, negligent.

1. BUDGET 2017

Budget 2017 was announced on 11 October 2016 and the implementing Finance Bill was published on 18 October 2016. Together, they contained two pensions-related initiatives.

Benefits for Pensioners Increase

There will be a 5 per week increase in the State pension with effect from 1 March 2017. The timing of the increase will mean that schemes which operate State pension offsets based on the State pension amount in January of a given year will not see a change to the deduction until January 2018.

1. POLICY UPDATE

1.1 Access to ARF option for holders of Buy-Out Bonds originating in DB Schemes

A change to the Revenue Commissioner's administrative procedures, effective from 22 June 2016, means that former defined benefit scheme members whose benefits were transferred to a buy-out bond may now access an Approved Retirement Fund ("ARF") rather than being restricted to the purchase of an annuity.

Introduction

In the recent High Court decision in Bilta (UK) Ltd (In liquidation) and others v Nazir and others [2012] EWHC (Ch), the court considered the application of the legal doctrine of ‘ex turpi causa non oritur actio’ in the context of fraud.