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 spring 2020, the Czech Republic, like the rest of the world, was severely affected by the coronavirus pandemic. The spread of COVID-19 outbreaks led to drastic shutdowns and reduced operations in almost all sectors of the economy. The loss of income and suspension of payments threatened to lead to the insolvency of thousands of businesses. So in spring 2020 the Czech Parliament approved temporary statutory measures to prevent the collapse of the business sector due to formal insolvency proceedings (the so-called Lex COVID).

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.

On 3 December 2020, the UK Government (HM Treasury) issued a consultation paper (the Consultation) setting out a proposal to implement a new “special administration regime” (the SAR) which it is proposed would apply to any insolvency of an authorised payment institution (a PI) or electronic money institution (an EMI).

On 3 December 2020, HM Treasury published the Government's proposal to implement a new special administration regime for PIs and EMIs (PI and EMI SAR), a copy of which can be seen here.

Lockdown, shutdowns, drops in revenue and related negative impacts of the COVID-19 pandemic faced by companies even still operating and in a healthy state have prompted the Czech government to respond to this situation and implement statutory measures to mitigate such impacts (the so-called LEX COVID), also in the area of insolvency. Most of such measures are only temporary during the extraordinary measures taken by public authorities during the COVID-19 pandemic. LEX COVID, which brings the below-mentioned changes, has already been enacted and came into force on 24 April 2020.

The Czech Government has prepared several measures that should help people and businesses in the challenging times related to the outbreak of COVID-19. These measures are currently divided into several draft laws, covering topics such as insolvency, loans, leases, employment, and court proceedings. We have chosen relevant fields briefly described below and we will provide more detailed information about these relevant fields once the final laws are passed by the Parliament (which should be shortly due to the state of legislative emergency).