On 30 October 2020, the Insolvency Service published its quarterly insolvency statistics for July to September 2020 (Q3 20).

What do the stats say?

Statutory demand is a common and important tool in the winding up process. But recently, the Hong Kong Court of First Instance has reminded us that it is by no means a must.

On 8 October the Insolvency Service published a report on pre-pack sales in administrations, together with draft regulations imposing a mandatory referral to independent scrutiny in the case of pre-packaged sales to connected parties.

This article, written by Tim Carter and Helen Martin, considers the background to the proposed regulations, their content and their potential impact.

Background

On 29 September 2020 the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 came into force. To keep this snippy, we’ll refer to these new Regulations as “CIGAR”.

1. Introduction 

The long-running saga between Shandong Chenming Paper Holdings (“Shandong Chenming“) and Arjowiggins HKK2 Ltd (“Arjowiggins“) has continued with the Court of Appeal handing down its judgment on an appeal against a lower court judgment which had dismissed Shandong Chenming’s application to injunct Arjowiggins from presenting a winding-up petition against Shandong Chenming (Shandong Chenming Paper Holdings Limited v. Arjowiggins HKK2 Limited [2020] HKCA 670).

Why has it been difficult to get a winding-up order?

The Corporate Insolvency and Governance Act 2020 (CIGA 2020) came into force on 26 June. Under CIGA 2020, creditors are (currently until 30 September 2020, although the period may be extended) unable to present a winding-up petition on the basis of:

The rapid onset of the COVID-19 pandemic, coupled with the drastic lockdown restrictions, has left many businesses – particularly those that rely on heavy footfall – in dire financial circumstances.

Businesses are therefore seeking tools to help them weather this storm and light-touch administration is an option that continues to rear its head.

What is it?

Yesterday (30 July), the Insolvency Service published its quarterly insolvency statistics for April to June 2020 (Q2 20).

Some may be surprised to learn that, during these uncertain times, company insolvencies in England and Wales have declined by one-third compared to the same quarter ending June 2019 (Q2 19).

By way of a breakdown, and by comparing Q2 20 with Q2 19, the numbers of:

On 26 June 2020, the eagerly anticipated Corporate Insolvency and Governance Act 2020 (“CIGA”) came into force. The result is that the changes made to insolvency law will now hinder the ability of landlords to recover unpaid rent from its tenants. We look at how the provisions of CIGA do this and the remaining options available to landlords to recover overdue rent.

What has CIGA changed?

(a) Statutory demands