Although the contentious background to the applications to restrain the presentation of two winding up petitions heard together in (but only listed singularly as) the case of Shorts Gardens LLB v London Borough of Camden Council [2020] EWHC 1001 (Ch) is somewhat unusual, these cases nonetheless raise some interesting points of principle which may be used by the courts in determining whether it is appropriate to restrain or dismiss a winding up petition due to COVID-19.
As businesses and companies in the UK face an uncertain few weeks and months with unprecedented pressures, it can be easy for directors to panic and not know where to turn.
To assist in decision-making, we give a reminder of the law in this area, and some signposts for those seeking help.
In this briefing, we give a short reminder of statutory duties owed by UK directors under the Companies Act 2006, the potential risks of continuing to trade while possibly insolvent, and actions that should be taken in order to mitigate those risks.
Directors’ duties
Hot on the heels of our April 2020 article on the proposed reintroduction of the Crown preference, Parliament has recently approved legislation that will increase the ring-fenced amount available to unsecured creditors on an insolvency of a company from £600,000 to £800,000.
In our last article, which can be found here, we reported on the government’s intention to give HMRC priority in the recovery of certain debts (including VAT, PAYE, Employee NICs, and Construction Industry Scheme deductions ) in insolvency proceedings.
In the landmark decision in Re Systems Building Services Group Limited [2020] EWHC 54 (Ch), ICC Judge Barber held that the duties of a director survive the insolvency of a company.
FSA has published an undertaking Legal & General has given under the Unfair Terms in Consumer Contracts Regulations (UTCCR), in relation to its home insurance policies. It held that certain critical expressions in the policy were potentially so wide that it was hard for a customer to know what was excluded. The insurer agreed to make its wording easier to understand. (Source: FSA Publishes Insurance UTCCR Undertaking)
BIS and Treasury have published their response to the consumer credit elements of the Government review of consumer credit and personal insolvency. The response explains the initiative that will ensure that over 85% of customers with personal current accounts will see clearer, fairer and more manageable charges for unarranged overdrafts. Customers will be able to get alerts when their balance is low and will not incur a fee if they exceed their limit by a small amount. Also, from late 2013 there will be guaranteed account switching within seven days.
FSA has published three consultation papers on the Retail Distribution Review (RDR). The papers cover:
FSA has set out its standards for “key attributes” of effective resolution regimes. The standards require each jurisdiction to:
CEIOPS holds annual conference: CEIOPS has held its annual conference. The event included a panel session on Solvency II and discussion by Sharon Bowles of the new European Supervisory Authorities.