The UK Government has announced changes to the regime for winding-up petitions. With effect from 1 October 2021, some of the protections currently afforded to businesses against aggressive debt recovery action are being phased out.
The changes are intended to avoid a 'cliff edge' for debtor companies when the current measures lapse at the end of September 2021, and have a tapering effect to avoid the flood of winding-up petitions that might otherwise be expected.
What are the current restrictions (in place until 30 September 2021)?
The Corporate Insolvency and Governance Act received Royal Assent on 25 June 2020. It implements the measures announced by the UK government on 23 April 2020 to safeguard against aggressive rent collection tactics. It follows the ban on forfeiture for non-payment of rent contained in the Coronavirus Act 2020 which came into effect on 25 March 2020. In this article, DLA Piper’s experienced Real Estate and Restructuring lawyers assess the debt collection restrictions contained in both Acts.
On 23 April 2020, the UK Government announced that the use of statutory demands and winding-up petitions would be restricted to ‘safeguard the UK high street against aggressive debt recovery actions' during the COVID-19 pandemic.
On 23 April 2020, the UK Government announced that the use of statutory demands and winding-up petitions would be restricted to ‘safeguard the UK high street against aggressive debt recovery actions' during the COVID-19 pandemic.
In a world of multinational businesses, ever-changing consumer trends and political uncertainties, insolvencies and financial restructurings of a cross-border nature are a common occurrence. Officeholders therefore frequently need to consider options that allow, at the very least, recognition of their appointment in the jurisdictions where the insolvent debtor has (or had) operations, assets or other relevant connections.
What is a CVA?
A CVA is an insolvency and rescue procedure under the Insolvency Act 1986, allowing a company in financial distress to make legally binding arrangements with its unsecured creditors. Typically, this involves rescheduling or reducing the company’s debts or even amending certain contractual terms.
With the holiday season now upon us, analysts are closely watching the restaurant industry, particularly the casual dining segment. Reminiscent of the conditions in 2008-2009, many are speculating whether the increase in online consumer shopping that served as a catalyst for the current “Retail Apocalypse” will reduce crucial holiday shopper foot traffic and push some teetering dining chains over the edge.
Despite the downturn in the retail industry, retailers should not automatically adopt a "glass half empty approach" but instead view the impending cycle as creating opportunities for companies in both the U.S. and globally. In recent months, a steady stream of analyst coverage has painted a bleak outlook for the retail industry. Between February and March 2017, BCBG Max Azria, Eastern Outfitters, hhgregg, Gander Mountain, and Gordmans were among the companies added to the long list of retailers to seek bankruptcy protection.
Despite the downturn in many retail sectors, retailers should not automatically adopt a “glass half empty approach” but instead view the impending cycle as creating opportunities for companies in both the U.S. and globally.
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