Almost a year has now passed since the Corporate Insolvency and Governance Act 2020 (CIGA) first entered force on 26 June 2020. According to the Explanatory Notes that accompanied CIGA, “the overarching objective of [the Act] is to provide businesses with the flexibility and breathing space they need to continue trading during this difficult time”. To this end, CIGA introduces a number of permanent and temporary amendments to the UK’s insolvency landscape which are aimed at ensuring businesses can maximise their chances of survival against the backdrop of the COVID-19 pandemic. 

On 18 March 2021, the UK Government published its long-awaited white paper on restoring trust in audit and corporate governance.

This follows a series of high-profile audit errors and major corporate collapses, including those of BHS in 2016 and Carillion in 2018, which led the Government to commission three independent reviews into different aspects of the UK’s audit, reporting and corporate governance systems.

The white paper targets large listed and AIM-listed companies, and large private companies where there is a public interest, and primarily focuses on:

On 26 June 2020 the UK Corporate Insolvency and Governance Act 2020 (the Act) came into force. The Act marked the most significant insolvency reforms in a generation – introducing new permanent restructuring tools (such as the restructuring plan and the moratorium). It also introduced two temporary measures (see our blog post here) specifically dealing with the impact of COVID-19 on companies:

The Corporate Insolvency and Governance Act 2020 (the Act) introduced significant changes to insolvency law, including permitting companies to propose a “restructuring plan”. The restructuring plan offers a flexible option for companies that sponsor defined benefit pension schemes to compromise their obligations to creditors and, potentially, to the pension scheme itself.

With the fallout from the pandemic hitting many businesses, those considering insolvency should look at the broad gamut of options on offer to avoid winding up the company. Matthew Padian, managing associate, explains.

The Pension Schemes Act 2021 (‘the Act’) has received Royal Assent, with the UK government indicating that key provisions will come into force by autumn 2021.

The Act includes a number of provisions that will significantly impact restructuring activity involving financially distressed groups with a UK defined-benefit (DB) pension scheme.

What will change under the Act?

Below are some of the most significant changes being introduced by the Act.

Will the end of the moratorium on evicting commercial tenants in March prompt more CVAs?

With the moratorium on forfeiture of commercial leases for non-payment of rent set to expire on 31 March, many tenants will be working out how to pay their rents. Using a company voluntary arrangement (CVA) may offer one way of compromising rents if landlords decline to negotiate a rent reduction.

But the road towards a CVA is not without its potholes, and there are two key signs that landlords are growing increasingly savvy when reacting to them.

After Virgin Atlantic and Pizza Express achieved ‘too much consent’ and did not need cross-class cram down in the end, DeepOcean is the first judgment applying cross-class cram down as part of a restructuring plan.

The High Court has, for the first time, sanctioned a restructuring plan exercising the power to cross-class cram down. The court handed down its sanction order but noted that, as the first decision to use cross-class cram down, a reasoned judgment will follow in due course.

On 13 January 2021, the court sanctioned three interconditional restructuring plans ('the restructuring plans') for three subsidiaries of DeepOcean Group Holding BV (together with all of its subsidiaries, 'the DeepOcean Group'):

At 11pm on 31 December 2020, the UK-EU Trade and Cooperation Agreement (TCA) came into effect implementing the UK’s exit from the single market. The TCA covers some important things in great detail and some things more scantly. Unfortunately for insolvency practitioners, it is largely silent on almost all issues relating to insolvency, meaning that, despite not technically having a ‘no-deal’ Brexit, for insolvency practitioners it may certainly feel that way.

Recognition of insolvency proceedings