In March 2020, the UK government announced that changes will be made to enable UK companies undergoing a rescue or restructure process to continue trading, giving them breathing space that could help them avoid insolvency.

The legislation implementing this has now been laid before Parliament in the Corporate Insolvency and Governance Bill. This includes measures intended to tide companies through the COVID-19 pandemic, as well as far-reaching wholesale reforms to the UK’s restructuring toolbox.

As the business world starts to count the cost of the COVID-19 pandemic and the government measures taken to contain it, attention is turning to the tools available to help companies that have been financially impacted.

Many companies are deferring payments to conserve liquidity, raising difficult questions around directors’ duties and leading to an immediate focus on how to protect the business from resulting creditor action.

The English Court of Appeal has handed down its judgment in the Debenhams case, on which we acted. A copy of the judgment can be downloaded here. This upholds the decision of the High Court, which followed the earlier decision in Carluccio’s.

Further to our blog about measures announced by the Government to protect commercial tenants from “aggressive” rent collection strategies, the Government subsequently confirmed that the restrictions will apply (unless extended) from:

At the end of March, the Government introduced measures providing a moratorium on evictions for commercial tenants for non-payment of rent until 30 June 2020.

COVID-19 is placing unprecedented strain on all businesses, and insolvency practitioner (“IP”) practices are no exception. Government-imposed restrictions on activities and movement will have a direct impact on the ability to carry on business as usual. There may be fewer employees available (through illness, self-isolation and furloughing), strain placed on remote working capabilities and a limited ability to carry out site visits to deal with cases as usual. Closure of schools and caring responsibilities may also lead to reduced personnel capacity.

COVID-19 and Government-imposed restrictions are placing an unprecedented strain on everyone and businesses and individuals may be facing extreme financial pressure. COVID-19 is impacting businesses throughout the supply chain in most, if not all, sectors. This may mean that clients and debtors are unable to meet their obligations and there may need to be changes as to how these are dealt with. This note aims to provide some guidance to help Insolvency Practitioners (“IPs”) deal with certain practical issues that may arise in active cases.

Yesterday the UK Insolvency Service released their quarterly statistics spanning October to December 2019. These confirm that liquidations and administrations in 2019 hit levels not seen for over five years. This signals a potentially serious underlying concern about the UK economy.

On 28 March 2019 the European Parliament adopted a Directive on insolvency, restructuring and second chance (the Directive). This project has had a long tail, following a Commission Recommendation issued in 2014 and, after that had no impact, a draft Directive in November 2016. This draft Directive is now about come to fruition. It has three main aims

1. to ensure that member states have a preventive restructuring framework – which includes a restructuring plan;

Are you prepared to take advantage if one of your competitors falls into difficult times or enters an insolvency process? Do you know your way around buying from a distressed seller? What are the things you need to know? How can you prepare? What will make your bid most attractive?

Recent high profile collapses such as HMV have highlighted the opportunities that can be found within the distressed space – if you are prepared and know how to act swiftly.