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.
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.
In a judgment delivered on 14 October 2020, the High Court, in refusing to appoint an examiner to New Look Retailers Ireland Limited (New Look Ireland) ruled that it was "entirely premature to consider the appointment of an examiner". New Look Ireland trades under the brand name "New Look" and operates across 27 stores in Ireland.
We reported in our previous blog published on 15 June 2020 (“The Corporate Insolvency and Governance Bill – a pensions perspective”) that a number of pensions concerns had been raised about the Corporate Insolvency and Governance Bill (the Bill). As a result, the Bill was subject to significant amendment and debate from a pensions perspective in the House of Lords.
The new Corporate Insolvency and Governance Bill (the Bill) has been introduced into the UK Parliament and proposes significant changes to insolvency law, including:
The Office of the Director of Corporate Enforcement (ODCE) has recently issued welcome guidance on how the impact of COVID-19 will be considered by the ODCE when evaluating potential restriction cases in respect of directors of insolvent companies – see here.
The Revenue Commissioners have issued some recent welcome clarifications about certain provisions of the Government's temporary wage subsidy scheme.
Application for the Subsidy Scheme – An Admission of Insolvency?
The main provisions of the subsidy scheme are set out in Section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020.
That section also contains the criteria for an employer's eligibility to avail of the subsidy scheme. One such criterion is that:
In the case of Wilson v McNamara [2020] EWHC 98 (Ch) the High Court of England and Wales (the Court) considered whether the EU principle of freedom of establishment requires that a pension held in another EU member state (Ireland) should be excluded from a bankruptcy estate under UK law in the same manner as a UK pension would be in a UK bankruptcy. Mr Justice Nugee decided in order to decide the case the Court needed to refer a preliminary reference to the European Court of Justice (CJEU) on a question of EU law.
In the recent decision of Re M.D.Y. Construction Ltd [2018] IEHC 676 the Examiner sought to have proposals for a scheme of arrangement confirmed by the High Court pursuant to section 541 of the Companies Act 2014 (the "Act"). The most interesting feature of the case was that the scheme of arrangement was proposed for approval by the Interim Examiner before his appointment was confirmed by the High Court.
Arrangement to be approved the day after application to confirm appointment