R3, the association of business recovery professionals, has produced a Standard Form Covid 19 CVA Proposal and accompanying Covid 19 Standard Conditions.
The Standard Form proposals are intended for use by SME companies, in each of the jurisdictions across UK that have been affected by Covid 19, to save time and cost and make CVAs more accessible to them.
'Chapter 11 bankruptcy', the US insolvency regime, often features in the UK headlines. When Lehman Brothers filed under Chapter 11 in 2008, it marked the start of the global financial crisis. Chapter 11 (which refers to part of the US Bankruptcy Code) is a restructuring tool designed to rescue companies. Its closest UK counterpart is Administration, under Schedule B1 to the Insolvency Act 1986.
The reactivation of wrongful trading rules at the end of last month marks the return of personal liability risk for directors of businesses that continue to trade while on the brink of insolvency.
Corporate Insolvency: Temporary Measures extended
On 29 September 2020, The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 ("the Regulations") will be laid before Parliament. It is expected that they will be passed without amendment.
The purpose of the Regulations is to extend certain of the temporary measures introduced by The Corporate Insolvency & Governance Act 2020 ("CIGA") to assist companies who are struggling to deal with the economic ramifications of lockdown.
Corporate Insolvency: Temporary Measures extended
From 30 September 2020, The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 ("the Regulations") are in force.
The purpose of the Regulations is to extend certain of the temporary measures introduced by The Corporate Insolvency & Governance Act 2020 ("CIGA") to assist companies who are struggling to deal with the economic ramifications of COVID-19.
The new UK Corporate Insolvency and Governance Act (CIGA), which took effect in June 2020, ushers in permanent changes to the English insolvency and restructuring landscape as well as temporary, and largely retrospective, measures to help mitigate the economic impact of the COVID-19 pandemic.
The three permanent additions are:
Winding up a company – liquidation – applies in circumstances where a company is unable to pay its debts. In that situation, the company's directors, creditors or contributories can present a winding up petition. (This can be found in sections 122, 123 and 124 of the Insolvency Act 1986.)
A company is deemed unable to pay its debts if:
The interaction between the principles of insolvency law and the Coronavirus Job Retention Scheme (JRS) have come into sharp focus in recent weeks, with the administrators of Carluccio's and Debenhams seeking guidance from the English courts about how the scheme impacts on their obligations to employees.
As part of its response to the COVID-19 situation, Companies House has announced that it will accept the filing of statutory insolvency documents via emailed PDF attachments.
This measure applies to companies registered in Scotland, as well as England & Wales and is yet another practical example of the steps being taken to try and alleviate the administrative burden on insolvency practitioners.
It is perhaps not as well-known as it should be that the Bankruptcy (Scotland) Act 2016 sections 195 – 198 provides a six-week moratorium – effectively a postponement or period of protection from action to recover debts - to individuals, partnerships and trusts facing financial distress or liquidity issues.
The moratorium provides breathing space to allow parties to be protected from their creditors while they take advice and consider what debt relief options might be available to them.
A party can normally apply for the moratorium once in any 12-month period.