Summary

The Insolvency Service has released its report on CVAs (the “Report”), which was commissioned in response to the significant concerns raised by the commercial property sector in recent years and the legal challenges launched by landlords against a number of CVAs.

The much anticipated judgement of Mr Justice Snowden in relation to a restructuring plan proposal (the “Plans”) made by Virgin Active Holdings Limited, Virgin Active Limited and Virgin Active Health Clubs Limited (the “Plan Companies”) was handed down on 12 May 2021.

Summary

The much anticipated judgement of Mr Justice Snowden in relation to a restructuring plan proposal (the “Plans”) made by Virgin Active Holdings Limited, Virgin Active Limited and Virgin Active Health Clubs Limited (the “Plan Companies”) was handed down on 12 May 2021.

Despite the scale of the pandemic and resulting build-up of Covid related rent arrears, currently estimated at around £4.5bn, business restructuring has been relatively muted. This is partly explained by the moratorium on forfeiture and other restrictions on landlords’ remedies, combined with unprecedented government financial support for struggling businesses.

But rent arrears cannot be pushed down the track indefinitely. As restrictions are eased and focus turns to tackling this debt, business restructuring activity will no doubt intensify.

A Supreme Court judgment issued yesterday has overturned a Court of Appeal decision heavily limiting the ability of insolvency practitioners to commence and enforce adjudication proceedings against their creditors. The court’s decision allows much greater flexibility in the use of adjudication for the administration of construction insolvencies, however some uncertainty remains over the basis on which decisions obtained in such adjudications will be permitted to be enforced against creditors.

Temporary provisions restricting action to wind up companies and reverse some winding up orders already made are a step closer following presentation of the Corporate Insolvency and Governance Bill (“Bill”) to the House of Commons on 20 May. The Bill will now work its way through both Houses before imminently becoming law. The Bill includes a number of substantial corporate insolvency changes, but also temporary provisions restricting action to wind up companies in light of Covid-19, on which we focus here.

Last year we reported on a decision of the Scottish Court of Session which suggested that greater leniency may apply to the interpretation of performance bonds in Scotland than in England (see our earlier Law-Now here). A further decision from the Court of Session issued last month would appear to support this trend.

Fife Council v Royal & Sun Alliance Insurance plc

Whilst there is evidence that, especially in the retail market, the number of store closures and resulting empty units is at its lowest level since a peak in 2012, high profile announcements such as that of BHS mean that they are still a reality. The Court has, with this decision, provided a timely reminder of the principles of surrender by operation of law of which landlords, tenants and guarantors should be mindful.

Summary 

A recent Scottish Inner House decision provides an overview of the approach to be taken in Scotland to interpreting performance bonds. The decision notes that the degree of compliance required when making a call may be strict, or not so strict, depending on the construction of the bond. The court’s decision also refers to the commercial purpose of the bond being key and may suggest that a more lenient approach to performance bonds is to apply in Scotland.

Introduction

We recently commented on a Scottish case involving dissolution, disclaimer and restoration (read our Law-Now here). There has now been an English case raising the same issues which on the face of it analyses the same provisions of the Companies Act 2006 (UK wide legislation) in a different way to achieve the same result.

The approach of the courts