Although the contentious background to the applications to restrain the presentation of two winding up petitions heard together in (but only listed singularly as) the case of Shorts Gardens LLB v London Borough of Camden Council [2020] EWHC 1001 (Ch) is somewhat unusual, these cases nonetheless raise some interesting points of principle which may be used by the courts in determining whether it is appropriate to restrain or dismiss a winding up petition due to COVID-19.

In response to the anticipated economic impact of the Covid-19 pandemic, on 31 March 2020 the Czech Government approved the so-called ‘Lex COVID-19’ and sent the draft law to the Parliament for expedited legislative processing. This article focuses on the implications of the Lex COVID-19 on the insolvency proceedings in the Czech Republic. For wider implications of the Lex COVID-19, please see this article.

As businesses and companies in the UK face an uncertain few weeks and months with unprecedented pressures, it can be easy for directors to panic and not know where to turn.

To assist in decision-making, we give a reminder of the law in this area, and some signposts for those seeking help.

In this briefing, we give a short reminder of statutory duties owed by UK directors under the Companies Act 2006, the potential risks of continuing to trade while possibly insolvent, and actions that should be taken in order to mitigate those risks.

Directors’ duties

Hot on the heels of our April 2020 article on the proposed reintroduction of the Crown preference, Parliament has recently approved legislation that will increase the ring-fenced amount available to unsecured creditors on an insolvency of a company from £600,000 to £800,000.

In our last article, which can be found here, we reported on the government’s intention to give HMRC priority in the recovery of certain debts (including VAT, PAYE, Employee NICs, and Construction Industry Scheme deductions ) in insolvency proceedings.

In the landmark decision in Re Systems Building Services Group Limited [2020] EWHC 54 (Ch), ICC Judge Barber held that the duties of a director survive the insolvency of a company.

The recent Amendment on the Czech Insolvency Act (the “Amendment”) enters into force on 1 July 2017.

The Amendment states that a creditor is entitled to be satisfied from its security even when its contingent or future claim (such as bank guarantee) becomes actual after the start of the security provider’s insolvency.

The new Amendment on the Czech Insolvency Act (the “Amendment”) will enter into force on 1 July 2017.

The Amendment introduces a “liquidity gap” test, which will be used when a debtor (entrepreneur) needs to determine whether it is considered insolvent or not. The liquidity gap is the difference between a debtor’s due debts and its readily available funds. A debtor will only be considered insolvent if the liquidity gap is higher than 10% of its overdue debts.

In May 2015, the Czech Ministry of Justice submitted a draft amendment to the Insolvency Act to the Government (the “Amendment”).

The Czech Parliament passed an amendment to the Code of Civil Procedure (Act No. 99/1963 Coll., as amended) and the Act on Execution Procedure (Act No. 120/2001 Coll., as amended). Most of the provisions of the new legislation will be effective as of 1 January 2013. The amendment will, among other things, significantly modify the rules on enforcement of claims in the Czech Republic, as it changes some of the existing methods of enforcement under Czech law as well as introducing new ones.