Rogue directors will find themselves in the firing line if and when The Rating (COVID-19) and Directors Disqualification (Dissolved Companies) Bill, which is currently making its way through parliament, comes into force. The proposed bill will enable the investigation and potential disqualification of directors of dissolved companies, and responds in particular to concerns around COVID-related fraud.
Background
The past week has been frustrating for landlords, with the High Court rejecting a landlord challenge to New Look’s CVA (Lazari Properties 2 Ltd and others v New Look Retailers Ltd and others [2021] EWHC 1209 (Ch)) and days later sanctioning Virgin Active’s restructuring plan (Re Virgin Active Holdings Ltd and others [2021] EWHC 1246 (Ch)).
The Insolvency Service published its quarterly insolvency statistics for the period January to March 2021 (Q1 2021) on 30 April 2021. By way of comparison, see our previous update on the Q4 2020 statistics here.
The published statistics for the first quarter of 2021 continue the downward trend seen in the previous 12 month period, with company insolvencies falling overall by 22% from the previous quarter.
As the UK slowly emerges from the second wave of the COVID-19 pandemic, the government has announced the further extension of the duration of certain temporary measures initially introduced pursuant to the Corporate Insolvency and Governance Act 2020 (CIGA).
On 24 February 2021, the government published new draft Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 (the Regulations), following the consultation process conducted in late 2020. The Regulations are still to be debated by Parliament, but are expected to come into effect on 30 April 2021 with few substantive amendments.
In Uralkali v Rowley and another [2020] EWHC 3442 (Ch), the High Court has confirmed the position in relation to the duties that officeholders owe to third parties involved in the sale process of a business and assets out of an insolvent estate.
On 13 January 2020, the High Court sanctioned the restructuring plans proposed by three UK companies in the DeepOcean group, under Part 26A of the Companies Act 2006.
The United Kingdom formally left the European Union (EU) at 11pm on the 31 January 2020 (Exit Day) and entered into a period of transition. This transition period largely maintained the “status quo” with regards to restructuring and insolvency law and practice, primarily due to the UK having secured ratification of the withdrawal agreement. This made the arrangements between the UK and the EU fully reciprocal post-Exit Day and avoided the no-deal “cliff edge” Brexit, which many had initially feared.
After a year in which numerous businesses have relied on various forms of government support to stay afloat, many will be hoping that 2021 offers the chance to emerge from this period and resume some degree of normal trading. Certainly, the coming year will be make-or-break time for those businesses that have been most impacted by the pandemic – and as government assistance is wound back, the demand for working capital funding is likely to be high.
With over a third of hospitality businesses currently at moderate to severe risk of insolvency (according to the most recent ONS survey), many in the sector are urgently considering the best way forward. One strategy, which we have recently seen a number of casual dining businesses like Carluccios and Gourmet Burger Kitchen deploy, is a ‘prepack’ administration. However, although the deals involving household names may grab the headlines, pre-packs are also widely used by small and micro businesses.