Managing the financial health of a business to ensure it continues to be viable and successful can be challenging, particularly in today’s economic environment.

June 2023

Contents

Will your business be financially viable at the end of lockdown? What challenges does 2021 pose? What are the next steps

In the final part of our predictions for 2021 for the UK insolvency market we look at pensions, the National Security and Investment Bill and cross border matters.

Ongoing uncertainties about the COVID-19 pandemic, coupled with the looming deadline of Brexit, mean businesses and owners are in for a tough ride over the next few months, possibly much longer if the UK continues to face restrictions.

In this blog, we highlight changes to law, practice and procedure that will or could impact the restructuring insolvency market this year – covering important changes that should be on your radar – as well as providing an update on those changes that were expected but which might be delayed beyond 2020.

Brexit – will it be business as usual for R&I practitioners?

This week sees the UK finally leave Europe.

The proposal to reinstate Crown preference in insolvency has met resistance from all angles; the insolvency profession, turnaround experts, accountants, lawyers and funders. But despite HMRC’s bold statement in its consultation paper that the re-introduction of Crown preference will have little impact on funders, it is clear following a discussion with lenders that it may well have a far wider impact on existing and new business, business rescue and the economy in general than HMRC believes.

With the gradual opening of energy supply markets allowing new energy providers to challenge the established providers and bring increased competition to the market, the last two decades have seen an increase in smaller energy providers entering the market and sharing a growing customer base. But what happens to the customers when an energy provider becomes insolvent?

Brexit insolvency issues for trustees of pension schemes with overseas sponsors

You might remember that before 2016, in the world before the EU referendum (which did exist!), it was effectively not possible for the insolvency of an overseas sponsor of a UK pension scheme to trigger entry into the PPF unless the overseas sponsor had a branch or office (an “establishment”) in the UK (for legal geeks you might remember this was the issue discussed in the Olympic Airlines case which was heard by the Supreme Court in 2015).

We are yet to see the true impact of Christmas trading in the retail industry although HMV is already a victim of the tough conditions for retailers. Additionally, Boots has announced a fall in sales and the launch of a “transformational costs management program” to save more than $1 billion and Next has confirmed that profits in store have fallen and although online sales are up, the uncertainty about the UK economy after Brexit makes forecasting difficult. Only one thing is clear – consumers remain at risk in the event of a retail business entering administration.

An effective and well-equipped insolvency and restructuring regime gives confidence to investors and financiers, enabling credit to flow through to businesses and boost economic activity, growth and innovation.