As the measures in the UK designed to protect businesses from insolvency draw to an end, what guidance can be taken from Australia where similar measures ended a few months ago?

Given the global pandemic, it's somewhat unsurprising that the UK's loss of access to the EU Regulation on Insolvency Proceedings (EUIR) has received relatively little press.

After all, what with the state support of furlough and loan schemes along with the temporary suspension of winding up petitions and wrongful trading rules, as well as the ban on landlords evicting commercial tenants formal insolvencies in the UK have "just dried up" says HFW fraud and insolvency co-head Rick Brown.

What were the main insolvency and restructuring trends you were seeing pre-pandemic?

A challenging economic environment and Covid-19 are behind a looming wave of contentious insolvency in the Middle East. The legislative framework in the UAE now provides the tools to creditors to face the challenge.

Few things go together as naturally as fraud and insolvency. The pattern is now well rehearsed: scams pile up unnoticed while money flows in the good times, but when recession hits, increased scrutiny from lenders, counterparties and the tax man – not to mention insolvency practitioners – means fraud is far more likely to be discovered.

Summary

The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, which will come into force on 4 May 2021, will provide individuals with the opportunity to obtain legal protection from creditors in the form of either a breathing space moratorium or a mental health crisis moratorium. Given the economic impact of the Covid-19 pandemic, there may be a significant number of individuals seeking to obtain a moratorium to pause action against them to recover debts.

Protecting debtors

The interesting times of the last 14 months were preceded by the interesting times of the financial crisis of 2008/2009. The reverberations of that financial crisis had a profound effect upon governments’ presumptions as to the financial stability of economies generally but also the financial stability of sectors such as financial services.

The temporary restrictions on winding-up petitions brought in under the Corporate Insolvency and Governance Act 2020 (“CIGA”) are wider than originally envisaged when first announced by the government in April 2020 and have now been extended until 30 June 2021.

The Covid-19 pandemic has had a severe impact on the economy. This has given rise to an increasing number of claimants with claims against insolvent businesses.

In these circumstances, a third-party claimant would usually notify the company’s insolvency practitioner of its claim. The claimant is then required to pursue its recovery as part of the insolvency process alongside other creditors.

The Third Parties (Rights Against Insurers) Act 2010 (the 2010 Act)¹