With coronavirus causing unprecedented distress to the whole global economy, all types of business in every sector will be affected. These are not normal times, and it is clear that all businesses will need to formulate coherent action plans to survive. The Government appears to be working on emergency plans to provide help to trade and industry that has already been badly affected by underlying economic uncertainties. More high-street names have closed their doors this week.
It concerns me when I meet with a director of a failing company and he or she simply doesn’t know the various insolvency procedures should their company get into financial difficulties.
In the Matter of System Building Services Group Limited (In Liquidation) [2020] EWHC 54 (Ch), the court confirmed that a director’s fiduciary duties continued after the appointment of an administrator or liquidator and that the subsequent purchase from the administrator/liquidator of a property at an undervalue was in breach of those duties. As a result, the property was declared to be held by the director on a constructive trust for the company.
The famous and respected Beales department store chain has entered into administration, an insolvency procedure provided under the Insolvency Act.
It is always depressing when any company fails and is forced to enter into administration, let alone a prestigious business such as Beales with its 139-year-old history. The ripples of such an insolvency not only impact upon its 1300 employees, but it is also painfully felt amongst its suppliers, landlords and of course the greater community.
Retail, as a sector, has long been under pressure from increased competition from online retailers, which has resulted in reduced footfall on the high street, affecting many companies, including many well-known names.
Between 2016 and 2019, 13 of 23 company voluntary arrangements (CVAs), which are used by UK businesses to reduce their debts, saw their group going into administration, while other companies that did not agree a CVA ended up seeking investors to buy the business.
What is a CVA?
It is extremely sad to hear the news that Katie Price has been declared bankrupt.
Although the stigma of bankruptcy may have disappeared, it is still an extremely sobering event when an individual fails financially and is declared bankrupt by a court. In an increasingly materialistic world, bankruptcy is an ever-common event in society.
Recently, the British Chamber of Commerce (BCC) warned that economic conditions are weakening and businesses are struggling, following a survey they have conducted of 6,600 companies employing 1.2 million workers. Their research found that domestic and export sales are falling, and services firms have seen a decrease in work in the three months to September. This has prompted fears that the UK’s economy may fall into recession.
Introduction
On August 29, 2019, the majority of the Alberta Court of Appeal held in Canada v. Canada North Group Inc., 2019 ABCA 314 (Canada North) that priming charges granted in a Companies’ Creditors Arrangement Act (CCAA) Initial Order can have priority over the Crown’s deemed trust for unremitted source deductions. [1]
If your company has gone into liquidation and you are in the process of setting up a new business, you may want to use the same or a similar company name. However, if you either act as director or are involved in the management of the new company with the same or similar name as the insolvent company, you run the risk of both civil and criminal liability if you don’t comply with the restrictions under the Insolvency Act 1986.
Once again, the statistics show an increase in corporate and personal insolvencies nationally, with a reported 16,090 corporate insolvencies and 115,299 personal insolvencies in the UK in 2018. While the media is focusing on how this reflects on the economy and the government, insolvency specialist Tony Sampson looks at what it means for the millions of creditors involved in those insolvencies. In short, what will those creditors actually receive?