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On Friday 24 April, RPC hosted a 30 minute webinar on the interaction of furloughing and insolvency law.

During this session, our Insolvency Partner Paul Bagon discussed the recent High Court judgement involving Italian restaurant chain Carluccio's, which entered administration at the end of March.

When the Coronavirus Act 2020 (the "Act") received royal assent on 25 March 2020, commercial tenants across the country were afforded some relief.

On 28 March 2020 the Business Secretary announced further new far-reaching measures to help businesses combat the financial impact of COVID-19.

In a welcome intervention, the Business Secretary declared it was the government’s intention to suspend wrongful trading provisions and to introduce a moratorium for businesses undergoing a restructuring process. Both measures are intended to assist companies to trade through financial distress caused by the loss of business due to the COVID-19 pandemic.

Concerns regarding the strength of UK supply chains and the consequences which arise when links in the chain fail, are not new and were recently subject to significant scrutiny in the context of Brexit negotiations. But with COVID-19 causing a host of new problems for already stressed supply chains, what can businesses do to protect themselves?

Lawyers have called for a break on winding-up petitions against retailers as they fail to pay creditors due to the outbreak. So far, retailers have been hit with 52 winding-up petitions since the beginning of the year, with the numbers accelerating since the coronavirus outbreak took hold, according to lawyers at RPC.

Such a move would give retailers breathing space as they try to mitigate the impact of coronavirus, but it would also hurt creditors including small suppliers.

Insolvency intersected with the UK government’s response to the coronavirus pandemic in an application to the High Court by the administrators of restaurant chain Carluccio’s. Considering the government’s Coronavirus Job Retention Scheme (the “Scheme”), the court held that:

The Government has launched a number of initiatives to assist companies and businesses to trade through the current financial stress. But what should directors still be aware of as they steer their organisations through these unprecedent times?

COVID-19: On 28 March 2020 the Business Secretary announced further new far-reaching measures to help businesses combat the financial impact of COVID-19. What it the likely impact of the suspension of wrongful trading provisions and a moratorium for businesses in restructuring on your business?

The COVID-19 pandemic is a public health crisis unprecedented in modern history, and the resulting economic dislocation has caused financial distress across supply chains worldwide. In light of this extraordinary crisis—and in anticipation of a wave of defaults by businesses large and small in the months to come—shippers, vendors, and other suppliers are assessing their potential exposures in the event of a customer failure.

This client alert summarises the recent announcement by the UK government concerning reforms to UK insolvency law to help struggling businesses, being: