Every five years or so, the insolvency profession seems to try and wrestle with the public outcry about the use of so-called pre-packs. In its simplest terms, this is where “Widget Manufacturing Limited” goes into administration, and the very next day “Widget Manufacturing 2021 Limited” is operating the same business and being owned by the same shareholders. The only crucial difference is that several key liabilities (usually owed to landlords) are left behind in the insolvent business.
KEY POINTS The risk that prepetition lease payments made by a lessee that is a debtor in a US bankruptcy will be clawed back from an aircraft lessor can be reduced if: • the lease is a true lease rather than a disguised secured loan or finance lease • one or both of basic rent and maintenance reserves are payable in advance (i.e., at the beginning of a rent period rather than at the end) • basic rent and maintenance reserves are payable monthly rather than quarterly or semiannually • the lessor enforces the lease’s payment obligations consistently • any payment made by a third party on beha
A quick recap
In March 2020 the UK Government imposed unprecedented restrictions in the face of the Covid-19 pandemic in relation to the forfeiture of commercial leases by enacting the Coronavirus Act 2020 and other business support measures. These introduced the following key restrictions on rent arrears recovery:
Overview
The Corporate Insolvency and Governance Act (“the Act”) became law on 26 June 2020. (Read our previous update on the Act here). As has been widely discussed, the Act introduces new corporate insolvency rescue procedures as well as temporary and permanent insolvency and corporate governance measures.
The UK Government announced on 24 September 2020 that some of the temporary Covid-19 measures introduced under the Corporate Insolvency and Governance Act (“the Act”) will be extended.
Summary of extension
Summary of extension
This article highlights where the legislation, as it was introduced in the Bill, differs from the final form of the Act
Temporary measures to continue until the end of September 2020
The Corporate Insolvency and Governance Bill (“Bill”) is currently going through Parliament and, if approved, will introduce wide-ranging changes to the UK’s corporate insolvency regime. The Bill includes a number of measures designed to protect businesses which are struggling as a result of the coronavirus pandemic. Some of these measures are temporary, however parliament may decide to extend these if necessary.
The key measures included in the Bill are summarised below.
Temporary provisions