In the current climate, it is expected that thousands of business will enter administration and Administrators will need to assess each administration on its merits to see if it is appropriate to adopt a light touch approach.
As a result of the unprecedented situation that is being faced by businesses due to the Covid-19 pandemic lockdowns there have been many discussions within the insolvency and legal sectors about how best to rescue struggling businesses.
As a creditor, especially during the current Covid-19 crisis, it may be tempting to accept all and any payments from debtors.
Payments that a debtor company makes to you during the period where there is a winding-up petition in place will be a void disposition, under section 127 of the Insolvency Act 1986, unless there is an application to the Court and receipt of what is known as a “validation order,” allowing you to keep the money.
What’s happening in real life?
The changes?
On Saturday, during the Government’s daily Coronavirus update, it was announced that it would shortly legislate to:
On March 25, 2020, the Senate passed an amendment to H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (as amended, the “CARES Act”), which (as of March 26, 2020) is being considered in the House.
The complete text of the current draft of the CARES Act can be found here.
“Only when the tide goes out do you discover who’s been swimming naked” – Warren Buffet
The tide has gone out on the municipal finance market.
While much of the discussion about the financial fall-out of the COVID-19 virus has focused on the massive wealth destruction in stock markets and pressure on corporates around the world, the impact on the largest financial market in the world- the $3 trillion US municipal finance market- cannot be ignored. Simply put, the market is imploding.
In a recent decision, [1], the High Court decided that it was not in the public interest to wind up a business rates mitigation scheme under its Insolvency Act powers, as it found that this scheme did not subvert the intention of insolvency law.
The United States Court of Appeals for the Seventh Circuit held that payments made by a debtor’s customers to its lender converting a pre-petition loan to a post-petition loan constituted disbursements for the purposes of calculating the statutory fees payable pursuant to 28 U.S.C. 1930(a)(6). In re Cranberry Growers Coop., 2019 U.S. App. LEXIS 21121 (7th Cir. July 17, 2019). This decision, coupled with the increase in the quarterly fees for the U.S.
On January 9, 2019, California Attorney General Xavier Becerra filed a motion with the U.S.
The Court of Appeal has ruled that the court does have jurisdiction to grant a licensee (as opposed to a tenant) relief from forfeiture provided that the licensee has possessory or proprietary rights (Manchester Ship Canal Company Ltd v Vauxhall Motors Ltd (formerly General Motors UK Ltd) [2018] EWCA Civ 1100).
Forfeiture and Relief from Forfeiture
On 25 April 2018 a new Insolvency Practice Direction came into force with immediate effect (PDIP 2018). Its purpose is to bring the insolvency practice directions into alignment with the procedural requirements under the Insolvency Rules 2016 and the new Business and Property Courts Practice Direction.