In our previous update dated 5 November 2020, we looked at when it is reasonable for insolvency practitioners to continue litigation. In this article, we explore the circumstances in which personal costs orders may be made against liquidators.
Key points
Today, new legislation comes into force* that provides directors of companies in financial difficulty with a second breathing space from the financial impact of the wrongful trading provisions.
On 26 June 2020, the Corporate Insolvency and Governance Act 2020 (Act) came into force with changes to insolvency law to help businesses manage the economic implications of Covid-19. The new Act’s permanent measure on continuing supply stands out for the construction industry.
This round-up collates the information, analysis and guidance relating to insolvency issues shared by our Construction and Restructuring, Insolvency and Bankruptcy teams during the COVID-19 pandemic. For further information on any of the issues below, please get in touch with one of the Key Contacts.
The stringent regulations introduced to avoid the spread of the Coronavirus (COVID-19) pandemic caused widespread disruption across UK sites. The consequent commercial challenges were too great for some businesses − despite government measures to help those facing financial difficulty. Inevitably, insolvencies followed.
Recent insolvency law reforms in the UK, Singapore and Australia impact upon the ability of a party to a construction contract to terminate it due to the other party's insolvency.
Background
The Federal Government has announced its largest insolvency reform package in over 30 years, which includes a simplified formal debt restructuring process for eligible small businesses.
The centerpiece of the reforms is the adoption of a US-style "debtor in possession" restructuring model, which closely mirrors the recently enacted small business restructuring provisions of subchapter V of the US Bankruptcy Code.
The new UK Corporate Insolvency and Governance Act (CIGA), which took effect in June 2020, ushers in permanent changes to the English insolvency and restructuring landscape as well as temporary, and largely retrospective, measures to help mitigate the economic impact of the COVID-19 pandemic.
The three permanent additions are:
As we head towards the last part of 2020 in the midst of a recession and some of the most challenging business conditions many have ever faced, it is worthwhile considering the aftermath of the 2008 global financial crisis. Then, in the real estate funds space, there was a shift away from pooled investments through funds and an uptick in real estate joint ventures, as investors sought to take greater control over their investments.
The Insolvency, Restructuring and Dissolution Act 2018 (the "IRDA") came into force on 30 July 2020. The consolidation of all personal and corporate insolvency and debt restructuring legislation into a single statute, along with other legislative changes, seeks to further strengthen Singapore's position as an international debt restructuring hub. This note highlights certain key changes effected by the IRDA that are relevant to loan market participants.
Restrictions on ipso facto clauses