Claims against directors for unsuccessful tax avoidance schemes when their company enters into insolvency is not a new phenomenon, but a very recent case introduces a new potential defence for directors, as our Insolvency and Corporate Recovery specialist Tony Sampson explains.

Why would HMRC challenge a scheme?

Tennis star Boris Becker has recently been found guilty of four charges under the Insolvency Act 1986 (the Act). This case shows that the Insolvency Service will take similar cases seriously and shows that there are clear consequences for individuals who try to conceal assets in bankruptcy.

The proposed Commercial Rent (Coronavirus) Bill and updated Code of Practice represents a commercial and pragmatic response by the legislator to resolving the apparent billions of pounds of commercial rent arrears arising out of the pandemic.

What does the Commercial Rent (Coronavirus) Bill propose?

• Commercial rent arrears continue to accumulate as a result of the pandemic, such that arrears are estimated to reach £9 billion by March 2022 and comprise a much larger slice of the typical debt stack than they did pre-pandemic.
• The UK government has proposed a binding arbitration scheme to help resolve the arrears and further extend the existing protections from enforcement and insolvency procedures that

In the year leading up to lockdown in March 2020, there were 18,000 corporate insolvencies. The year following lockdown, this figure dramatically dropped by over a third to 11,000.

With the significant reduction in corporate insolvencies, it could be suggested that the Government support has actually been too effective and companies which ought to have entered an insolvency process have avoided doing so due to a mixture of financial support and restrictions on creditors, in particular landlords.

• Brexit ripped up the rules on automatic cross-border recognition of formal insolvency proceedings and restructuring tools between the UK and the EU.
• Recognition will now depend on a patchwork of domestic legislation, private international law and treaties and may lead to different outcomes depending on the jurisdiction.
• Cross-border recognition is still achievable but involves careful navigation and a more tailored approach in individual cases to selection of the most effective process and its route to recognition.

Legal landscape

The use of a company name which is the same or similar to the name of an insolvent company is fraught with complications. 

Were you at any stage involved in a company which went into liquidation or administration? Are you now involved in another business with the same or a similar name? If so, you could inadvertently have fallen foul of the criminal and civil liability under Section 216 of the Insolvency Act 1986. Joseph Miller explains the pitfalls of this complicated and often overlooked area of insolvency law.

The consequent distress in the market is evident with 9 supplier insolvencies in the last few weeks alone, including Avro Energy, Utility Point and People’s Energy.

Today, 1 October 2021, is important as Ofgem is due to increase tariff caps from that date. This is also the date when the restrictions on petitioning for the winding up of companies on the basis of insolvency will be eased.

Legal landscape – energy regulations

In distressed situations, there are a number of issues to navigate, including:

The Government has announced the relaxation of the rules which were put in place in order to restrict the use of winding up petitions during the coronavirus pandemic. The changes, which come into effect on 1 October 2021 and will remain in force until 31 March 2022, are likely to prompt a significant increase in the number of petitions being presented to the court given the ever-increasing level of debt that has accumulated as a result of the pandemic.

There have been two recent changes to the insolvency laws in England and Wales relating to winding up petitions1 and Part 1A moratoriums.

Winding up petitions – Relaxation of restrictions