With the increase in global trade and business, often involving complex corporate structures in multiple jurisdictions, we expect to see a significant increase in cross-border insolvency and restructuring matters in coming years. This is especially the case with rapid advancements in technology and digital change driving “borderless” transactions and investments in every industry.
According to the latest data produced by UHY Hacker Young, Pub Insolvencies have risen by 66% in the last year. The impact of such a staggering statistic is that these debts which are owed to our clients become even more unobtainable to collect.
The pot of available funds drops dramatically once the pub business is placed in the official insolvency process.
The case will be passed to an Official Receiver and on the most part an Insolvency Practitioner is then appointed.
Back in October 2017, the Pre-Action Protocol for Debt Claims (“PAP”) was launched to very little fanfare. PAP is part of the Civil Procedure Rules which govern how parties deal with litigation claims through the County Court and is the first time that strict rules have been put in place for pre-action conduct on a debt matter. I wrote an article about PAP at the time to explain the ins and outs of it.
Much has already been said about the demise of Carillion and the impact of its liquidation on the various parties with whom it contracted. In this article, I would like to examine what light the demise of Carillion throws on themes commonly encountered within insolvency and whether there are lessons to be learned for everyone.
Having read the various reports in the press, it is clear that whilst Carillion entered into multi-billion pound government contracts, the contracts had extremely small profit margins, ultimately rendering the business unsustainable.
When faced with bankruptcy proceedings, it is paramount that you act quickly in order to avoid unnecessary costs and stress.
The bankruptcy proceedings
As of 1st October 2017, debt recovery and collections in both the commercial and consumer world is going to see a big change with the introduction of the debt recovery Pre-Action Protocol (‘PAP’).
There has been a previous pre-action protocol, introduced in 2014, which was in many ways accepted as a sensible approach to collection of all debts.
Ever since the introduction of the ‘out of court’ procedure to appointment an administrator, there has been a practice of filing successive Notices of Intention to Appoint an Administrator. This practice has been the topic of much discussion and its legality was recently addressed by the Court of Appeal in the case of JCAM Commercial Real Estate Property XV Limited –v- Davis Haulage Limited [2017] EWCA Civ 267.
Introduction
Today, thanks to the high-cost of current court fees, small to medium-sized enterprises (SMEs) face the problem of not getting paid by a customer and then, subsequently, not being able to go to court to get paid.