Secured lenders across the UK are unhappy with the government’s decision to push through a new law which could partly or fully wipe out their security in favour of HMRC debts in a liquidation or administration. In this article, Tim Symes, a partner in our Insolvency and Commercial Litigation teams, considers the return of HMRC’s Crown preference.
The government has published draft regulations designed to tighten up how administration sales to connected parties will work. The hope is that this will increase creditor confidence and improve transparency in the process.
So, what are pre-pack administrations, what is wrong with them, and what is the government going to do about it?
What are pre-pack administrations?
A pre-pack administration is simply a ‘teed up’ sale of a company’s business and assets before it enters administration, which is completed immediately after administration.
New regulations deriving from the Corporate Insolvency and Governance Act 2020 have extended the effective prohibition on statutory demands and winding up petitions until 31 December 2020. Tim Symes, a partner in our Insolvency and Commercial Litigation teams, looks at the implications of this for debtors and creditors.
The Court of Appeal has handed down judgment in a case concerning the Core VCT PLC companies (In Members Voluntary Liquidation) [2020] EWCA Civ 1207. The case concerns an order made to restore three dissolved companies after they went through a solvent liquidation process (ie no creditors still owed money), putting them back into solvent liquidation and appointing liquidators to investigate not only the affairs of the company but also the conduct of the ex-liquidators. The restoration application was made without notice to the ex-liquidators or members.
One of the most powerful tools for insolvency practitioners when investigating the affairs of an insolvent company where wrongdoing is suspected is section 236 of the Insolvency Act 1986 (“IA 1986”). This confers power on English courts to order certain categories of parties to produce documents and an account of dealings relating to companies being wound up in the UK.
The Corporate Insolvency and Governance Bill (CIG Bill) is not yet law but has already been considered and, in effect, applied in a recent High Court judgment. Marc Jones, a partner in our Commercial Litigation and Fraud teams, looks at the facts.
A successful purchase depends not just on negotiating a two-party transaction, but rather navigating the applicable process and dealing with all the competing interests successfully to allow a bid to succeed and closing to occur.
Q: Do opportunities exist for asset buyers in times of distress?
Creditors risk losing important rights in bankruptcy cases if deadlines are not met. Unfortunately, sometimes the existence or relevance of a deadline is not obvious to a creditor. Indeed, bankruptcy notices can be indecipherable and tempting to ignore, but failing to abide by deadlines comes at a high price. A recent opinion from the U.S. Bankruptcy Court for the District of Massachusetts underscores the need for creditors to take timely action to preserve rights, which is especially noteworthy given the current coronavirus pandemic and the expected increase in bankruptcy filings.
The Covid-19 crisis could plunge the UK into the worst economic depression since the 1930s, and with it will come a spate of corporate insolvencies. In this article, Marc Jones explains why the existing insolvency regime is out of tune with the current government policy of saving good businesses and what needs to change to bring it into line.
The last few decades have seen a steady increase in ‘non-party costs orders’. These are court orders against non-participating people or entities requiring them to pay (either fully or partially) the costs of litigation in which they are not formally involved as parties. This year has proven to be one of flux for such liabilities.