The Department for Business, Energy & Industrial Strategy (BEIS) has recently issued a press release regarding proposed changes in the law to better protect consumers in the event that a company, and in particular a retailer, becomes insolvent.
Under existing law, if a company becomes insolvent but goods prepaid for are still in its possession, they may be considered as assets belonging to the business and can be used by administrators to pay off the company’s debts.
The Finance Act 2020 received Royal Assent on 22 July confirming the Government’s intention to restore HM Revenue & Customs (HMRC) as a secondary preferential creditor in insolvencies. From 1 December 2020, HMRC’s claims for unpaid employer NIC, PAYE and VAT will rank ahead of floating charge holder claims and unsecured creditors, reducing the monies available for distribution to lower ranking creditors.
This judgment provides some guidance in relation to the scope and application of s283A IA86, which gives a bankrupt’s trustee in bankruptcy three years to take the necessary steps to realise or secure the bankrupt’s interest in the bankrupt’s home failing which that interest will cease to be part of the estate and will automatically revest in the bankrupt.
In this case the court was concerned with the meaning of the phrases (a) ‘an interest in’, (b) ‘a dwellinghouse’ and (c) ‘sole or principal residence’ under s283A(1).
The Corporate Insolvency and Governance Act 2020 makes the most significant changes to UK insolvency law in a generation. The Act introduces three permanent measures: a new free standing moratorium, a new restructuring plan process (largely modelled on schemes of arrangement but with the addition of a cross-class cram-down), and restrictions on termination of contracts for the supply of goods and services. The moratorium and the restructuring plan are of particular significance to secured lenders, and this note addresses some of the most frequently asked questions by the ABL community.
The Companies (Miscellaneous Provisions) (COVID-19) Act 2020 (the Act) was passed by the Dáil on 30 July 2020 and, once commenced, will make temporary amendments to, inter alia, the Companies Act 2014 (the Companies Act) in order to address certain operational challenges that COVID-19 has presented to Irish companies.
CIGA 2020 which received the Royal Assent on 25 June 2020 has introduced several significant changes to UK insolvency legislation. Some of these are temporary measures enacted in response to the Coronavirus pandemic to mitigate the effects of the lockdown. Others, however, are permanent measures that result from a consultation process to amend the Insolvency Act 1986 begun in 2016 and concluded in 2018.
In this case the court considered a debtor’s application to set aside a bankruptcy order made in her absence (due to self-isolation in accordance with Covid-19 guidelines). It was held that the fact that the debtor was bankrupt meant she had no standing to apply to set the order aside. The court accepted that the debtor had a good reason not to attend court, and had acted promptly to set the order aside, however legal precedent going back to the 1990’s meant that only a trustee in bankruptcy could challenge the liability orders.
This case was heard before CIGA came into force but the provisions of the CIG Bill were known. Statutory demands were served on 27 March 2020 on the company in respect of debts due under loan agreements and a winding up petition had been presented. The company applied for an injunction to restrain the advertisement of the petition, claiming that although it was insolvent it had been prevented from obtaining funding, to enable it to propose a scheme of arrangement to its unsecured creditors, as a result of the pandemic.
The joint liquidators of a company, which had been compulsorily wound up in England and Wales, sought orders under section 236 of the Insolvency Act 1986 (“IA86”) for production of documents and an account of dealings with the company, in respect of companies in Italy. The question for the Court was whether s236 IA86 had extraterritorial effect. The problem for the court was that there was competing first instance decisions both for and against.
A bankruptcy petition was dismissed on the application of the debtor, who claimed that a guarantee document was not a valid deed, the transaction which was purported to be guaranteed was a sham and that the debtor’s signature had been forged. Whilst the court accepted that there was a substantial dispute as regards the transaction (payment of fees of US$500 billion!) and that the form of guarantee was invalid, as no evidence had been called to show that the debtor’s signature had been forged, the bankruptcy petition hearing was not the right forum to decide the matter.