In this article, we examine the repercussions of Debenhams Retail Ltd, Re [2020] EWCA Civ 600
Background
Suppliers are now prevented from terminating many contracts and supplies of goods or services if the customer is subject to a ‘relevant insolvency procedure’ (such as going into administration, CVA, or appointing a provisional liquidator).
This follows the Corporate Insolvency and Governance Act 2020, which came into force on 26 June. Although Coronavirus has accelerated the passing of the Act, these are set to be permanent changes.
What can’t suppliers do?*
DAC Beachcroft's GC Horizon Scanner is a selection of legal and regulatory developments that we consider are the most interesting and relevant to General Counsel, senior managers and professionals, allowing them to keep abreast of issues which are likely to impact their business, prepare for opportunities and mitigate risks.
A new era of corporate compliance in a time of financial crisis |
The Corporate Insolvency and Governance Act 2020 came into force on 26 June bringing in measures to alleviate the burden on businesses during the Covid-19 pandemic and allow directors to focus their efforts on continuing to operate. In this article we consider the temporary changes to the wrongful trading regime and other key changes introduced by the Act.
Temporary wrongful trading relaxation
Oliver Hyams and Amy Held investigate the recent case of Islandsbanki Hf & Ors v Stanford [2020] EWCA Civ 480.
Background
Adjudication is a quick and comparatively cheap method of dispute resolution and for those reasons is attractive to insolvent companies seeking to recover debts. However, a respondent was likely to be able to restrain the insolvent company from referring the matter to adjudication on the basis that it would be futile to do so, since any positive decision was unlikely to be enforced as a result of the very fact of the company’s insolvency. Therefore, any award lacked practical utility. Following the decision of the Supreme Court in Bresco v Lonsdale, that is no longer the case.
The first tentative steps are now being taken to ease the lockdown restrictions imposed on the nation as a consequence of the COVID-19 pandemic and thoughts are turning to how we can return to “normal”. The construction sector is no exception but finds itself in a slightly different position to many businesses as sites were never required to close (provided that work could carry on “safely”). Nevertheless the impact of COVID-19 has wreaked havoc on the finances of the construction sector and the viability of current and future projects.
Following the posting of the article I co-wrote with Morayo Fagborun-Bennett on the Recovery of Commercial and Residential Rent Arrears, there have been a couple of developments of note.
This article follows the #HardwickeBrew on 28th May 2020 which looked at the Corporate Insolvency & Governance Bill. If you would like to take part in future #HardwickeBrews, please sign up via our Events page.
Introduction
- This note reviews the provisions relating to the moratorium procedure for Great Britain under the draft Corporate Insolvency and Governance Bill (“CIGB”).
CIGB
On 20 May 2020, the Government introduced the Corporate Insolvency and Governance Bill in Parliament. The Bill is a much awaited development following the Secretary of State for Business, Energy and Industrial Strategy’s statement on 28 March 2020 announcing key measures to help businesses address the challenges resulting from the impact of coronavirus.
Financial services firms subject to special insolvency regimes supervised by the FCA, PRA, and other financial services regulators have been largely excluded by the Bill.