The Corporate Insolvency and Governance Bill was finally introduced to Parliament on 20 May. It is now clear that the provisions of the Bill relating to statutory demands and winding up petitions will apply to Scotland without the need for the Scottish Government to pass further legislation.
Statutory demands
In our recent update on AGMs, we mentioned that the Government is due to pass legislation giving companies increased flexibility for holding Annual General Meetings, amongst other measures to help businesses through the COVID-19 situation.
The interaction between the principles of insolvency law and the Coronavirus Job Retention Scheme (JRS) have come into sharp focus in recent weeks, with the administrators of Carluccio's and Debenhams seeking guidance from the English courts about how the scheme impacts on their obligations to employees.
The Corporate Insolvency and Governance Bill (the “Bill”) has been laid before the UK Parliament today, Wednesday 20 May 2020.
The Bill, if passed, will implement some significant changes to UK insolvency law and at the same time effect a range of temporary measures to assist with corporate governance during the Covid-19 situation.
Moratorium for protection from creditors
The Coronavirus (Scotland) (No.2) Bill (the “Bill”) has been introduced by the Scottish Parliament today, 11 May 2020. The aim of the Bill is to respond to the financial impact the COVID-19 pandemic is having on individuals and small businesses (by that Scottish Ministers mean sole traders, not companies incorporated under the Companies Act 2006).
As part of its response to the COVID-19 situation, Companies House has announced that it will accept the filing of statutory insolvency documents via emailed PDF attachments.
This measure applies to companies registered in Scotland, as well as England & Wales and is yet another practical example of the steps being taken to try and alleviate the administrative burden on insolvency practitioners.
It is perhaps not as well-known as it should be that the Bankruptcy (Scotland) Act 2016 sections 195 – 198 provides a six-week moratorium – effectively a postponement or period of protection from action to recover debts - to individuals, partnerships and trusts facing financial distress or liquidity issues.
The moratorium provides breathing space to allow parties to be protected from their creditors while they take advice and consider what debt relief options might be available to them.
A party can normally apply for the moratorium once in any 12-month period.
Op 17 maart jl. nam de regering uitzonderlijke maatregelen om de economische gevolgen van de corona uitbraak het hoofd te bieden. Met noodmaatregelen probeert de regering ondernemingen overeind te houden. Het blijft onzeker of die maatregelen voldoende financiële ruimte geven om de salarissen en schuldeisers (op termijn) te betalen. We bespreken daarom in deze bijdrage een uiterste redmiddel: de wettelijke procedure van surseance van betaling.
Surseance van betaling (uitstel van betaling)
The Act on the confirmation of private plans (Wet homologatie onderhands akkoord or WHOA) was submitted to the Dutch parliament last year and, once adopted, introduces a framework under which tailor-made (financial) restructuring plans can be implemented outside formal insolvency proceedings.
The WHOA combines elements of the English Scheme of Arrangements, US Chapter 11 and the EU Restructuring Directive (EU 2019/1023).
The following is an overview of the WHOA's most important features.
The procedure
Insolvency in the construction industry is not just isolated to contractors, sub-contractors and consultants. Industry and economic pressures can affect all parties, including at times employers, therefore it is equally important for contractors to carry out due diligence when bidding for projects and to consider contractual mechanisms that can be put in place to protect against non-payment by the employer and insolvency risks.