Re Debenhams Retail Limited [2020] EWHC 921 (Ch)
In the current climate, it is expected that thousands of business will enter administration and Administrators will need to assess each administration on its merits to see if it is appropriate to adopt a light touch approach.
As a result of the unprecedented situation that is being faced by businesses due to the Covid-19 pandemic lockdowns there have been many discussions within the insolvency and legal sectors about how best to rescue struggling businesses.
The Carluccio’s judgment provides some much-needed clarity on the interrelation of the Furlough Scheme and the requirements of insolvency legislation. It is to be commended for its clarity and for the fact that it had to construe the workings of the Furlough Scheme in the absence of any statutory guidance as to its implementation. It is to be hoped that, when the Government comes to enact the necessary legislative measures (including perhaps amendments to Schedule B1 and IR 2016), that it does so with this judgment very firmly in mind.
As a creditor, especially during the current Covid-19 crisis, it may be tempting to accept all and any payments from debtors.
Payments that a debtor company makes to you during the period where there is a winding-up petition in place will be a void disposition, under section 127 of the Insolvency Act 1986, unless there is an application to the Court and receipt of what is known as a “validation order,” allowing you to keep the money.
What’s happening in real life?
While in previous weeks the winding up petition list has been adjourned for a minimum of three months, this week’s list was successfully conducted by Skype. This article discusses how the hearings worked.
As most businesses, landlords and property solicitors will now know, s.82 of the Coronavirus Act 2020 (“CA 2020”) means there can be no forfeiture for non-payment of rent until July 2020, possibly later (“the relevant period”). But forfeiture has never been the only option open to a landlord whose tenant isn’t paying rent. The government lockdown was announced just two days before the March quarter day, with the inevitable consequence that many businesses did not pay the March quarter day rent.
The changes?
On Saturday, during the Government’s daily Coronavirus update, it was announced that it would shortly legislate to:
In these unusual times, Hardwicke is open for business as usual and here to help you and your clients with the multiple issues that may arise out of the current economic conditions. This information update is to help keep you up to date with developments and to share our insight in response to the developments our country is going through at this unprecedented time.
We will be providing regular information to keep you up to date. This update covers:
Although the position is fast-moving and guidance is expected to be given in due course by the Law Society, it is presently understood that remote video conferencing technology such as Skype or Zoom could be used by a practising solicitor to administer a statutory declaration.
Today’s list of winding up petitions has been adjourned for a minimum of three months with petitions being re-listed for June, July and August. ICC Judge Mullen recited in his order that having considered the Protocol for Remote Hearings dated 20th March 2020 and the LCJ’s Review of Court Arrangements due to COVID-19 dated 23rd March 2020, he has concluded that the list “cannot presently be conducted remotely” and that “satisfactory arrangements to ensure safety cannot be put in place”.