The Corporate Insolvency and Governance Act 2020 received Royal Assent on 26 June 2020. Regulations have been introduced which give the Pension Protection Fund (the PPF) certain rights.
As shopping centre owner Intu warns it could be forced to shut many of its sites if it can’t resolve its financial issues by tomorrow, 26/06/2020, our real estate and corporate restructuring and advisory experts take another look at what could happen next.
On top of the multiple challenges hitting retail and leisure landlords and occupiers arising from COVID-19, the news that Intu has had to write down the value of its shopping centre portfolio by nearly £2 billion came as further bad news.
The Supreme Court’s decision in Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25 (17 June 2020) has been eagerly anticipated.
The appeal raised important questions about the compatibility of adjudication with the operation of insolvency set-off. The Supreme Court allowed the appeal, deciding that a liquidator was entitled to refer an insolvent company’s claims to adjudication where there were cross-claims between the parties.
The facts
1. Summary
The Supreme Court decision in Bresco Electrical Services Ltd (In Liquidation) v- Michael J Lonsdale Electrical Ltd handed down on 17 June 2020 is both timely and significant given the "new normal" that we are all now operating within. In the current economic climate of "lockdown" and the present economic downturn that is now occurring, the worlds of construction and insolvency are now likely to interact and collide on a more frequent basis.
The Corporate Insolvency & Governance Bill is making its way through Parliament at the moment. It introduces a number of new processes the focus of which is to assist in the rescue of companies as a going concern.
The biggest shake-up of English insolvency law for a generation
This summary is based on the provisions of the Bill as drafted at 15 June 2020. It is still subject to change before it becomes law.
New Moratorium process – basic overview
What new measures have been introduced by the UK government to provide further support to commercial tenants struggling to pay rent?
The Corporate Insolvency and Governance Bill was recently introduced into Parliament. While the effects of some of the changes proposed are intended to be only temporary, they have potential consequences for pension schemes.
Changes of particular relevance are as follows:
- Restrictions on the use of statutory demands for winding up petitions.
- New Moratorium process
- Court approved corporate restructuring plan
The Bill received its second and third readings on 3 June 2020 and will now go to the House of Lords for consideration.
The government has published the Corporate Insolvency and Governance Bill which, if passed, will significantly restrict suppliers’ ability to exit commercial agreements due to restructuring or insolvency-related causes.
That the current pandemic has thrown a curveball at many businesses is a given.
At the end of February, the Bank of Scotland Business Barometer reported that overall business confidence in the UK was at a net balance of 23%. Only two months later and confidence plunged to minus 29%.
The government has introduced fundamental changes to the procedures for presenting winding-up petitions and making winding-up orders in the Corporate Governance and Insolvency Bill.
Speed read
The High Court has recently ruled that the agreement between the liquidator of a company and the parent of that company, which contemplated the transfer of all of the assets of the company to the parent gave rise to a trust arrangement on the facts of the case. As a consequence of that trust arrangement, lands which were inadvertently not transferred by the liquidator in the course of the liquidation were deemed not to have vested in the State when the company was dissolved, as would otherwise have been the case under the State Property Act, 1954.