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

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 

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.

A recent Sheriff Court judgment is the latest decision to consider the role and remit of the court reporter in a liquidation which, unusually, involved the court appointing two reporters.

In Scotland, the Insolvency (Scotland) (Receivership and Winding Up) Rules 2018 provide that where there is no creditors committee, the remuneration of a liquidator shall be fixed by the court. In practice, the court appoints a reporter to examine and audit the liquidator’s accounts and to report on the amount of remuneration to be paid.

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.

It seems that business disruption due to coronavirus is pretty inevitable. What should you as a company director be doing if the disruption means your business starts to suffer?

What changes for me as a director?

As a director, you know that you owe duties to the company. When the business starts heading towards insolvency, there is a change of emphasis and instead of doing what is best for the shareholders, you have to change and consider what the consequences of your actions will be for the company’s creditors.

Against the backdrop of the insolvency of Scottish companies carrying on business in India, a recent decision of the Inner House of the Court of Session has considered the competency of seeking declaratory orders in petition procedure.

Background

In October 2016, we reported on a Court of Session decision which concerned three Scottish registered companies carrying on business in India and which had been placed into administration under the Insolvency Act 1986.

Can a Creditors Voluntary Arrangement (CVA) lead to a stay in the enforcement of an adjudicator’s decision?

In January of this year the Court of Appeal refused to stay enforcement of an adjudication award due to a CVA ((1838) Cannon Corporate Limited v Primus Build Limited [2019] EWCA Civ 27). Four months later another enforcement decision against a company subject to a CVA came before the Technology and Construction Court (TCC). This time a stay was granted – so what was the difference?