It is an unfortunate reality that the number of insolvencies in the construction sector seems certain to rise in coming months as the economic impact of COVID-19 takes effect. In this context, the recent Supreme Court decision in Bresco Electrical Services Ltd (In Liquidation) v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25 is particularly relevant.
This case concerned important questions regarding the compatibility of two statutory regimes:
The government’s temporary changes to the insolvency rules to cater for Covid-19 – in particular the new restrictions on the presentation of winding-up petitions – have been well-publicised. These have now been packaged within an Act (the Corporate Insolvency and Governance Act (“CIGA”)) which also brought in significant, permanent changes to UK insolvency law.
On 1 August 2020, amendments to Act XLIX of 1991 (the Insolvency Code) are scheduled to come into force, which have been designed to promote the cooperation between debtors and creditors in bankruptcies and allow for the use of electronic communications in insolvency procedures.
The key changes contained in the amendments include the following:
Pre-emption right for the Hungarian state
Businesses continue to face a challenging environment owing to the global COVID-19 crisis and consequent measures introduced by governments worldwide. The scope and nature of these measures is constantly evolving, with the focus now shifting to an easing of restrictions and facilitating a bounce back of the economy. As part of their response to such measures, businesses will be continuing to look at how best to deal with potential contractual disputes, or considering if some contracts can be terminated.
The UK has introduced a new restructuring tool, the Restructuring Plan, which when coupled with other provisions of the new law creates the possibility of the management of a company in financial difficulty remaining in control of a process designed to turn the company around as a going concern whilst in many cases having the benefit of a moratorium. Sounds a little like Chapter 11 in the US?
We examine whether the Restructuring Plan will offer aviation companies in the UK (and elsewhere?) a potential route to deal with the difficulties caused by the COVID-19 pandemic.
Insolvency termination clauses in Supply Contracts
What are the potential implications of the new measures in relation to contracts for the supply of goods or services set out in the Corporate Insolvency and Governance Act 2020 (the “Act”) for aircraft lenders, lessors and airlines? In the second of a series of three articles, we consider the new prohibition on suppliers invoking termination clauses (or changing other terms) upon an insolvency or formal restructuring process introduced in the Act.
Introduction
On 20 May 2020, the UK Government published the Corporate Insolvency and Governance Bill (the “Bill”). The Bill was published in response to Covid-19 with a view to assisting companies and directors through these challenging times.
The Corporate Insolvency & Governance Bill became law today - having had its first reading just over a month ago.
In summary, the provisions in the Act allow for:
The new moratorium regime
What are the potential implications of the new moratorium regime set out in the Corporate Insolvency and Governance Act 2020 (the “Act”) for aircraft lenders, lessors and airlines? In the first of a series of three articles, we consider this new law.
Two of the classic self-help remedies open to landlords for recovering commercial rent arrears have traditionally been forfeiture and Commercial Rent Arrears Recovery (CRAR), but both of these have been restricted as a result of Government measures to support tenants during the coronavirus crisis. There is also a proposed ban on winding-up petitions for coronavirus-related debts, which is already being applied by the courts.
Amended CRAR Regulations