The Corporate Insolvency and Governance Act 2020 came into force on 26 June 2020 introducing a number of temporary and more permanent reforms, summarised in my colleague Jess’ post here.
Following the recent Supreme Court decision in Bresco Electrical Services Ltd (In Liquidation) v Michael J Lonsdale (Electrical) Ltd, it is clear that companies in liquidation have the right to adjudicate a dispute. However, a successful adjudication is only half the battle: the insolvent company must still persuade the court to enforce the decision.
The Corporate Insolvency and Governance Act came into force on 26 June 2020 introducing a number of reforms aimed at providing protection to companies in financial distress, particularly as a result of the COVID19 pandemic.
However, the reforms present a number of potential problems to suppliers. Specifically, a permanent provision has been added to the Insolvency Act 1986 which:
Since Richard Branson’s Virgin Atlantic Airways Ltd’s request for Government loan was denied (see the post by my colleague, Jess), the airline has announced plans for a private-only solvent recapitalisation to "rebuild its balance sheet" and "welcome passengers back".
Assuming the Pizza Express company voluntary arrangement (CVA) follows the approach taken by other casual diners and retailers who have also launched CVAs recently, we can predict with some confidence what the Pizza Express CVA proposal might say.
The recent High Court decision in Hellard & Anor v Registrar of Companies & Ors [2020] EWHC 1561 (Ch) (23 June 2020) serves as a useful reminder to any party seeking the restoration of a company to the Register of Companies that it is important first to consider whether such party has the requisite standing to make the application.
New restrictions contained in the Corporate Governance & Insolvency Act 2020 now in force severely impact the steps creditors can take to get payment of an undisputed debt owed by a company.
Creditors cannot now use statutory demands to threaten that a company will be wound up if it does not pay what is owed. This is because any statutory demand made between 1 March 2020 and 30 September 2020 will be void.
Enforcement options in England & Wales – recent High Court judgment provides rare guidance on Orders for Questioning
Once the litigation or arbitration has been fought and you obtain a judgment in your favour, if your opponent does not pay up, a new process will begin in attempting to enforce that judgment.
Why has it been difficult to get a winding-up order?
The Corporate Insolvency and Governance Act 2020 (CIGA 2020) came into force on 26 June. Under CIGA 2020, creditors are (currently until 30 September 2020, although the period may be extended) unable to present a winding-up petition on the basis of:
The rapid onset of the COVID-19 pandemic, coupled with the drastic lockdown restrictions, has left many businesses – particularly those that rely on heavy footfall – in dire financial circumstances.
Businesses are therefore seeking tools to help them weather this storm and light-touch administration is an option that continues to rear its head.
What is it?