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 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.

Last week, in Re a Company (Application to Restrain Advertisement) [2020] EWHC 1551 (Ch) the High Court restrained the advertisement of a winding up petition on grounds of the impending changes to insolvency legislation, which are intended to have a retrospective effect.

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.

A Supreme Court judgment issued yesterday has overturned a Court of Appeal decision heavily limiting the ability of insolvency practitioners to commence and enforce adjudication proceedings against their creditors. The court’s decision allows much greater flexibility in the use of adjudication for the administration of construction insolvencies, however some uncertainty remains over the basis on which decisions obtained in such adjudications will be permitted to be enforced against creditors.

What new measures have been introduced by the UK government to provide further support to commercial tenants struggling to pay rent?

The government recently published its Corporate Insolvency and Governance Bill which includes a temporary “ban” on statutory demands. In its current form, the ban will prevent landlords and other creditors from relying on statutory demands served between 1 March and 1 month after the Bill becomes law. The Bill also includes provision to prevent the winding up of companies where their inability to pay is due to Covid 19.

In a bid to assist struggling companies amid the uncertainty brought on by the pandemic, Hungary issued Government Decree No. 249/2020, which amends the Bankruptcy Code and gives companies breathing space while they explore options for rescue.

The changes created by the decree, which came into force on 29 May 2020, will be in effect only during the state of the emergency and include the following:

In response to the COVID-19 pandemic, the Slovak government and Parliament have approved another measure to help entrepreneurs overcome the negative impacts of this crisis on their businesses. The bankruptcy moratorium is an opt-in model and entrepreneurs are entitled to apply for such temporary bankruptcy protection subject to certain conditions. However, before applying various legal and business consequences should be assessed.

Who can apply?

Temporary provisions restricting action to wind up companies and reverse some winding up orders already made are a step closer following presentation of the Corporate Insolvency and Governance Bill (“Bill”) to the House of Commons on 20 May. The Bill will now work its way through both Houses before imminently becoming law. The Bill includes a number of substantial corporate insolvency changes, but also temporary provisions restricting action to wind up companies in light of Covid-19, on which we focus here.